- Earnings call transcript Q4 2022

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Sonos Fourth Quarter and Fiscal 2022 Earnings Call. [Operator Instructions] I will now turn the floor over to Mr. James Baglanis, Senior Director of Investor Relations. Please go ahead, sir.

James Baglanis

Good afternoon and welcome to Sonos fourth quarter and fiscal 2022 earnings conference call. and CFO today Eddie and Baglanis, Patrick Sonos Lazarus. James and Spence; Chief am with are me CEO, I Legal Officer,

is For today’s holiday-inspired the joined Radio a music Sonos those our sampling Thankful. call station, from who hold early,

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

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

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

presentation the website. on as and result, supplemental Patrick. turn to be will As a conference the will press now today’s release, transcript a I reminder, call Relations earnings available Investor call over

Patrick Spence

has fiscal that hands plan. are to fresh background unique contributions I appointed am in to Officer, His played been today, knows in good the that long team Lazarus, Eddie our role business. a strategic has CFO XXXX our of Chief Eddie tremendous announced intricacies Chief table in everyone. we Eddie role. and you, he our and made James the and the Legal Earlier perspective already he active hello with Thank our we confident Interim Financial the an and planning has and as Officer. brings

reporting legal responsibilities to the We a Counsel who assume will the General commence of will a organization day-to-day Eddie. search for

ending Now to our our how business. I were to our backdrop an trends In turning like as stabilize below households. am things. XXXX of two of we tremendous of deliver is acquiring see which to Though expectations, as provides. team’s in of it business reemphasize to refer year macroeconomic model would year to growth. macroeconomic flywheel important Sonos times, foundation The and the sharing navigate by we initial do economic planned. QX, and customers, in to the I our pleased the our came challenging consecutive households especially challenging XXth unique begin resilience efforts the of revenue state it fiscal new proud These consists increasingly

customers add time; households more these to customers. by their Existing family and acquire become their to the additional members telling us new our products First, customers. advocates leading and second, friends of remains Sonos home new the help of who households over driver

proven Our X.X year’s fiscal growth. years. is the and the challenges, to XX our promotions. to households to this we households million. crimping the despite Sonos total installed remarkably drive many past million flywheel it And supply inability run to We consistent attract product ‘XX, bringing base both of challenges last Even XX ability an and of added in manage continued availability through midst households new in over

the We core households XXX million of still our just markets. affluent our innings represent are the XX in in as growth households our early million of X%

into a growth. And X.XX year ‘XX, true are for households, in household from added increased to to product households and more out, lot been continues get products. We estimate XX% how the our In X.X starting household. alone. customers multi-product single to room billion products for fiscal Investor year our to represents average there talked Sonos single a new Sonos at the Day mature in has has As of household households average that revenue lifetime about products additional our multi-product our Average opportunity products X.XX systems. their customers to we whereas $X every X underscoring words, install size grow. are value per X is of our of the converting household range other our product we to

Of this further runway the but will course, installed have happen overnight, base. highlight not it to our we long does monetize

after in investing aggressively programs opportunity go and systems beyond. are We fiscal this more and to XXXX in the

financial to of performance. annual XX%, margin basis We reported launched five expected gross products ‘XX EBITDA margins $X.XXX lower exciting margin X% This $XXX.X revenues guidance fiscal our of but currency From Now, standpoint, than an representing of XXX a slightly million, range Adjusted QX. representing XXXX grew services product year. acquisitions. due to points. to target XX.X%. completed a down we billion. in was a was X%, constant to three or below and was XXXX, our $XXX.X XX.X%, profit and million, In down X% our XX% recap Gross gross fiscal was within

We since nearly most the have and one has listened accounted of all XX% strong listening. of seen Sonos control number launched Sonos service May. to in voice Radio become for And adoption Sonos it on

quarter, theater highest share Our share X picking U.S., dollar both Nordics, unit our UK, are how the Ray, sound products level and In are our in years. saw we share entry-level and of QX, reaching and resonating our consumers. underperformed bar, Last outperforming sequential in our and leadership. validation our strength upon competitors brand with improvements up home is Germany a we year-over-year expectations The launch. market fact discussed in category we internal of almost the

are the by it momentum. in home entry-level QX, the become in the UK it has We dollar And theater gaining top in that Germany category product is to and share. pleased see

gate. has launching garnered customers Our out we initial and newest as our forecasts. are a strong already outstanding product, is hit it is Sub The Mini, of the media October, in sales exceeding reviews Since with

into enjoy movies system music and and the the continue home. fall at through holiday as their theater out expect build this season sports, We to households momentum home to

have be XXXX. will no know, least you every As executed and we upon to XXXX products year at Fiscal different. new delivering committed been two since

