SONO - Earnings call 4 2023

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Operator

Good afternoon. My name is Krista, and I'll be your conference operator today. At this time, I would like to welcome everyone to Sonos Fourth Quarter and Fiscal 2023 Conference Call. [Operator Instructions]. I will now like to turn the conference over to James Baglanis, Head of Investor Relations. begin. may you James,

James Baglanis

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

joined early, Country. those from music sampling today's is Day who For new station, Sonos Lazy hold a our Radio the call HD exclusive

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

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

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

turn to which over our is As I Investor posted a like our reminder, that to we earnings on portions note contains our available and transcript investor Relations call now the certain of earnings Investor investors.sonos.com. Relations an Patrick. call supplemental to have press would will also presentation. release, for conference presentation the website, I website, supplemental presentation separately convenience,

Patrick Spence

of adjusted was our fiscal or was hello, of guidance exchange X% came and today, our excluding $X.XX Revenue down we results, $XXX QX midpoint billion for EBITDA line in you, James, which everyone. with and revenue X% EBITDA. Earlier the foreign Thank adjusted and and in roughly down XXXX million. announced year-over-year

loyal it While to more a play play our base, we've in discounts throughout countries year positions customer year. good that the competitors challenging of than competitors, news is we brand resilient is categories business we many strong our share was in despite market which thanks The the today. the our offering and our deep strong retained in

In in recorded and fact, States theater portfolio since of both Germany XXXX. our United product our we execution market This of this year our testament a highest share and home is the the team. the strength brand, our to in

a consumption we when down be home home the of and trends joy it eventually, going too enduring content. to strong help audio, of touring cycle will secular Work so return. and our as of consumers phenomenon There an will an increased to home from the remains We of is term. video of and attest know part business culture. business thriving success over music are the essential in the that long part brings Swift our And Taylor be Beyonce comes and we're know drive that will

this. of all from benefits Sonos

to we right fiscal our footprint. I come. contributions XXXX, ground in drive growth sales to sustainable mid-June across in again 'XX to expense the level three we for successful towards we is once confident high We any reduced changes estate that our investing We profitable a hit product when both necessary make marketing, make and am running, in years we're have executives achieve driving incremental conducted they fiscal They've I that our and at Sonos. expectations are key count base highly appointed difficult limit In growth. head will the plan the to initiatives proved X% to future objectives, and leadership and rightsize at to to real made the strictly our the and growth substantially reduction will decision growth. that willing roles force long-term

for we best, importantly, product doing is Most focused do on producing innovate the so introductions X, products. move is This competition. our the often This speaker all-in-one with great Sonos earlier further X confident we that over the in the picking And on Move out launched the easiest market. stage, are decision by customers agree. expectations great stereo sound Sonos raising a the and purchase, we of and competition customer's were from base importance Driven improved the products world. ahead one speakers We X.X the are AR sonos.com. why on it of stars fidelity existing rated launched are new best had new of already deeper in Move over year's immense to is critical further XX-hour the expanded lead the a competition benefit and this we and is these we primarily story our what first the a X ourselves by battery our we of life. in market two is continue Sales that higher separate our to which products premium bar is ensure It categories, but portable year. similar and the

drive and best consumer down future. point the put the revenue fiscal a ARXXX. our [ come, growth Dolby ARXXX be damper The cycle the for market will in on strength but magazine they these from brand entry-level the all-in-one best-in-class they to category ARXXX XXXX. into XXXX, one price inventions spending products speaker Time and years best-in-class well in discretionary with and will best at Atmos named recently in of the the have the ], We with an of

our to there. we take consumer pieces why electronics virtually start key company from fiscal a every I like the different new out would to the are we year, reintroduce moment As Sonos, of other

to with They growing stores partner consistently our and to generate We system. launches. flock to preorder have new ardent Sonos new our They products. and from to our custom products they for purchase as who direct-to-consumer retail base products. sonos.com. their buzz and being their test installed mouth the their a most of large their by friends fit praises one product our additional our homes to And growth. household to top supporters ask of our importantly, our channel, Sonos evidenced eagerly of family They They local purchase expand sing contributors word installers

