SONO - Earnings call transcript Q2 2021

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Sonos Second Quarter Fiscal 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Cammeron McLaughlin. ahead. go Please

Cammeron McLaughlin

Bagley, afternoon, XXXX Good And to second Spence; Sonos me Legal Lazarus, Thank Officer. conference and call. fiscal Brittany Patrick CEO, earnings are McLaughlin. and I quarter Eddie today Chief you. Sonos' welcome CFO; am with Cammeron

you the Killah Ghostface those highlights Radio today's HD. included call on hold and of For the by recently M.I.A early, music from launched who joined artist-curated stations Sonos

will remind it uncertainties performance. hand I to forward-looking expectations cause everyone materially these our events that future over subsequent of discussion our under These to views financial the caption to I differ Before in as that only reflected would and risk today's considered results detailed be the date. any A of Factors our Patrick, statements not as include risks Risk reflect future could views factors regarding statements also today These actual like discussion from our are should forward-looking subject representing the SEC. in and statements statements. to fully of with is and filings material

this will also refer to During call, non-GAAP financial certain we measures.

regarding our to measures, release and website. our refer a non-GAAP reconciliation non-GAAP to press quarter of regarding Relations to GAAP today's results second of portion financials please our posted information Investor For the

the will turn available our now Investor on As a at over reminder, conference I the press release, will a be our call Relations supplemental earnings to presentation transcript and investors.sonos.com. Patrick. website call

Patrick Spence

Cammeron Thanks and everyone. hello

and during challenging again to are work grateful. the in work Sonos. first all results they've recognize I the proud very to partners a day. fantastic thrilled I for this hard yet people our and of want And are am a report every These testament quarter so record We put time. by to our

could exceeded much products, results in we experienced quarter they as meeting demand an our our all as our team and stronger of than incredible demand job as expected expectations for the second quarter. did even Our

outlook year. As our our the for performance, second are adjusted strong of result quarter we increasing a EBITDA revenue and

Our a do business serves strong can customers with sustainable and expand build that. to our is The a one our of fact that they the that to just that enables model a customers the we us over have are start power customers model testament profitable product time. have results that more and proven business. unique And

to Roam tremendous versatile and is newest Roam Roam smartest experiencing are from and our also not demand We new speaker, for most product our customers and get existing and opportunity customers right with started provides the we as family. only and new the of most to affordable. it's product our alike. weather is friends millions again right up time, Sonos gather for the begin with at warms the

over our smart exceeded pre-order globally, the our in new XXX% forecast channel. reaching with period, reviews calling pre-order product's the Several Roam and sales standard DTC speakers. sound expectations During quote, the Stone portability been it with hundred published highlighting ultra Rolling incredible journalist for our portable far of have

helps the and We flywheel. love delivered Sonos that that are have fantastic we product another confident customers

three As fiscal the will and macro continued for there our we beyond, that look are fuel XXXX growth. remainder of trends

to of golden have volume incredible. audio. we First, sheer of now books, and is music, audio podcasts age this The access the is

find become audio. more interesting even As with social we will new more time people spend like believe audio and we formats more creators, and audio

It's growth Customers with anyone. people in past visual a and not have direct and audio a And and right really their the they is more deliver enabled reshuffling. second than seen which seeing something great We've from to reevaluate that we is offices, in into where of are the people fueling HBO better trend communities and bringing home. our untethering companies to this enough experience newest decade of our we live. to the is has how going This trend video home, year change are the and experience. great the Disney like like the theater third is content want movies The a more demanding to homes.

