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.
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20231115636387/en/
Investor Contact James Baglanis IR@sonos.com
Press Contact Erin Pategas PR@sonos.com
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