Exhibit 99.1
Sonos Reports Fourth Quarter and Fiscal 2023 Results
Santa Barbara, CA – November 15, 2023 - Sonos, Inc. (Nasdaq: SONO) today reported fourth quarter and fiscal 2023 results.
Fiscal 2023 Financial Highlights (unaudited)
●Revenue decreased 5.5% year-over-year to $1,655.3 million; on a constant-currency basis, revenue decreased 3.3% year-over-year
●Gross margin decreased 220 basis points year-over-year to 43.3%
●GAAP net loss of $10.3 million compared to net income of $67.4 million last year
○GAAP diluted loss per share of $(0.08) compared to GAAP diluted earnings per share (EPS) of $0.49 last year
●Non-GAAP net income1 of $121.4 million compared to $171.1 million last year
○Non-GAAP diluted EPS1 of $0.92 compared to $1.24 last year
●GAAP net loss margin of 0.6% compared to net income margin of 3.8% last year
●Adjusted EBITDA1 of $153.9 million compared to $226.5 million last year
○Adjusted EBITDA margin1 of 9.3% compared to 12.9% last year
●Free cash flow of $50.1 million. Cash flows from operating activities of $100.4 million
Fourth Quarter 2023 Financial Highlights (unaudited)
●Revenue decreased 3.5% year-over-year to $305.1 million; on a constant-currency basis, revenue decreased 5.1% year-over-year
●Gross margin increased 270 basis points year-over-year to 42.0%
●GAAP net loss of $31.2 million compared to $64.1 million last year
○GAAP diluted loss per share of $(0.25) compared to GAAP diluted EPS of $0.50 last year
●Non-GAAP net loss1 of $9.0 million compared to $38.3 million last year
○Non-GAAP diluted loss per share1 of $(0.07) compared to $(0.30) last year
●GAAP net loss margin of 10.2% compared to 20.3% last year
●Adjusted EBITDA1 of $6.3 million compared to $(25.6) million last year
○Adjusted EBITDA margin1 of 2.1% compared to (8.1)% last year
●Free cash flow of $12.0 million. Cash flows from operating activities of $22.2 million
○Inventories of $346.5 million, increased 16.2% from last quarter
○Finished goods of $281.6 million, increased 17.3% from last quarter
Notes: 1 Non-GAAP net income (loss)/Non-GAAP diluted earnings (loss) per share, Adjusted EBITDA and Adjusted EBITDA margin exclude stock-based compensation, legal and transaction related fees, amortization of intangibles, and restructuring and abandonment costs. See “Use of Non-GAAP Measures” and reconciliations to GAAP measures below.
Sonos CEO Patrick Spence commented, “While it was a challenging year in the categories in which we play, the strength of the Sonos brand and product portfolio enabled us to retain a strong market share position. We successfully raised the bar in the speaker category with the
introduction of our new Era products, and extended our leadership in the premium portable category with Move 2. And we delivered on our commitment to EBITDA margin in spite of the headwinds we faced.”
Mr. Spence continued, “As we enter Fiscal 2024, we are laser focused on execution and positioning our business to return to top and bottom line growth when conditions improve. While current market conditions remain challenging, this is the beginning of a multi-year product cycle where we expect to reap the rewards of our R&D investments. This cycle begins with our entry into a new multi-billion dollar category in the second half of the year that will complement our current offering, delight customers and drive immediate revenue. We are so excited about what we have to share with the world in Fiscal 2024 and beyond.”
| | | | |
Fiscal 2024 Outlook |
| | Low end | Midpoint | High end |
Revenue ($ million) | 1,600 | 1,650 | 1,700 |
| % y/y | -3% | 0% | 3% |
| % y/y - constant currency | -3% | 0% | 3% |
| | | | |
Gross margin - GAAP | 45.0% | 45.5% | 46.0% |
| Adjustments⁽¹⁾ | 0.4% | 0.4% | 0.4% |
Gross margin - Non-GAAP⁽¹⁾ | 45.4% | 45.9% | 46.4% |
| | | | |
Adjusted EBITDA ($ million) | 150 | 165 | 180 |
| Adjusted EBITDA margin | 9.4% | 10.0% | 10.6% |
Notes:
(1) Non-GAAP gross margin excludes approximately $7 million (0.4% of revenue) of stock-based compensation and amortization of intangible assets included in GAAP gross margin
Fiscal 2023 Company Highlights (unaudited)
Key Metrics:
●Total households increased 9% to 15.3 million in Fiscal 2023
●Existing households accounted for 44% of new product registrations in Fiscal 2023
●Average number of registered products per household of 3.05 in Fiscal 2023 vs 2.98 last year
●Direct-to-consumer (DTC) revenue was flat year-over-year and represented 24% of total revenue
●Installer Solutions (IS) revenue decreased 7% year-over-year and represented 21% of total revenue
New Stock Repurchase Program
●As announced in a separate release today, the company’s Board of Directors has authorized a new common stock repurchase program of up to $200 million.
