Sonos, Inc. · NASDAQ:SONO
Sonos — Q3 FY2021 Earnings Presentation
22 slides from Sonos's earnings presentation, Aug 11, 2021
Slide 1: Q3 FY21 Financial Results
Q3 FY21 Financial Results August 11, 2021
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 October 2, 2021, our fiscal 2024 targets, our long-term focus, financial, growth, a
Slide 3: Q3 Highlights
Q3 Highlights ● Record Q3 results driven by continued strong demand ● Record Q3 adjusted EBITDA margin of 12.3% driven by strong demand, opex leverage on higher sales, and gross margin expansion ● Record Q3 revenue of $378.7M, +52% from LY driven by strong product demand, annualizing the Y/Y decline
Slide 4: Record Q3 Profitability and Strong Revenue Growth
Record Q3 Profitability and Strong Revenue Growth Q3 Revenue ● Revenue +52% due to strong product demand across all categories, annualizing the Y/Y $378.7 declines in Q3 20 (retail store closures), and $260.1 offset by continued constrained product $249.3 availability ● Adjusted EBITDA growth driven b
Slide 5: Strong Gross Margin Expansion
Strong Gross Margin Expansion Gross Margin Gross Margin ex Tariff Duties and Refunds Gross margin +300 bps Y/Y - key drivers: ● Lower promotional discounts (“At Home with Sonos” campaign Q3 LY) ● Fixed cost leverage on higher sales volume ● $5.0M tariff refund; $4M tariff expense ● Offset by channel mix
Slide 6: Strong Opex Leverage on Higher Sales, Anniversarying Restructuring LY
Strong Opex Leverage on Higher Sales, Anniversarying Restructuring LY Q321 Q320 Y/Y Change ● Drove significant opex leverage on the higher Research and Development (GAAP) $55.6 $57.8 (3.8)% sales base and anniversarying restructuring Restructuring and related charges - 4.9 (100.0)% and related charge
Slide 7: Significant Cash Flow and Strong Balance Sheet
Significant Cash Flow and Strong Balance Sheet ● Cash flow from operations of $246.7M, Y/Y +197% from LY YTD21 YTD20 Change Cash flow from operations $246.7 $83.2 197% ● Free cash flow of $211.9M, Capital expenditures $34.8 $29.9 16% +298% from LY Capex % of revenue 2.6% 3.0% ● Free cash flow / adjusted
Slide 8: FY21 Outlook
FY21 Outlook
Slide 9: FY21 Priorities
FY21 ● Delivering innovative new products that both new and existing customers love, e.g., Roam ● Services that enhance and further Priorities ● differentiate the customer experience Strengthening our direct-to-consumer efforts ● Supporting our incredible partnerships ● Adjusted EBITDA margin expansio
Slide 10: Raising FY21 Outlook: Continued Strong Demand and Adj. EBITDA Margin Expansion
Raising FY21 Outlook: Continued Strong Demand and Adj. EBITDA Margin Expansion Initial FY21 Outlook Prior FY21 Outlook Prior FY21 Outlook NEW FY21 OUTLOOK FY20 Actuals (provided at 4Q earnings) (provided at 1Q earnings) (provided at 2Q earnings) Adjusted EBITDA $108.5 million $170 - $205 million $19
Slide 11: Long Term Opportunity
Long Term Opportunity
Slide 12: Trends Fueling Our Growth
Trends Fueling Our Growth #1 #2 #3 The Golden Age Hollywood at The Great of Audio Home Reshuffling
Slide 13: Our Opportunity: Homes
Our Opportunity: Homes PLUS Geographic Expansion 349M Households in Core Markets1 ~9% FY20 Penetration of Target $75K+ Households in Core Markets2 116M Affluent ($75k+2) Households 11M Sonos FY20 Households Source: Euromonitor CY2020 1. Core Markets include the United States, Canada, Australia, United
Slide 14: Our Opportunity: Revenue
Our Opportunity: Revenue PLUS Audio content, services & business $89B Global Audio ~7% FY20 Penetration of Premium Home Audio Market $25B Global Home Audio $18B Premium Global Home Audio $1.3B Sonos FY20 Revenue Source: Futuresource CY2020, Premium defined as $100+ wireless speakers, $200+ soundbars,
Slide 15: Our Strategic Initiatives
Our Strategic Expand Our Brand Initiatives Expand Our Offerings Drive Operational Excellence
Slide 16: Confidence in Our FY 2024 Financial Targets
Confidence in Our FY 2024 Financial Targets Revenue Gross Margin Adjusted EBITDA Margin $2.25B 45-47% 15-18%
Slide 17: Appendix
cy ee ral A :S
Slide 18: Non-GAAP Measures
Non-GAAP Measures We have provided in this presentation financial information that has not been prepared in accordance with GAAP. We use these non-GAAP financial measures to evaluate our operating performance and trends and make planning decisions. We believe that these non-GAAP financial measures help
Slide 19: Reconciliation of Net Income (Loss) to Adjusted EBITDA
Reconciliation of Net Income (Loss) to Adjusted EBITDA Three Months Ended Nine Months Ended July 3, 2021 June 27, 2020 July 3, 2021 June 27, 2020 Net income (loss) $17,826 ($56,980) $167,339 ($38,526) Add (deduct): Depreciation and amortization 9,065 8,861 25,789 27,692 Stock-based compensation expe
Slide 20: Gross Profit and Margin Excluding the Impact of Tariffs
Gross Profit and Margin Excluding the Impact of Tariffs Three Months Ended Nine Months Ended July 3, 2021 June 27, 2020 July 3, 2021 June 27, 2020 Revenue $378,672 $249,310 $1,357,204 $986,491 Reported gross profit 177,861 109,791 643,062 410,420 Add/deduct: Tariffs, net of refunds (738) 4,049 (1,860) 2
Slide 21: Reconciliation of Cash Flows Provided by Operating Activities to Free Cash Flow
Reconciliation of Cash Flows Provided by Operating Activities to Free Cash Flow Nine Months Ended July 3, 2021 June 27, 2020 Cash flows provided by operating activities $246,741 $83,151 Less: purchases of property and equipment and intangible assets (34,792) (29,905) Free cash flow 211,949 53,246 Note
Slide 22: SONOS
SONOS