SONO - Earnings call transcript Q3 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sonos Third Quarter Fiscal 2022 Conference Call. [Operator Instructions]. Thank you. Investor may of your Head Baglanis, Relations, begin you conference. James

James Baglanis

today Third and James XXXX me Eddie Patrick Lazarus. welcome Legal afternoon, Bagley; Quarter CFO, Baglanis, Sonos' Brittany Spence; to with am Good Officer, I Sonos' Fiscal Chief CEO, Call. Earnings and are Conference

is board series For basement, from joined music created early, member, episode new by today's call who the of sound Nigel the Godrich. those hold Sonos the from live music

installment with Nigel with Radio latest out produce Sonos episodes to monthly. new this partnered coming

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

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

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

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

Patrick Spence

future Sonos, opportunity. Lazarus, instrumental September wish interim played board the want hard as Brittany as past Bagley, to role CFO greatly years and will Brittany and will the Brittany her work We Officer, previous all make announced we Earlier investor value. helping did smart our Brittany at endeavors. and pursue financial Brittany Chief increase us everything James, her thank I of over X. as future in be another member. drive CFO, at in Thank Legal to everyone. an you, shareholder and behalf an performance, everyone X effective our today, hello, and leaving the for On dedication CFO Sonos Eddie appreciate for Sonos Sonos X professional succeed and that investments

year, Chris While that concentrated many of member Eddie in and organization, as Head and played experience Chief rest strategic company's a role and very we In beat. James allocation Fund, Sequoia Mason, will also involved Baglanis have a finance his planning finance in and reporting experienced ensure past don't parental Officer, equity was and Chief during our we the last and strategic a team for and at intricacies stepped a you accounting in experienced the previous planning strategy and organization our leave long-only of strategy. has technology of know Tribune, he Relations, deeply capital at Officer, Legal team and day-to-day of the miss Accounting Eddie role fund. and Board in ran Investor the the He's always planning Brittany's has our business. both our the knows decisions. legal he to also finance active he provide guidance so With our an

backdrop reported we to become have more earnings, Since QX macroeconomic earnings. turning Now we challenging. significantly seen the

which we major dollars affected to play. significantly appreciated and all adversely other particularly in inflation the currencies categories relative you know, has in sentiment the globally, As consumer high

$XXX.X of reported X% of adjusted down revenues representing million, EBITDA year-over-year line margin on basis, in ambition, weren't delivered our growth of results million this against well teams our constant with currency revenue a our executed challenging X%. delivering $XX.X a were While backdrop, We XX.X%. of

X by primary Our results impacted in factors. were the quarter negatively

is to First, companies services our in goods June. a earnings near-term focus and product believe already travel. have starting shifting categories this from this of their as we in part other a We of saw many demand consumer in cycle, discussed reflection softening consumers

in a of remain U.S. throughout the we caused in quarter. and out a of Amp us foreign resulted constrained products quarter our third, in continue opportunities million key which supply we dollar have And Beam. $XX currency result, to backlog headwind. revenue the like on some Second, And a strengthening miss to as the the

additional detail in quarter consumer a some and Let from me of saw and QX. demand the product we our that's view on perspective provide how what informing

best lapping the We year. softening outsized had your observed impact substantial bar, demand an was product launch June, compact launch In by consumer we across launched was that in quarter last compounded $XXX. our which on last successful year. Roam, by Softening its under TV sound the for our categories Ray, bang same a in offers which demand, consumer buck sales drop impacted versus the

incredibly customers. significantly year. remain product a that about is to Ray point new we a for price the expectations our As terrific missing the potential Nonetheless, reach excited new having at a has result,

expect their turn to beyond continues reviews and lifestyle tech excellent very spending cautious Ray Looking retail influenced from our Changing position. patterns media. we be outlook who inventory are receive term, that will to approach short the taking partners' consumer in it successful a as