years. Our cohorts products an new over acquisition both at base is those year, over of installed our over years, make within to steady purchases by homes the In customers average recent business X-year window, layer installed of of that driven and last have acquired a repurchased enter relatively base cake a continue new the our X.X time. a additional who Each of subsequent is loyal customers our X/X households our by customers and started have with clip. XX products

cohorts, behavior on As that that of Page tremendous pre-COVID more to recent years introductions. consistent of We presentation. indications early opportunity continue the marketing even the their is via investor we participation illustrated drive cohorts new product to deck XX on efforts are to and XX Page have of see which age, and higher earnings the repurchase

in increased of price revenue the prior sold. across household per why fiscal grow consistent our per X.XX and the through steady we we favorable end product X.XX year. generate up products average from behavior the at XXXX, to is Simultaneously, mix, saw which we've optimization is base installed This product

We across cohorts continue. expect trend lifetime this our value greater to driving of

that product discussed As we range our $X household gives average today, the to in in targets. single X installed converting our our base to whereas and into the highlights have billion starting noted Sonos opportunity of confidence deliver our product to our of have households our we multiproduct multiproduct household single are ability monetize products. size X.X long represents products install past, the every households We're XX% previously now. to the eventually further average for estimate on have X we households long-term revenue We get has household. This to financial runway a

control this demand have XXXX we of markets. we consumer assumption of households to that quarter market market. our [indiscernible] $XXX the be inner Obviously, fiscal will we the bringing built global just To can a in our Today, plan control products core are share conditions saw with persist. we we X% have the prudent, the the X% and billion the affecting categories, but weak cannot we

we So efforts concentrated what have our on. that's

fiscal be different. over XXXX will year fiscal of year will the As few demonstrate This the past in the was I and a the said, raising development of XXXX research categories. existing a bar of years. the beginning investments our cycle, made marks which in we've payoff product multiyear

new product a we In the exciting second half. that excite revenue. of second All this in product new with offerings, we over of year a the complement expect a accounting current in new launching this generate major for will our immediate customers large told, the from drive category product million year, to $XXX multibillion-dollar and will portion this be introductions half revenue

be believe Our expectation far billion been of our the This in at categories downswing normal the the yet can end. company given billion XXXX short have midpoint. we $X.X is we of in that rate in a and at But its not be we is times. effectively prudent what is this post-pandemic may growth cycle flat that between for to revenue $X.X believe our for fiscal

road relentless innovation, and tech, time, my expect As execution fully growth. on to will result map I've in product revenue that an normalize times in consumer lived through XX we in low in will years returning our us exciting multiple behavior and focus double-digit

range annual in XX.X%. shortly. have fiscal guidance but improvement and sight return XXXX, XXXX short expect in to our Eddie we be also to margin target fell to gross our in We discuss are wanted We midpoint which where GAAP to line setting of will of at XXXX fiscal fiscal and we

to and drive as margin We adjusting this expenses will be year. necessary expansion monitoring some

except step taken flat employees receiving small We already this year, of the number promotions. a extraordinary for salaries holding of have

services and this will balance continue revenue work down the We constrained investments deliver that to and the prioritizing years. to have new following the environment and expansion a yield significant been in and with costs year products margin will between

the to to our be at flat target XX% midpoint. guidance, together, more XX% million will margin points swift EBITDA adjusted up revenue environment, midpoint XX progress towards make of adjusted targeting basis we are all XX%, $XXX is for our it a margins. fiscal we we at guidance of from return XXXX the normalized a Bringing Once EBITDA to of demand of despite which

of navigate single importance dilution strong no and cash more count. this As repurchasing shareholders a to $XX debt. million returning quarter. do is to ever so million share mitigating in $XXX recognize the done than we capital that balance We after challenging QX And we have than a sheet, with more of in of we stock and environment, our

that Directors pleased announce end, million $XXX repurchase To new to Board I'm a our program. of that authorized has share

us fiscal continue and M&A in between returning at shareholders strategy road these will capital. that use of XXXX. drive bounced and We ahead We continue of and growth. a XXXX accelerate years an believe repurchasing our our so allocation to have a pursue great fiscal capital exciting cash capital do few improved expect profitable levels and opportunistic organic to is to stock map We in generation investment, to to