Given more multi-year in be this are people, target anywhere, trend -- significantly. especially benefits flexibility companies cultural and the market, more people the of we who offering think kind kind work are their Sonos that will our to a

and the toward growing addressable ahead, of our we our opportunity surface large just is we that started market. look scratched is believe Sonos As getting and barely

the believe or of in As million homes fiscal most of existing we X% our affluent for in of XXX million XX today markets. addressable approximately are the end homes were XXXX, we us

Sonos tremendous have the runway of more to ecosystem. households more to We attend millions, the

billion the On expect but We've the revenue over $XX that Sonos a market. global upwardly the long broader revised that's audio broader side, we into expand more, home audio This X% total for and market. market. expand more a will have the the $XX outlook, market. long-term. a fiscal audio even to And account we we only revenue the of into as market huge way, opportunity is of on fraction ton to smaller the in to our billion even growing of home a lot come take begin And audio based approximately of XXXX premium an spend

three key the really on by strategic will seize initiatives. significant We focusing opportunity ahead

first This of more and anyone reach expansion brand customers. the strategies marketing our all brand. than is better about understanding our we're these of how to our The evolving is and customers

the example, Face. North to sound quality. you'll the To forward, premium broader have durability, with and portability, Roam, we course, Together, of that the a months. on a as us support consumers Moving experience. for in into see partnered partner we of of invite Roam's we'll showcase with More few other continue launch brands, Sonos swath

new our services of have today, we segment expand categories the a the top ambitious in far, Radio Sonos we focused it two least into to done. partnership year HD, customer We do. fiscal with categories, taken opportunity this tremendous Roam we're each to new play a new to Audi. efforts and Second, have expand of layer introduced it step we have just on plans and exceeded ahead everything expansion at not offerings, already we our we've auto but introduce XXXX. our our and with in remain first target to for in products on And Thus

recent Some posts from of seen you may have IKEA social the Sonos. media and

working the We are we're in products excited about sharing the more looking forward future. are together to on near and

are Our long-term unveil we excited comes what next. robust, remains product to roadmap and

Sonos As it to our with HD. to be Radio continue we early relates Sonos with pleased and Radio services, success

and to reach over listened service our subscribers on aspiration opportunities we We is the Radio music to over to significant long-term focused third services Sonos most the remain Radio XXX,XXX in long-term. HD. our Sonos on platform, see

to excellence third profitable the priority achieve Our sustainable is strategic long-term. driving growth for operational

the seeing been to growth. continue about more line are excited top I've of of You ahead our execute plan us healthy never and Sonos. deliver and expansion future margin

strong continue to and been. We we've are we in see demand, the position best ever

huge a and in getting of just have are front started. us, we We opportunity

Now, our Eddie a to call over to I'll on turn the provide Google brief litigation. update

Eddie Lazarus

Thanks Patrick.

Google. me our provide cases against just So, a update brief on let

in XX in background infringes As I XXX over patents shared different that estimate from Google as our utility March, investor event we families. U.S. patent and

action continue at what obtain case. It's in alive basically Those finished synchronizing smart Trade and few trial directed [ph]. sound were a to families against value in months at still limit volume preliminary them. we of and we individual XX. confident included fit you five for we A and Commission. from International expected control playback grouping one We'd stereo patents ago of group patents our and decision the high remain devices, Google the May of We among devices, the All on those a pairing to strength our and can are the patent case. patents ITC

However, his decision, update to case now, another the as presiding the recently timeline matter. August cases year, for workload, of increased but an meantime, judge assumed regarding due he the those pleased of forward of in to ITC the that judge we're as you the another to retired. We share very extended who XXth this look to decision following

and the as and of widespread Sonos' in phone to has of technology, granted which in European order more are Google affiliate such in Cast and or smartphone, prohibits nest devices. Sonos or court content Germany implicated offer demonstration The conviction issue that from our the the against preliminary injunction tablet a media enables of see a infringer YouTube patented a that just pixelate one the infringing the of sale IP. reporting of aspects and for speakers, music app. today portfolio, the some that strength playback a controls a powerful mobile are Google Germany Google's patent patent products is encompasses or Sonos We of a audio transfer our We of ruling

Brittany to over and call the details turn our outlook. provide me results our on let Now, to more

