[Sonos Third Quarter Fiscal 2025 Results Overview](index=1&type=section&id=Sonos%20Third%20Quarter%20Fiscal%202025%20Results%20Overview) Sonos demonstrated strong performance in Q3 FY2025, with revenue exceeding the high end of guidance and Adjusted EBITDA reaching its upper limit, primarily driven by significant year-over-year expense reductions [Executive Summary and Highlights](index=1&type=section&id=1.1.%20Executive%20Summary%20and%20Highlights) Sonos reported strong Q3 FY2025 results, with revenue and Adjusted EBITDA at the high end of guidance, driven by significant year-over-year expense reductions - Q3 revenue exceeded the high end of guidance, and **Adjusted EBITDA** reached its upper limit, primarily due to **significant year-over-year expense reductions**[2](index=2&type=chunk)[3](index=3&type=chunk) Q3 FY2025 Financial Highlights (Unaudited): | Metric | Amount (million USD) | | :-------------------------- | :-------------- | | Revenue | 344.8 | | GAAP Gross Margin | 43.4% | | Non-GAAP Gross Margin | 44.7% | | GAAP Net Loss | (3.4) | | GAAP Diluted EPS | (0.03) | | Non-GAAP Net Income | 22.6 | | Non-GAAP Diluted EPS | 0.19 | | Adjusted EBITDA | 36 | [Management Commentary](index=1&type=section&id=1.2.%20Management%20Commentary) CEO Tom Conrad emphasized the company's return to craftsmanship, customer-centric design, and innovation, positioning Sonos as a platform for unique, seamless experiences and long-term growth - CEO Tom Conrad stated that Q3 was a solid step for Sonos, as the company returns to craftsmanship, customer-centric design, and innovation, advancing its vision as a platform combining hardware and software to deliver unique, seamless experiences, and is confident in achieving **long-term growth**[3](index=3&type=chunk) - CFO Saori Casey commented that Q3 was another quarter of solid execution, with both revenue and **Adjusted EBITDA** reaching the high end of guidance, marking the company's **fourth consecutive quarter** of achieving performance guidance amidst tariffs and an uncertain macroeconomic backdrop[3](index=3&type=chunk) [Conference Call and Webcast Information](index=2&type=section&id=1.3.%20Conference%20Call%20and%20Webcast%20Information) Sonos will host a conference call and webcast on August 6, 2025, at 4:30 PM ET to discuss Q3 FY2025 results, with recordings and transcripts available on the investor relations website - The conference call and webcast will be held on **August 6, 2025, at 4:30 PM ET (1:30 PM PT)**[8](index=8&type=chunk) - Participants can listen via the Sonos Investor Relations website webcast or by dialing **(888) 330-2454 (U.S.) / (240) 789-2714 (International)** using conference ID **8641747**[8](index=8&type=chunk)[9](index=9&type=chunk) - An archived webcast and transcript of the conference call will be available on the investor relations website after the event[9](index=9&type=chunk) [Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) This section presents Sonos' consolidated statements of operations, balance sheets, and cash flows for the reported periods, providing a comprehensive view of its financial position and performance [Consolidated Statements of Operations and Comprehensive Income (Loss)](index=2&type=section&id=2.1.%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) In Q3 FY2025, Sonos reported a GAAP net loss of $3.4 million, compared to a net income of $3.7 million in the prior year, primarily due to decreased revenue and gross profit despite reduced operating expenses Q3 FY2025 (Three Months) Operating Results (Unaudited, Unit: thousand USD): | Metric | June 28, 2025 | June 29, 2024 | YoY Change | | :-------------------------- | :------------------ | :------------------ | :-------- | | Revenue | 344,764 | 397,146 | -13.19% | | Cost of Sales | 195,040 | 205,505 | -5.19% | | Gross Profit | 149,724 | 191,641 | -21.87% | | Total Operating Expenses | 152,653 | 179,052 | -14.69% | | Operating (Loss) Income | (2,929) | 12,589 | Shifted to Loss | | Net (Loss) Income | (3,379) | 3,709 | Shifted to Loss | | Diluted (Loss) Earnings Per Share | (0.03) | 0.03 | Shifted to Loss | Q3 FY2025 (Nine Months) Operating Results (Unaudited, Unit: thousand USD): | Metric | June 28, 2025 | June 29, 2024 | YoY Change | | :-------------------------- | :------------------ | :------------------ | :-------- | | Revenue | 1,155,376 | 1,262,676 | -8.50% | | Cost of Sales | 650,637 | 676,320 | -3.79% | | Gross Profit | 504,739 | 586,356 | -13.92% | | Total Operating Expenses | 520,798 | 565,033 | -7.83% | | Operating (Loss) Income | (16,059) | 21,323 | Shifted to Loss | | Net (Loss) Income | (23,286) | 14,947 | Shifted to Loss | | Diluted (Loss) Earnings Per Share | (0.19) | 0.12 | Shifted to Loss | [Consolidated Balance Sheets](index=5&type=section&id=2.2.