Slide 1: Q3 Fiscal Year 2024 Financial Results
Q3 Fiscal Year 2024 Financial Results August 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: Q3 and YTD Overview
Q3 and YTD Overview Q3 YTD Highlights Revenue ● Q3 Revenue of $397.1M (+6.4% y/y), $1,350.1 bringing YTD revenue to $1,262.7M $1,262.7 (-6.5% y/y) $397.1 $373.4 ● In Q3 gained $ and unit market share Reported: -6.5% in US home theater category Reported: +6.4% CC: -7.3% CC: +6.6% ● Q3 GAAP gross marg
Slide 4: Launch of Ace
Launch of Ace Suki Waterhouse 4.2M Followers Live post here. Desi Perkins 4.3M Followers Live post here. “Sonos has nailed style, fit, and comfort to such an extent that I keep forgetting these are a debut product in a new category for the company.” -The Verge “Move aside, AirPods Max; there is a new
Slide 5: Demonstrating Resilient Gross Margin Recovery in Fiscal 2024
Demonstrating Resilient Gross Margin Recovery in Fiscal 2024 Q3 Gross margin increased +230bps y/y driven by: ● Inventory reserve releases and lower component costs, partially offset by additional promotional activity Expected FY24 Gross Margin Recovery Expected to be Driven By ● Lower component cost
Slide 6: Q3 Operating Expense Trends
Q3 Operating Expense Trends ● GAAP OpEx dollars -7% y/y: 3Q24 3Q23 Y/Y Change ○ OpEx (GAAP) leverage of 660 bps y/y driven by R&D (GAAP) $ 74.2 $ 77.8 (5)% increase in revenue, and decrease in Less: Stock-based compensation expense 9.7 8.6 13% restructuring and abandonment costs and Less: Amortizati
Slide 7: Cash Flow & Balance Sheet Highlights
Cash Flow & Balance Sheet Highlights ● Cash, cash equivalents & marketable securities of $277M ○ Includes $50M cash deployed into short duration treasury bills YTD24 YTD23 ● YTD24 cash flow from operations of $228M, Cash flow from operations $ 227.6 $ 78.2 +$150M y/y from $78M in YTD23 Capital expendi
Slide 8: Inventory Trends
Inventory Trends ● Inventories are down $143M, -48% y/y due to 3Q23 2Q24 3Q24 measures taken to more efficiently manage Finished goods $ 240,117 $ 114,222 $ 102,403 inventory % y/y (7)% (58)% (57)% ○ Total inventories -14% q/q % q/q (13)% 1% (10)% ○ Finished goods inventory decreased Components $ 58,0
Slide 9: FY24 Outlook
FY24 Outlook 9
Slide 10: Fiscal 2024 Outlook
Fiscal 2024 Outlook Key Assumptions FY23 Actuals Revised FY24 Outlook ● Midpoint of guidance implies ○ Revenue of $1.513 billion (-9% y/y) Revenue $1.655 billion $1.503 to 1.523 billion ○ GAAP Gross Profit of $689 million (-4% y/y) % (decline) / growth (6%) (9%) to (8)% ○ GAAP Gross Margin of 45.5% (
Slide 11: The Sonos Story
The Sonos Story 11
Slide 12: Sonos at a Glance
Sonos at a Glance 2002 9 1,800+ 60 Founded Locations Employees Countries distributed 22 2 3,800+ $1.66B Products Services US Patents and Applications FY23 Revenue 12
Slide 13: Broad Product Portfolio Spanning Variety of Price Points and Use Cases
Broad Product Portfolio Spanning Variety of Price Points and Use Cases Portables All-in-One Speakers Roam 2 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 $2
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 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 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 100+ 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: A Detailed Look at Customer Behavior and Install Base Monetization
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 six current categories (All in One, Home Theater, Components, Headphones, Portables and Pro) FY18 FY19 FY20 FY21 FY22 FY23 FY24 -Era 100 All in One -Sonos One -One SL -Five
Slide 26: 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 27: Where We Are & Where We Are Going
Where We Are & Where We Are Going FY24 Guidance Midpoint Long Term Financial Targets $1,513M $2,500M Revenue Revenue 45.5% 45-47% GAAP Gross Margin GAAP Gross Margin $105M $375-450M Adjusted EBITDA Adjusted EBITDA Note: FY24 Adjusted EBITDA target of $105 million represents 6.9% Adjusted EBITDA marg
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 (Loss) to Adjusted EBITDA
Reconciliation of Operating Income (Loss) to Adjusted EBITDA Three Months Ended Nine Months Ended June 29, July 1, June 29, July 1, 2024 2023 2024 2023 Operating Income (Loss) (GAAP) $ 12,589 $ (21,261) $ 21,323 $ 7,816 Stock-based compensation 21,930 18,329 64,961 59,549 Legal and transaction relat
Slide 32: Reconciliation of Net Income (Loss) to Adjusted EBITDA
Reconciliation of Net Income (Loss) to Adjusted EBITDA Three Months Ended Nine Months Ended June 29, July 1, June 29, July 1, 2024 2023 2024 2023 (In thousands, except percentages) Net income (loss) $ 3,709 $ (23,571) $ 14,947 $ 20,966 Add (deduct): Depreciation and amortization 12,032 12,209 35,154
Slide 33: Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (unaudited, in thousands, except share and per share amounts) Three Months Ended Nine Months Ended June 29, July 1, June 29, July 1, 2024 2023 2024 2023 Reconciliation of G
Slide 34: 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 Nine Months Ended June 29, July 1, June 29, July 1, 2024 2023 2024 2023 Cash flows provided by operating activities $ 63,483 $ 8,887 $ 227,640 $ 78,211 Less: Purchases of property and equipment (23,214)
Slide 35: SONOS
SONOS