Slide 1: Q1 Fiscal Year 2024 Financial Results
Q1 Fiscal Year 2024 Financial Results February 6, 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: Q1 Highlights
Q1 Highlights ● Q1 revenue of $612.9M, -8.9% y/y (-10.5% constant currency) and +101% sequentially from 4Q23 ● In Q1 gained $ and unit market share in US home theater category ● Q1 GAAP gross margin of 46.1%, +370bps y/y and +420bps q/q ● Q1 GAAP net income of $80.9M ○ Q1 Non-GAAP net income $106.1M
Slide 4: Q1 Financial Summary
Q1 Financial Summary Q1 Revenue ● Revenue -8.9% y/y, or -10.5% constant currency, to $612.9M primarily driven by: $672.6 ○ Declines in our retail and other channels, as partners $612.9 normalized ordering levels, as well as softer demand, partially offset by the impact of favorable foreign Reported:
Slide 5: Line of Sight to Material Gross Margin Recovery in FY24
Line of Sight to Material Gross Margin Recovery in FY24 Q1 Gross margin increased +370bps y/y driven by: ● Lower component costs, fewer spot component purchases, lower inventory-related provisions, and FX tailwinds (100bps), partially offset by impact of additional promotional activity Expected FY24
Slide 6: Responsibly Investing to Drive Long Term Growth
Responsibly Investing to Drive Long Term Growth ● Committed to managing operating expenses (OpEx) while making targeted and responsible investment in 1Q24 1Q23 Y/Y Change product roadmap and category expansion to drive long R&D (GAAP) $ 79.2 $ 76.9 3% term growth Less: Stock-based compensation expen
Slide 7: Cash Flow & Balance Sheet Highlights
Cash Flow & Balance Sheet Highlights ● Cash and cash equivalents of $467M, no debt, an increase of $247.1M q/q. Key contributors to 1Q24 1Q23 q/q increase in cash balance driven by: Cash flow from operations $ 275.4 $ 182.3 ● Cash flow from operations of $275M, +$93M y/y Capital expenditures $ (6.1) $
Slide 8: Significant Progress Toward Rightsizing Inventory Levels
Significant Progress Toward Rightsizing Inventory Levels ● Exited the holidays with $173 million lower 1Q23 4Q23 1Q24 inventories compared to 4Q23 due to measures Finished goods $ 260,734 $ 281,571 $ 113,354 taken to more efficiently manage inventory % y/y 79% (31)% (57)% % q/q (36)% 17% (60)% ○ Total
Slide 9: FY24 Outlook
FY24 Outlook 9
Slide 10: FY24 Outlook Unchanged: Balancing Investment and Driving Margin Expansion
FY24 Outlook Unchanged: Balancing Investment and Driving Margin Expansion Key Assumptions FY23 Actuals Unchanged 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% y/y) % (decl
Slide 11: The Sonos Story
The Sonos Story 11
Slide 12: Sonos at a Glance
Sonos at a Glance 2002 10 1,800+ 60 Founded Locations Employees Countries distributed 20 2 3,800+ $1.66B Products Services US Patents and Applications FY23 Revenue 12
Slide 13: 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 $139 $249 $259 $299 Hom
Slide 14: 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 15: 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 15
Slide 16: … 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 17: 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 130+ 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 18: 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) 18 Source: Internal Data
Slide 19: Open Platform Enables Freedom of Choice
Open Platform Enables Freedom of Choice 130+ Content Partners Home Automation & Voice Assistants Home Control Partners 19
Slide 20: 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 21: 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 21
Slide 22: 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 23: 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 24: 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 25: 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 Era 100 All in One Sonos One One SL Five Era 300 Arc Beam (Ge
Slide 26: 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 27: 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 28: 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 29: 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 30: Appendix
Appendix 30
Slide 31: Reconciliation of Operating Income to Adjusted EBITDA
Reconciliation of Operating Income to Adjusted EBITDA Three Months Ended December 30, December 31, 2023 2022 Operating Income (GAAP) $ 79,695 $ 86,304 Stock-based compensation 19,358 20,195 Legal and transaction related costs (1) 3,743 6,289 Amortization of intangibles 1,492 1,704 Restructuring and
Slide 32: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to Adjusted EBITDA Three Months Ended December 30, December 31, 2023 2022 (In thousands, except percentages) Net income $ 80,947 $ 75,188 Add (deduct): Depreciation and amortization 11,878 11,132 Stock-based compensation expense 19,358 20,195 Interest income (3,075) (1,9
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 December 30, December 31, 2023 2022 Cash flows provided by operating activities $ 275,401 $ 182,286 Less: Purchases of property and equipment (6,077) (14,689) Free cash flow $ 269,324 $ 167,597 Note: $ i
Slide 34: Sonos
SONOS