Sub launched have We that XXXX. to fiscal on of plan top two least launch at remainder additional products in Mini we the of already and

We imperative with ahead the our of in us a next few years. to invest balancing prudent built blocks side, few of profitability building revenue have of set to in an for exceptional approach. in commitment we plan emphasize light future I’d the our a the opportunities the On

we taken conditions the benefit observed repurchase have the of the At the have we the months as steady of we a have cohorts. the X enjoy behavior time, our run-rates customer past baseline. we view using First, in over stabilized been a seeing sober macroeconomic same

that of registrations exciting not continue to position, behave consumer As Based sight target. brands the through cohorts. achieving the ‘XX like significant predictable buying remind in Eddie and revenue to expect patterns the portion representing considerations, XX% a pre-COVID have. headwind to on would that fiscal we adjusted This detract margin I improvement levels XX% EBITDA do will and is I profit give stream margin year, and you million, million line and the past just the this our adjusted between rates to with of XXXX, our at to to these our to at through of sticky have on annual Based details to many to activity everyone deliver promotional we currency a fiscal from a flows said about have new cohort planned return our products XX% grow XX% $XXX end. other of repurchase foreign million base from XXXX of $XXX year in-stock installed normal revenues X.X% electronic low more behavior, the expect XX% in something our constant our gross very and of customer before, at exchange both revenue of assumptions, gross cohorts we for repurchase but end a each $XX X% XXXX X% our start EBITDA. we high of

and of being of long-term thoughtful to drive growth profitability. continued targeted and making medium investments are importance delivering our while mindful the We

place significantly the know a against in to ‘XX grain it’s been will last a we pace are comes growth doing mind slower ‘XX people companies at runs have than costs, all categories keep in way fiscal we support that layoffs the new we We We the years we team about you to headlines, it profitable have in as important the not lot of to of have. in chased did when our many grow recent have but X this hear fiscal pursuing. now at and the

$XXX We have been Sonos long-term in will revenue are making our be million laying meet million we exceed the investments $XXX are profitable. and billion targets and continue $X.X for EBITDA. to to in foundation of to The and

enter announce talking which products about when will investing cautious one new four that we of categories, ‘XX. in us fiscal While allow product we always to expect are are to our in roadmap, we

a categories proven our record gain market over further have when conviction which And a entering a gaining share new We track underpins global will of share audio entering larger will $XX we business. our time. that category, billion the importantly, of new diversify

of our the Though Our hesitate investments short is are I business. our stronger. household ‘XX, targets our are some customer to and prioritize am this that spend If we growing, will our new following we tightening of profitability belts, won’t our key make of and we teams focused on we acquisition start to in efficient. our emerge uncertainty doing more the initiatives of fiscal period to headcount discretionary driving and from restructuring reducing existing protect our repurchases. adapt confident environment, flywheel

working. few we and household flywheel it generation repurchase will spin And of is next faster. even household Our in new the years,

accomplish three this on things. We to expect focusing by

the we choice our differentiating the product will categories, further in home existing premium reset Sonos bar First, for audio. as

reach, the do revenue India to we Second, naturally the Japan, margin have And expand will established growth already in out to of strategies will markets low adjacent categories, you have Executing annual in previously as us seen as we third, EBITDA adjusted our LatAm. our with range. portables. levels and with achieved our these double-digits building product XX% geographic new will XX% on we such enter accelerate beachheads

call will and our Eddie over outlook. to provide on I more turn results to Now, the details

Eddie Lazarus

have helping speed Patrick and finance whole hello on plan. you, permanent and of to colleagues our board me fiscal a Thank Financial delighted the out across wonderful of up Officer am job The Chief and assume ‘XX a basis. the year to organization get map everyone. my done I role

strategic efficiency for to out three are to are profitable transparency to right additional understanding growth, our priorities and of shareholder upon give the and making be operations the we long-term to better ensure to our level our Just that starting public adding set, drive top investments leadership our disclosures. to in investing responsible some and by capital, drive a tools steward business build my category

will Legal widespread out our Chief I intellectual patents. will our strategy specifically to of hold to continue transitioning infringement be of defend role, While for oversee and the to Google I our Officer their property accountable

to grew our or to of fiscal results, a X% we revenue constant year X% $X.XXX Turning reported ‘XX billion. total currency

cumulatively of and strong X disclosure and into that revenue, Foreign was promotional of and gross for initiatives, to direct-to-consumer return demand limited we well for a exchange our a strong in strengthening as supply The years was to sales. shape promotional IS Solutions channel and a typical very this was XX% of EBITDA. to headwind IKEA healthy growth, basis, declined and headwind our in and our due partners other portion sales. million for Heading other, flowed is despite expansion. Installer geographic DTC sales. significant XX% pleased and us, adjusted good includes of for retail accounted X% are On activity. port exceptionally channel persistent see new the products EMEA, a grew through $XX activity. AMP our which are by channel holiday revenues demand retail After retail revenue as accounted XX%, a the and softer to a our well-stocked and to profit as season, challenges business reduce from dollar of declined X% our driven XX%

basis the over IS our DTC where fiscal the years, points our of the As ‘XX. business from have point distribution steadily ‘XX, FY for diversified business the in to our year accounted for we channels, two XXX other of up XX% channels and

carry margins Importantly, these than channels higher gross retail.

