Sonos, Inc. · NASDAQ:SONO

Sonos — Q2 2021 Earnings Presentation

22 slides from Sonos's earnings presentation, May 12, 2021

  1. Slide 1: Q2 FY21 Financial Results

    Q2 FY21 Financial Results May 12, 2021

  2. Slide 2: Forward Looking Statements

    Forward Looking Statements This presentation contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding our outlook for the fiscal year ending October 2, 2021, our long-term focus, financial, growth, and business strategies a

  3. Slide 3: Q2 Highlights

    Q2 Highlights ● Record Q2 results driven by ability to fulfill strong demand ● Record Q2 adjusted EBITDA margin of 14.6% driven by significant gross margin expansion ● Record Q2 revenue of $332.9M, +90% from LY driven by strong product demand, annualizing the Y/Y declines in Q2 20, and strong DTC grow

  4. Slide 4: Record Q2 Profitability and Strong Revenue Growth

    Record Q2 Profitability and Strong Revenue Growth Q2 Revenue ● Revenue +90% due to strong demand, $332.9 continued success of new product intros, annualizing the Y/Y declines in Q2 20 (partner $210.2 inventory rebalancing / start of COVID-19 $175.1 pandemic LY), and strong DTC growth ● Adjusted EBITD

  5. Slide 5: Record Q2 Gross Margin

    Record Q2 Gross Margin Gross Margin Gross Margin ex Tariff Duties and Refunds Gross margin +810 bps Y/Y - key drivers: ● Lower promotional discounts (“At Home with Sonos” campaign accrual in Q2 LY) ● Reduction in tariff duties ● Mix shifts into higher margin products and channels ● Fixed cost leverage

  6. Slide 6: Strong Opex Leverage on Higher Sales

    Strong Opex Leverage on Higher Sales 2Q21 2Q20 Y/Y Change ● Drove significant opex leverage on the Research and Development (GAAP) $56.4 $49.6 13.7% higher sales base % of revenue 16.9% 28.3% (1,140 bps) ● Year-over-year increases in opex driven by Sales and Marketing (Non-GAAP) $57.2 $50.5 13.3% the

  7. Slide 7: Significant Cash Flow and Strong Balance Sheet

    Significant Cash Flow and Strong Balance Sheet ● Cash flow from operations of $176M, Y/Y +397% from LY YTD21 YTD20 Change Cash flow from operations $176.0 $35.4 397% ● Free cash flow of $156M, Capital expenditures $19.9 $25.8 -23% +1531% from LY % of revenue 2.0% 3.5% ● Free cash flow / adjusted EBITDA o

  8. Slide 8: FY21 Outlook

    FY21 Outlook

  9. Slide 9: FY21 Priorities

    FY21 ● Delivering innovative new products that both new and existing customers love - ie: Roam ● Services that enhance and further Priorities ● differentiate the customer experience - ie: Sonos Radio and Radio HD Strengthening our direct-to-consumer efforts ● Supporting our incredible partnerships ● A

  10. Slide 10: Raising FY21 Outlook: Strong Demand; Continued Adj. EBITDA Margin Expansion

    Raising FY21 Outlook: Strong Demand; Continued Adj. EBITDA Margin Expansion Initial FY21 Outlook Prior FY21 Outlook NEW FY21 OUTLOOK FY20 Actuals (provided at 4Q earnings) (provided at 1Q earnings) Adjusted EBITDA $108.5 million $170 - $205 million $195 - $225 million $225 - $250 million Adjusted EB

  11. Slide 11: Long-Term Opportunity

    Long-Term Opportunity

  12. Slide 12: Our Strategic Initiatives

    Our Strategic Expand Our Brand Initiatives Expand Our Offerings Drive Operational Excellence

  13. Slide 13: Trends Fueling Our Growth

    Trends Fueling Our Growth #1 #2 #3 The Golden Age Homes Becoming The Great of Audio Movie Theaters Reshuffling

  14. Slide 14: Our Opportunity: Homes

    Our Opportunity: Homes PLUS Geographic Expansion 349M Households in Core Markets1 ~9% Current Penetration of Target $75K+ Households in Core Markets2 116M Affluent ($75k+2) Households 11M Sonos FY20 Households Source: Euromonitor 1. Core Markets include the United States, Canada, Australia, United Kin

  15. Slide 15: Our Opportunity: Revenue

    Our Opportunity: Revenue PLUS Audio content, services & business $89B Global Audio ~7%Current Penetration of Premium Home Audio Market $25B Global Home Audio $18B Premium Global Home Audio $1.3B Sonos FY20 Revenue Source: Futuresource CY2020, Premium defined as $100+ wireless speakers, $200+ soundbar

  16. Slide 16: Our FY 2024 Financial Targets

    Our FY 2024 Financial Targets Revenue Gross Margin Adjusted EBITDA Margin $2.25B 45-47% 15-18%

  17. Slide 17: Appendix

    Appendix

  18. Slide 18: Non-GAAP Measures

    Non-GAAP Measures We have provided in this presentation financial information that has not been prepared in accordance with GAAP. 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

  19. Slide 19: Reconciliation of Net Income (Loss) to Adjusted EBITDA

    Reconciliation of Net Income (Loss) to Adjusted EBITDA Three Months Ended Six Months Ended April 3, 2021 March 28, 2020 April 3, 2021 March 28, 2020 Net income (loss) S17,221 ($52,320) $149,513 $18,454 Add (deduct): Depreciation and amortization 8,742 9,726 16,725 18,831 Stock-based compensation exp

  20. Slide 20: Gross Profit and Margin Excluding the Impact of Tariffs

    Gross Profit and Margin Excluding the Impact of Tariffs Three Months Ended Six Months Ended April 3, 2021 March 28, 2020 April 3, 2021 March 28, 2020 Revenue $332,949 $175,098 $978,532 $737,181 Reported gross profit 165,776 73,009 465,201 300,629 Add/deduct: Tariffs, net of refunds 1,940 6,269 (1,121) 2

  21. Slide 21: Reconciliation of Cash Flows Provided by Operating Activities to Free Cash Flow

    Reconciliation of Cash Flows Provided by Operating Activities to Free Cash Flow Six Months Ended April 3, 2021 March 28, 2020 Cash flows provided by operating activities $175,953 $35,368 Less: purchases of property and equipment and intangible assets (19,927) (25,800) Free cash flow 156,026 9,568 Note

  22. Slide 22: SONOS

    SONOS

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