●Under its most recently completed repurchase program, the company repurchased $100 million in stock, representing 6.6 million shares at an average price of $15.25 per share,
enabling the company to return capital to shareholders and offset dilution from compensation plans
Continued Product Innovation
●Era 100 - $249 MSRP. Only marginally larger than its predecessor, Sonos One, Era 100 boasts a new design and faster processing power, with a next-generation acoustic architecture that delivers detailed stereo sound and more powerful bass
●Era 300 - $449 MSRP. Era 300 delivers an unprecedented spatial audio experience for a single all-in-one speaker. With support for Dolby Atmos, the breakthrough design features six drivers that create a three-dimensional soundstage and make listeners feel like they're inside their music and movies
●Move 2 - $449 MSRP. The best-selling portable speaker has been revamped. Taking inspiration from the acoustic architecture developed for Era 100, Move 2 produces powerful stereo sound and up to 24 hours of battery life — more than twice that of the first generation — in an ultra durable and water-resistant design
●Sub Mini - $429 MSRP. Building on the award-winning Sonos Sub, this wireless subwoofer delivers rich, balanced bass in a more compact and equally iconic design. When paired with recommended speakers, Sub Mini creates a more immersive sound experience
●Sonos Pro - This new software as a service (SaaS) offering gives business owners the power to control Sonos across multiple locations. With this subscription-based solution, business owners get access to a web-based dashboard for remote monitoring and management, commercially-licensed music, and personalized support
Expansion of our Brand
●Brand Partnerships - More than 30k consumers, industry and press visited the sound experience at the Dolby House during SXSW, March 2023
●Advocacy - The Era Advocacy campaign enlisted more than 130 influencers, creating 350 pieces of bespoke content that resulted in more than 12M impressions and 10M views
●Retail - Global impact retail partnerships delivered unique brand and product experiences for consumers amplified by local PR and advocate partnerships
●Installer Solutions - The Sonos Professional experience at CEDIA Expo, the premier tradeshow summit for home technology integration professionals, saw over 3,500 integrators, distribution partners, and strategic partners visit the booth
Responsible Innovation
●Recognized as one of the best places to work for LGBTQ+ equality by the Human Rights Campaign Foundation.
●Publishing annual Listen Better Report in the coming weeks, highlighting the progress we’ve made on our sustainability and social impact work. In Fiscal 2023, we advanced our Climate Action Plan to become carbon neutral by 2030 and net zero by 2040. We also disclosed our Scope 1, 2, and 3 greenhouse gas emissions to the Carbon Disclosure Project (CDP).
●We built sustainability into all three of our new marquee products: Era 100, Era 300, and Move 2. We also introduced Product Environmental Reports to enhance our
transparency. These reports provide detailed information about the materials and environmental footprint of each new product.
●Won Best In Show at the 2023 Dieline Awards for our sustainable paper-based Ray and Sub Mini product packaging.
●Launched partnership with 1% for the Planet to donate 1% of Certified Refurbished sales to high-impact nonprofits focused on environmental preservation and restoration.
●Improved our ESG ratings from multiple rating agencies, including from Medium Risk to Low Risk by Sustainalytics.
Supplemental Earnings Presentation
The company has posted a supplemental earnings presentation accompanying its fourth quarter and fiscal 2023 results to the Earnings Reports section of its investor relations website at https://investors.sonos.com/reports-and-filings/default.aspx#section=earningsreports.
Conference Call, Webcast and Transcript
The company will host a webcast of its conference call and Q&A related to its fourth quarter and fiscal 2023 results on November 15, 2023, at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). Participants may access the live webcast in listen-only mode on the Sonos investor relations website at https://investors.sonos.com/news-and-events/default.aspx.
The conference call may also be accessed by dialing (888) 330-2454 with conference ID 8641747. Participants outside the U.S. can access the call by dialing (240) 789-2714 using the same conference ID.