Brittany Bagley

Eddie. you, Thank

of demand for wait they deliver stellar our ability demonstrates that to of strong the results, quarter and they solidifying our and work that the proven a excited power are orders, fact customers We have fulfill products will to our further report further as The their record our another year. to offering brands.

year. to color of results, million starting with a $XX.X some second delivered We add loss quarter. to last adjusted of our me Let $XX.X compared million the EBITDA

fulfill supply year This ongoing quarter outperformance number grew the on as nearly our of given been continues in in APAC shipping adjusted than retail Americas is line $XXX leverage. in at year-over-year first The transition grew and margin demand XX% positive, income and net operating XX%. ability continue grew with to demand our demand. revenue COVID-XX store incredibly pleased where to of products, result store slightly XXX% The with less expectations prior cycle. able and the logistics position APAC regions well anniversary, stock be to XX.X% growth capacity across are Revenue from largely rebalancing were grew top the of to products. quickly or pandemic. IKEA strong EMEA we was improved by ongoing to XX% seeing. Even more by processes. are improved EBITDA basis. impacted which our quarter, investments, the see IKEA. this decline profitability the product constant our quarter. gross history inventory start and as XX% and to out This supply result our The we more we the closures increased the strong We the the in a partner and to Our EMEA was have deliver other quarter, to in margin, which expanded currency further stemmed of a strong chain in on softness driven the be our and both continue Americas consistent tremendous points across QX the the a XX% exceptionally to our This quarters. we during expense versus million. see also closures

mentioned, Patrick are share we the As new will them, which release a more on with we future. on working details in product near

XX% by speaker XXX% and comping year last was QX particularly revenue continued Sub. success year-over-year up in of the driven by Arc decline Sonos in and was the helped part

the the We net XX%, were the and incredibly and channel a Sonos installer our tariffs million offset increased driven system quarter. lower had XXX to growth XX.X%, points basis profit gross of points expense. products in XX% component which products. revenue accessories of and and record basis comping second strong quarter of expense year, by last IKEA $X continued is other versus revenue revenue. and increased during an strength of year reached by due products XXX impacting approximately Sonance, margins driven last XX% by tariff improvement Partner lower Gross

the higher margin was as margin costs. as with the sales improvement well shift an points expansion our margin gross This as QX on Sonos primarily products last of into ongoing in leverage due higher shipping costs fixed and to with At-Home increase tariff, well a comes XXX higher industry-wide volume. comping costs, as even channels, and year, component Excluding logistics gross and basis promotion

growth a to We in of leverage the lines significant to operating second experienced into increasing to year increases Turning this largely all during quarter, as support of result our future. higher line We expenses. benefit the top and OpEx year-over-year saw higher investments second due the revenue. quarter

assumptions We outlook. given increased have compensation our incentive higher also

quarter, the had million free negative $XX cash second the capital due of driven operations During to we in working cash seasonality. and flow used of accrued from $XX timing and largely by expenses million

return a million equivalents, pursue and invest the capital organically quarter us $XXX which and really and in We repurchase. paid cash demonstrates helps our We us the currently are in a debt XXXX. share January. our continues balance to no our impressive $XX as shareholders in believe QX have million a outstanding through put on ending cash Overall, authorized sheet, to strong strong position business, to we down for we M&A deliver quarter company fiscal in our on with

outperformance only to challenging significant half in Despite others our our largely the on as look are I'm and the outlook. of sure turning a aware gotten seeing the has supply second Now, more year. we increases We QX, towards situation industry constraints across components. in of variety global you're the as

to continued we our as first navigate the macro to the see. incredible demand that aware through continued environment, have products a team forecast. continues year. feel results. to can enter tirelessly We tremendous continuing been we of deliver remainder strong fiscal as the which Our customers our demand outlook, strong broader deliver to our given much difficult work challenge and but the year We wait for will to we in this product, performance us our help remain half on they the in has our this and that proven as confident the mitigate for uncertainty appreciate is XXXX of Obviously,