the XX% with take the softness EBITDA to margins of margin. it and to are we we adjusted in our XX% we gross hit billion seeing, to $X.X XX% extending to line revenue, expect long-term As a XX% time macroeconomic are result targets

our is continue nothing to among our strong, lives find and of customer they to affluent strengths. acquisition services content The plays accordingly, Sonos and our trend consume is to demanding increasingly However, bring target customer conviction throughout household repurchases is awareness This established, economic flywheel spend. and growing. their ways products life. content Individuals leadership opportunity the brand tremendous to new our changed our better and are to ahead Regardless base new this to our continues existing Sonos. in has proven for fluctuations, short-term long-term of category

map X track at have a of least road record robust product and We new annually. launches product a

We macro we and dynamics in the our underscore for further categories have steady QX, among Sonos. saw power I've gained and point secular growing market share extensively base trends Despite addressable a or households. our the the model tailwinds key flywheel, and quarters, built held of across geographies, that the of large proof opportunity that we working. the of about existing is spoken another few In repurchase is past our this we long-term yet

purchase. not a one-and-done is Sonos typical

show that time those the started fiscal they customer this additional basis true to customers and time consistent of started have of across with We cohorts prior on started pandemic all and a these cohorts true existing during purchase again return that of true Our of those This that the is cohorts year. to that predictable see behavior us Sonos cohorts. products. pandemic, repurchase

flywheel We to are innovation Sonos we fueling driving the Relentlessly growth. is control, delivering what focusing creating on delivering can critical consumers. long-term alike and that and products

to and in excited existing take closed to both had product with Mayht's acquisitions, We acquisition invest quarter. X this through to organically, and like and with launches integrated groundbreaking differentiate you very Mayht, and we innovation are portfolio. future seamlessly, which our continue team thoughtfully seen of technology advantage product saw year, further the Mayht The in service as you've our the of

base. also the we at product hard of our taking investing expense While delivery look our of road is a map the in are utmost priority,

billion and in confident greater audio investing existing a categories. new market. new global We that exciting us of in emerge are $XX in position these an services both and of and the to products period share a this number stronger put I'm from take

outlook. Now I'll turn to more the results Brittany and over to provide call our on details

Brittany Bagley

We EBITDA currency line on margins Thank you, of $XXX.X XX.X%. X% basis a delivered growth of Patrick. with on a a X% decline year-over-year top million to basis or of reported constant

currency on to out certain X% are on reported environment now Amp. factors especially be impacting regions. in And a continued Americas challenging more we to above, Year-over-year, grew a our results. performance strengthening basis. called have declined Patrick U.S. we XX% supply As on constrained the mixed EMEA and These across a our revenue seeing currency products, the led dollar and in constant on macro dollar. continued and of currency on we X% comparisons basis. business a results, or grew relative revenue currency as since and declined constant over soft QX APAC a XXX% U.S. was the EMEA to basis X% QX. QX in basis. APAC Ukraine experiencing reported particularly X% from weakening given war constant ongoing last and is got our harder XX% the significantly

partially year-over-year, by offset increased in Sonos ongoing One, the speaker X% in year. Ray Roam launch the of and strength driven last by of and Arc revenue lapping the introduction QX

revenue the by relative increased to was products constraints. availability supply component basis primarily revenue of costs XXX lower higher QX accessory improvement. XX% other Sonos margin XX products points by a system driven decreased points, due and Timing basis, year-over-year XX.X%. to related to of X%, sequential higher sales. Gross higher margin declined driven component expenses to basis gross prices, selling driver this by offset partially primary increased costs. On Partner

discussed prior year, R&D. we invest in As notably in the business we continued quarters, have to in this

new Roam control. to Sonos Colors, Gen SL, X have voice Ray proud are Roam launched We Beam including products, and X,

map. We to have year product also made X this support our long-term technology acquisitions road

further ERP been the have investing have of scale pleased successfully go-live in quarter. and completed the new systems to our we in support are Additionally, system our to