An archived webcast of the conference call and a transcript of the company’s prepared remarks and Q&A session will also be available at https://investors.sonos.com/reports-and-filings/default.aspx#section=earningsreports following the call.
| | | | | | | | |
Consolidated Statements of Operations and Comprehensive (Loss) Income |
(unaudited, in thousands, except share and per share amounts) |
| | | | | | | | |
| | Three Months Ended | | Twelve Months Ended |
| | September 30, 2023 | | October 1, 2022 | | September 30, 2023 | | October 1, 2022 |
Revenue | | $ 305,147 | | $ 316,290 | | $ 1,655,255 | | $ 1,752,336 |
Cost of revenue | | 177,093 | | 192,191 | | 938,765 | | 955,969 |
Gross profit | | 128,054 | | 124,099 | | 716,490 | | 796,367 |
Operating expenses | | | | | | | | |
Research and development | | 65,517 | | 67,274 | | 301,001 | | 256,073 |
Sales and marketing | | 58,601 | | 72,649 | | 267,518 | | 280,333 |
General and administrative | | 32,297 | | 44,240 | | 168,518 | | 170,429 |
Total operating expenses | | 156,415 | | 184,163 | | 737,037 | | 706,835 |
Operating (loss) income | | (28,361) | | (60,064) | | (20,547) | | 89,532 |
Other income (expense), net | | | | | | | | |
Interest income | | 2,661 | | 1,070 | | 10,201 | | 1,655 |
Interest expense | | (149) | | (168) | | (733) | | (552) |
Other (expense) income, net | | (6,696) | | (8,364) | | 15,473 | | (21,905) |
Total other (expense) income, net | | (4,184) | | (7,462) | | 24,941 | | (20,802) |
(Loss) income before (benefit from) provision for income taxes | | (32,545) | | (67,526) | | 4,394 | | 68,730 |
(Benefit from) provision for income taxes | | (1,306) | | (3,459) | | 14,668 | | 1,347 |
Net (loss) income | | $ (31,239) | | $ (64,067) | | $ (10,274) | | $ 67,383 |
| | | | | | | | |
Net (loss) income attributable to common stockholders: | | | | | | | | |
Basic and diluted | | $ (31,239) | | $ (64,067) | | $ (10,274) | | $ 67,383 |
| | | | | | | | |
Net (loss) income per share attributable to common stockholders: | | | | | | | | |
Basic | | $ (0.25) | | $ (0.50) | | $ (0.08) | | $ 0.53 |
Diluted | | $ (0.25) | | $ (0.50) | | $ (0.08) | | $ 0.49 |
| | | | | | | | |
Weighted-average shares used in computing net (loss) income per share attributable to common stockholders: | | | | | | | | |
Basic | | 127,335,311 | | 127,104,659 | | 127,702,885 | | 127,691,030 |
| | | | | | | | |
Diluted | | 127,335,311 | | 127,104,659 | | 127,702,885 | | 137,762,078 |
| | | | | | | | |
Total comprehensive (loss) income | | | | | | | | |
Net (loss) income | | (31,239) | | (64,067) | | (10,274) | | 67,383 |
Change in foreign currency translation adjustment | | 2,035 | | (249) | | 153 | | (2,221) |
Comprehensive (loss) income | | $ (29,204) | | $ (64,316) | | $ (10,121) | | $ 65,162 |
| | | | |
Consolidated Balance Sheets |
(unaudited, in thousands, except par values) |
| | As of |
| | September 30, 2023 | | October 1, 2022 |
Assets | | | | |
Current assets: | | | | |
Cash and cash equivalents | | $ 220,231 | | $ 274,855 |
Accounts receivable, net of allowances | | 67,583 | | 101,206 |
Inventories | | 346,521 | | 454,288 |
Prepaids and other current assets | | 25,296 | | 37,042 |
Total current assets | | 659,631 | | 867,391 |
Property and equipment, net | | 87,075 | | 86,168 |
Operating lease right-of-use assets | | 48,918 | | 28,329 |
Goodwill | | 80,420 | | 77,300 |
Intangible assets, net | | | | |
In-process research and development | | 69,791 | | 64,680 |
Other intangible assets | | 20,218 | | 26,384 |
Deferred tax assets | | 1,659 | | 1,508 |
Other noncurrent assets | | 34,529 | | 36,628 |
Total assets | | $ 1,002,241 | | $ 1,188,388 |
| | | | |
Liabilities and stockholders’ equity | | | | |
Current liabilities: | | | | |
Accounts payable | | $ 187,981 | | $ 335,758 |
Accrued expenses | | 89,717 | | 109,290 |
Accrued compensation | | 22,079 | | 23,624 |
Deferred revenue, current | | 20,188 | | 27,318 |
Other current liabilities | | 34,253 | | 39,649 |
Total current liabilities | | 354,218 | | 535,639 |
Operating lease liabilities, noncurrent | | 54,956 | | 25,596 |
Deferred revenue, noncurrent | | 60,650 | | 56,152 |
Deferred tax liabilities | | 9,846 | | 9,642 |
| | | | |
Other noncurrent liabilities | | 3,914 | | 846 |
Total liabilities | | 483,584 | | 627,875 |
| | | | |
Commitments and contingencies | | | | |