In is long-term commitment what closing, both I to we bottom laser-focused control, and want we are on our growth. top that to can drive line reiterate and

will We as the years year 'XX footing, growth with normalize. investments and this will later over new The share have this our our regain in are categories, a remains R&D to and 'XX the enter growth see as improves should economic ability our the excited to pay our proactive and significantly we to will large, conditions capital begin as continue more categories and our are disproportionate ahead allocation accelerate year. positioning only drive off last we company measures capture several to take. you fiscal opportunity fiscal and in their and to accelerating

our I in that have over will our for value shareholders drive plans certainly the term, long While turn short the confidence term. great

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

Edward Lazarus

everyone. Thank you, and Patrick, hello,

following things: finished the work pandemic. demand first, softening our characterized we three categories economic observed, the consumer transitions as through year in we by Patrick As

our And a focus third, lineup demand softer years serve environment. product costs come. on important for the to improvement that Second, in us will to tight match

decline year-over-year Turning the currency a and X.X% X.X% reported. numbers. revenues billion, constant to fiscal XXXX $X.XX were of

to sales and per that as year-over-year. retailer between channel DTC flowed reflects Products our installer our channels our sold, declined geographies represents products the due a and saw by us basis mix, two across that sold. puts season. X% installers a price adjusted year-over-year. X% to was offset Product portion EBIT. we significant promotional product headwind product gross the increase on exchange position demand, these and percentage revenue variance channels. sold which and and healthy FX reduce we a million favorable some reflect The consumer reduction in both grew a revenue and to This by retailers figures inventory which to Foreign channel across of than regerations, increase $XX activity revenue and profit X% reduction whereas resulted in through the headwind and inventory headwinds. declined more holiday a partially This increased enter increases in channel from levels

varies slightly unbroken revenue we the streak on By those year-over-year the Americas APAC, XXXX. Americas which in regional run rate affecting year difficult XX% went The a of XX% the EMEA public softer both Performance registration and significantly environment every impacted year-over-year. in Revenue up trend. in sell-in increasing which retailer contrast, reflects our declined the APAC basis. EMEA Americas continued in in was performance regions, macroeconomic revenue in and to relative particularly since and

and On business X% includes and basis, initiatives, XX% of and cumulatively channel a declined retail IKEA which other, sales. was other

As resilient. Solutions was DTC came previously particularly roughly year-over-year in at flat inventory. year, channel of APAC work challenged EMEA the dealers were sales. was and sales were XX% whereas noted, XX% X% of Americas our Installer the as declining more year-over-year down and

we inventory we to 'XX cleaner in with registration the much are FY 'XX calls, And a As we entering outpacing stock sell-in, out installed in FY on entered significantly called channel previous much position. channel. thanks too

was a provisions, lower FX air by component by to higher spot over basis points and point margin XXX return XXX basis freight costs, year-over-year. promotional of 'XX, GAAP basis partially Gross gross component and points purchases, activity down versus level normal price expense. impacted FY XX.X%, offset was margin a fewer of increases component XXX excess headwind

'XX XXXX. decline ongoing that adjusted by base map. road our number year-over-year below margin protect we approximately million, EBITDA profitability that $XXX or but stay payout can in the I providing a XX%, confident year's While of X.X%. 'XX our XX% of margin and into operating $XXX pieces in fiscal this mid-June. this driven into of account, spend year, and expense will is gross expense XX% range the was discuss FY our our fiscal bonus lower There level. Taking revenue. in margin were to product Adjusted while of including normalized the gross roughly for for margin target The our get further was midpoint I this X% RIF million of guidance, employees, that $XXX to revenue, XXXX. we impacting expenses this operating FY factors annual I estimate our a am would back flat program deferred guidance in was lower announced assumes to contraction these normalized moving gross base in investments expenses were note million Non-GAAP representing we

was driven of managing a $XXX $XX improvements, capital year-over-year. Free was result ended flow primarily cash This We by and year an from resulting $XXX working million, better million of cash focus inventory. with on debt. million no the our increase

year-over-year. proud our our inventory total $XXX balance team's the year Our goods million, XX% ended to balance finished sheet. at down I'm work of efforts down

we build Finished We we are the the XXXX. inventory XX% did holidays inventory million in balance fiscal carrying sequentially million, holidays. of our entering $XXX QX up were $XXX as than goods sheet, on into less