%20Consolidated%20Balance%20Sheets) As of June 28, 2025, Sonos' total assets decreased to $834.4 million from $916.3 million on September 28, 2024, primarily due to significant reductions in inventory and net property, plant, and equipment Consolidated Balance Sheets (Unaudited, Unit: thousand USD): | Metric | June 28, 2025 | September 28, 2024 | Change | | :-------------------------- | :------------------ | :------------------ | :------- | | Cash and Cash Equivalents | 201,273 | 169,732 | +18.58% | | Inventory | 115,427 | 231,505 | -50.14% | | Total Current Assets | 503,141 | 551,086 | -8.70% | | Net Property and Equipment | 80,726 | 102,148 | -20.97% | | Total Assets | 834,402 | 916,312 | -8.94% | | Total Current Liabilities | 315,603 | 366,153 | -13.79% | | Total Liabilities | 435,096 | 487,692 | -10.80% | | Total Stockholders' Equity | 399,306 | 428,620 | -6.84% | [Consolidated Statements of Cash Flows](index=7&type=section&id=2.3.%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended June 28, 2025, net cash provided by operating activities significantly decreased to $133.9 million from $227.6 million in the prior year, influenced by net loss and working capital changes Consolidated Statements of Cash Flows (Unaudited, Unit: thousand USD): | Metric | June 28, 2025 (Nine Months) | June 29, 2024 (Nine Months) | YoY Change | | :---------------------------------- | :--------------------------- | :--------------------------- | :-------- | | Net Cash from Operating Activities | 133,948 | 227,640 | -41.16% | | Net Cash from Investing Activities | (24,167) | (88,153) | +72.58% (Decreased Outflow) | | Net Cash from Financing Activities | (78,703) | (133,184) | +40.91% (Decreased Outflow) | | Net Increase in Cash and Cash Equivalents | 6,883 | 31,541 | -78.18% | | Cash and Cash Equivalents, End of Period | 201,273 | 227,114 | -11.47% | [Revenue Analysis](index=14&type=section&id=Revenue%20Analysis) This section provides a detailed breakdown of Sonos' revenue performance by product category and geographical region for the reported periods [Revenue by Product Category](index=14&type=section&id=3.1.%20Revenue%20by%20Product%20Category) In Q3 FY2025, Sonos speakers remained the largest revenue contributor but saw a 15.75% year-over-year decline, with Sonos system products and partner products also decreasing, leading to an overall revenue reduction Revenue by Product Category (Unaudited, Unit: thousand USD): | Product Category | June 28, 2025 (Three Months) | June 29, 2024 (Three Months) | YoY Change | | :------------------------ | :--------------------------- | :--------------------------- | :-------- | | Sonos Speakers | 253,669 | 301,105 | -15.75% | | Sonos System Products | 73,179 | 75,186 | -2.67% | | Partner Products and Other Revenue | 17,916 | 20,855 | -14.10% | | **Total Revenue** | **344,764** | **397,146** | **-13.19%** | Revenue by Product Category (Unaudited, Unit: thousand USD): | Product Category | June 28, 2025 (Nine Months) | June 29, 2024 (Nine Months) | YoY Change | | :------------------------ | :--------------------------- | :--------------------------- | :-------- | | Sonos Speakers | 915,330 | 991,378 | -7.67% | | Sonos System Products | 183,993 | 209,013 | -12.00% | | Partner Products and Other Revenue | 56,053 | 62,285 | -10.01% | | **Total Revenue** | **1,155,376** | **1,262,676** | **-8.50%** | [Revenue by Geographical Region](index=14&type=section&id=3.2.%20Revenue%20by%20Geographical%20Region) In Q3 FY2025, revenue declined year-over-year across all geographical regions, with the Americas experiencing the largest decrease, followed by EMEA and Asia Pacific Revenue by Geographical Region (Unaudited, Unit: thousand USD): | Region | June 28, 2025 (Three Months) | June 29, 2024 (Three Months) | YoY Change | | :-------------------------- | :--------------------------- | :--------------------------- | :-------- | | Americas | 229,656 | 264,611 | -13.21% | | Europe, Middle East, and Africa | 97,245 | 110,902 | -12.31% | | Asia Pacific | 17,863 | 21,633 | -17.43% | | **Total Revenue** | **344,764** | **397,146** | **-13.19%** | Revenue by Geographical Region (Unaudited, Unit: thousand USD): | Region | June 28, 2025 (Nine Months) | June 29, 2024 (Nine Months) | YoY Change | | :-------------------------- | :--------------------------- | :--------------------------- | :-------- | | Americas | 731,041 | 827,238 | -11.63% | | Europe, Middle East, and Africa | 363,642 | 372,074 | -2.27% | | Asia Pacific | 60,693 | 63,364 | -4.22% | | **Total Revenue** | **1,155,376** | **1,262,676** | **-8.50%** | [Non-GAAP Financial Measures and Reconciliations](index=8&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section provides reconciliations of GAAP to non-GAAP financial measures, including gross profit, operating expenses, net income, and Adjusted EBITDA, offering a clearer view of underlying operational performance [Reconciliation of GAAP to Non-GAAP Gross Profit](index=8&type=section&id=4.1.