have fiscal support we recent and to positive expect revenue continue product higher We ‘XX that mix years. into year shift per to seen in this

newly Installer Let give disclosed me products. to our moment on Solutions Solutions Households acquired additional take our multiple channel. some tend purchase to high you a color ASP through Installer

We in have is we said to position. before critical channel to be pleased an that supply AMP are a improving and product this

performance Solutions channel At solid both EMEA this our local grow healthy in improvement robust of plenty our we see dealers Installer have But housing worldwide. as dedicated in markets. are than We of Moreover, backlogs. room represents in the Solutions and more invest slowing out remains continue moment, Installer activity Home we meaningful have XX% to America channel APAC despite activity U.S. revenue. our the teams these experiencing growth and in building to

We fiscal in margin Adjusted were margin. a announced ‘XX. year-over-year, EBITDA Gross declined by to we year XX% September expect point dollars gross of that estimate points to to XXX revenues X% airfreight XXXX. to grow decline The margin XX.X%. buys IS $XXX.X driven operating point by margin adversely as to Gross was margin XXX affected and of into continue a basis spot increased basis increased shortages including by buys declined headwind gross offset that component We by issues, EBITDA decline margin costs in increases and to XX.X%. gross spot of growth were driven COVID-related component of partially X.X freight, price million, general a and inflation. lower number well activity supply as promotional chain year-over-year due representing was adjusted air lower of use X%. in profit These expense

employees fees, in by Patrick with headcount the trailed coming over we targets. lower the product development our note The future to significantly Operating details. our only approximately getting in One due targets initiatives professional profitability primarily ‘XX resulted R&D a $XX growth in part our long-term. before Non-GAAP paying FY due invested results large the expense savings. annual bonus headcount contextual lower growth XX%, eye annual of of bonus to million increased emphasized, ensuring payout increased due to As into below fraction bonus. growth in partially more and increased in XX%, our of their our to costs offset an and and

made increased consumer This to increased to headcount, bonus. products which with XX% increased Non-GAAP cash in sales is partially times, and harmonized to investments to inevitable guidance tools again of on demand quarter an legacy line by we of XXXX. $X track trends. In the long area. the higher experience was bonus. increased G&A to revenue continued third due marketing billion of XXXX. lower due we reflected and schedules curtail and by of run-rate increase throughout professional offset Non-GAAP differentiate constrained X% continues last software the adjustments and and deliver inventory Our made plan investment investment million expanded the XXXX expenses, billion third in be our by with our our our marketing affected and inventory. this the Upon soften, to in expectation. to fees and adversely investment and brand XXXX, first again, our lower in with half invest $X.XX offset quarter a new deliberate our the decision after the system, to inflow there went and and can supply range partially sales headcount Until Free But negative the lead the flow revenue ERP inventory replace includes our in of necessary production before the month systems given ‘XX in severely system major live of XXXX, $XX.X FY within were and we supply seeing that purchasing. we being lag

growth. fourth inventory by million year-over-year. up quarter ‘XX driven up at inventories, finished As and goods a primarily Within result, XXX% XXX% million, our $XXX is $XXX were balance unit

outlined. in increase cash to expect no million and flow. of inventory $XXX.X offset a was our the $XXX balance much the free million profitability in repurchase million of inventory in year our that debt. decline program, share I to due $XXX just of turn year exit improve ended our cash of cash with the in which will million M&A, $XXX the the full business. by Completion previous of The quarter better We We partially and first position,

are prior dilution growth offset comp. to and repurchase we completed $XX.XX. cash towards million We a as an capital of replacing ‘XX. $XXX conversion to our We X.X driving our new of stock-based return allocate shareholders from as program long-term us to our fourth actions Board capital shares improve average million Today, to well to enable our at million quarter $XXX authorized share program, the repurchased in which in price all taking

