Slide 1: Q4 and Fiscal Year 2024 Financial Results
Q4 and Fiscal Year 2024 Financial Results November 13, 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 quarter ending December 28, 2024; our long-term outlook; our long-term focus, financial, growt
Slide 3: FY24 Overview
FY24 Overview ● Revenue of $1.52B, -8% y/y driven by softer demand due to challenging market conditions and challenges resulting from our recent app rollout, partially offset by the introduction of Ace in June 2024 and the impact of favorable foreign exchange rates. ● Gained significant $ market share
Slide 4: Launch of Ace
Launch of Ace Press/Reviewer Accolades Diplo Devontasmith 6.3M Followers 1M Followers Customer Accolades Ace continues to earn widespread recognition, with TIME recently naming it one of the Best Inventions of 2024 and Esquire naming Sonos Ace in its 2024 Gadget Awards. Ace is also an integral part
Slide 5: Launch of Arc Ultra & Sub 4
Launch of Arc Ultra & Sub 4 Press/Reviewer Accolades “Whether you have an existing Sonos “The [Arc] Ultra produces a noticeably “I’ve spent a week testing the Sonos “The Sonos Arc Ultra is the system you want to upgrade or you're clearer and better-defined sound than Arc Ultra, watching movies, devou
Slide 6: Launch of the Reimagined Sonos App
Launch of the Reimagined Sonos App Sonos is a company built on innovation at the intersection of software Commitments and hardware, and the delivery of joyful experiences We released a set of commitments that will ensure we continue to deliver the best wireless audio system in the world and our cust
Slide 7: Continued Product Innovation
Continued Product Innovation Sonos Ace - $449 MSRP Our first-ever headphones, marking our long-awaited entry into the personal listening category. The premium over-the-ear Bluetooth® headphones feature breathtaking lossless and spatial audio, world-class Active Noise Cancellation (ANC) and Aware Mode
Slide 8: Expansion of our Brand
Expansion of our Brand Brand building efforts with partners, influencers and retailers drives awareness and purchase intent with customers at scale. Deepening connections with the Installed Solutions partners increases brand affinity which should result in higher likelihood to recommend Sonos in key pur
Slide 9: Responsible Innovation
Responsible Innovation Sustainability by design: Ace, Roam 2, Arc Ultra, and Sub 4. Whether it's incorporating recycled materials, improving serviceability by utilizing more screws in place of adhesives, or reducing idle energy consumption – each new Sonos product demonstrates progress toward our su
Slide 10: Fiscal 2024 Financial Summary
Fiscal 2024 Financial Summary NET REVENUE GROSS MARGIN FY24 revenue decline driven FY24 gross margin driven by by softer demand due to by a decrease in product and $1,717 $1,752 challenging market 47.2% material costs and $1,655 45.4% 45.4% $1,518 conditions and challenges inventory-related -8% y/y
Slide 11: Overview of Key Metrics
Overview of Key Metrics Fiscal year 2019 2020 2021 2022 2023 2024 ● Added 1.0 million new households, total ending Sonos households (M) 9.1 10.9 12.6 14.0 15.3 16.3 household base of 16.3 million, +7% y/y New HHs 1.7 1.8 1.7 1.4 1.3 1.0 ● Revenue per product sold increased +5% y/y to Products regist
Slide 12: FY24 Operating Expense Trends
FY24 Operating Expense Trends FY24 FY23 Y/Y Change ● Committed to managing operating expenses R&D (GAAP) $ 304.6 $ 301.0 1% (OpEx) while making disciplined investment in Less: Stock-based compensation expense 37.9 35.5 7% product roadmap and marketing to drive long Less: Amortization of intangibles