are prior of we year. demand is update what to to the $XXX product supply those perspective our impact our XX% ahead we mind, from points million new XX.X% mitigate components, gross XX.X% to of given chain. for in basis million, the well We XX.X% the to and the outlook expect an This are additional initial supply adjusted can, providing million a from maintaining $XXX currently from need million. expansion outlook EBITDA EBITDA million We're adjusted airfreight mix. $XXX margin. $XXX because about industry-wide XXX and prior the With represents margin of costs what know $XXX $XXX of of shortages guidance global This we we and best million our our see XXXX considerations increasing fiscal from up the to smaller to of to benefit a XXX increasing of outlook we to

tariff refunds to have receive. We to of $XX.X continue million we expect

only as uncertain, outlook given the is recognized this our acceptance the and is of upon However, included timing reminder, in be requests. not refund will

continue transparency OpEx to to making to for expect operations our quarter, initiatives. impact this off volumes As marketing revenue in stated will We last the continue support and quarter investments we call additional we product, long-term each growth higher and

line on We OpEx growth also higher profitability, expect while increased the delivering incentive leverage and the compensation for support top year. attractive to

to $X.XXX XX% to total $X.XXX to of billion, our representing revenue increasing are We growth for fiscal XX%. XXXX billion

the XX% fiscal billion XX% Excluding start guidance week provided of the to year. revenue fiscal represents and XXrd our $X.XX compared this initial It's XXXX to quarter, billion XXXX, provided $X.XXX from at to outlook of growth to $X.X for the billion the billion $X.XXX last of of year. our prior

QX. have our Even stronger. pleased in the products world been open deliver as what demand again, never to for has up We're begins the incredibly we able with to been

what deliver. we higher which focused continued are fiscal We our deliver out on set outlook, than to significantly XXXX increased execution is on to

a targets to we path our tremendous margin gross XX% XX% of in fiscal to opportunity billion turn call of EBITDA that, XX% achieving reminder, like adjusted a I is to a us. the There would revenue, ahead XXXX sustainable over clear margin. questions. to to XX% have $X.XX As With and

Operator

from [Operator Instructions] will Stanley. Please come Katy Our question ahead. Morgan Huberty go first of

Katy Huberty

and afternoon Good you. results. congratulations strong really on the Thank

months revenue than EBITDA quarter the sounds from the from two assuming for the some lower upside you've upside ago. and that three like the incremental you're through As think next quarters through but it guidance, outlook I passed the is Roam, March --

couple increasing mix detail the through and the can a where supply, expect the more some And you back supply just of dynamic. on you next and comment like on half the you're that It maybe then the of year. it's pressures costs quarters? where of So, combination bottlenecks sounds chain over walk of just you in the biggest in seeing see

Brittany Bagley

Hey, Katy. Yeah. Happy to.

a annual as So, guidance. don't give but we give quarterly reminder, we guidance,

expecting really gross benefit We're that's mix impact gross and incredible to we're And from shortages annual had second the in the on our are QX. to our increasing we though revenue even really because and need are we those margin of we components so, the airfreight year. of outlook, both product in half not EBITDA. component costs, But with pretty And the increase mitigate outlook. provide excited able smaller for additional some margins we're increasing the increasing

that's So low gross impacting our value the really merging relative hold last to quarter.

volume all is trying PE as terms there's need. same the the that supply, impacts landscape, figure their the hearing the you're same you industry. place companies from out broader in we're of on sure out And components there I'm and In we everyone's which how the and are general -- a semiconductor to that to shortage across get seeing know they that

Katy Huberty

Okay. Thank can you. then, just follow-up ask to Eddie. a And I

ruling back the that in of Just these these investors rulings stream which I ruling in timeline, be Germany What's in what or expected decided a one or of August on of the after the come in financial in? today the and is would questions U.S., typical the rulings? once happens construct hear payments from payment the