great and able some report the across effort implementation, with our every teams financials, Sonos. on been a had successfully to we bumps minor ERP While have to as business thanks our at we execute

development, in of fees we given a and $XX.X XX% revenue. Excluding than build softer cash in inventory additional driven and We would from be and our like to higher investments. Adjusted head transaction holiday of due margin investments business inventory. legal have levels lower count, Heading higher them EBITDA variable are XX.X%. delivered by the free we the costs, had by EBITDA OpEx demand primarily the usually we're compensation. the partially adjusted X% year-over-year, representing flow flow declined we But into driven by a of by quarter, QX. professional fees the seeing, million, negative quarter, standpoint, year-over-year, operations lower inventory to grew product offset a in cash From seasonal

quarter and adjusted build ended with $XX believe from inventory get still inventory QX, Despite buys the quarter. the of component better in X and million cash we will operations cash, the $XXX cash in We the holiday delivered and of of but no million after our the first to in have months a position debt. year we now use

our position a next should cash free work more few quarters, As a profile. return normalized flow we to over the you see through inventory

balance us Our remains sheet economic uncertain flexibility significant and this environment. strong affords to navigate

cash remain During million product very acquisition the excited we Mayht, road our $XXX adding to of this about of on future used technology and QX, we map.

on We repurchases. also spent million share $XX

of end of $XXX year, the have million X which repurchases, $XX QX the towards our months first $XXX we on remaining cash the million deployed Over authorization. of million leaves at

Now continued along retail run and FX our of challenging 'XX the slowing of fiscal outlook. environment, channel turning macro caution In supply with our headwinds from partners and business light to in our softening we QX. constraints, expect a rates some

these cover which should As on QX are impacts seeing currently To registrations we in a anticipated trends, expectations. product launch lead evaluated more QX stable run which be we timing, to to into forecasting little are 'XX, we detail, our we but QX. slightly to these our push softer the further through from of launch decided product to QX factors an better rates

our Ray and this channels, which our softer resetting recognize and closely is ordering strong close Registrations our a reviews. from forecast. retail real-time how we in perspective, it to watching are demand expectations are sense revenue From on with during sell-in our we for We non-DTC DTC get we period, we are continues our expecting our as partners. this to best for proxy economic channel, though sell-through along also are

many ahead current and we inventory is extra partners of positions they inventory of evaluate as impacting channel especially selling, are will in how their remains Our revenue weeks healthy caution our holiday inventory stock, EMEA. seeing which but decide

the estimated million million also a QX. are assuming be in year, $XX FX $XX impact strong, resulting an for in dollar that We impact including the continues to

better in exiting have year. a QX, in a Finally, on but position start do backlog we will to be still expect Amp supply to the

We last quarter have situation relative catching seen and up the on are supply our availability. improve to product

we supply concurrent to particularly these were these QX, 'XX, in the until While We as have we weakness. seen have well not been cost demand in we their components easing impact has of factors, for some given many now and times. constraints challenging watching with benefits shipping see critical the be logistics, do lead but as of noted largely demand will and seen

us well. with diversification our now Vietnam will believe continued and to chain strategy continue Malaysia We supply serve and

QX As revenue $X.XX of year XX% would on This revenue shifted with We these this If we constant had currency in X% Amp of we The the that basis, QX a to lowering $X.XXX full revenue and On result would constant growth have of range represents QX X% implies million, of XX% down to a stock earned year-over-year. instead. the $XXX for in in year growth guidance still all 'XX basis. at matters timing, a billion of factors, growth been full on release, our revenue our billion. currency year to and of a product these are represent we are guidance year-over-year. expected not fiscal would note fully midpoint be this this down will X.X% range midpoint.