%20Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Gross%20Profit) In Q3 FY2025, Sonos' non-GAAP gross margin was 44.7%, higher than the GAAP gross margin of 43.4%, primarily due to the exclusion of stock-based compensation, intangible asset amortization, and restructuring charges Reconciliation of GAAP to Non-GAAP Gross Profit (Unaudited, Unit: thousand USD): | Metric | June 28, 2025 (Three Months) | June 29, 2024 (Three Months) | YoY Change | | :-------------------- | :--------------------------- | :--------------------------- | :-------- | | GAAP Gross Profit | 149,724 | 191,641 | -21.87% | | Non-GAAP Gross Profit | 154,121 | 193,269 | -20.25% | | GAAP Gross Margin | 43.4% | 48.3% | -4.9 pp | | Non-GAAP Gross Margin | 44.7% | 48.7% | -4.0 pp | Reconciliation of GAAP to Non-GAAP Gross Profit (Unaudited, Unit: thousand USD): | Metric | June 28, 2025 (Nine Months) | June 29, 2024 (Nine Months) | YoY Change | | :-------------------- | :--------------------------- | :--------------------------- | :-------- | | GAAP Gross Profit | 504,739 | 586,356 | -13.92% | | Non-GAAP Gross Profit | 522,499 | 591,269 | -11.63% | | GAAP Gross Margin | 43.7% | 46.4% | -2.7 pp | | Non-GAAP Gross Margin | 45.2% | 46.8% | -1.6 pp | [Reconciliation of Selected Non-GAAP Operating Expenses](index=10&type=section&id=4.2.%20Reconciliation%20of%20Selected%20Non-GAAP%20Operating%20Expenses) Sonos' non-GAAP operating expenses, including R&D, sales and marketing, and G&A, decreased year-over-year in Q3 FY2025 and the nine months ended, primarily due to reduced stock-based compensation, amortization, and restructuring charges Selected Non-GAAP Operating Expenses (Unaudited, Unit: thousand USD): | Expense Category | June 28, 2025 (Three Months) | June 29, 2024 (Three Months) | YoY Change | | :----------------------- | :--------------------------- | :--------------------------- | :-------- | | Research and Development (Non-GAAP) | 52,610 | 63,514 | -17.17% | | Sales and Marketing (Non-GAAP) | 58,072 | 66,948 | -13.26% | | General and Administrative (Non-GAAP) | 20,407 | 24,440 | -16.42% | | Total Operating Expenses (Non-GAAP) | 131,089 | 154,902 | -15.37% | | Operating Income (Non-GAAP) | 23,032 | 38,367 | -39.98% | Selected Non-GAAP Operating Expenses (Unaudited, Unit: thousand USD): | Expense Category | June 28, 2025 (Nine Months) | June 29, 2024 (Nine Months) | YoY Change | | :----------------------- | :--------------------------- | :--------------------------- | :-------- | | Research and Development (Non-GAAP) | 176,633 | 202,358 | -12.69% | | Sales and Marketing (Non-GAAP) | 196,521 | 203,834 | -3.59% | | General and Administrative (Non-GAAP) | 62,027 | 85,247 | -27.24% | | Total Operating Expenses (Non-GAAP) | 435,181 | 491,439 | -11.45% | | Operating Income (Non-GAAP) | 87,318 | 99,830 | -12.53% | [Reconciliation of Net (Loss) Income to Adjusted EBITDA](index=11&type=section&id=4.3.%20Reconciliation%20of%20Net%20(Loss)%20Income%20to%20Adjusted%20EBITDA) Adjusted EBITDA for Q3 FY2025 was $35.6 million, down from $48.9 million in Q3 FY2024, while the Adjusted EBITDA margin for the nine months ended June 28, 2025, increased to 10.9% from 10.3%, reflecting the impact of various non-GAAP adjustments Reconciliation of Net (Loss) Income to Adjusted EBITDA (Unaudited, Unit: thousand USD): | Metric | June 28, 2025 (Three Months) | June 29, 2024 (Three Months) | YoY Change | | :-------------------- | :--------------------------- | :--------------------------- | :-------- | | Net (Loss) Income | (3,379) | 3,709 | Shifted to Loss | | Adjusted EBITDA | 35,589 | 48,906 | -27.23% | | Adjusted EBITDA Margin | 10.3% | 12.3% | -2.0 pp | Reconciliation of Net (Loss) Income to Adjusted EBITDA (Unaudited, Unit: thousand USD): | Metric | June 28, 2025 (Nine Months) | June 29, 2024 (Nine Months) | YoY Change | | :-------------------- | :--------------------------- | :--------------------------- | :-------- | | Net (Loss) Income | (23,286) | 14,947 | Shifted to Loss | | Adjusted EBITDA | 125,936 | 130,506 | -3.49% | | Adjusted EBITDA Margin | 10.9% | 10.3% | +0.6 pp | - On February 5, 2025, the company initiated a **restructuring plan** involving **12% of its workforce** to reduce its cost base; restructuring and other charges primarily reflect cost transformation initiatives (including the 2025 restructuring plan and product roadmap rationalization) and non-recurring CEO transition costs related to equity award modifications[19](index=19&type=chunk) [Reconciliation of GAAP Net (Loss) Income to Non-GAAP Net Income](index=12&type=section&id=4.4.