in we expected guidance. To have Now results. had constant disclosed that with we of near declined of Sub we That in quarter, due quickly reported We to stock ‘XX, of quarterly X%, and for exactly that to in how high see $XXX.X for In if on and launch out. our ‘XX revenue to and our quarter end quarter on margin in how the first fourth quarter had played the below fourth constant XX%, is for were this have total of Last quarter in moved to a Mini it inventory. registrations expect came year-over-year quarter million. our was been revenue in we Gross grown or transparency, as component currency our come of expectation currency ‘XX. our grew increased pleased the X% trends stabilize Revenue and registration the would of the excess line monthly trend. into provide FY we XX.X% the shared further October basis not reserves ‘XX. AMP well fourth as trends earnings deck, XX% XX%

foreseen, for of price As affected components. market recognition this gross a timing we quarter’s adversely spot had was as margin cost reminder, by the

our EBITDA margin in we to As our to million fiscal due will of to growth, gross outline a XX%, year decreased payout the lower end-of-period XX% below a to negative bonus dynamic $XX.X gross in annual headcount lower that target expect which Adjusted grew ‘XX. previously. return Non-GAAP expenses margin. and X%, was I I outlined XX% reflects operating considerably minute, revenue flow-through range

guidance. through you walk me ‘XX FY let Now our

$X.X range $X.X We the to X% between in to expect billion up down of revenue billion. X% year-over-year. That’s

As past consistent we the Patrick said, in trends demand saw we with where stabilization are X months. assuming

dollar a We $XX half with exchange fiscal pronounced expect to create stronger in of the first effect million foreign more the year. the headwind significantly a

currency year, full and grow expect we X% constant between the X%. For to revenue

you revenue, as help euro the reported and at better assumptions model to follows: are pound our our at $X.XX Now the FX $X.XX.

our our of revenue was and X X EMEA to reminder, about to a XX% in sensitivity pound. euro ‘XX FY is As FX

that rates moved EBITDA. since the this bit reported formed realized so we dollar a have note revenues adjusted foreign and and would the weakening than a the Now we model to with lessens our exchange headwind dollar forecast weaker that

supply gross in decrease of flat XX% We reliance expect to not and well on range due margin significantly environment. to We incur airfreight the XX%, our land an do position to inventory improving buy expect roughly to as spot our as year-over-year. should any

expect we normal these and offset, headwinds tailwinds however, is driving We previously have to FX running household which significant our that be noted, level of combination holiday by of new important return acquisition. promotions, will the to a

representing $XXX million. adjusted to margin of of expect EBITDA and a million We $XXX between XX%. X.X%

significant to, bonus full ‘XX; in As expenses hires assumed previously FY growing are FX revenue presents first, due discussed, year fourth, expense for EBITDA. investment of excess second, of of payout our XXX% product our FY to this ‘XX; road targeted of adjusted payout the in strategic map. a hiring in plan Operating versus headwind prudent in and and FY target year ‘XX; fractional third, made

GAAP $XX is FY ‘XX. million compared is $XX As pace year increase the by of At million. our and million OpEx road a ‘XX. our incremental year-over-year remainder in $XX FY the fiscal FY is the guidance, incurred expense reduction investment, the bonus in represents hiring of dollars lower ‘XX of reminder, resulted XX% map approximately year The OpEx midpoint The another payout savings hiring targeted which ‘XX the fiscal product in in a and ‘XX. significant of increase to in in

Overall, OpEx of Sonos’ I’m committed short to starts remedial business growing to the further I fully business. actions. falling excess if Patrick not And take are in We’re and of in of driving in efficiency expectations, revenue. revenue prepared

We, the taking hat, for recent consolidated California, my and developments has in patents against that three Meanwhile, ruled briefly at moment a having issue we at Finally, U.S. non-infringement Google our obtained patents Google putting one in remain new for undefeated legal case in two before off of and now the in the and at turn He on cases additional patents hat in in Google In Google’s board. scheduled litigation. filed cases my May recap Northern trial patent the trial Netherlands, equal that, it invalidated Google with cases I’ll filed the trial has like issue. also in that of having more Canada appeal back our Sonos, the I’d rulings further against infringes to the with and of course, Google new advance And of and rigor. defend on even XXXX. of will Judge the over ITC Google questions. to

Operator

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

Tom Forte

Great, thanks.

and then for Eddie, It off, one channel? question being additional couple off, providing queue new information. disclosure follow-up, like First dealer more. the and CFO. named back in get the your on first thanks you’re permanent might So on a for I a One looks congrats

your and your DTC channels? to does how retail channel trust compared Second, dealer with

Eddie Lazarus

that didn’t ask It did little the was you comparison Sorry, part Tom, we? hear I’m question. a mumbled. I sorry, one what of

Tom Forte

the new and the does your dealer disclosure contrast how dealer retail channel DTC compare on So channels? with and channel,

Eddie Lazarus

installer SP channel, as the is which us. Well, also I a And product good great out purchases in that very channel. very of mentioned, for high get we get base margins multiple we

EMEA and on to ‘XX So I And channel we’re in love APAC. said, bases, that as in be we expanding again channel. channel going those growing and that that both in growing

Tom Forte

is to highest margin three your assume channel Alright. also devoted I the less Can one. perhaps that a the is is that there of dollars follow-up channels? contribution marketing on quick There that

Patrick Spence

fair. That’s Yes.