XX% Our component sequentially. million was $XX balance up of

owned to better balance in top discussed, managing improving As cash exit near inventory and we inventory a before conversion first the position. quarter to Further in previously sometime remains increase fiscal the a component year. peak an priority, expect even to reaching this and in we term expect our continue our

million of We repurchasing QX. our common authorization share of million an average for shares X of repurchase million X.X% per by $XX shares $XXX at representing completed price $XX.XX share, as outstanding

For our the X.X%. shares, $XX.XX year, rate million more X.X price for the than of an taking count year, full by million share shares a reduction average repurchased equity down we per share net X.X at our offset of basic which

remains new As managing Patrick high our repurchase $XXX Returning allocation announced mentioned, balanced capital to priority and dilution Board our capital a authorization. a shareholders framework. share million within

Americas with which the relatively in line year-over-year. now in our and the QX year-over-year, was demand. to Revenue increased $XXX.X $XXX X% million turning Revenue APAC for the softening of guidance, quickly before our million. guidance declined quarter. million of We due I'll expectations higher finally, range And by reported results. towards EMEA of to respectively, and X% in end recap $XXX XX%, to our revenues

component expense million, As we fill year-over-year. margin due XX%, X.X% related XXX but holiday lower QX, lower was $XXX.X results. is or RIF. sequentially challenging increased basis mid-June our of our season. at declined impact XXX QX. And of from below basis excess to contra year-over-year, in of due provisions. [ and operating and revenue Total regions points adjusted to dollars timing expenses. of slightly the operating channel quarter's non-GAAP on full to macroeconomic expectations, from million to our higher above million both gross ] primarily down noted climates see accrual our Gross last $XX of recognition bonus ahead points expectations decline select a due in QX went quarter, Adjusted profit and EBITDA X% by $X.X came we up the This

Now guidance. fiscal for our XXXX

X% which of XXXX. in the the roughly the will We we expect of new multibillion-dollar come of second will revenue more a low in of half we and of that that fiscal introductions in be product revenue share flat from lion's $XXX 'XX. at is category billion, million will decline high assumption guidance and the the new The entering midpoint. representing the than key a year-over-year billion FY generate range $X.X from year-over-year at end of X% at end $X.X this in Embedded to growth

timing differ with this of past launches first full revenue between to our years, associated we revenue. representing product of contribution, Because somewhere from expect XX% the the XX% our of shape their of year's new to and year the half

demand that guidance. Our recovery our guidance fiscal trends the drive persists QX assuming we end our would upside Any of throughout weak 'XX softened run of broadly rate in further. trends to the assumes 'XX, saw consumer somewhat with categories fiscal in low

of X% midpoint range and component the component We annual improvements purchases X% up expect fewer being gross XX%. XX% contributing We to back product growth. GAAP recovery into with in which to a dollars with year-over-year, provisions, margins midpoint favorable range excess reported the profit would target bring This a of mix, foresee gross flat in all XXXX. us implies fiscal in And to costs, our GAAP spot XX.X% component we the for lower XX.X%.

XXXX's GAAP was points over XXX impacted fiscal basis reminder, FX points of provisions. and XXX a As basis excess approximately gross by component of headwind margin

done continue make the will add gross to to as in it margin reconciliations. gross begun But have We model easier gross we margins business we our and non-GAAP past. to GAAP have GAAP to profit providing

is and to comp gross to approximately As of amortization a of margin stock-based such, $X million to XX.X% non-GAAP to XX.X% expected of GAAP cost due be intangibles allocated revenue.