%20Reconciliation%20of%20GAAP%20Net%20(Loss)%20Income%20to%20Non-GAAP%20Net%20Income) Sonos' Q3 FY2025 non-GAAP net income was $22.6 million, significantly higher than the GAAP net loss of $3.4 million, with non-GAAP diluted EPS at $0.19, reflecting adjustments for stock-based compensation, legal and transaction-related fees, intangible asset amortization, and restructuring charges Reconciliation of GAAP Net (Loss) Income to Non-GAAP Net Income (Unaudited, Unit: thousand USD): | Metric | June 28, 2025 (Three Months) | June 29, 2024 (Three Months) | YoY Change | | :-------------------------- | :--------------------------- | :--------------------------- | :-------- | | GAAP Net (Loss) Income | (3,379) | 3,709 | Shifted to Loss | | Non-GAAP Net Income | 22,582 | 29,487 | -23.42% | | GAAP Diluted (Loss) Earnings Per Share | (0.03) | 0.03 | Shifted to Loss | | Non-GAAP Diluted Earnings Per Share | 0.19 | 0.23 | -17.39% | Reconciliation of GAAP Net (Loss) Income to Non-GAAP Net Income (Unaudited, Unit: thousand USD): | Metric | June 28, 2025 (Nine Months) | June 29, 2024 (Nine Months) | YoY Change | | :-------------------------- | :--------------------------- | :--------------------------- | :-------- | | GAAP Net (Loss) Income | (23,286) | 14,947 | Shifted to Loss | | Non-GAAP Net Income | 80,091 | 93,454 | -14.30% | | GAAP Diluted (Loss) Earnings Per Share | (0.19) | 0.12 | Shifted to Loss | | Non-GAAP Diluted Earnings Per Share | 0.65 | 0.73 | -10.96% | [Free Cash Flow](index=14&type=section&id=4.5.%20Free%20Cash%20Flow) For the nine months ended June 28, 2025, free cash flow decreased to $110.5 million from $188.2 million in the prior year, primarily due to reduced cash flow from operating activities Free Cash Flow (Unaudited, Unit: thousand USD): | Metric | June 28, 2025 (Nine Months) | June 29, 2024 (Nine Months) | YoY Change | | :---------------------------------- | :--------------------------- | :--------------------------- | :-------- | | Cash Flow from Operating Activities | 133,948 | 227,640 | -41.16% | | Less: Purchases of Property and Equipment | (23,418) | (39,477) | +40.68% (Decreased Outflow) | | **Free Cash Flow** | **110,530** | **188,163** | **-41.26%** | [Stock-based Compensation and Amortization of Intangibles](index=16&type=section&id=4.6.%20Stock-based%20Compensation%20and%20Amortization%20of%20Intangibles) Total stock-based compensation expense for Q3 FY2025 slightly decreased year-over-year, while total amortization of intangible assets significantly increased from $1.5 million in Q3 FY2024 to $3.3 million in Q3 FY2025 Total Stock-based Compensation Expense (Unaudited, Unit: thousand USD): | Period | June 28, 2025 | June 29, 2024 | YoY Change | | :-------------------- | :------------------ | :------------------ | :-------- | | Three Months | 20,784 | 21,930 | -5.22% | | Nine Months | 69,364 | 64,961 | +6.78% | Total Amortization of Intangible Assets (Unaudited, Unit: thousand USD): | Period | June 28, 2025 | June 29, 2024 | YoY Change | | :-------------------- | :------------------ | :------------------ | :-------- | | Three Months | 3,322 | 1,493 | +122.50% | | Nine Months | 10,039 | 4,478 | +124.20% | [Use of Non-GAAP Measures Explanation](index=16&type=section&id=4.7.%20Use%20of%20Non-GAAP%20Measures%20Explanation) Sonos provides non-GAAP financial measures like Adjusted EBITDA, free cash flow, and non-GAAP gross margin/net income to offer additional insights into operational performance by excluding items not representative of core operations - The company uses non-GAAP financial measures to assess operating performance and trends, and to make planning decisions, identifying underlying business trends that might be obscured by certain expenses and items[23](index=23&type=chunk) - Items excluded from non-GAAP financial measures include **stock-based compensation expense**, **legal and transaction-related fees**, **amortization of intangible assets**, and **restructuring and other charges**[23](index=23&type=chunk)[24](index=24&type=chunk) - The company does not provide a reconciliation of forward-looking non-GAAP financial measures to GAAP financial measures because the information needed to calculate reconciling items is unavailable, and the variability, complexity, and limited visibility of adjusting items in future periods make it difficult to reasonably predict with accuracy[24](index=24&type=chunk) [Additional Information](index=18&type=section&id=Additional%20Information) This section includes forward-looking statements, information about Sonos, and investor and press contact details [Forward-Looking Statements](index=18&type=section&id=5.1.