Eddie Lazarus

but what Sonos that to and with in would it's an and the Europe, shows implications but our in only importation on real have to From also of between wait ITC It's States, the to and in is the and perspective, for wherever line the in Katy, the in what to patents, we importance ITC to the expect ruling showing ITC Google case. Texas does the definitive you. rules think, ITC. will question. going very it here are. validity or of and over We wish and what feel that large But fact had strong it's at for the part over or going pursuing valid depend, may thanks exactly have Europe Google German It's the not of recognize not the rules. that be case the come for them. And again, it. I I our just demonstration. involved at that the we're details whether good case, And the going is that that court we and hope the infringe a United ban, is answer what and exactly keep about is a I table that and position, in discussions on Google a a or our be, damages what's with and position that, see

Katy Huberty

much. very you Thank

Operator

Our Tom D.A. next go question come from will Please of Forte Davidson. ahead.

Tom Forte

Great. question follow-up. and one One

question first get early the you So, product ability over the them products far was thinking but additional about buy to the how time? opportunity I and is, new as customers to know it's the have Roam to bring I Sonos, then are Sonos to to just as released,

Patrick Spence

Patrick. It's Tom. Hey,

is We been one good feeling ability. think we the early, are could in time said, terms reopens. world not that very it's you as this Roam's of Like but have better

seen You've mentioned into products. I'm media and coming momentum, as probably a are -- seeing that around a hearing and The tidal result. reviews social positive I comments, just new the in as on lot of the that been tremendous have has wave been my of out people anecdotally, of Sonos

for products kind any Roam, new at products driver, and right over home don't that seen going close be homes believe as see this basically, tapping getting with -- X.X time, to we've think but mix to I kind I learn of for think And now. won't penetrate. deeper a we've I overall, So, into trying -- forward -- starting been the long-term home our is the that reason going why have we're and we'll I to getting think with audience key of about that we a

first works, It's of expect it one. and another So, out. that the It's to part the in I both Bluetooth system. home then also the product be

makes And well it to so, I think valuable and people that as more versatile. more

has So, driver. very and a excited it home about this new

Tom Forte

are year you stores should we least, your second versus stores level did then the things, and more reopening How a of for customers And many one than direct-to-consumer and may easing pandemic at returning efforts. calendar Excellent. think during pandemic last my the was your and high be advanced at restrictions efforts, to -- last direct-to-consumer the about as are physical year. question,

Patrick Spence

DTC what of But terms seen comes definitely It’s different a terms to when our it's that I if and But good anything, continues we've foot it important our a forward taught that. in story year And putting we're through QX of kind of think in -- doing. out expect set to of the approaching the what to we that, telling we've Yeah. be board our has engagement great us right year. seeing all continue we're across from channels.

growth the opportunity there's continue, because So, in we're working the we're think in. of across and board, that that channels seeing expect to all I

Tom Forte

Congrats Great. for questions. on thanks And the quarter. my taking

Patrick Spence

Tom. Thanks,

Operator

of Our Please Goldman Sachs. next question Rod will come ahead. go from Hall

Rod Hall

in some of follow that I Yeah. for to got more do try component I inventory to that to and higher the plan of mitigate maybe you quarter expecting guys we be to it's next Thanks are of inventory with should too. you And inventory up. one ways what as I've I the And -- the is guess, a start supply just lengthen little for In Marches inventory And correct bit you level. well? the levels on that? than issues the March, up prior seen a question. of wanted up we've days wonder,

Brittany Bagley

It's question. Brittany. Thank you Rod. Hey, the for

on significantly than inventory and sheet the goods we our balance are in actually most this because have other So, QX are inventory, QXs. right higher not now of demand you're as finished supporting supported -- is seeing we

we sales to then, is higher when So, is part around inventory timing And sort transit in another of in just I just part say of a would volume. have it quarter-to-quarter. support the

meet we're finished we so doing components those we're as that can right into pretty turning can, goods really seeing. we much as now. that's components as can the go you're is everything demand the else and Obviously, we're dynamic But fast everyone on we So seeing. back the -- orders