Stockholders’ equity: | | | | |
Common stock, $0.001 par value | | 130 | | 130 |
Treasury stock | | (72,586) | | (50,896) |
Additional paid-in capital | | 607,345 | | 617,390 |
Retained earnings (accumulated deficit) | | (12,788) | | (2,514) |
Accumulated other comprehensive loss | | (3,444) | | (3,597) |
Total stockholders’ equity | | 518,657 | | 560,513 |
Total liabilities and stockholders’ equity | | $ 1,002,241 | | $ 1,188,388 |
| | | | |
Consolidated Statements of Cash Flows |
(unaudited, dollars in thousands) |
| | Twelve Months Ended |
| | September 30, 2023 | | October 1, 2022 |
Cash flows from operating activities | | | | |
Net (loss) income | | $ (10,274) | | $ 67,383 |
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | | | | |
Depreciation and amortization | | 48,969 | | 38,504 |
Restructuring and abandonment charges | | 5,533 | | — |
Stock-based compensation expense | | 76,857 | | 75,640 |
Provision for inventory obsolescence | | 20,640 | | 6,276 |
Other | | 5,535 | | 4,705 |
Deferred income taxes | | (583) | | (1,508) |
Foreign currency transaction (gain) loss | | (7,335) | | 10,775 |
Changes in operating assets and liabilities: | | | | |
Accounts receivable, net | | 32,120 | | (5,513) |
Inventories | | 87,004 | | (277,489) |
Other assets | | 10,470 | | (16,604) |
Accounts payable and accrued expenses | | (162,345) | | 129,686 |
Accrued compensation | | (2,185) | | (52,904) |
Deferred revenue | | (4,576) | | (1,667) |
Other liabilities | | 576 | | (5,544) |
Net cash provided by (used in) operating activities | | 100,406 | | (28,260) |
Cash flows from investing activities | | | | |
Purchases of property and equipment, intangible and other assets | | (50,286) | | (46,216) |
Cash paid for acquisitions, net of acquired cash | | — | | (126,416) |
| | | | |
Net cash used in investing activities | | (50,286) | | (172,632) |
Cash flows from financing activities | | | | |
Payments for debt issuance costs | | — | | (929) |
Proceeds from exercise of stock options | | 21,346 | | 40,443 |
Payments for repurchase of common stock | | (100,064) | | (150,121) |
Payments for repurchase of common stock related to shares withheld for tax in connection with vesting of restricted stock units | | (29,874) | | (39,653) |
Net cash provided by (used in) financing activities | | (108,592) | | (150,260) |
Effect of exchange rate changes on cash and cash equivalents | | 3,848 | | (14,094) |
Net increase (decrease) in cash and cash equivalents | | (54,624) | | (365,246) |
Cash and cash equivalents | | | | |
Beginning of period | | 274,855 | | 640,101 |
End of period | | $ 220,231 | | $ 274,855 |
Supplemental disclosure | | | | |
Cash paid for interest | | $ 1,330 | | $ 344 |
Cash paid for taxes, net of refunds | | $ 9,522 | | $ 9,306 |
Cash paid for amounts included in the measurement of lease liabilities | | $ 14,218 | | $ 14,636 |
Supplemental disclosure of non-cash investing and financing activities | | | | |
Purchases of property and equipment in accounts payable and accrued expenses | | $ 2,784 | | $ 9,112 |
Right-of-use assets obtained in exchange for new operating lease liabilities | | $ 31,692 | | $ 5,054 |
Change in estimate of asset retirement obligations | | $ 2,290 | | $ — |
| | | | | | | | |
Reconciliation of GAAP to Non-GAAP Cost of Revenue and Gross Profit |
(unaudited, in thousands, except percentages) |
| | Three Months Ended | | Twelve Months Ended |
| | September 30, 2023 | | October 1, 2022 | | September 30, 2023 | | October 1, 2022 |
Reconciliation of GAAP cost of revenue | | | | | | | | |
GAAP cost of revenue | | $ 177,093 | | $ 192,191 | | $ 938,765 | | $ 955,969 |
Stock-based compensation expense | | 437 | | 467 | | 2,038 | | 1,620 |
Amortization of intangibles | | 973 | | 1,510 | | 4,103 | | 2,149 |
Non-GAAP cost of revenue | | $ 175,683 | | $ 190,214 | | $ 932,624 | | $ 952,200 |
| | | | | | | | |
| | | | | | | | |
Reconciliation of GAAP gross profit | | | | | | | | |
GAAP gross profit | | $ 128,054 | | $ 124,099 | | $ 716,490 | | $ 796,367 |
Stock-based compensation expense | | 437 | | 467 | | 2,038 | | 1,620 |
Amortization of intangibles | | 973 | | 1,510 | | 4,103 | | 2,149 |
Non-GAAP gross profit | | $ 129,464 | | $ 126,076 | | $ 722,631 | | $ 800,136 |
| | | | | | | | |
GAAP gross margin | | 42.0% | | 39.2% | | 43.3% | | 45.4% |