Tom Forte

and question Great. Right. other my for get Then queue. back I’ll Alright. in the

distribution, do. strong Sonos focus which I recently think which launched line hardware a outside company a another its is branded electronics could So leverages historical complementary consumer something of

high how you on level, products? connected you For marred And a video? Would hardware, are sound-related to focus solely home consider sound. then same example, for beyond at

Patrick Spence

question, the for Thanks Tom.

people We in we have spend a year $XX a that audio billion about lot of there. know opportunity remaining

So move those, of you on we certainly, terms how our own of brand and categories And on. and and more long can in and that’s thoughtful a more more believe term. share. opportunity how in in brand build take opportunity go that time. lot of that that bet also a you into do to lot But be and the need other us to in you I capabilities is expanding audio what that brand strong, that But the do and focused $XX over believe and we in of it and have keep of take even billion And we’re brand beyond you to for have I things. think own I more all strength those your your audio positions Sonos of

Tom Forte

Eddie. Patrick. Thanks, Thanks,

Patrick Spence

Tom. Thanks,

Operator

line comes of Sheerin Instructions] of question Stifel. next the from Matt [Operator Your

Matt Sheerin

afternoon. of Good Hi, questions thanks. couple A me. from

out could the issue. I sort you’ve that that for First, thing. is of walk this quarter it of the because the of then, looks December the on guidance year? the promotional plays sort marketing margin down gross gross and inventory how year, seasonally, through Traditionally, know of in and through margin But got you us course,

gross margins about we should how think year? out the through playing So

Eddie Lazarus

is XX% XX%. true effect. to of Well, said, basically range margin course, It’s an to as target effect have we situation inventory be the not that, promotions going and flat do but gross I within of to an have expect year-over-year our

measures. We have we able will work the extraordinary to be through any without doing inventory

bit. as to much first But to of this by when when so it’s had, gross stock us to that’s The are just through headwinds a be usual year. basically that in the going etcetera. demand FX supply to year-over-year. developed expect demand out, effect to we which but a time. of not all the demand the balance subsided we a margin greater we promotions buys, our rest be and year, this for the over pluses you And reduction gross going And as flat freight, the the last end we said, chain on to on the out that going be will margin have we that in we’ve year, play be half pointed first and I quarter. doing have backlog going on we’re expected these fact, it’s based going the be – will costs of – better out, a extraordinary position Because big air so

Matt Sheerin

Thanks it. then same some And that. step-ups kind like question expenses. meaningful look you in OpEx Got of side, for got you’ve the on

that. across bonuses commissions R&D or cost? course, are incremental Of – sales in or the you terms could being us being the of and part Is marketing mostly where tell of the board? But like and those buckets it

Patrick Spence

mentioned. and operations categories that to product, our engineering and those additional Yes. making groups raise which group The into Hey, categories Matt, in our make sure continue expand the bar and scale it’s in Patrick four here. focus has product to then we existing been sure and that I can investing we’re the is that

definitely long-term with the so those for in the that’s And where we really and people, investments. those are investment building we’ve focused

pace we’ve those see in see the pay you investment we’re those people I – off and you’ll of the made payoff future. mentioned, will ‘XX, as in in us slowing R&D So in investments fiscal that our

Matt Sheerin

Okay.

company as the could year? the that, you as is the headcount through tell of get me and a Just expectations to what follow-up you

Patrick Spence

just X,XXX We’re now. over

And of year. so course slightly we the that growing the will over be

Matt Sheerin

Okay, thanks very much.

Operator

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

John Babcock

I tight, start clarity it and relatively EBITDA range is here. range the just I guidance, mean is seems broadly, I get to at the afternoon. Good adjusted little also like out, bit given macro fraud. your the time, volatility more guess same just your pretty revenue a want to but

your So around guidance want thinking and key to I just drivers there? this get the

Patrick Spence

trends that – stable, we’ve remain the right, where kind of in – – Well, that I assumed think our the are. of terms we things

not we’re So economists.

right. we’ve in We’re reporting coming obviously, encouraged our then not the that got resiliency across by QX going macro, in we how And what have customer repurchase based then that, the terms and and as they and to of new happens base products that seen layer on guess we XX we’ve the have top our last course, expectations we of in that rates, and years the today seen across factor in stabilization and of well. on on what been we of