%20Forward-Looking%20Statements) This press release contains forward-looking statements regarding Sonos' long-term outlook, strategy, market growth, operating model, and macroeconomic environment, which involve risks and uncertainties that could cause actual results to differ materially - Forward-looking statements cover **long-term outlook**, financial, growth, and business strategies and opportunities, ability to expand existing customers, market growth and share, operating model and cost structure (including transformation efforts), app recovery efforts and related software updates, tariffs and ability to mitigate them, macroeconomic environment, and other factors affecting volatility in financial results[25](index=25&type=chunk) - Risks and uncertainties include difficulties and impacts of implementing operating model and cost structure improvements; restructuring and related charges potentially higher or not occurring within expected timelines; ability to accurately forecast product demand and effectively manage inventory levels; ability to timely release redesigned app software updates and address related customer commitments; ability to maintain, enhance, and protect brand image; impact of global economic, market, and political events (including tariffs, global trade tensions, ongoing inflationary pressures, high interest rates, and foreign exchange rate fluctuations); changes in consumer income and overall consumer spending; ability to successfully introduce new products and services and maintain or expand existing product success; efforts to expand direct-to-consumer channels; market competition and market share; relationships with channel, distribution, and technology partners; ability to meet product demand and manage product supply delays; supply chain challenges; ability to protect brand and intellectual property; use of artificial intelligence; and other risk factors identified in the company's filings with the U.S. Securities and Exchange Commission (SEC)[25](index=25&type=chunk) - All forward-looking statements reflect views only as of the date of this press release, and the company assumes no obligation and expressly disclaims any obligation to update forward-looking statements due to new information or future events[26](index=26&type=chunk) [About Sonos](index=19&type=section&id=5.2.%20About%20Sonos) Sonos (NASDAQ: SONO) is a leading sound experience brand and inventor of multi-room wireless home audio, known for unparalleled sound quality, thoughtful design, ease of use, and an open platform that provides access to favorite content - **Sonos (Nasdaq: SONO)** is one of the world's leading sound experience brands and the inventor of multi-room wireless home audio[27](index=27&type=chunk) - Sonos is known for delivering an **unparalleled sound experience**, thoughtful home design aesthetics, ease of use, and an open platform that makes all audio content accessible[27](index=27&type=chunk) - Sonos is headquartered in **Santa Barbara, California**[27](index=27&type=chunk) [Investor and Press Contacts](index=19&type=section&id=5.3.%20Investor%20and%20Press%20Contacts) Sonos provides contact information for its investor relations and media departments for inquiries - Investor Contact: James Baglanis, Email: **IR@sonos.com**[28](index=28&type=chunk) - Press Contact: Erin Pategas, Email: **PR@sonos.com**[28](index=28&type=chunk)

Company Overview - Sonos' FY24 revenue reached $1.52 billion[9] - The company boasts a strong patent portfolio with over 4,300 US patents and applications[9] - The average number of Sonos products per household in FY24 was 3.08[9] - Existing households account for 44% of product registrations[9] Market Position and Strategy - Sonos differentiates itself through an open content and control platform combined with premium hardware[12] - The company is focused on expanding its ecosystem by attracting new households and encouraging existing customers to purchase additional products[27] - Sonos is targeting a total addressable market (TAM) of $27 billion, encompassing premium global home audio and over-the-ear (OTE) headphones[48] Customer Behavior and Monetization - There are 16 million Sonos households in FY24[9] - The company identifies an incremental revenue opportunity exceeding $6 billion by increasing product adoption among existing single-product households[38] - Approximately 34% of customers repurchase within three years[41] Financial Performance - The GAAP gross margin for FY24 was 45%[9] - In FY24, Retail & Other accounted for 55% of revenue, DTC 23%, and Installer Solutions 22%[50]

Core Viewpoint - Sonos, Inc. is expected to report a decline in year-over-year revenues for Q3 fiscal 2025, despite a sequential increase due to seasonal factors, with challenges stemming from product category pressures and external economic conditions [2][4][6]. Financial Performance Expectations - Sonos anticipates Q3 revenues between $310 million and $340 million, representing a sequential increase of 19–31% but a year-over-year decline of 14–22% [2]. - The consensus estimate for earnings is set at 9 cents per share, down from 23 cents in the prior-year quarter, with a trailing four-quarter average earnings surprise of 29.3% [3][10]. - GAAP gross margin is expected to be between 43% and 45%, while non-GAAP gross margin is projected at 45.2% to 47% [7][10]. Challenges Impacting Performance - Sonos faces multiple headwinds, including cyclically pressured product categories, particularly in the portables segment, and uncertain demand trends [4]. - Supply chain disruptions, regulatory pressures, and financial market volatility are likely to have negatively impacted margins and competitive positioning [5][6]. - Tariff-related expenses are projected to increase, with actual cash outlay expected to rise significantly in the upcoming quarters [5]. Strategic Initiatives - The launch of high-margin products like Sonos Ace and Era 100 Pro is anticipated to help mitigate some of the margin and demand pressures [8][10][12]. - Sonos is focusing on product innovation and maintaining a cadence of two hardware launches per year to drive long-term growth [12]. - Expansion of direct-to-consumer initiatives and a growing international presence, particularly in Asia, are expected to support overall performance [13].