Slide 13: Inventory Trends
Inventory Trends ● Inventories are down $115M, -33% y/y due to 4Q23 3Q24 4Q24 measures taken to more efficiently manage inventory Finished goods $ 281,571 $ 102,403 $ 199,825 % y/y (31)% (57)% (29)% ○ Total inventories +49% q/q due to upcoming holiday quarter partially % q/q 17% (10)% 95% offset by com
Slide 14: Cash Flow & Balance Sheet Highlights
Cash Flow & Balance Sheet Highlights ● Cash, cash equivalents & marketable securities YTD24 YTD23 of $221M ○ Includes $51M cash deployed into short Cash flow from operations $ 189.9 $ 100.4 duration treasury bills Capital expenditures $ (55.2) $ (50.3) ● FY24 cash flow from operations of $190M, % of r
Slide 15: 4Q24 Overview
4Q24 Overview ● Q4 Revenue of $255.4M (-16.3% y/y) ○ Americas (70% of sales): -13% y/y ○ EMEA (23% of sales): -30% y/y ○ APAC (8% of sales): +7% y/y ● In Q4 gained $ market share in US home theater category ● Q4 GAAP gross margin of 40.3% ● Q4 Adjusted EBITDA of -$22.6M (-8.9% margin) Source: intern
Slide 16: Demonstrating Resilient Gross Margin Recovery in Fiscal 2024
Demonstrating Resilient Gross Margin Recovery in Fiscal 2024 Q4 Gross Margin decreased -170bps y/y driven by: ● Higher promotional activity, partially offset by lower product and material costs. FY24 Gross Margin increased +210bps y/y driven by: ● Decrease in product and material costs, decreased inv
Slide 17: Q4 Operating Expense Trends
Q4 Operating Expense Trends 4Q24 4Q23 Y/Y Change R&D (GAAP) $ 70.8 $ 65.5 8% ● Made $4M of app recovery investments in 4Q24 Less: Stock-based compensation expense 8.8 8.2 7% ● GAAP OpEx dollars +10% y/y: Less: Amortization of intangibles 0.5 0.5 0% Less: Restructuring and abandonment costs 4.9 0.2 n
Slide 18: 1Q25 Outlook
1Q25 Outlook To Be Provided on Earnings Call 18
Slide 19: The Sonos Story
The Sonos Story 19
Slide 20: Sonos at a Glance
Sonos at a Glance 2002 8 1,700+ 60 Founded Locations Employees Countries distributed 23 2 3,800+ $1.52B Products Services US Patents and Applications FY24 Revenue 20
Slide 21: Broad Product Portfolio Spanning Variety of Price Points and Use Cases
Broad Product Portfolio Spanning Variety of Price Points and Use Cases Home Theater Ray Beam $279 $499 Arc Ultra $999 Sub Mini Sub Arc $429 $799 $899 Speakers Era 100 Era 300 Five IKEA SYMFONISK IKEA SYMFONISK IKEA SYMFONISK Picture IKEA SYMFONISK $249 $449 $549 Bookshelf speaker Speaker lamp frame
Slide 22: 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 23: 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 23
Slide 24: … Yet We Remain the Leader
… Yet We Remain the Leader FY24 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 25: Why the Sonos Ecosystem Wins
Why the Sonos Ecosystem Wins “Software Eats Audio” - We have invested over $1.3 billion into R&D over the last 5 years Hardware + Software + Services Sound Easy to use 100+ third-party apps Design Reliable 2 3rd-party voice services Quality All works together 2 1st-party services Durability Rich pat
Slide 26: 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) 26 Source: Internal Data
Slide 27: Open Platform Enables Freedom of Choice
Open Platform Enables Freedom of Choice 100+ Content Partners Home Automation & Voice Assistants Home Control Partners 27
Slide 28: 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 cate
Slide 29: Large and Growing Install Base
Large and Growing Install Base Total Households 16.3 Existing Households Net New Households 15.3 1.0 14.0 1.3 AGR 17%C 12.6 1.4 10.9 1.7 9.1 1.8 7.4 1.7 5.9 1.5 4.6 1.3 1.2 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 29