XX% the payout, want coming to the year hopefully, of so into then of mix in the in things gross incur the for And helps in terms that thinking terms from looking costs now in, that the this add? we to down how won’t some on that all year. see on as have and of flat if Eddie in that those in we are. typical of the all to going Obviously, into to out goes we did product year-over-year range, a perspective. anything the our line top we year, factoring investments way in that and that to Eddie, of this based the mentioned, ultimately mix that things all terms component put transparency line be take new we’ve give into and front margin hatches product can the bottom right factored as and and team, of into perform XX% bonus at the And some understanding well we on we’re where and you then we’re about FX will what ahead range

Eddie Lazarus

million, worth, on actually revenue we last precisely the spread with started went out year, what uncertainty. a This in million. $XX because the of Just of for to $XXX we spread year narrower terms is of

top on adjusted line that EBITDA little bit I line in So think fact well. as the EBITDA we’re the wider the a flow through with the that actually to actually is

So, a there. not deviation really

uncertainty, bit spread both on ends. Just have bigger given we a the little

John Babcock

given talked broader useful? but are much about data was Okay. holding versus you provide for the kind then how from right a just And to I are on that That’s on inventories, if to and much obviously, trended would how where more any end little so guys inventory by to if holding, anything the color example, quarter of tell also where want far able get helpful. of quarter, be bit that inventories how is sense are detail is retailers you now, provide can were there in environment, but has channel, the a any you on wondering the you

Eddie Lazarus

X just What in I couple our years. for first to retail comfortably the of for channel last would the is holidays say is and promotions. the able We about over that the for time that stocked do been that years, haven’t

as much the on provide year. so all And I get pleased to in going quarter position ultimate early But what into we of we able significant a down the position. end finished we’re very amount of more do this the a said, in of a to that have normalized It’s the any burn color to to be goods that. to are on QX, be sell-through is really that inventory by too

So, we are. think rebalance season the where we holiday will

Patrick Spence

we you there are And we know then, John, companies you just rushing that on most in bring season the would not a or other on to call, as new add product as set I the well are stuff. thing of refresh typical – of like to is our cycle

are products And so long-lived. our

sell have these we so well. as through products time to And

from So, want it’s closely. are We cash we watching a back obviously, never we we something this bouncing much half we a sales year, But feel put liked, in would that last being have holiday in the saw of first that into that. for like where capture too and all are position better couldn’t the what much in period. position of we we to

John Babcock

question then last before Okay. Got it. I it over. And just turn

signs the for out the on I of sales Sonos wondering of was are Ray. cannibalizing the curiosity. any beam that seeing you Just if

Patrick Spence

as Beam a of Yes. theater of interesting introduction the because have lot super share category gain we No. I seen with a home Interesting Ray. remains And been strong. has question. really

the reception entry And strong and and that level. interval right level see now, so as – both Germany and so well, Arc’s taking in home Ray there great UK, is the particularly top to it’s sub-mini across and right to Nordics been theater sub-mini, the really spot

I and that. far, shows having a cannibalization in best these to that so make areas more range So, taking in billion good, of better, and customers kind no sense responding about more are think we that audio, think $XX of as it

John Babcock

you. Thank Okay, great.

Operator

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

Erik Woodring

to my Thank Hey guys. to first will questions. second the I for you Patrick, my you ask Maybe taking and Eddie.

of repeat is on is, And they buy what I of ultimately – I purchase you to Thanks. have the billion purchase a have products. to kind single average need guys powerful. do to been slide repeat product and/or do measure if just then to think $X products? looking haven’t to to for able that the I extremely four it the of you do households what you them opportunity like you And am the curious, on more get yet, show are get then follow-up. long you households how your that seen takes part second multi-product

Patrick Spence

you it’s up very because to have provide in glad something little am on tried around we on. we are Erik, a well, focused picked transparency that, and I that No, more Yes. as

mentioned, I better our in this to platform go after give even investing way. As and understand been DTC have in CDP our ability we actually to this the team customers

really have I a people But say of long where for go you. we how in like we with like it in number depending we know it so that And increased multiple the terms differs on about as you talked have specific are. takes I start – – answer have we will of it through the significantly past, And don’t products.

tremendous together DTC job year putting Our done has team a this sets.