Sonos named interim leader Tom Conrad as its next chief executive officer, expressing confidence in the turnaround effort he’s pursuing https://t.co/wirAMV5AYW ...

Group 1 - The S&P 500 is approaching the 6,000 mark, indicating a need for investors to adopt creative strategies to outperform the market [1] - There is an expectation of high dispersion in the market, particularly among large-cap stocks [1] - The analyst has extensive experience in technology sectors, having worked on Wall Street and in Silicon Valley, which informs their insights on current industry trends [1]

Core Insights - Sonos Capital has launched a new investment fund aimed at supporting affordable housing while providing reliable returns to investors [1][9] - The firm emphasizes a hands-on approach to managing mobile home communities, viewing them as neighborhoods that require investment and care [2][3] Investment Strategy - The new fund focuses on scaling high-performing mobile home communities and enhancing resident satisfaction through comprehensive management [2][5] - Sonos Capital targets mobile home parks in areas with strong economic fundamentals, including stable job markets and population growth [4] Community Impact - The company aims to upgrade infrastructure, improve public spaces, and enhance safety measures in mobile home parks while maintaining affordability [3][8] - By strengthening ties with residents, Sonos Capital enhances overall property performance, benefiting both investors and the communities [3][5] Educational Commitment - Sonos Capital invests in educating its investors through webinars, market research, and regular communications to ensure they understand mobile home park investing [6][8] - The leadership's involvement in industry associations provides insights into evolving trends and policy discussions, which are shared with investors [6][8]

Sonos (SONO) Conference Call Summary - May 28, 2025 Company Overview - **Company**: Sonos (SONO) - **Industry**: Consumer Electronics / Audio Products Key Points and Arguments Recovery and Performance Metrics - Sonos is recovering from previous app issues, with core metrics around reliability and performance now exceeding those of the predecessor app version [5][6] - Focus on improving the core experience, which is essential for customer retention and repurchases [6][7] - A recent promotion to existing customers yielded a better take rate than a similar promotion conducted a year prior to the app launch, indicating positive recovery trends [10][11] Financial Guidance and Market Position - The company anticipates a choppy year-over-year comparison due to the launch of new products last year, but expects growth in Q4 [12][13] - Sonos is restructuring to be more scalable and efficient, reducing headcount while reorganizing teams to streamline operations [14][15] Tariff Mitigation Strategies - Sonos has shifted production away from China, primarily to Vietnam and Malaysia, to mitigate tariff impacts [16][17] - The company is adopting a flexible pricing strategy to manage tariff costs while maximizing gross profit dollars rather than focusing solely on gross margin percentages [19][40] Leadership Transition - An active CEO search is underway, with the interim CEO, Tom, effectively managing the transformation and recovery efforts [22][23] - The search process is expected to take about six months, with five months already completed [24] Product Innovation and Market Competition - Sonos aims to maintain a steady cadence of product launches, focusing on core experience improvements while exploring new innovations [27][30] - The company ranks fourth in patent power, indicating a strong foundation for future innovations [30] - Sonos acknowledges competition from emerging brands and is focused on articulating its unique value propositions to customers [33][35] Cash Management and Shareholder Returns - Sonos has paused stock buybacks to preserve cash for operational flexibility amid tariff uncertainties, but plans to resume buybacks once conditions stabilize [36][37] Geographic Expansion - The company is actively pursuing geographic expansion, particularly in APAC markets, which are showing double-digit growth potential [38][39] - This expansion strategy aims to diversify revenue sources and tap into high-income customer segments in regions like the Middle East [39] Additional Important Insights - Sonos is committed to a disciplined approach in R&D investments, ensuring alignment with revenue projections to avoid overextending resources [31][32] - The company is leveraging its existing product lines to capture demand in new markets without necessarily launching new products [39][41]

