Slide 1: Q2 Fiscal Year 2024 Financial Results
Q2 Fiscal Year 2024 Financial Results May 7, 2024
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding our outlook for the fiscal year ending September 28, 2024; our long-term outlook; our long-term focus, financial, growth,
Slide 3: Q2 and 1H Overview
Q2 and 1H Overview Q2 1H Highlights Revenue ● Q2 Revenue of $252.7M (-16.9% y/y), $976.8 bringing 1H24 revenue to $865.5M $865.5 (-11.4% y/y) $304.2 ● In Q2 gained $ and unit market share $252.7 in US home theater category Reported: -11.4% CC: -12.6% Reported: -16.9% ● Q2 GAAP gross margin of 44.3%
Slide 4: Line of Sight to Material Gross Margin Recovery in FY24
Line of Sight to Material Gross Margin Recovery in FY24 Q2 Gross margin increased +100bps y/y driven by: ● Lower component costs, favorable product mix, partially offset by additional promotional activity Expected FY24 Gross Margin Recovery Expected to be Driven By ● Lower component costs, favorable
Slide 5: Responsibly Investing to Drive Long Term Growth
Responsibly Investing to Drive Long Term Growth ● Committed to managing operating expenses (OpEx) 2Q24 2Q23 Y/Y Change while making targeted and responsible investment in R&D (GAAP) $ 80.3 $ 80.8 (1)% product roadmap and category expansion to drive long Less: Stock-based compensation expense 10.4 9.
Slide 6: Cash Flow & Balance Sheet Highlights
Cash Flow & Balance Sheet Highlights ● Cash, cash equivalents & marketable securities of $292M ○ Includes $46M cash deployed into short 2Q24 2Q23 YTD24 YTD23 duration treasury bills Cash flow from operations $ (111.2) $ (113.0) $ 164.2 $ 69.3 ● Cash flow from operations of $164M in 1H24, Capital expen
Slide 7: Significant Progress Toward Rightsizing Inventory Levels
Significant Progress Toward Rightsizing Inventory Levels ● Inventories are down $147M, -45% y/y due to measures taken to more efficiently manage inventory 2Q23 1Q24 2Q24 Finished goods $ 274,459 $ 113,354 $ 114,222 ○ Total inventories +4% q/q % y/y 32% (57)% (58)% ○ Finished goods inventory increased b
Slide 8: FY24 Outlook
FY24 Outlook 8
Slide 9: Maintaining our FY24 Outlook: Balancing Investment and Driving Margin Expansion
Maintaining our FY24 Outlook: Balancing Investment and Driving Margin Expansion Key Assumptions FY23 Actuals Maintaining our FY24 Outlook ● Midpoint of guidance implies ○ Revenue of $1.65 billion (relatively flat y/y) Revenue $1.655 billion $1.6 to 1.7 billion ○ GAAP Gross Profit of $751 million (+5%
Slide 10: The Sonos Story
The Sonos Story 10
Slide 11: Sonos at a Glance
Sonos at a Glance 2002 10 1,800+ 60 Founded Locations Employees Countries distributed 21 2 3,800+ $1.66B Products Services US Patents and Applications FY23 Revenue 11
Slide 12: Broad Product Portfolio Spanning Variety of Price Points
Broad Product Portfolio Spanning Variety of Price Points Portables All-in-One Speakers Roam Move 2 Era 100 Era 300 Five IKEA SYMFONISK IKEA SYMFONISK IKEA SYMFONISK Picture IKEA SYMFONISK $179 $449 $249 $449 $549 Bookshelf speaker Speaker lamp frame speaker Floor lamp speaker $119 $249 $259 $299 Hom
Slide 13: Market Position
Market Position Premium Sonos is differentiated by our unique combination of an open content and control platform with high-quality, premium hardware that spans a variety of form factors, use cases, and price points. No other company has created an interoperable suite of products serving customers in
Slide 14: Sonos Innovation Is Widely Adopted
Sonos Innovation Is Widely Adopted Sonos Sonos releases digital founded June music system in 2002 February 2005 Sonos Apple HomePod demos at D2 June 2004 Google Home Amazon Echo Denon Heos Lenbrook Bluesound Jan Jan Jan Jan Jan Jan Jan Jan Jan 2018 Present 2002 2004 2006 2008 2010 2012 2014 2016 14
Slide 15: … Yet We Remain the Leader
… Yet We Remain the Leader FY23 Top Ranked Models (by $ share) United States EMEA1 $200+ Home Theater2 $150+ Streaming Audio $200+ Home Theater2 $150+ Streaming Audio Brand Rank: #1 Brand Rank: #2 Brand Rank: #1 Brand Rank: #2 Top Products in Category Top Products in Category Top Products in Categor
Slide 16: Why the Sonos Ecosystem Wins
Why the Sonos Ecosystem Wins “Software Eats Audio” - We have invested over $1.2 billion into R&D over the last 5 years Hardware + Software + Services 100+ third-party apps Sound Easy to use 2 voice providers Design Reliable 2 first-party services Quality All works together (Sonos Radio & Durability R
Slide 17: Our Innovation Is Protected by a Robust and Growing Patent Portfolio
Our Innovation Is Protected by a Robust and Growing Patent Portfolio Total Sonos U.S. Patents and Patent Applications (filed over time, cumulative) 17 Source: Internal Data
Slide 18: Open Platform Enables Freedom of Choice
Open Platform Enables Freedom of Choice 100+ Content Partners Home Automation & Voice Assistants Home Control Partners 18
Slide 19: Key Drivers of Long Term Growth