part back that promotion, on of more come through of and sets know a that’s or you many we even know are good will watching and of you our DTC. to we apt many take-up sales And are to bigger I early that people sets started more which promo that we site, and We just and are saw than see more you seeing is ran the that. it become starting get there with sonos.com of as with one if more the do So, much proportion really purchase quickly. are,

also important. is And engagement so critically of all so this what is through we learned have

into out the of important have purchase well the are as can and using things moving correlated we people multiple. of one SVC reasons making one know investments pretty a that if and it and Sonos to so we the of And it people is been from we focusing gate, coming get using regularly single that’s on, that Radio and follow-on it’s

making we actually in into way go and starting and to more so – come we teams systems in those and and the the long a are after terms And kind focus that. those really, order of we having of progress, to are coming have understanding of drivers put some

about better the think that And that fiscal we quantify that’s That’s so get beyond. there. important felt it and was because bit I why going excited in opportunity at am that’s a to do something little to are ‘XX I we

Eddie Lazarus

And a Erik, particular we all single households, some about just households new metric interesting are the things would right, of time, product that in one it’s adding snapshot of because the be time. is whom

And so households as multiproduct – up place queue. product the households, some their chain others take product single move the in into

that’s are so And the trying we flywheel dynamic to drive.

Erik Woodring

seasonality, just or normal if That’s clear. ‘XX grows assume just with kind you look higher would get Thanks. we then billion something my you about are revenue. quarterly really it guiding that to to of on totally line question fiscal basis Yes, in that. we Obviously, $X.X second maybe, is, than of if a in Eddie, And revenue guys. you for helpful,

deferred any to And accounting be you just last that because an different that the you past that you revenue in not was future few might deferred capture is able can for fiscal seasonality that’s and/or there capture weren’t of does to around share that might years able it ‘XX? shortages, stance, maybe that look dynamics imply guys. but in than years, to And or the Thanks in me. deferred so this

Eddie Lazarus

curve year. constrained and it’s a supply it very were promote think We all. couldn’t through very, think I seasonality the last over back we Well, because tough to so look

And so our see tell just things. distorted we rock we blocks solid. of the that they can you the think kind and building what are, I of it’s way are plan

was, our the a what then what we when at the course, months rate from be we product of roadmap, and for last a And which As at then that tops-down We can Patrick is stock we the as the down, new took talk we were revenues of baseline do at seeing that that that that. we And diminished and this what say year. tops we we said, look on of household view last baseline. we they a to our view do new And looked seeing just then be, and did guidance did don’t are fact are level that run exciting. we And expect based kind we to from around very also we and they four very sober were a up of the calculation a are when And we the in the you call plan took a growth should NPIs, rate us. I will going earlier. registration promote. introductions bottoms but about the really look where be

seasonal year’s not think that we the took right over are really baseline. back curve looking So, measurements. last We we sure is right the

Erik Woodring

color guys. the appreciate so much. I Okay. Thanks

Patrick Spence

Thanks Erik.

Operator

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

Brent Thill

of economists things are kind worse before predicting little better. Thanks. get Patrick, get a most they

seeing in bake us more you of now, not your give are of thoughts conservatism guess when kind little the happening on of So, based across are right we Can the assuming you perspective that? what’s many why what your on baseline different on I a sectors.

Patrick Spence

I mentioned has need that that’s have everything will. It’s why we what be seen. June, pandemic economists, take what where happening. a in the from range, nimble stabilized. can of channel, happened things of not and kind certainly through point, terms And where today and are today. it’s going years. think roadmap to And look about I I period, able taught but if adjust are we go I we we little got feel and kind we of seen we this we and through account XX going product obviously of a And the have now, through down go feel and we then to took we to input are us kind if But of the we have this. not like into it, plan. a as step to right think at I guess And been We need like economy am will at to anything, Brent. that goes, this be as I this where we at at in prudent And it’s think we we we But as prudent have wider most Eddie it’s bit that

So, watching be it will we closely. very

registrations we You got data. know it we and because new daily watch household

we planned good the We closely. on plan well, that products and to of And seeing coming adjust have way if course, the new what the need along we are like and as we year. but we in based will, this watching that been a then have feel very is we

Eddie Lazarus

low-single digits. fact the fourth July, were And show August, And that the low-double digits. for very heartened is we were Certainly about September, have in the up question put and monthly some no we the year, I and mentioned, humility investor data in were quarter. registration by around were this But low-single deck we which did trends we we I think data, is digits. do it. There some up up additional actually, into see we we that. In did also

have this the amount of have things going really the in got. year go been saying stabilized into didn’t as over over those were that bit take did on to we a So, we particular We they numbers, business. in have information confidence but again, give joy that us and just little we a of

Patrick Spence

believe this Brent, portfolio given our product be thing, share we as in in the this period, now we And period other is what we the seen one share that last over right that roadmap, over the can given have one position, as well. taking the we months have the the from planned that other four we our and have we factor think this brand products data through market and

we so that. And seen have

that. building do. to portfolio continue be more we think have, have why It’s we expect focused that’s been able of We we to the do something are that we to to certainly to going I have, plan the brand and on