Slide 30: 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 16M Sonos FY24 Households Source: Euromonitor 2023 1. Core Markets include the United States, Canada, Mexico, Au
Slide 31: 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 32: A Detailed Look at Customer Behavior and Install Base Monetization
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 first
Slide 33: New Product Innovation Drives Household Acquisition & Repurchase Activity
New Product Innovation Drives Household Acquisition & Repurchase Activity We continue to launch new products across our six current categories (All in One, Home Theater, Components, Headphones, Portables and Pro) FY25 FY18 FY19 FY20 FY21 FY22 FY23 FY24 to date -Era 100 Speakers -Sonos One -One SL -F
Slide 34: Framing Our Long Term Opportunity: Revenue
NEW: Framing Our Long Term Opportunity: Revenue Launch of our new premium over-the-ear (OTE) headphones unlocks an incremental $5bn core Premium OTE headphones TAM, +23% increase We remain just 2% penetrated into the $100bn Global Audio market PLUS Audio content, services & business $22bn $5bn Premi
Slide 35: Where We Are & Where We Are Going
Where We Are & Where We Are Going Fiscal 2024 Long Term Financial Targets $1,518M $2,500M Revenue Revenue 45.4% 45-47% GAAP Gross Margin GAAP Gross Margin $108M $375-450M Adjusted EBITDA Adjusted EBITDA Note: FY24 Adjusted EBITDA of $108 million represents 7.1% Adjusted EBITDA margin. Long term targ
Slide 36: Differentiated Channel Distribution
Differentiated Channel Distribution Channel mix remains relatively flat YoY as challenges related to the launch of our new app and category headwinds weigh on our FY24 results 2018 2019 2020 2021 2022 2023 2024 ● Retail & Other (55% of revenue, +0 bps), -8% y/y Retail and Other 830 930 838 1,011 987 9
Slide 37: Summary Financial Overview
Summary Financial Overview 2018 2019 2020 2021 2022 2023 2024 Americas 603 678 756 981 1,044 1,048 1,005 % y/y 12% 11% 30% 6% 0% (4%) EMEA 479 485 471 618 578 518 430 % y/y 1% (3%) 31% (7%) (10%) (17%) APAC 55 98 100 117 130 89 83 % y/y 78% 2% 18% 11% (32%) (7%) Total Revenue 1,137 1,261 1,326 1,717
Slide 38: Appendix
Appendix 38
Slide 39: Reconciliation of Operating Loss to Adjusted EBITDA
Reconciliation of Operating Loss to Adjusted EBITDA Three Months Ended Twelve Months Ended September 28, September 30, September 28, September 30, 2024 2023 2024 2023 Operating Loss (GAAP) $ (69,369) $ (28,361) $ (48,046) $ (20,547) Stock-based compensation 19,333 17,308 84,294 76,857 Legal and tran
Slide 40: Reconciliation of Net Loss to Adjusted EBITDA
Reconciliation of Net Loss to Adjusted EBITDA Three Months Ended Twelve Months Ended September 28, September 30, September 28, September 30, 2024 2023 2024 2023 (In thousands, except percentages) Net loss $ (53,093) $ (31,239) $ (38,146) $ (10,274) Add (deduct): Depreciation and amortization 17,224
Slide 41: Reconciliation of GAAP Net Loss to Non-GAAP Net (Loss) Income
Reconciliation of GAAP Net Loss to Non-GAAP Net (Loss) Income Reconciliation of GAAP Net Loss to Non-GAAP Net (Loss) Income Three Months Ended Twelve Months Ended September 28, September 30, September 28, September 30, 2024 2023 2024 2023 Reconciliation of GAAP net loss GAAP net loss $ (53,093) $ (3
Slide 42: Reconciliation of Cash Flows to Free Cash Flow
Reconciliation of Cash Flows (Used in) Provided by Operating Activities to Free Cash Flow Three Months Ended Twelve Months Ended September 28, September 30, September 28, September 30, 2024 2023 2024 2023 Cash flows (used in) provided by operating activities $ (37,734) $ 22,195 $ 189,906 $ 100,406 Le
Slide 43: SONOS
SONOS