Core Viewpoint - Sonos, Inc. reported a non-GAAP loss per share of 18 cents for Q2 fiscal 2025, consistent with the previous year's loss and meeting consensus estimates [1][2] Financial Performance - Quarterly revenues increased by 3% year over year to $259.8 million, aligning with the high end of the company's guidance [2] - Revenue from Sonos speakers was $194.5 million, up 3.9% year over year, while system products generated $50.5 million, growing 2.6% [5] - Partner products and other revenues totaled $14.7 million, down 8.9% year over year [5] - Revenue from the Americas was $176.8 million, up 3.9%, while Europe, the Middle East, and Africa remained flat at $68.8 million, and Asia Pacific revenues rose 8% to $14.2 million [6] Margin and Expense Management - Non-GAAP gross profit was $122.3 million, a 7.6% increase year over year, with gross margin expanding by 210 basis points to 47.1% [7] - Adjusted operating expenses decreased by 14% year over year to $135 million, reflecting cost-saving measures [8] - Adjusted EBITDA loss was $1 million, significantly better than guidance, marking a $33 million improvement from the prior year [9] Cash Flow and Shareholder Returns - The company used $59.7 million in cash from operations, with free cash outflow improving to $65 million from $121 million last year [11] - Sonos returned $33 million to shareholders through stock repurchases, with a new $150 million share repurchase program authorized [12] Future Guidance - For Q3 fiscal 2025, Sonos expects revenues between $310 million and $340 million, reflecting a quarter-over-quarter increase but a year-over-year decline [13] - GAAP gross margin is anticipated to be between 43% and 45%, while non-GAAP gross margin is projected to be between 45.2% and 47% [13][14]

Core Insights - Sonos reported revenue of $259.76 million for the quarter ended March 2025, marking a year-over-year increase of 2.8% and exceeding the Zacks Consensus Estimate by 1.50% [1] - The company's EPS for the same period was -$0.18, an improvement from -$0.34 a year ago, but did not deliver an EPS surprise as it matched the consensus estimate [1] Revenue Performance - Revenue from Sonos speakers was $194.52 million, below the average estimate of $203.42 million, reflecting a year-over-year increase of 3.9% [4] - Revenue from partner products and other revenue was $14.70 million, falling short of the estimated $17.30 million, representing a year-over-year decline of 8.9% [4] - Revenue from Sonos system products reached $50.54 million, surpassing the average estimate of $34.62 million, with a year-over-year increase of 2.6% [4] Stock Performance - Sonos shares have returned +12.8% over the past month, outperforming the Zacks S&P 500 composite's +10.6% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Financial Performance - Total revenue for the three months ended March 29, 2025, was $259.8 million, compared to $252.7 million for the same period in 2024, representing a growth of 2.3%[99] - Net loss for the three months ended March 29, 2025, was $70.1 million, compared to a net loss of $69.7 million for the same period in 2024, indicating a slight increase in losses[99] - Adjusted EBITDA for the three months ended March 29, 2025, was $(826) thousand, compared to $(33.6) million for the same period in 2024, showing an improvement in operational performance[99] - Total revenue for the six months ended March 29, 2025, decreased by $54.9 million, or 6.3%, compared to the same period in 2024, mainly due to softer demand and challenges from the 2024 app rollout[112] - The volume of products sold decreased by 8.3% for the six months ended March 29, 2025, primarily driven by declines in units sold of Sonos One and Arc[114] Product Sales and Revenue Composition - Products sold increased to 768 units in the three months ended March 29, 2025, from 747 units in the same period in 2024, reflecting a growth of 2.8%[99] - Sonos speakers revenue represented 74.9% of total revenue for the three months ended March 29, 2025, with a 3.9% increase compared to the same period in 2024[110] - Sonos system products represented 19.5% of total revenue for the three months ended March 29, 2025, with a 2.6% increase compared to the same period in 2024[110] - Partner products and other revenue represented 5.7% of total revenue for the three months ended March 29, 2025, decreasing by 8.9% compared to the same period in 2024[110] - Total revenue for the three months ended March 