SONOS(US:SONO)2025-02-06 22:13Financial Performance - Total revenue for the three months ended December 28, 2024, was $550.857 million, a decrease of $62.012 million or 10.1% compared to $612.869 million for the same period in 2023[106] - The number of products sold decreased by 12.3% to 1,850 thousand units for the three months ended December 28, 2024, down from 2,109 thousand units in the same period in 2023[108] - Sonos speakers revenue represented 84.8% of total revenue, decreasing by 7.1% to $467.142 million, while Sonos system products revenue decreased by 28.7% to $60.274 million[107] - Net income for the three months ended December 28, 2024, was $50.237 million, resulting in a net income margin of 9.1%, compared to $80.947 million and a margin of 13.2% for the same period in 2023[97] - Adjusted EBITDA for the three months ended December 28, 2024, was $91.173 million, down from $115.242 million in the same period in 2023, reflecting a decrease in Adjusted EBITDA margin from 18.8% to 16.6%[103] Revenue Breakdown - Revenue from the Americas decreased by 17.3% to $324.583 million, while EMEA revenue increased by 3.0% to $197.612 million for the three months ended December 28, 2024[109] Cost and Expenses - Cost of revenue decreased by $20.7 million, or 6.3%, for the three months ended December 28, 2024, compared to the same period in 2023, primarily due to a decrease in products sold and product costs[113] - Gross profit declined by $41.3 million, or 14.6%, with a gross margin of 43.8% for the three months ended December 28, 2024, down from 46.1% in the prior year[110] - Research and development expenses increased by $1.6 million, or 2.0%, totaling $80.8 million, driven by stock-based compensation expenses[118] - Sales and marketing expenses rose by $2.7 million, or 3.2%, totaling $86.6 million, primarily due to increased advertising and marketing activities[120] - General and administrative expenses decreased by $14.0 million, or 35.1%, totaling $25.8 million, mainly due to lower personnel and facilities costs following the restructuring plan[123] Restructuring and Innovation - The company initiated a restructuring plan affecting approximately 6% of its employees to reduce costs, with most costs incurred in the fourth quarter of fiscal 2024[103] - The Sonos app underwent a significant redesign in May 2024 to enhance user experience and drive innovation[94] - The company continues to focus on technological innovation, as evidenced by its growing global patent portfolio[94] Cash Flow and Investments - Net cash provided by operating activities for the three months ended December 28, 2024, was $156.2 million, down from $275.4 million in the same period of 2023, reflecting a decrease of 43.3%[134] - Cash used in investing activities totaled $9.3 million, primarily due to purchases of marketable securities of $10.1 million and property and equipment of $13.1 million, partially offset by $13.9 million from maturities of marketable securities[135] - Cash used in financing activities was $33.8 million, mainly for repurchases of common stock amounting to $27.2 million and $9.0 million related to tax withholdings on stock awards[136] - The net increase in cash and cash equivalents for the three months ended December 28, 2024, was $110.2 million, significantly lower than the $247.1 million increase in the same period of 2023[133] Foreign Currency Exposure - The company recognized a foreign currency exchange loss of $6.0 million for the three months ended December 28, 2024, compared to a gain of $10.1 million in the same period of 2023[142] - A hypothetical adverse change of 10% in foreign currency exchange rates would have resulted in an adverse impact of approximately $9.3 million on income before taxes for the three months ended December 28, 2024[142] - 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[141] - The company’s international sales are primarily denominated in foreign currencies, exposing it to risks from currency fluctuations, particularly with the euro and British pound[140] Tax and Interest - Interest income decreased by $1.2 million, or 39.5%, to $1.9 million, attributed to lower cash balances[124] - Other income (expense), net, shifted from an income of $10.3 million in 2023 to an expense of $6.0 million in 2024, reflecting significant foreign currency exchange losses[125] - The provision for income taxes changed from an expense of $12.0 million in 2023 to a benefit of $6.4 million in 2024, a decrease of $18.4 million or 153.6%[126] Cash Position - As of December 28, 2024, the company had cash and cash equivalents of $280.0 million, including $143.3 million held by foreign subsidiaries[128] - The company has a Revolving Credit Agreement allowing borrowing up to $100 million, with no outstanding borrowings as of December 28, 2024[130] - The net income contributing to operating cash flow was $50.2 million, with non-cash adjustments of $47.3 million and a favorable impact from changes in operating assets and liabilities of $58.6 million[134] - The decrease in inventories contributed $89.3 million to cash flow, indicating improved inventory management[134]