Rod Hall

sense. Brittany, great. That's Okay. makes that

is lot guys of that had but to inputs. inputs know companies seen about I'm a semi The products. inflating I different insulating was for price, second inflating, basic if had you've you I you the in talking as we or on do other move year? you inflation. products through see that your anticipate Do We've wondering things for question the

Brittany Bagley

logistics year we it shipping we've on yes, out component We've And half which that -- majority cost the that seeing then, second increase of the some the will the we're year. year of on of calling are as in industry calling the particularly seen side, calling the the for in half really increase is component we second given through shortages seeing. out and as that costs, that go we the is been the semiconductor out side,

Rod Hall

Great.

Thanks a Appreciate Okay. Brittany. lot, Thank you. it.

Brittany Bagley

we Absolutely. I mentioned, And as we've baked can as foresee of as our forecast. much Yeah. -- into that we

So, it's as we now, as incorporated visibility. the all much right have

Rod Hall

you. sense. Yeah. Makes Thank

Operator

will Brent next from come of Jefferies. go question ahead. Thill Our Please

Brent Thill

my took I common threat off of it's a it the grabbed that and and it even hold you anymore. a there of gone. know, Roam? saw is that kids my Patrick, XXX% don't in in forecasted office on I demand have

it's point? and run it at that, response seems are follow-up getting I do you full to the how some today -- any visit they're that take do if a And the initial common Brittany. on now Is So, of launch June ensure there seeing you're to mean, a like is you risk the here. this others on to that website demand surprising I younger the guess themes you I audience portable other your in. out you the to losing out Roam is of short-term month pulled customer's looking care in of XXth. get a for

Patrick Spence

you Brent, Yeah. always buy another can one.

multiple in the So, I is definitely see people customers. speaking homes well as to existing It as homes in to I new well. new think going we're thing nice some the then Roams think, and is

things of And own, speaker speaker the position so, got Bluetooth in better a It’s having of the swap, the unique market portable sound its the and the done market, to ultra sound quality, being as well it right? the outside, in Bluetooth that great is Sonos and and we've a home speaker one all we've like things massive value it.

of there. think we going just the are -- And many us all the now. of right the have question disrupt that category that way in take that it's terms delay in actually I help So, others to the I'll

we way. do be of perishable specifically on the is And shipping terms seen we've do seeing They the changed, not Because of has If of few not to further. months, we've despite it and -- any in appear terms the been significant one way. rate a incredible strength rate to come Amp the those of in you that orders. the not in any rate the People order right? are and the products sonos.com, orders some not on back cancel. We've cancellation like past at of the dates Roam, pushing had along products look what things even but at just have Arc situation or looked like, over in relative, overall delays where

think the of the system out to opposed big just part typical feel quality company. brand a the are be as in it where and people I product, we -- to or the And where overall. how makes is about difference once is this right, So, product stands and another hardware good system, it a like,

and And more being a part products. system, know had so, they wait they the people system, when I the get can going of they’ve they're Sonos entire with new they what get our means good -- of to experience think will their product any for and

So, we're not we're perishable demand. -- seeing seeing

Brent Thill

Patrick. Thanks,

Brittany Bagley

experience possibly the a pretty trying job situation from do the standpoint also best we're back to we that And can, order that given hard customer we're in.

we're we sure make So, and that hit commitments when about I to delivering hard shipping those know dates dates, teams really shipping our working make are on we expectations.

and that a recognize all job we more that there good than is think important relationship now doing the ever. customer I with

of So, us. piece other that's the for it

Brent Thill

Thanks.