year At range gross to margin the QX. for levels midpoint, to margin few This the XX.X% quarters margin gross fiscal 'XX. of last XX% X a for our for main narrowing is reasons. We are the below XX.X% implies this guidance

costs The We costs improve in-stock expect elevated incur sell to expense them quarter in and is we first these component our to required in the product. the advance position.

quarter Despite business to in of our expected remain and we gross FX. margin with a our long-term that to is QX fiscal The performance, expect annual year do impact in operating major target XX%, we 'XX. other gross margin to XX% achieve committed the

through Our flows QX adjusted revenue decline to EBITDA.

the guidance As full our XX.X%. result, margin million. to we to $XXX lowering range This a an of to million adjusted $XXX EBITDA XX.X% are in represents year range

we fiscal implies negative pausing QX look as amazing includes we adjustments $XX to deliver 'XX of of in beyond, adjusted OpEx and and 'XX. are cost continuing in forecast. our the change products and map hiring, Despite This travel road this For long-term making we the our EBITDA to million. our taking the given importance midpoint, to at the actions for QX, invest the in year other at expect

QX guidance fiscal earnings 'XX year We our on regarding expect to further provide call.

changed As our growth nothing Sonos. has Patrick of discussed, long-term the in conviction regarding potential

of a us XX% us a the that premium provide environment, consistently to these we loyal update We significant on to believe brand the it market our longer Despite revenue, more billion XX% history macroeconomic with we large certainty gross support believe to opportunity. flywheel to EBITDA continue Sonos timing. because uncertain on growing and these deliver But will tremendous adjusted further a attributes, time. along margin. $X.X We anticipated have and shareholder we XX% these than of delivering deliver XX% have products changes the value a will and equity, resilient well take customer and environment, achieve position can margins in of targets. innovative and When to factors, new over previously

challenging we category and of environment, execution, an are operating proud are our and are even We leadership a in exit and stronger confident but business. we dynamic build our upon as we team's will

that turn as Business It support. Patrick, Chief call to of talented being luck the will wish involved executive what Sonos IP With Sonos, macro XX serve road achieved. proud Sonos well fan bittersweet and whole pleasure the I of words. I is moving best trends to Patrick, career I been discussed, dedicated incredible a the all is Sonos thank I I has am a for to It CFO moving years and future after The margins, long such where them continue a you, despite as will Eddie, the for forward. term. positioned opportunity almost product gross sheet And the work be healthy both Officer. and so company know map, has X.X with team years leadership including Sonos over team. kind want CFO, strong position for alongside Eddie. that, and on success. balance to thank Finally, the to truly their of I team incredible I'll new for of the and be my a

Edward Lazarus

Good afternoon.

off, she'll chance I thrive shoes finance also having with with my She's appreciated colleague, lie team their and opportunities work I business so say I've to the a even endeavor. and that have strategy wonderful the been end, of X-plus First our lead step on how to like interim for also to to to a into additional know defend infringements. to there continue seizing that responsibilities would will closely that honored work closely Brittany To just accountable her CFO us. developments. hold recent more last next Patrick a say and our world-class been in few and ahead Google I'm just property as our these much enjoyed I'd impact years. not to intellectual

First, our ruled in also court Google federal our a We with California, that rendered the case in addition. does claims zones Google Judge adverse on so-called split on decision team's the showdown against disagree the patent representative Northern release. that has but for in other infringe the respectfully Google X judge patent. patent, ruled

X infringement X in Commission at Second, total on alleging Trade of and same cases image new California, Google X us a the against patents patent. based Northern cases the International filed of mirror

will to against We patent defend rights. vigorously this from us our pursuing dissuade attempt

defenses reflected Google's Google patented record strong track issue. over recently France. in patent later strength damages does our scheduled found and in for questions. October. in the in forward affirm litigation and against fair I With commence follows our portfolio, Sonos results run our Canadian have trial This of look to call attaining Our to that, to to We would us, for court year case the where not turn day showdown this defending the Netherlands infringe a as and in court our royalty. prospects the the is like for against Germany, Overall, continued our most the successful