Key Drivers of Long Term Growth “The Sonos Flywheel” New households enter the Sonos ecosystem, and existing households purchase additional products at a steady rate. Driven by Continue to raise the bar in Enter new product New business initiatives 1 2 3 Expand geographic reach 4 existing product cat
Slide 20: Large and Growing Install Base
Large and Growing Install Base 15.3 Total Households Existing Households Net New Households 14.0 1.3 12.6 1.4 R CAG 19% 10.9 1.7 1.8 9.1 7.4 1.7 5.9 1.5 4.6 1.3 1.2 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 20
Slide 21: Framing Our Long Term Opportunity: Households
Framing Our Long Term Opportunity: Households PLUS Geographic Expansion 391M Households in Core Markets1 ~9% Current penetration of total affluent households 172M Affluent ($75k+2) Households 15M Sonos FY23 Households Source: Euromonitor 2023 1. Core Markets include the United States, Canada, Mexico, Au
Slide 22: Our Install Base Continues to Purchase Additional Sonos Products
Our Install Base Continues to Purchase Additional Sonos Products A significant portion of our annual product registrations come from our existing households (HHs), many of which start with just one product. Lifetime value of customers grows as products per HH increases Incremental revenue opportunity
Slide 23: Average Registrations per Customer
NEW: A Detailed Look at Customer Behavior and Install Base Monetization Over Time Consistent repurchase behavior across larger cohorts and greater monetization of products sold underscores our conviction to deliver our long term financial targets Cohorts behave similarly over time, regardless of when
Slide 24: Launching 2+ Products Annually Drives Household Acquisition & Repurchase Activity
Launching 2+ Products Annually Drives Household Acquisition & Repurchase Activity We continue to launch new products across our five current categories (all in one, home theater, components, portables and Pro) FY18 FY19 FY20 FY21 FY22 FY23 FY24 -Era 100 All in One -Sonos One -One SL -Five -Era 300 -A
Slide 25: Framing Our Long Term Opportunity: Revenue
Framing Our Long Term Opportunity: Revenue PLUS Audio content, services & business $100B Global Audio ~2% Current penetration of $30B global audio market Global Home Audio $22B Premium Global Home Audio $1.66B Sonos FY23 Revenue Source: Futuresource CY2022, Premium defined as $100+ wireless speakers,
Slide 26: Where We Are & Where We Are Going
Where We Are & Where We Are Going FY24 Guidance Midpoint Long Term Financial Targets $1,650M $2,500M Revenue Revenue 45.5% 45-47% GAAP Gross Margin GAAP Gross Margin $165M $375-450M Adjusted EBITDA Adjusted EBITDA Note: FY24 Adjusted EBITDA target of $165 million represents 10.0% Adjusted EBITDA mar
Slide 27: Diversified Channel Distribution
Diversified Channel Distribution Challenges in the retail environment and changes in consumer shopping patterns have resulted in business mix shifts into higher-margin channels, like DTC and Installer Solutions (45% combined, +90 bps y/y). 2018 2019 2020 2021 2022 2023 ● Fiscal 2023 y/y comparisons i
Slide 28: Summary Financial Overview
Summary Financial Overview 2024 - Guidance 2018 2019 2020 2021 2022 2023 Midpoint Americas 603 678 756 981 1,044 1,048 % y/y 12% 11% 30% 6% 0% EMEA 479 485 471 618 578 518 % y/y 1% (3%) 31% (7%) (10%) APAC 55 98 100 117 130 89 % y/y 78% 2% 18% 11% (32%) Total Revenue 1,137 1,261 1,326 1,717 1,752 1,
Slide 29: Appendix
Appendix 29
Slide 30: Reconciliation of Operating (Loss) Income to Adjusted EBITDA
Reconciliation of Operating (Loss) Income to Adjusted EBITDA Three Months Ended Six Months Ended March 30, April 1, March 30, April 1, 2024 2023 2024 2023 Operating (Loss) Income (GAAP) $ (70,960) $ (57,226) $ 8,735 $ 29,078 Stock-based compensation 23,673 21,025 43,031 41,220 Legal and transaction
Slide 31: Reconciliation of Net (Loss) Income to Adjusted EBITDA
Reconciliation of Net (Loss) Income to Adjusted EBITDA Three Months Ended Six Months Ended March 30, April 1, March 30, April 1, 2024 2023 2024 2023 (In thousands, except percentages) Net (loss) income $ (69,709) $ (30,652) $ 11,238 $ 44,537 Add (deduct): Depreciation and amortization 11,243 11,713
Slide 32: Reconciliation of GAAP Net (Loss) Income to Non-GAAP Net (Loss) Income
Reconciliation of GAAP Net (Loss) Income to Non-GAAP Net (Loss) Income Reconciliation of GAAP Net (Loss) Income to Non-GAAP Net (Loss) Income (unaudited, in thousands, except share and per share amounts) Three Months Ended Six Months Ended March 30, April 1, March 30, April 1, 2024 2023 2024 2023 Re
Slide 33: Reconciliation of Cash Flows Provided by Operating Activities to Free Cash Flow
Reconciliation of Cash Flows Provided by Operating Activities to Free Cash Flow Three Months Ended Six Months Ended March 30, April 1, March 30, April 1, 2024 2023 2024 2023 Cash flows provided by (used in) operating activities $ (111,244) $ (112,962) $ 164,157 $ 69,324 Less: Purchases of property an
Slide 34: SONOS
SONOS