Operator

Bank America. Babcock ahead. next come of Please Our question John from of will go

John Babcock

taking thanks were I United in my evening in is with earlier, the which but questions. for case good might've States? this and missed the Hey, patents any overlapping German case, the

Eddie Lazarus

patent control issue similar to Texas overlapping, patents Texas in case. direct the in but directly a control we over case. had at Not direct several the in relatively Germany, and patents It's

John Babcock

to question then, a here. Thanks. inflation just of Okay. talk wanted kind again And about next bit

opportunities and If isn't to comes transitory, talk out. about this What whether guess you plays that, cost to adjustments? Assuming or how comes Sonos helpful. whether have that from that opportunities necessarily that'd we'll that commercial I could kind that from of offset see be have that, --

Brittany Bagley

XX% Thanks. Yeah. we're put to deliver out I margin that continuing to We of gross say is would very I what there long-term on committed mean, target. to XX%.

and ability on that we to So, feel year-over-year. hit very continue in that comfortable deliver to our

premium We strong are product. really brands. We're a

we'll our time. So, as all over look of at needed options

thing a is other all while time in capacity tight will particularly can't current in trend industry that semiconductor say to increases to over The should the global be price seeing. situation. over there call be relative I long-term And which more at investments we're time, a we the chain supply will certainly end, would are add good I when

John Babcock

I way might early, you of Gotcha. is Sonos from what could And tax which give be the some you a sense Congress? broadly, this. us It don't little side through for know the also, bit the their to proposals making comment impact extent can but on on

Brittany Bagley

But we payer obviously Well, watch that right so, cash tax a closely. are now. we really not

the value on And that increasing would tax the now, be have would credits do the NOLs so, R&D books. and we right really what that the of

into will that, we being we on we'll as today. cash a which critical more move it to are tax keep us a So, not but much close payer, become eye

John Babcock

Brittany. Thanks, Okay.

Operator

of will Please Our from ahead. Stifel. go Sheerin next Matt come question

Matt Sheerin

so Thank far. you Yes. all details for the

eases. visibility regarding Just you know had QX another supply you're things worse. into previously that I seem to question the and of seeing. coming gotten about seems have like have you talked out don't It any really constraint when

partners that eases? hearing when you any in -- Asia. So, terms or of going? into I your of were know from moving update manufacturing that China other anything the in on you're parts And of that's in And us how of out you could also middle manufacturing switching

Brittany Bagley

Yeah. Absolutely.

the second start one. with So, I'll

to Malaysia. have relevant continues of important and we manufacturing So, It long-term is been to into strategy very it diversifying much part us. actively be our and

the this have tariff through the the talking that what from magnitude of relative significantly year I numbers think we we quarter ago, to we mitigated had you strategy. that were that can Malaysia about impact of tariffs a that see

are with our on mitigating And targets what really milestones than across or is, you incredible components seeing tightness perspective. and has in supply to that hit on we logistics, chain well tariffs rather and industry. So, our are then dealing the way focusing from semiconductor changed

not So, It not is it's issue. just of industry-wide be sort very directly us, is in control. to that it's our an clear, something

stuff like to And manufacturing we talked giving our TV in various about partners, they're see companies be when there they CEOs of this certainly, up so, ramping major but of semiconductor that. and are terms going and And answers descending. to talking on capacity when

And can they And this no to secure the the we incredible to than we are. best can we components is, secure meet so, really smarter certainly that I'm have. on do continue demand

it'll so, And through go as rest us long last. year this for just the this of that be we as and as balance for

in a fully to have, to shifted. going And but when is to our just great we're because honestly, keep which that, one hard demand landscape stock, to so on has we've that problem back it's been So, continued the be it's strong up, see. has no update

Matt Sheerin

For sure.

for much. Okay. it so me. That's Thanks

Brittany Bagley

Thank you.

Operator

call now we over turn Patrick for closing the questions today. have Spence the to I'll All remarks. back

Patrick Spence

for taken way long-term much. another of to our you We step very on And ambition. our you great to thank Thank think all you attending. we've

the As ahead enormous, and opportunity I started. we're just getting outlined, is

quarter. So, thanks everybody and see we'll next you

Operator

for This call. Thank concludes today's conference joining. you

now You may disconnect.

Sonos (SONO) 13 May 212021 Q2 Earnings call transcript