Sonos, Inc. (Nasdaq: SONO) today reported fourth quarter and fiscal 2022 results
SANTA BARBARA, Calif.--(BUSINESS WIRE)--Nov 16, 2022--
Sonos, Inc. (Nasdaq: SONO) today reported fourth quarter and fiscal 2022 results.
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Fiscal 2022 Financial Highlights (unaudited)
Non-GAAP net income 1 of $165.9 million compared to $248.3 million last year
Non-GAAP diluted EPS 1 of $1.20 compared to $1.77 last year
Adjusted EBITDA of $226.5 million compared to $278.6 million last year
Adjusted EBITDA margin of 12.9% compared to 16.2% last year
Free cash flow of $(74.5) million. Cash flows (used) in operating activities of $28.3 million
Fourth Quarter 2022 Financial Highlights (unaudited)
Non-GAAP net (loss) 1 of $(40.4) million compared to non-GAAP net income of $11.8 million last year
Non-GAAP diluted (loss) per share 1 of $(0.32) compared to $0.08 last year
Adjusted EBITDA of $(25.6) million compared to $17.1 million last year
Adjusted EBITDA margin of (8.1%) compared to 4.8% last year
Free cash flow of $(125.2) million. Cash flows (used) in operating activities of $103.9 million
Notes: 1 Non-GAAP net income/EPS and non-GAAP net (loss)/(loss) per share exclude stock-based compensation and legal and transaction related fees. See “Use of Non-GAAP Measures” and reconciliations to GAAP measures below.
“The macroeconomic backdrop became significantly more challenging in Fiscal 2022 and I am proud of our team's tremendous efforts to deliver our 17th consecutive year of revenue growth. We grew the team to build on our leadership in existing categories, and pursue four additional categories, to ultimately capture more of the $96 billion global audio market. We were pleased to see trends stabilize in Q4, and head into the holidays with a good early response to our latest product, Sub Mini, and our healthiest in-stock inventory position in three years,” said Patrick Spence, CEO of Sonos.
Mr. Spence continued, “We will remain disciplined as we invest in the year ahead, and will take all necessary steps to protect the health of the business. My conviction in the long-term potential of Sonos has never been stronger. As these headwinds subside, I am confident that we will return to double-digit revenue growth.”
Sonos today announced that Eddie Lazarus, the Company’s interim Chief Financial Officer and Chief Legal Officer, has been appointed as Chief Financial Officer of the Company. A search will commence for a General Counsel who will assume the day-to-day responsibilities of the legal organization, reporting to Mr. Lazarus.
“Eddie has seamlessly transitioned into his expanded role and made an immediate impact on the organization,” said Mr. Spence. “I am confident that under his leadership we will execute on our strategic priorities, drive greater organizational efficiency and make continued progress toward delivering on our long term financial targets.”
Fiscal 2022 Company Highlights (unaudited)
Direct-to-consumer (DTC) revenue decreased 5% and represented 23% of total revenue
New disclosure: Installer Solutions (IS) revenue increased 28% and represented 21% of total revenue
New Stock Repurchase Program
Expansion of our Ecosystem
Mayht - Acquisition Announced April 2022: Mayht is a Netherlands-based company that has invented a new, revolutionary approach to audio transducers. Transducers are the foundational element within speakers that create sound, and Mayht has re-engineered them to enable smaller and lighter form factors while producing exceptional sound.
Sonos Voice Control - May 2022: The first voice experience created purely for listening on Sonos. Designed with privacy at its core, Sonos Voice Control is the simplest way to control your music, offering complete command of your Sonos system using only your voice.
Sonos Ray - June 2022 - $279 MSRP: Our entry-level, smart soundbar for TV, music and more.
Sub Mini - September 2022 - $429 MSRP: The wireless subwoofer that sets a new standard in its category for powerful, balanced bass. Building on the award-winning design of Sub, Sub Mini delivers rich, clear low end in a more compact, cylindrical design.
Expansion of our Brand
LFC delivered TV viewership of over 270M in Season 1/ FY22.
ESPN delivered 205M impressions in its first season.
Food52, a platform with a large female following, delivered more than 28M impressions by the end of FY22
For the launch of Roam Colors, more than 170 advocates in the outdoor, travel and wellness spaces delivered inspiring video content showcasing how they Feel More with Sonos, resulting in more than 70M impressions in FY22
Responsibility and Innovation
Recognized as one of the best places to work for LGBTQ+ equality by the Human Rights Campaign (HRC) Foundation.
Publishing annual Listen Better Report on November 29th, highlighting the work we have done to improve our efforts as a responsible company. In FY22, we advanced our Climate Action Plan by conducting an annual assessment of our greenhouse gas emissions.
Won two awards for our product packaging. First-place in 2022 Dieline Awards under the electronics, office, e-commerce, entertainment and self-promo category, and Industrial Designers Society of America IDEA 2022 Jury Chair Award for Sonos Global Packaging System.