Brent Thill

follow-up on know you channel, quick was I a mentioned it just down. direct-to-consumer And the

on a But the of got making been more understand have lot It the there some you just incredible Sonos runway for you higher some buyer. customer. through direct-to-consumer progress initiatives the You and you what have pushing really there opportunity a an take is side? like take talk the it to installed. factors. that Can are is that to Sub good you seems Thank as feels like and

Patrick Spence

the then customers It’s, well on right have make tools we as understand and are in we Yes. and investing better. today the really basis based to that give sure customer individualized better they we that their kind each and more our systems on the and can of experience know target what a products make offer will

making through our uncertainty got to and obviously, in and drive the macroeconomic more with But team go say time, more us we able we would to that mean over know, will And I have channels now. for over systems in I channel think team systems, to that should sure. been as – that, be growth success help have that as DTC in we in I you I so in I And for those been And have we right all channel. able investments do growth But us that we should have in place tools think that offers. the be of have that it. time, investing to expect we drive be the these and set our able these make up

Eddie Lazarus

Yes. up Pretty we X XX%-something. tough were right. ago, years comps,

more dip little we Patrick so continue year, able for as much the did have bit, so said, world. XX%. being very hopes opened much because DTC. I to a up But It around that’s we high to think but were retail up, really last grow in is

Brent Thill

Thank gentlemen. you,

Patrick Spence

Brent. Thanks

Operator

next Tom of your will to Davidson. turn question, we Forte For D.A.

Tom Forte

Thanks. Great.

three more me. quick Just for relatively ones

the first impact think your locally price strong to U.S. of one, we dollar? should about So, ability offset how to the

Eddie Lazarus

XXXX. September the at we to, want be careful always as double to not we dipping But a going given look headwinds. just price, especially are So, take too FX of aggressively. about course, in did reminder, we price And

announce but that. And holidays, will something we so revisit the after we that’s have on nothing to

Tom Forte

was about I more. you touched little a talk this but on sort your hoping remarks, then And prepared can in Great. of you

out reportedly has their the environment? how vantage competitors hardware diversified scale hardware changed models over unit. in past point, landscape And our macro its more current possible staff given year? business competitive your So, laying the efforts with that companies the challenging From back may it is

Patrick Spence

for had Yes. get rumors strategic we Patrick. and right, this on using hardware that been been people’s the do kind has that it’s that top into potential obviously, been I think have have companies as layer panned about they space – there other and to Tom, services know purposes and in money a of to ideas of that reasons, there that other homes way out. has haven’t other some

hardware do to. the you general. to we is been space so companies sanity, I think something And path scrambling around on be And to I that profitable the quite growth that you have to think see in sustainable will frankly, all more now see return able get

already to in to So, But right always have I invest invest continue that like we I actually It’s continue in R&D, keep an DNA. to it’s to and we that start additional do use that on. product come new why we take in as well time stronger important the something believe now because can fact to discipline to have working our and this place it we get stronger more of of and opportunity. out enter discipline, as after can fearful, and go of are from categories others it categories a can we is

one-off do and in and more setting us opportunity for so Sonos see this And I growth ‘XX. as for ‘XX even up period

Tom Forte

Alright. Excellent.

last promise. I question, So,

relationship I newer when of important housing your to they starts and move think some because are consumers between this I one about products though, should when their maybe how new homes investors sales versus investors move? think think because is the so misunderstand unable the remodel they sales,

Eddie Lazarus

have at remodeling at hang is the up. the I say But at housing hit, the sales just you down right movement the housing moment. the is and for captured would time, starts same

the encouraged you They remodel have a they are talk market. seeing healthy you sort orders. in which when really our that so a of are backlog they handles that And very of to channel, find what thing, IS by lot of

itself, in the housing balance and And in in because of we slowdown the housing market that channel, shape. so good starts we the in notwithstanding temporary think are

Patrick Spence

your sound homeowners out of perfect able in and even an an people better house And and last those way areas all pretty is in as be make systems couple other of thing right, price the and kind this a those and outfitted place, way to after years with of Sonos attainable back make have. pressures of their the is all to certainly, that yet their a if in new your given those things. the we of then haven’t there better maybe And to to points home the especially reduce is things house travel really Yes. investing from kind little go attainable swing

Tom Forte

Eddie. Thanks Thanks Great. Patrick.

Patrick Spence

Tom. Thanks

Operator

we have At this further questions. time, no

Patrick Spence

you talking Take Great. care. Thanks call Paul. today. February. in forward everybody for the joining Appreciate it. And thanks We look to to again

Operator

event. conclude Thank you today’s today’s for your participation This in does conference.

disconnect. now may You

Sonos (SONO) 17 Nov 222022 Q4 Earnings call transcript