Non-GAAP gross margin | | 42.4% | | 39.9% | | 43.7% | | 45.7% |
| | | | | | | | |
Reconciliation of Selected Non-GAAP Financial Measures |
(unaudited, dollars in thousands) |
| | Three Months Ended | | Twelve Months Ended |
| | September 30, 2023 | | October 1, 2022 | | September 30, 2023 | | October 1, 2022 |
Research and Development (GAAP) | | $ 65,517 | | $ 67,274 | | $ 301,001 | | $ 256,073 |
Stock-based compensation | | 8,177 | | 8,037 | | 35,530 | | 30,724 |
Amortization of intangibles | | 496 | | 512 | | 1,983 | | 2,961 |
Restructuring and abandonment costs | | 188 | | - | | 6,556 | | - |
Research and Development (Non-GAAP) | | $ 56,656 | | $ 58,725 | | $ 256,932 | | $ 222,388 |
| | | | | | | | |
Sales and Marketing (GAAP) | | $ 58,601 | | $ 72,649 | | $ 267,518 | | $ 280,333 |
Stock-based compensation | | 3,499 | | 3,685 | | 15,677 | | 15,335 |
Amortization of intangibles | | - | | - | | - | | - |
Restructuring and abandonment costs | | 180 | | - | | 5,635 | | - |
Sales and Marketing (Non-GAAP) | | $ 54,922 | | $ 68,964 | | $ 246,206 | | $ 264,998 |
| | | | | | | | |
General and Administrative (GAAP) | | 32,297 | | 44,240 | | 168,518 | | 170,429 |
Stock-based compensation | | 5,195 | | 5,988 | | 23,612 | | 27,961 |
Legal and transaction related costs | | 2,944 | | 5,529 | | 32,950 | | 22,873 |
Amortization of intangibles | | 24 | | 24 | | 96 | | 96 |
Restructuring and abandonment costs | | 106 | | - | | 3,458 | | - |
Adjusted General and Administrative (Non-GAAP) | | $ 24,028 | | $ 32,699 | | $ 108,402 | | $ 119,499 |
| | | | | | | | |
| | | | | | | | |
Total Operating Expenses (GAAP) | | $ 156,415 | | $ 184,163 | | $ 737,037 | | $ 706,835 |
Stock-based compensation | | 16,871 | | 17,710 | | 74,819 | | 74,020 |
Legal and transaction related costs | | 2,944 | | 5,529 | | 32,950 | | 22,873 |
Amortization of intangibles | | 520 | | 536 | | 2,079 | | 3,057 |
Restructuring and abandonment costs | | 474 | | - | | 15,649 | | - |
Adjusted Operating Expenses (Non-GAAP) | | $ 135,606 | | $ 160,388 | | $ 611,540 | | $ 606,885 |
| | | | | | | | |
Total Operating Income (GAAP) | | $ (28,361) | | $ (60,064) | | $ (20,547) | | $ 89,532 |
Stock-based compensation | | 17,308 | | 18,177 | | 76,857 | | 75,640 |
Legal and transaction related costs | | 2,944 | | 5,529 | | 32,950 | | 22,873 |
Amortization of intangibles | | 1,493 | | 2,046 | | 6,182 | | 5,206 |
Restructuring and abandonment costs | | 474 | | - | | 15,649 | | - |
Adjusted Operating Income (Non-GAAP) | | $ (6,142) | | $ (34,312) | | $ 111,091 | | $ 193,251 |
Depreciation | | 12,422 | | 8,759 | | 42,787 | | 33,298 |
Adjusted EBITDA (Non-GAAP) | | $ 6,280 | | $ (25,553) | | $ 153,878 | | $ 226,549 |
| | | | | | | | |
Reconciliation of Net (Loss) Income to Adjusted EBITDA |
(unaudited, dollars in thousands except percentages) |
| | Three Months Ended | | Twelve Months Ended |
| | September 30, 2023 | | October 1, 2022 | | September 30, 2023 | | October 1, 2022 |
(In thousands, except percentages) | | | | | | | | |
Net (loss) income | | $ (31,239) | | $ (64,067) | | $ (10,274) | | $ 67,383 |
Add (deduct): | | | | | | | | |
Depreciation and amortization | | 13,915 | | 10,805 | | 48,969 | | 38,504 |
Stock-based compensation expense | | 17,308 | | 18,177 | | 76,857 | | 75,640 |
Interest income | | (2,661) | | (1,070) | | (10,201) | | (1,655) |
Interest expense | | 149 | | 168 | | 733 | | 552 |
Other (income) expense, net | | 6,696 | | 8,364 | | (15,473) | | 21,905 |
(Benefit from) provision for income taxes | | (1,306) | | (3,459) | | 14,668 | | 1,347 |
Legal and transaction related costs (1) | | 2,944 | | 5,529 | | 32,950 | | 22,873 |
| | | | | | | | |
Restructuring and abandonment costs (2) | | 474 | | - | | 15,649 | | - |
Adjusted EBITDA | | $ 6,280 | | $ (25,553) | | $ 153,878 | | $ 226,549 |
Revenue | | $ 305,147 | | $ 316,290 | | $ 1,655,255 | | $ 1,752,336 |
Net (loss) income margin | | (10.2)% | | (20.3)% | | (0.6)% | | 3.8% |
Adjusted EBITDA margin | | 2.1% | | (8.1)% | | 9.3% | | 12.9% |
(1) Legal and transaction-related costs consist of expenses related to our intellectual property ("IP") litigation against Alphabet and Google, as well as legal and transaction costs associated with our acquisition activity, which we do not consider representative of our underlying operating performance. |