Operator

Instructions]. [Operator

Davidson. of from comes line question D.A. Tom with first Forte the Your

Thomas Forte

and one one question I follow-up. have

a Brittany, and the of many working off, though, you, First wearing the hats, then, I you it's are Eddie, clearly wish luck very of future. you in capable been with impressive. is best pleasure And which

my first decline interest question, housing the travel? larger in you for rising think the either rates being sales of So by and/or devoting are the do discretionary market with on impacted your spending a portion consumers

Patrick Spence

closely. Patrick. We're Tom, one. that market the watching it's housing take I'll

and we've Americas this the We in Our services I others, and point, to spend. think the quarter. on X% your revenue actually anecdotally, focus seen that, believe also travel heard from grew summer

seen, everything think there's So something talked we've was hit about as then from to think we pattern, in about. it really the that as I we And really, something that. us June

didn't saw we well, So materialize expected, see we line after weakness in see had that And across given demand was and the to April demand off with didn't environment. because retailers what were across just impacts really expected. and products in us specifically also really same macro June that the Colors had the board, had Ray their through of expected get as the as all we we And also we inventory just the positions, we obviously materialize go more not Roam launching back orders in see that as we'd and in compounded of which that Sono we start and what May cautious macro any and that. way

understanding of helpful So we terms hopefully, saw. that's in what

Thomas Forte

my talk the about And can strong the follow-up, dollar? you for to your ability adjust prices then outside U.S. for

Brittany Bagley

XX% to and maintaining that gross looking price certainly It's increases about mind we'll margin. XX% But in our take we as to also commitment September. can at, are keep that something we one. that obviously always I last took think

decision something the to will sure so something as contemplate the that that. really long-term we it's is want like for And right business make

Operator

of Thill question comes next Your Brent with Jefferies. the line from

Brent Thill

execution missteps the XX% this frame competitive you issues, on you put Were this balance? Is would -- any that? you inside, if an is there to the had in macro? any from how all perspective or versus execution there frame Patrick, macro macro? how would the Is

Patrick Spence

we're more macroeconomic. we gaining we attention to our happening the started the And generally. this one holding Brent, close market asked market is share -- to like mentioned, or categories we we of paid see in That's steady I and from as is And can everything the exactly ourselves, the that across as things that see key question what's share.

Sonos so looking position right about And as comes it reviews We're also our been holding media, been and the kind any the and partners products to you we up at living from feedback gaining feel good. has from to from from and new has from those or are feedback like the customers share. reviews now. from of retailers channel our our Ray expect good would are the product And retailers the we that

feel position right good the about now. in we we're So

largely also we I chalk macro, it up execution. believe we better So always get but to can at

off I the making, the are sure mentioned, we're as see but make what have for prudent been we're we we in, macro the that so long can make will investments planning definitely in going we're that investments to And to environment largely the all term and pay from favorite. is

Brent Thill

why got And June, into And color? August, to this -- you're wasn't push in in decision on the like us just of next -- second seen improve the stabilize guess up solution was that? Can And it June? year. push the just out just -- worse? or Was quarter was clarify you the now can kind give because environment, you and it Brittany, you some follow out that just in can I deterioration of July it was you it have that things part ready to new if and

Brittany Bagley

Yes, happy to.

remember, Ray as we lot to I general probably Patrick was, macro we June, So FX June. part in factors said, we've to just dollar continued say, of went forward. was as see the strengthen, would about a to the it talked so that really And we availability then as that of also going look as you look a

were doing our that performance go-forward that So factor able see into product to outlook. was how really we and

a out, look partners that thoughtful maybe would product just I at softening data. channel would in it, and talked in with the the on we next at but -- run then our some as call we pretty nothing said the because fact look slight be did cautious as about out And my retail I for slightly EMEA, in call continued run to a call that some about, stable just partners stabilization in I too look expecting being softer. as much probably we of registration the through I across would see I We're for registration they are we our quite of thematically, But the as except as we quite quite retail and not Americas, lines. being with that's so to go they are holiday cautious. right all they say most especially -- from fits, basis inventory have rate now now. would also where we rate remarks, at And how out think Nothing right the we thematically inventory on tried those as that one quarter. into We've our now inventory are comfortable we those There's in questions. that that

impacts And so how many That to on that is we're expecting obviously basis. they readjust to more they a a impact of want weeks sell-in what as onetime have. see from