EBITDA representing At EBITDA of XX% $XXX the range million, midpoint, be non-GAAP margin expected a up normalized is XX% X.X% million to expected adjusted a of expense approximately is $XXX XX.X%. revenue. $XXX Adjusted XX% decrease a to from million, XXXX. in the the be representing operating our expenses to in between of X.X% At $XXX fiscal base XXXX. margin, in from fiscal year-over-year midpoint, is of this and Non-GAAP to X% operating are million

as expense seek well savings. other cost initiatives as have underway We we out reduction relentlessly

count we benefit and our a limit mentioned incremental be period fruits strictly head ambitions. our us of hiring forward to significant will a enabling are harvest past growth investments, growth Patrick tied to future going As earlier, entering of to

event the to outlined profit the top that some through of EBITDA. we In tracking investment gross flow dollars adjusted ahead allow see and incremental we will expectations, line performance our to balance of

free time. providing for formal flow at guidance XXXX cash We in are not fiscal this

significantly expect to XXXX. the improve conversion do saw fiscal our we we from in XX% ratio However,

line revenue Sub the sequential in increase QX, we XXX% to with to sequentially XX% QX expect see of approximately that past XXXX a in factors a constraints, XXX%, for nonrecurring amount was significant by Note roughly launch the as by seasonality. observed that growth fiscal in driven to As cleared backlog including of of the quarter Mini. well related as was pass supply

QX to adjusted XX%. to in range for a guidance margin low operating to We million margin gross million to be $XX resulting our of the annual in sequentially, end of below GAAP expect mid-teens. by bit increase the We EBITDA expenses and XX% non-GAAP $XX

having already the the infringed setback awarding at district argument the the touch with disagree judge in on we speakers. five rejected Google the a volume our different the against the our suffered Google Last ruled patents judge note, of covering with against International and filed. Northern verdict with us [ finally, million she court of infringement for Google litigation a last on held would of Circuit litigation. already On be Google that Google's least, an Commission. Sonos the $XX.X And and they ruling the oral cross brought appeal against in control patents. made ITC the setup, the this ruling commission California. the appeal cases our ] Google's first valid and against the but to equalization District overturned comprehensively Federal of jewelry had not of briefly one appealed. When We week, administrative fees that a zone indicated in others we have and court We for case law positive that case from second Google smart synchronization, us Trade

but pending, process Angeles. on District in ends, Once patents Los case that Court will the our be we in to free based Federal damages the stayed these pursue is appeals

obtain on in that our on has will accountable and has a remain efforts innovations. infringing the prevail we investment ways hold ultimately road confident we handsome to go, we our will journey a defending that long our been for the While to patents our return Google and

speaks commend work our to their strong year. our our and team both strength the our It like their performance products. brand for through we everyone just continue about volumes the product a that despite else I'd able in all of share deeply were industry, discounting portfolio challenging up, to wrap To market

We and will quality. innovation drive continue to

in working and half we and the been to that that in we've of apart the that, second to times wait things on question. As year. good bad, it I'll sets you of show over us one can't With turn the

Operator

[Operator Instructions] the Your question comes Forte first from D.A. Tom Davidson. of line from

Thomas Forte

Great.

always. quick follow-up. the So Patrick you and thank questions two Eddie, initial thoughtful I have comments for as and quick then one

my in responding So your two sales you quick And are items. first are ones, how lower-priced your disproportionate for promotions? seeing numbers then to consumers

Edward Lazarus

So Tom, we're not the end. seeing at anything low special

has In up price this fact, went products year of well. before the up year-over-year, it average X% as the our and year, significantly sales gone

So the working And sorry. second we're me us. the remind for seeing premiumness is question,

Thomas Forte

Yes.

Howard... So [indiscernible] you thank for So the

Edward Lazarus

and that things there consumer was for computing of Yes, quarter, -- spending the one that guide and gross hit promotions. 'XX. overperformance taken Promotion. no the fourth seen definitely was looking that. We've in into our fiscal is that margin, the doubt for we've in There's just about account our

Thomas Forte

my what anything you else. gauge as data are housing then at points Great. question demand, future starts follow-up or And to such second looking

at. right points high-level I the demand challenge to try electronics data when to curious looking you're consumer I'm the now what everyone think determine for is returns.