(2) On June 14, 2023, the Company initiated a restructuring plan to reduce its cost base (the “2023 restructuring plan”). The 2023 restructuring plan included a reduction in force involving approximately 7% of its employees, further reducing the Company’s real estate footprint, and re-evaluating certain program spend. Total pre-tax restructuring and abandonment costs under the 2023 restructuring plan were $11.4 million, substantially all of which were incurred in the third quarter of fiscal 2023, with nominal amounts to be incurred through the first quarter of fiscal 2024. Total restructuring and abandonment costs for the twelve months ended September 30, 2023, include $4.8 million non-recurring lease abandonment charges that were incurred in March 2023, when the Company abandoned portions of its office spaces for the remainder of their respective lease terms in support of operational efficiencies. |
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Reconciliation of GAAP Net (Loss) Income to Non-GAAP Net Income |
(unaudited, in thousands, except share and per share amounts) |
| | Three Months Ended | | Twelve Months Ended |
| | September 30, 2023 | | October 1, 2022 | | September 30, 2023 | | October 1, 2022 |
Reconciliation of GAAP net (loss) income | | | | | | | | |
GAAP net (loss) income | | $ (31,239) | | $ (64,067) | | $ (10,274) | | $ 67,383 |
Stock-based compensation expense | | 17,308 | | 18,177 | | 76,857 | | 75,640 |
Legal and transaction related costs | | 2,944 | | 5,529 | | 32,950 | | 22,873 |
Amortization of intangibles | | 1,493 | | 2,046 | | 6,182 | | 5,206 |
Restructuring and abandonment costs | | 474 | | - | | 15,649 | | - |
Non-GAAP net (loss) income | | $ (9,020) | | $ (38,315) | | $ 121,364 | | $ 171,102 |
| | | | | | | | |
Reconciliation of net (loss) income per share | | | | | | | | |
GAAP net (loss) income per share, diluted | | $ (0.25) | | $ (0.50) | | $ (0.08) | | $ 0.49 |
Non-GAAP adjustments to net (loss) income per share | | 0.18 | | 0.20 | | 1.00 | | 0.75 |
| | | | | | | | |
Non-GAAP net (loss) income per share, diluted | | $ (0.07) | | $ (0.30) | | $ 0.92 | | $ 1.24 |
Weighted-average shares used in GAAP per share calculation, diluted | | 127,335,311 | | 127,104,659 | | 127,702,885 | | 137,762,078 |
Weighted-average shares used in non-GAAP per share calculation, diluted | | 127,335,311 | | 127,104,659 | | 131,947,092 | | 137,762,078 |
Note: Certain figures may not sum due to rounding | | | | | | | | |
| | | | | | | | |
Reconciliation of Cash Flows Provided by (Used in) Operating Activities to Free Cash Flow |
(unaudited, dollars in thousands) |
| | Three Months Ended | | Twelve Months Ended |
| | September 30, 2023 | | October 1, 2022 | | September 30, 2023 | | October 1, 2022 |
Cash flows provided by (used in) operating activities | | $ 22,195 | | $ (103,917) | | $ 100,406 | | $ (28,260) |
Less: Purchases of property and equipment, and intangible assets | | (10,201) | | (21,269) | | (50,286) | | (46,216) |
Free cash flow | | $ 11,994 | | $ (125,186) | | $ 50,120 | | $ (74,476) |
| | | | | | | | |
Revenue by Product Category |
(unaudited, dollars in thousands) |
| | Three Months Ended | | Twelve Months Ended |
| | September 30, 2023 | | October 1, 2022 | | September 30, 2023 | | October 1, 2022 |
(In thousands) | | | | | | | | |
Sonos speakers | | $ 223,323 | | $ 235,091 | | $ 1,293,440 | | $ 1,368,916 |
Sonos system products | | 62,316 | | 62,782 | | 285,064 | | 297,110 |
Partner products and other revenue | | 19,508 | | 18,417 | | 76,751 | | 86,310 |
Total revenue | | $ 305,147 | | $ 316,290 | | $ 1,655,255 | | $ 1,752,336 |
| | | | | | | | |
Revenue by Geographical Region |
(unaudited, dollars in thousands) |
| | Three Months Ended | | Twelve Months Ended |
| | September 30, 2023 | | October 1, 2022 | | September 30, 2023 | | October 1, 2022 |
Americas | | $ 203,531 | | $ 199,686 | | $ 1,048,245 | | $ 1,044,113 |
| | | | | | | | |
Europe, Middle East and Africa | | 83,374 | | 91,438 | | 518,179 | | 578,034 |
Asia Pacific | | 18,242 | | 25,166 | | 88,831 | | 130,189 |
Total revenue | | $ 305,147 | | $ 316,290 | | $ 1,655,255 | | $ 1,752,336 |
| | | | | | | | |
Stock-based Compensation |
(unaudited, dollars in thousands) |
| | Three Months Ended | | Twelve Months Ended |