Won CIO 100 award for “IT in a Box.”
Supplemental Earnings Presentation
Conference Call, Webcast and Transcript
The company will host a webcast of its conference call and Q&A related to its fourth quarter and fiscal 2022 results on November 16, 2022, at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). Participants may access the live webcast in listen-only mode on the Sonos investor relations website at https://investors.sonos.com/news-and-events/default.aspx.
The conference call may also be accessed by dialing (888) 330-2454 with conference ID 8641747. Participants outside the U.S. can access the call by dialing (240) 789-2714 using the same conference ID.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(unaudited, in thousands, except share and per share amounts)
General and administrative
Other income (expense), net
Other income (expense), net
Total other income (expense), net
Income (loss) before provision for (benefit from) income taxes
Provision for (benefit from) income taxes
Net income (loss) attributable to common stockholders:
Net income (loss) per share attributable to common stockholders:
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders:
Total comprehensive income (loss)
Change in foreign currency translation adjustment
Comprehensive income (loss)
Consolidated Balance Sheets
(unaudited, dollars in thousands, except par values)
Cash and cash equivalents
Accounts receivable, net of allowances
Prepaids and other current assets
Property and equipment, net
Operating lease right-of-use assets
In-process research and development
Liabilities and stockholders’ equity
Deferred revenue, current
Other current liabilities
Total current liabilities
Operating lease liabilities, noncurrent
Deferred revenue, noncurrent
Other noncurrent liabilities
Common stock, $0.001 par value
Additional paid-in capital
Accumulated other comprehensive loss
Total stockholders’ equity
Total liabilities and stockholders’ equity
Consolidated Statements of Cash Flows
(unaudited, dollars in thousands)
Cash flows from operating activities
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization
Impairment and abandonment
Stock-based compensation expense
Foreign currency transaction (gain) loss
Changes in operating assets and liabilities:
Accounts payable and accrued expenses
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchases of property and equipment, intangible and other assets
Cash paid for acquisitions, net of acquired cash
Net cash used in investing activities
Cash flows from financing activities
Payments for debt issuance costs
Proceeds from exercise of stock options
Payments for repurchase of common stock
Payments for repurchase of common stock related to shares withheld for tax in connection with vesting of restricted stock units
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents
Cash paid for taxes, net of refunds
Cash paid for amounts included in the measurement of lease liabilities
Supplemental disclosure of non-cash investing and financing activities
Purchases of property and equipment in accounts payable and accrued expenses
Right-of-use assets obtained in exchange for new operating lease liabilities
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(unaudited, dollars in thousands except percentages)
Depreciation and amortization
Stock-based compensation expense
Other (income) expense, net
Provision for (benefit from) income taxes
Restructuring and related expenses(1)
Legal and transaction related costs(2)
Restructuring and related expenses for the twelve months ended October 2, 2021, include a gain of $2.8 million, related to our negotiation for the early termination of a facility lease that was part of the 2020 restructuring plan. The gain represents the difference between the related operating lease liability and previously accrued restructuring expenses versus the early termination payment.
Legal and transaction related costs consist of expenses related to our intellectual property litigation against Alphabet Inc. and Google LLC as well as legal and transaction costs associated with our acquisition activity, which we do not consider representative of our underlying operating performance. Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)
(unaudited, in thousands, except share and per share amounts)
Reconciliation of GAAP net income (loss)
Stock-based compensation expense
Restructuring and related expenses
Legal and transaction related costs
Non-GAAP net income (loss)
Reconciliation of net income (loss) per share
GAAP net income (loss) per share, diluted
Non-GAAP adjustments to net income (loss) per share
Non-GAAP net income (loss) per share, diluted
Weighted-average shares used in GAAP and non-GAAP per share calculation, diluted
Note: Certain figures may not sum due to rounding
Reconciliation of Cash Flows Provided by (Used in) Operating Activities to Free Cash Flow
(unaudited, dollars in thousands)
Cash flows provided by (used in) operating activities
Less: Purchases of property and equipment, intangible and other assets
Revenue by Product Category
(unaudited, dollars in thousands)
Partner products and other revenue
Revenue by Geographical Region
(unaudited, dollars in thousands)
Europe, Middle East and Africa
(unaudited, dollars in thousands)
General and administrative
Total stock-based compensation expense
We have provided in this press release financial information that has not been prepared in accordance with generally accepted accounting principles (“U.S. GAAP”), including adjusted EBITDA, adjusted EBITDA margin, free cash flow, net income (loss) excluding stock-based compensation and legal and transaction related fees and diluted earnings (loss) per share excluding stock-based compensation and legal and transaction related fees. These non-GAAP financial measures are not based on any standardized methodology prescribed by U.S. GAAP and are not necessarily comparable to similarly titled measures presented by other companies. We use these non-GAAP financial measures to evaluate our operating performance and trends and make planning decisions. We believe that these non-GAAP financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses and other items that we exclude in these non-GAAP financial measures. Accordingly, we believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects and allowing for greater transparency with respect to a key financial metric used by our management in its financial and operational decision-making. Non-GAAP financial measures should not be considered in isolation of, or as an alternative to, measures prepared in accordance with U.S. GAAP. Investors are encouraged to review the reconciliation of these financial measures to their nearest U.S. GAAP financial equivalents provided in the financial statement tables above. We define adjusted EBITDA as net income adjusted to exclude the impact of depreciation, stock-based compensation expense, interest income, interest expense, other income (expense), income taxes and other items that we do not consider representative of our underlying operating performance. We define adjusted EBITDA margin as adjusted EBITDA divided by revenue. We define free cash flow as net cash from operations less purchases of property and equipment and intangible and other assets. We calculate non-GAAP net income (loss) excluding stock-based compensation and legal and transaction related fees as net income (loss) less stock-based compensation and legal and transaction related fees. We calculate non-GAAP diluted earnings (loss) per share excluding stock-based compensation and legal and transaction related fees as net income (loss) less stock-based compensation and legal and transaction related fees divided by our number of shares at fiscal year end. We calculate constant currency growth percentages by translating our prior period financial results using the current period average currency exchange rates and comparing these amounts to our current period reported results. We do not provide a reconciliation of forward-looking non-GAAP financial measures to their comparable GAAP financial measures because we cannot do so without unreasonable effort due to unavailability of information needed to calculate reconciling items and due to the variability, complexity and limited visibility of the adjusting items that would be excluded from the non-GAAP financial measures in future periods. When planning, forecasting and analyzing future periods, we do so primarily on a non-GAAP basis without preparing a GAAP analysis as that would require estimates for items such as stock-based compensation, which is inherently difficult to predict with reasonable accuracy. Stock-based compensation expense is difficult to estimate because it depends on our future hiring and retention needs, as well as the future fair market value of our common stock, all of which are difficult to predict and subject to constant change. In addition, for purposes of setting annual guidance, it would be difficult to quantify stock-based compensation expense for the year with reasonable accuracy in the current quarter. As a result, we do not believe that a GAAP reconciliation would provide meaningful supplemental information about our outlook.
Forward Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding our outlook for the fiscal year ending September 30, 2023, our long-term outlook, our long-term focus, financial, growth and business strategies and opportunities, growth metrics and targets, our business model, new products, services and partnerships, profitability and gross margins, market growth and our market share, the macroeconomic environment and our ability to weather it, and other factors affecting variability in our financial results. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors, including, but not limited to the duration and impact of the COVID-19 pandemic and related mitigation efforts on our industry and our supply chain; supply chain challenges, including shipping and logistics challenges, component supply-related challenges and inflationary pressures; our ability to effectively manage inventory levels, particularly during periods of fluctuating component availability; the impact of global economic, market and political events, including the continuing conflict between Russia and Ukraine, foreign currency exchange fluctuations and inflation; changes in consumer income and overall consumer spending as a result of economic or political uncertainty; changes in consumer spending patterns; our ability to successfully introduce new products and services and maintain or expand the success of our existing products; the success of our efforts to expand our direct-to-consumer channel; the success of our financial, growth and business strategies; our ability to meet product demand and manage any product availability delays; and the other risk factors set forth under the caption “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended July 2, 2022 and our other filings filed with the Securities and Exchange Commission (the “SEC”), copies of which are available free of charge at the SEC’s website at www.sec.gov or upon request from our investor relations department. All forward-looking statements herein reflect our opinions only as of the date of this press release, and we undertake no obligation, and expressly disclaim any obligation, to update forward-looking statements herein in light of new information or future events. Sonos and Sonos product names are trademarks or registered trademarks of Sonos, Inc. All other product names and services may be trademarks or service marks of their respective owners.
Sonos (Nasdaq: SONO) is one of the world’s leading sound experience brands. As the inventor of multi-room wireless home audio, Sonos’ innovation helps the world listen better by giving people access to the content they love and allowing them to control it however they choose. Known for delivering an unparalleled sound experience, thoughtful home design aesthetic, simplicity of use and an open platform, Sonos makes the breadth of audio content available to anyone. Sonos is headquartered in Santa Barbara, California. Learn more at www.sonos.com.
CONTACT: Investor Contact
KEYWORD: CALIFORNIA UNITED STATES NORTH AMERICA
INDUSTRY KEYWORD: MOBILE/WIRELESS TECHNOLOGY OFFICE PRODUCTS SPECIALTY SOFTWARE HOME GOODS AUDIO/VIDEO HARDWARE RETAIL CONSUMER ELECTRONICS
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PUB: 11/16/2022 04:05 PM/DISC: 11/16/2022 04:06 PM
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