Patrick Spence

business it. for prudent our our Yes. as we at think how Tom, We're about a you're year think look everybody. just challenge I go this mean, that right. cycle and about for what how being having is very in we through the now. planning we're channels, And exactly we're from hearing I been I

at. we -- things normalizing, want so looking our numbers. all And to results, 'XX And our we say actual to for assumed the it that we'd heard we've our in see at different probably same approach we environment points is as at going think our before would from change prudent -- us, I data we're the really and But will continue. to won't now in categories, or are look time, you perspective be our have in the on been see we that. that And until you seen start we something right that's

Operator

question of Frankel next Steve from Your the comes from line Rosenblatt.

Steven Frankel

could every for Are in backtrack terms just exactly what again minute. revenue saying you And year. QX you X just there you're -- the me guidance. Let remind of repeat saying me

Edward Lazarus

Right.

for of XX% expect revenue to to up from the typical we XXX%, which QX. -- and kind seasonality be is between QX, So sequentially QX, reflects QX

Steven Frankel

then And in what DTC with consumer drive Great. more terms doing on 'XX doing going Buy in your you given the partners are anything to inventory. and channel? your to Best like what's different of Are business Okay. contemplating

Patrick Spence

No. one on, with experiment what do thing do been is DTC. I trying through Steve, working we the our mean -- management we're -- we our relationship we've to the on customer

tap our trying that $X So into customers. to opportunity with billion existing

reach to experimenting We some these on out that trying of tap group and team into focused variety have things. a that is information and with a of and and offers

and occurring be to repurchase, will that during there the activities you try are accelerate year will. if there so And

large have existing we But drive opportunity with and retail things is say, our a growth those base. believe be to we with particularly as we're always we as channel, attempts to partners something well. and plan through and we'll there's go how continues usually it. would experiments there every our doing of there So those that in sales, we in each that drive share are some -- of DTC, might DTC partners that in to take our I learnings then And see with

certainly the So see trading one from we channel to other. off it don't as

Operator

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

Erik Woodring

accelerated. base expected down that and absolute an year, back, again important But if step to was maybe basis last year. flat still take of is be working kind and on grow flywheel year-over-year, metrics clear obviously Awesome. it's some right? a start next we of Patrick, your your installed You revenue them was saw

but how translating we maybe is two that? those The not into working, dynamics changes it's What question should my So together? growth. pay is flywheel

Patrick Spence

I XX% fact this And XX% gets it that in our position down overall share year-over-year. to the Yes. held is being sales to think also -- categories, we strong despite market a

well and as tons pretty consistently -- unpresented everything seen. and of from that discounting competition And that's throughout our so the year, with I've by

customers like where to And If fact of own can a and different hold have helps the continues an returning our electronics model because to purchase we existing this than in that helps most so us sure part is creates people company come anything, period. through that consumer make flywheel that, environment we that back. period this the in that that we with, can the revenue work work like

products, go plus will as we Eric, of be that both through front. into, into think categories the back combination that, revenue then, audio I perspective product new to we to And on where allow to a from consumers going think we're electronics overall I coming the want purchasing the us get to back

the focus meantime, will opportunities an people will customers going are new present that with more also we new going I the back in so when these know think to over seen look position how X also 'XX, upcycle at we periods. to. excellent we've going the going know, and categories We challenging I and to they that we're to had that having see And in those And years, in long on coming and purchase and what prudent a a it's those last customers, be back obviously we're now year. previous had and category, we we -- and cyclical, things the And to time into but are come of been be at we've do. for this one new given products

a will to position return And us things so growth. in combined to good I think those put

Erik Woodring

comment love that that then of awesome. expand Patrick, No, of multiyear is. also kind Would for Okay. believe to sitting product on you just why we're ahead you cycle. a you that's made And the

Patrick Spence

investments result a -- is last been that the few making years. we've really of the That's

four of I terms so at one, our went get time, for about we're fact go one to And is through opportunity new has immediate that the a term. The we more to year talked year long of going into big more We this build this that. year, was last in terms we'll last slow which business into but Pro, a benefits categories. one Sonos of us in which

good a those feel growth and categories position each have good we now to where in more ahead. we of we And able into in so new will years we're -- be coming, to entries like fiscal drive leverage

something we're we're material was map, and of model on going things what you and it's been help our will that felt about get but indication of a into in, we the the for know year get out quite but don't that on drive laying consistent basis, important it's as try investing something don't new tok to side year. we so And We about. growth road map feel that's to this we that like to to as entering difficult And excited we've an it it's for XXXX. obviously, be us very we to fiscal road we it's kind your category tic -- know every