| | September 30, 2023 | | October 1, 2022 | | September 30, 2023 | | October 1, 2022 |
(In thousands) | | | | | | | | |
Cost of revenue | | $ 437 | | $ 467 | | $ 2,038 | | $ 1,620 |
Research and development | | 8,177 | | 8,037 | | 35,530 | | 30,724 |
Sales and marketing | | 3,499 | | 3,685 | | 15,677 | | 15,335 |
General and administrative | | 5,195 | | 5,988 | | 23,612 | | 27,961 |
Total stock-based compensation expense | | $ 17,308 | | $ 18,177 | | $ 76,857 | | $ 75,640 |
| | | | | | | | |
Amortization of Intangibles |
(unaudited, dollars in thousands) |
| | Three Months Ended | | Twelve Months Ended |
| | September 30, 2023 | | October 1, 2022 | | September 30, 2023 | | October 1, 2022 |
Cost of revenue | | $ 973 | | $ 1,510 | | $ 4,103 | | $ 2,149 |
Research and development | | 496 | | 512 | | 1,983 | | 2,961 |
Sales and marketing | | - | | - | | - | | - |
General and administrative | | 24 | | 24 | | 96 | | 96 |
Total amortization of intangibles | | $ 1,493 | | $ 2,046 | | $ 6,182 | | $ 5,206 |
Use of Non-GAAP Measures
We have provided in this press release financial information that has not been prepared in accordance with generally accepted accounting principles (“U.S. GAAP”), including adjusted EBITDA, adjusted EBITDA margin, free cash flow, free cash flow conversion, non-GAAP gross margin, net income (loss) excluding stock-based compensation, legal and transaction related fees, amortization of intangibles, and restructuring and abandonment costs and diluted earnings per share excluding stock-based compensation, legal and transaction related fees, amortization of intangibles and restructuring and abandonment costs. These non-GAAP financial measures are not based on any standardized methodology prescribed by U.S. GAAP and are not necessarily comparable to similarly titled measures presented by other companies. 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 identify underlying trends in our business that could otherwise be masked by the effect of the expenses and other items that we exclude in these non-GAAP financial measures. Accordingly, we
believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects and allowing for greater transparency with respect to a key financial metric used by our management in its financial and operational decision-making. Non-GAAP financial measures should not be considered in isolation of, or as an alternative to, measures prepared in accordance with U.S. GAAP. Investors are encouraged to review the reconciliation of these financial measures to their nearest U.S. GAAP financial equivalents provided in the financial statement tables above. We define adjusted EBITDA as net income (loss) adjusted to exclude the impact of depreciation and amortization, stock-based compensation expense, interest income, interest expense, other income (expense), income taxes, restructuring and abandonment costs and other items that we do not consider representative of our underlying operating performance. We define adjusted EBITDA margin as adjusted EBITDA divided by revenue. We define free cash flow as net cash from operations less purchases of property and equipment and intangible and other assets. We define free cash flow conversion as free cash flow as a percentage of Adjusted EBITDA. We define non-GAAP gross margin as GAAP gross margin, excluding stock-based compensation and amortization of intangible assets. We calculate non-GAAP net income (loss) excluding stock-based compensation, legal and transaction related fees, amortization of intangibles and restructuring and abandonment costs as net income (loss) less stock-based compensation, legal and transaction related fees, amortization of intangibles and restructuring and abandonment costs. We calculate non-GAAP diluted earnings per share excluding stock-based compensation, legal and transaction related fees, amortization of intangibles and restructuring and abandonment costs as net income less stock-based compensation, legal and transaction related fees, amortization of intangibles and restructuring and abandonment costs divided by our number of shares at fiscal year end. We calculate constant currency growth percentages by translating our current period financial results using the prior period average currency exchange rates and comparing these amounts to our prior