29, 2025, increased by $7.1 million, or 2.8%, compared to the same period in 2024, primarily due to the introduction of new products Arc Ultra and Ace[109] Cost Management and Operational Efficiency - The company initiated a cost transformation initiative, expecting approximately $42.0 million in savings during the remainder of fiscal 2025 due to workforce reductions of approximately 6% in August 2024 and 12% in February 2025[94] - Operating expenses for the three months ended March 29, 2025, decreased by $8.2 million, or 4.5%, compared to the same period in 2024[124] - Research and development expenses for the three months ended March 29, 2025, were $77.4 million, a decrease of 3.6% compared to the same period in 2024[124] - Research and development expenses decreased by $15.7 million, or 19.5%, for the three months ended March 29, 2025, compared to the same period in 2024, primarily due to lower personnel-related costs and product development spend[128] - Sales and marketing expenses decreased by $0.4 million, or 0.7%, for the three months ended March 29, 2025, driven by lower personnel-related costs, partially offset by increased depreciation costs[131] - General and administrative expenses decreased by $11.8 million, or 29.0%, for the three months ended March 29, 2025, mainly due to lower personnel-related costs and a decrease in legal fees[134] Margins and Profitability - The company reported a net income margin of (27.0%) for the three months ended March 29, 2025, compared to (27.6%) for the same period in 2024[99] - Adjusted EBITDA margin improved to (0.3%) for the three months ended March 29, 2025, from (13.3%) for the same period in 2024[99] - Gross profit for the three months ended March 29, 2025, was $113.6 million, reflecting a 1.4% increase compared to the same period in 2024[116] - Gross margin for the three months ended March 29, 2025, decreased by 60 basis points to 43.7% compared to the same period in 2024[121] Cash Flow and Financial Position - Cash flows from operating activities provided $96.5 million for the six months ended March 29, 2025, consisting of a net loss of $19.9 million and non-cash adjustments of $85.4 million[150] - Cash used in investing activities was $17.2 million for the six months ended March 29, 2025, primarily for purchases of marketable securities and property and equipment[151] - Cash used in financing activities was $74.2 million for the six months ended March 29, 2025, mainly for repurchases of common stock[152] - As of March 29, 2025, the company had cash and cash equivalents of $173.2 million, including $72.9 million held by foreign subsidiaries[143] - The company believes existing cash and cash equivalents, cash flows from operations, and committed credit lines will be sufficient to meet long-term working capital needs for at least the next 12 months[144] Foreign Currency Exposure - The company recognized a tax provision of $11.0 million for the three months ended March 29, 2025, compared to a tax benefit of $0.7 million for the same period in 2024[140] - For the three months ended March 29, 2025, the company recognized a gain from foreign currency exchange of $0.2 million, compared to a loss of $3.3 million for the same period in 2024[158] - For the six months ended March 29, 2025, the company reported a loss from foreign currency exchange of $5.8 million, while it had a gain of $6.8 million in the same period in 2024[158] - A hypothetical adverse change of 10% in foreign currency exchange rates would have resulted in an adverse impact on loss before provision for income taxes of approximately $1.6 million and $10.9 million for the three and six months ended March 29, 2025, respectively[158] - The company's international sales are primarily denominated in foreign currencies, which exposes it to fluctuations in exchange rates, particularly with the euro and the British pound[156] - The company has not entered into any material foreign exchange contracts or derivatives to hedge foreign currency exposures, increasing its risk from exchange rate fluctuations[157] - The company’s inventory purchases are primarily denominated in U.S. dollars, while a portion of its operating expenses are incurred in foreign currencies, leading to potential impacts from currency fluctuations[156] - The volatility of exchange rates is influenced by many unpredictable factors, which could significantly impact the company's future results of operations[157] Accounting Policies and Estimates - The company evaluates its estimates and assumptions regarding financial statements on an ongoing basis, based on historical experience and reasonable assumptions[154] - There have been no material changes to the company's critical accounting policies compared to those disclosed in its Annual Report on Form 10-K[155] - Actual results could differ materially from the company's estimates and assumptions used in financial reporting[154]