Erik Woodring

just a And helpful. on quick That's maybe Okay. that. follow-up

shared necessarily that historically. product contribution type never You've of metric $XXX million new

Just curious how any past maybe the color if you can on years. compares that give us

be kind for this me. new of Just for to market help you that's product could gauge it us important you? And how truly and new believe

Patrick Spence

category. Thanks, Eric. This a is category multibillion-dollar

we're and great super So where timing, for base have has category of job. things. have it excited those about little terms we've The is doing been customer excited we a super the team been, what a all existing and of different Every planned. in we

so give we impact an idea year. could of kind people from wanted this they just the of And to expect

it to forward follow looking -- the we're category super as well. to and about excited and we have this ones so And

Operator

the of next Jason line Haas Your America. from question from comes Bank of

Jason Haas

if at litigation changes strategy if I'm have curious any future implications your this? will from if any court cases this on recent unfavorable it there's impact ruling all

Edward Lazarus

doesn't our the and It what doesn't bear bears adopted Northern case in fact is ruling we support he that bear brought legal doctrine that on -- are judge California strategy. simply a inaccurate. We that think that -- our to the to change the

so a that appeal. chance very have for strongly And appeal. feel intend we good to We we

in strategy. The be a It So big different in California court, involves our doesn't we'll otherwise it cases. case doesn't that fivecompletely also implications affect patents. for have different teeing next our other up damages

just patent. doctrinally terms in no either there's or So the of overlap in

steam full on strategy. ahead . So current we're just the

James Baglanis

And few are good I very That's been it's my mentioned, promotional. a hear. quarters from competitors talk you that you been you think coming have follow-up, share it. as as your to I'm where think could you Got if now, then about mentioned curious gains

So it's you see light up in share. to good picked of that

had coming where any sense of I'm just yes, if those are curious So from? you

Patrick Spence

particularly think to I a I a been Yes. I and would I theater mean, testament that's has say hope strong part, our portfolio.

You'll recall despite new introduced competitors home we in some of anything haven't theater so. the doing over year last our

so their things. at our and DTC making retail, loudly this of leveraging why -- it seen that we're product times, strong it We've challenging out our because the go-to-market up power are kind friends that by well. our speaks the I products family and quality and that been think clear customer see years. execution there, we've I quality base category great it others portfolio to So discount we better and in industry the power team have of model our we've to making And team even many XX believers of efforts Sonos then haven't it. the just think of in And like had sure speaks to the I so those products. around in than the that you of communications, about for across marketing, are And the our held

it And so XX great I strong product loyal base . years. a a innovative building over customer think from with portfolio comes

Operator

line Your next of from Capital Craig comes Column question Fuhrman the from Group. Alex

Alex Fuhrman

you to then be in seeing just something later came extension really the out? nice in fiscal customers new to going And think you're Or year. to of growth entering repeat plan a to see new more really Curious like customers? were and do if existing more expecting that's to bring number you owned appealing that strong natural the after about looks customer. as move this seeing It per that units that you category customers? new as customer you this on that's Do were metrics your helping thinking to

Patrick Spence

Alex. Thanks, Yes.

think strong bringing is have launch in for how I with every to say, product thing whatever categories, building move new. customers ultimately the with product strong we -- of in world. and that what we're is and existing that kind that is we product and expect so And we'd lots as out customers to existing purchasing always very maybe a I line pleased -- coming the would I'm the so what customers turn our products, existing certainly go And buy will and that of for in following these we enter expect follow multiple. from

then And products into build. expect we're Sonos what typically everything any new we to And on of bring customers through we working ecosystem. the time, over see that's help the that we that

quickly see product collection And trying have well. so kind phases know, of we'll we we we'll to you new. add And as and eye existing it, start things bring our both those have on as usually their to jump where to of life on the achieve then a it that in long

on So I think it very a works from perspective, well too. return investment

Operator

[Operator Norton the from Instructions] from James. comes your line next of question Jake Raymond