period reported results. We do not provide a reconciliation of forward-looking non-GAAP financial measures to their comparable GAAP financial measures because we cannot do so without unreasonable effort due to unavailability of information needed to calculate reconciling items and due to the variability, complexity and limited visibility of the adjusting items that would be excluded from the non-GAAP financial measures in future periods. When planning, forecasting and analyzing future periods, we do so primarily on a non-GAAP basis without preparing a GAAP analysis as that would require estimates for items such as stock-based compensation, which is inherently difficult to predict with reasonable accuracy. Stock-based compensation expense is difficult to estimate because it depends on our future hiring and retention needs, as well as the future fair market value of our common stock, all of which are difficult to predict and subject to constant change. In addition, for purposes of setting annual guidance, it would be difficult to quantify stock-based compensation expense for the year with reasonable accuracy in the current quarter. As a result, we do not believe that a GAAP reconciliation would provide meaningful supplemental information about our outlook.
Forward Looking Statements
This press release 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 and business strategies and opportunities, growth metrics and targets, our business model, new products, product categories and services, our product cycle and roadmap, our investments in R&D, profitability and gross margins, market growth and our market share, the macroeconomic environment and our ability to weather it, and other factors affecting variability in our financial results. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors, including, but not limited to: our ability to accurately forecast product demand and effectively forecast and manage owned and channel inventory levels; the impact of global economic, market and political events, including the potential for an extended global recession, continued inflationary pressures, rising interest rates and, in certain markets, foreign currency exchange rate fluctuations; changes in consumer income and overall consumer spending as a result of economic or political uncertainty or conditions; changes in consumer spending patterns; our ability to successfully introduce new products and services and maintain or expand the success of our existing products; the success of our efforts to expand our direct-to-consumer channel; the success of our financial, growth and business strategies; our ability to meet product demand and manage any product availability delays; supply chain challenges, including shipping and logistics challenges and component supply-related challenges; the resurgence of the COVID-19 pandemic and the other risk factors set forth under the caption “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended July 1, 2023 and our other filings filed with the Securities and Exchange Commission (the “SEC”), copies of which are available free of charge at the SEC’s website at www.sec.gov or upon request from our investor relations department. All forward-looking statements herein reflect our opinions only as of the date of this press release, and we undertake no obligation, and expressly disclaim any obligation, to update forward-looking statements herein in light of new information or future events. Sonos and Sonos product names are trademarks or registered trademarks of Sonos, Inc. All other product names and services may be trademarks or service marks of their respective owners.
About Sonos
Sonos (Nasdaq: SONO) is one of the world’s leading sound experience brands. As the inventor of multi-room wireless home audio, Sonos’ innovation helps the world listen better by giving people access to the content they love and allowing them to control it however they choose. Known for delivering an unparalleled sound experience, thoughtful home design aesthetic, simplicity of use and an open platform, Sonos makes the breadth of audio content available to anyone. Sonos is headquartered in Santa Barbara, California. Learn more at www.sonos.com.
Investor Contact
James Baglanis
IR@sonos.com
Press Contact
Erin Pategas
PR@sonos.com
Source: Sonos