QX. those environment that if like, a that's including all than launched looking QX in And look So cautious at. looks would heading what the what in thought into we and holiday things, at the rather we of being better lot we do the when product we're retailers of quarter it

Operator

line question with comes Hall Goldman Rod the from Sachs. Your of next

Roderick Hall

if a retailers made come Brittany takes back inventory through we have know back-to-school guys of the levels they and on you to just the do experience, are for to after that that. low? with feel ask inventory, I here inventory know we -- you in they think of want much what all course, in through wanted think And get they'll or retail. a things season on follow-up think the fact inventory there we where to back on this it decisions comment get curious that that the other I'm you of year see think I of guess they to this kinds terms you I people's how hand. as end in and Do your well -- pretty how have TVs you then from flows point to to

Brittany Bagley

we for say would products. think closely. what they're I we track our most low That's

overall of our inventory, balancing to sort view do. what continued as constructive sell-through conversations to is That And so that that continue rates movement they their and that continued are partners need said, our at will around they look holiday inventory that's sell levels of have everybody we in not to need just levels, your can sell their something But TV inventory to and with wants a what they watch, standpoint. do from to Sonos, quarter. point, sales that the

holiday So where good that still important for store is products them bit the are carry. products our to that in we products have and confidence of them a to for have

Roderick Hall

driver curious, I product, noticed still are times that know Amp, really And supply the come with then is lead I just I'm guess particularly there is we the what And you product? you days these called wonder main that. all weakness. the those it's challenge out installer of I in and there's wanted and behaving to back to really products systems long, you it's just any macro the do the to the like supply think seems do And constraints. expensive are how of an specialist there? Or type supply? just a It think effect addition people that's

Brittany Bagley

to talk I as demand and in little for we have what an need commentary of a one margin products think you And doing absolutely seeing standpoint. of enormous tell to wait QX biggest my amount we can't is product a a tell where now the are stock Rod, components back the to on it's less inventory I how have I to get that stock everything be get to and by we've continue that's question. challenge are on to from back in can we can for on here. in we that QX end gross it's we can had changed. from the get because component they certainly need the we installers, that to from it. had you the and visibility we us QX X and by the that It great product we levels just haven't product of would in we'll see that back bit say right it's that back stock,

Operator

Your question Bank of with of from Babcock John next comes America. line the

John Babcock

discussion talk following area Could in guess and about that, trends you just for that's trends up cost also just and the for looking I that on how supply chain. general you? component on

Brittany Bagley

is starting thankfully It Yes. to...

Patrick Spence

on is She mute.

Brittany Bagley

was Sorry, Thank mute. Patrick. on you, I

that area. we knew say You I I would have improvement in seen talking. was

I So out remarks. would my particularly logistics that called say, on shipping in I and

see to some there. improvement started have We

from We see really the work still as on to But we've component about some as many challenging that get between done, have are improvement have in we past get. our teams can. as quarters a There talked are to components started to components standpoint.

we where in think I ability look our both to are we maintain seeing supply. improvement ahead, as

provide softened as demand supply us, I not in think as well, that's for from but has the also a to easing industry some bit, others going for standpoint. just a chain