Unknown Analyst

should then get is for how I dollars click behind the up 'XX? And a customer to the fiscal velocity double -- and product marketing product or drive and product just is launches time awareness? we about internal wanted to further, number on Pro on what thinking Sonos when philosophy right think of

Patrick Spence

Yes.

leased it category. year our large why So we've out to we building. products think And as what multibillion-dollar as indication, we wanted some we're every year, no this that and about changes capturing is to we senior very give laid a

the to excited was the we're definitely little color is bar which year. Fiscal categories, story at of philosophy a raising a two about. categories least fiscal and on but to give in wanted I overall introduce existing products a year new 'XX So new remains trying every that, very entering of 'XX

doing for up our we things to we're as Sonos we've on if that to sign Pro it that and gas to right, good in in easier the continue we companies fire and can front, service. got in it that then make customers I IT side see that we be On the learn there. think able for we we're to from take And traction some that some today. do pour And

and for over that way more So how in thinking the kind Pro got about that, time. ideas of of lots do of exciting Sonos plans tuned we've stay we're so we

Operator

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

Unknown Analyst

deeper I This I pointed is start, David Two, know to and that competitors. for may. prior compared walk how quarter at Losberg years? your promotions level you just your Maybe to for you this guys of to holiday through on discounts expectations if promotion could Brent. have

season? this price thinking So just curious holiday how you're about competitive being on

Edward Lazarus

is mean season change interesting out on really to to opposed the moments putting going which So promotion we this I is a Monday philosophy, -- being holiday crucial Cyber and are some period. time. the all time and the as offerings But that. going the to in aren't quarter. promotional for Friday, our is during be very compelling component Black we that around

do to And again. practice, significant see but during so promoted we going I don't think from you're -- this will past departure period, so and a we've always

Unknown Analyst

guys litigation. what 'XX as XX% And to there this costs in the you Google last you transaction-related then that much up provide looks relates could it don't know which provide year, in like have from it visibility but expense like follow and I year, visibility that the here, to Is you you gas have that can think, is did maybe That's any primarily guys legal guys you Google it. the on how roughly I about look up, keep Got color into you related helpful. $XX to as litigation. or million

Edward Lazarus

was in lower. California, turned to the We went on to unusual had including we only would to very comparable an the two out which significantly We don't very Northern that multiple contested. had anything expect at which of it year, was forward, and be for ITC, the one Last we very, have map trials plus that for hotly trial prepare 'XX. year

. expect moment, expense to as would So at dramatically. I the at things stand the down very go least

Operator

further at I queue no Patrick Spence over to remarks. the closing this will in questions call have time. our We turn for now

Patrick Spence

And just from end. Thanks, my three Krista. quick things

product cycle. First, we of are beginning a the at multiyear

per have We product map road products far, a builds household you the seen per have that product. success growing and on thus revenue

starting the and enter of is the the real today continues enter one earnings fiscal new from of lifetime slides, in over we gets flywheel This half the to our the time. when our value we As data we turbocharged in with see build categories, cohort second you'll XXXX. cohorts released new

long. installed is our continue base very The to runway to monetize

Second, while our holding our environment market shows we challenging, that the remains share own. performance are

to to without product margin and way all enable the brand to having portfolio innovation, Our this us have. lead sacrifice our competitors continue category of

size on about return We to the We well to And headwinds finally, to lot don't objectives. to accelerate growth our see we more a as the to digits are feel a our normal low back growth people long-term deliver good categories need have of and we revenue these now. positioned double add team subside.

optimizing fiscal As we expense you our always base the deliver in XXXX, business from our managing and ensure profitable are actions saw growth. to will sustainable

to are have our look next Thank target XX%. a we and quarter. time, our EBITDA path We you of again to drive your we margins updating to XX% confident you for forward long-term to

Operator

and participation, may concludes This now today's call. Thank you you for your conference disconnect.

Sonos (SONO) 15 Nov 232023 Q4 Earnings call transcript