John Babcock

from about to that or is the goal anyway. you general ahead the we ultimately launched then? our only you mean say thinking do the the Got guess, a improve well, push around quarter generally, holiday so about product you. get into approach the launches And now as macro to mean really of Or thinking quarter then how quarter 'XX I were fourth will I the you you and back? get move product quarter. that think first that into and you 'XX in just standpoint, I of things that? as don't what's launches in But first continue season,

Patrick Spence

that. We always and is, type that John, consider it the timing of product around the

also as sure trying that up, it? but to spring/summer making many example we're of so factors what was a So with time readiness and last is is is Obviously, if one great can it of instance, that. So like Roam take those, -- account. we hitting for a to lined as

we'll the right And make situation sure think we a where But want the as bit the is so other we on what certainly, terms front we success set happening is to unique I to up product of think this most look in to them launches the for about now. see macro possible. are

to new least launches committed products, X at remain we And product new every so year. X

across know, X we've you year. As this done

that we'll and our also do targets. sure we balancing continue to what with to long-term that progress drive make to we're so And need reach

John Babcock

Act, just you've that a as changes pertains then to maybe the great. Inflation would provide don't chance last But be Reduction it's color this go through on to of And early bit some initial some the but any on I obviously, and that it kind little know there. a if tax standpoint. read, question, from gotten

Brittany Bagley

Yes.

have a this allowance an tax not up, I and still have, read. taxpayer really We point. a We just a impact us it say, really would valuation still initial But at not we're from standpoint. does

And at so looked future, and foreseeable the least big we've at from us. what impact for a not for

Operator

Morgan of the from comes question with line Woodring Erik next Your Stanley.

Erik Woodring

I a guide. I guess you the to kind I'd impact of line. love I'm million we FX a maybe launch or fiscal revenue. and think the able to implied speak that would on want implied the $XX you fulfill additional incremental backlog think kind been XQ delivered, But me about out if biggest maybe million $XX to if to correct better sense an revenue, it's just of new just headwind. don't headwinds I right? wrong, start of of Brittany, get biggest if have had product of I

I'd could So about be that would over September there's that love of if help what that's be fair impact amount biggest the kind quarter, maybe rank the think kind a us I of still a then And the of for you revenue in follow-up. remainder would ordering, to left there. just headwind helpful. have know

Brittany Bagley

Erik. course, of Yes,

we we constant if product we hadn't a would launch, pushed we on quantify those. and stock said in basis, if is on have we've So grown. didn't the currency been Amp that What

our and in quantify to product that's the it. softness looks big a a were think, I is standpoint across how FX including delta macro you $XX hoping million. We part obviously what we achieve for I did in then what So of from it Ray we rest really we're like is of delivering. achieving about what line, QX would attribute the say demand QX to And at between, would

that delta with also partner would of retail change point macro that run both guide. but we've the out. inventory of that this on so that QX sort dynamic And rest rate is called be And in the

Erik Woodring

goods levels maybe a you'll you then you we're call inventory make their than more next, want materials I goods, makes raw can get lot balance just versus help finished a about -- any it us be. historically But kind or just as higher if understand holidays. sheet comments there's through would it, of maybe that quick I it's to sense. kind on X imply that thinking of That mix of you And perhaps correctly. finished mentioned kind -- of over clarification But work the know the of sure quarter past the way of there

Brittany Bagley

see full you'll Q. We our course. of out break Yes, that And breakout. in the

published, Q inventory would both. we and numbers. more you'll goods. the I when got hold, So gets see than We've typically more say more our on it's component have finished exact we

some I more supply inventory we we've to because to to relative of we just goods, chain We ramping finished have to trying more has more had. say, been these And drive changed. of trajectory what would ownership mitigate have component then demand were because components we've the challenges

I think products. long-lived time. We well. the our them last They us news is for long products are a keep good for

amount we're more a the into go as for finished inventory process will holiday some the And which correcting back of inventory. quarter quarter. done But spend certainly for I that we new have get down slowed likely end of we that a QX. that us so be we get producing through QX, it have seasonally to the time really inventory. What at goods normal our is we position just down then working into highest is of as

Erik Woodring

final follow-up. just Maybe one if -- I could

strong might On you're Amp. then for want and gross nice for up because it? the the margin, of outperformed components you the pressure to fourth some be you're paying And I about sure. I it is for of And think maybe make clear, That's way to paying quarter want just gross just me. some think, -- to that's fiscal just more quarter. seem posted timing really of components. your the for point obviously, your Is to that right the effectively third when related expectations I margins fiscal in

Brittany Bagley

to right Yes, way think about it. the that's exactly

we some are getting components attributed when margins the and take but gross land of where to narrowing by in but is Amp charges we gross long-term We difference of the that stock would reconfirming bought in of entirely really and we we you QX, and difference on that on back our about actually pretty Again, put be QX the inventory targets, that between see extra a big that. up on we range thought within QX lot can margin, and that between that in. terms guidance a year. last the QX not and Amp, quarter of within It's timing it's built on still it

Operator

of question line next Forte the comes from with Davidson. Your Tom D.A.

Thomas Forte

follow-ups of for couple A quick me.

So release, your delaying on in Can color any the you that delaying you what about long-term give means? press targets. means financial talked what and

Patrick Spence

shooting Tom, believe be for. those are targets Patrick. to ones We it's that Yes. the right

to proven time that we gross and in margin range. time again have be see can You that

think little get way billion. in just we've the given very take been matter of longer EBITDA macroeconomic in to believe such that really is the the manage range in comfortable continue adjusted and this way headwinds the we a delivered it's attainable we're way that very will and we to a the the hitting deliver think future. business to And a So on of it that. about We've the $X.X there that that and terms way we

gives the the to that, we're headwinds ease, put And idea we certainly around way so about macroeconomic as start see more thinking some it we'll this. as but of that you hopefully color

Thomas Forte

more Two quick ones.

on current appreciate So M&A. I'd thoughts your

your you strategy? just on here come thoughts down have valuations Asset your across updated give the Can board.

Patrick Spence

that you breakthrough this, opportunistic and pick close like obviously, want the a road we Yes. technology enables about in I map. terms but accelerate and to We of quarter, what the and both there up cautious out future. for our us in help excited saw Mayht can we in be super what the were -- period mean what's

We have underway a now. lot right

a different than of had. across we initiatives We have more underway variety ever

talked that way. to effective about investing and an in and at in the taking make we're want every dollar I So balance smart hard look making We a that. we're that that doing sure way a fact sure that we're

the come make investments And So more inorganic that we'll our profitable on we talked if and to that the and they for billion look IPO. both of focused more to the we'll continue sustainable to take driving We're committed and sure about growth $XX before can up. market. we've audio opportunities be those that organic

Thomas Forte

in in talk apologize dollar.? and for about this can operating if I answer Last you local extent, and what are your knowing But one, U.S. to not not currencies all, expenses advance. at

Brittany Bagley

in to currencies. No are local need apologize. They predominantly

Operator

There call over are no questions further I the to Spence. Patrick at time. this turn back

Patrick Spence

Thanks, Emma, questions. and thanks, everybody, for your

on focusing we're mentioned, control point. at this we I As what can

investing going help of an and out We a headwinds new we think these new in are macroeconomic tremendous us are to innovation position. come even in products amount stronger of that

put we excited weather what so headwinds. macroeconomic brings, we're a position future ourselves the And and to these about in financial strong

they continue and to towards so targets. the and do long-term as every themselves, look opportunity long keep present as will that's grow we'll to exactly we what And for for heading

over many talk everyone. together. decade she's last Brittany Sonos So everything to working done wish to on her miss her the thanks, for We'll you We'll her everybody. And and well again, Thanks, for thanks next soon. of adventure.

Operator

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

may disconnect. You now

Sonos (SONO) 11 Aug 222022 Q3 Earnings call transcript