Sonos, Inc. · NASDAQ:SONO
Sonos — Q4 and FY2021 Earnings Presentation
29 slides from Sonos's earnings presentation, Nov 17, 2021
Slide 1: Q4 & Fiscal Year 2021 Financial Results
Q4 & Fiscal Year 2021 Financial Results November 17, 2021
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 1, 2022; our fiscal 2024 targets; our long-term focus; financial, growth; b
Slide 3: Fiscal Year 2021 Highlights
Fiscal Year 2021 ● Record Fiscal Year (FY) results driven by continued strong demand Highlights ● Record FY adjusted EBITDA margin of 16.2% driven by strong demand, opex leverage on higher sales, and gross margin expansion ● Record FY revenue of $1.717B, +29% from LY (+32% ex 53rd week LY) driven by
Slide 4: Expansion of our Offerings - FY21
Expansion of our Offerings - FY21 Sonos Radio HD - Launched November 2020 - $7.99/mo New ad-free, high-definition streaming tier. Sonos Radio HD features even more exclusive content directly in the Sonos app, now in lossless, CD-quality audio. Roam - Launched April 2021 - $179 MSRP The ultra-portable
Slide 5: Expansion of our Brand - FY21
Expansion of our Brand - FY21 Named to Fast Company’s Brands that Matter in 2021, a list that captures brands who are inspiring all of us, whether it be leading in pop culture or responding meaningfully to current events. First-ever sports team partnership with Liverpool Football Club, a multi-year
Slide 6: Delivering Operational Excellence - FY21
Delivering Operational Excellence - FY21 Continued strong execution delivering margin expansion and healthy top-line growth in fiscal 2021. Tremendous efforts of our team navigating a challenging supply chain and logistics environment. Included in Inc. Magazine’s first-ever list of the 250 Best-Led Com
Slide 7: Strong Financial Performance and Execution
Strong Financial Performance and Execution $1,717 47.2% NET REVENUE GROSS MARGIN +410 bps +29% $1,326 $1,261 43.0% 43.1% $1,137 41.8% FY2018 FY2019 FY2020 FY2021 FY2018 FY2019 FY2020 FY2021 $279 +157% $208 ADJUSTED EBITDA* FREE CASH FLOW* +61% $129 $109 $97 $89 $69 $(5) FY2018 FY2019 FY2020 FY2021 F
Slide 8: Q4 Highlights
Q4 Highlights
Slide 9: Record Q4 Revenue; Adjusted EBITDA Impacted by Supply Chain Dynamics and Investment
Record Q4 Revenue; Adjusted EBITDA Impacted by Industry-Wide Supply Chain Dynamics and Investment Q4 Revenue $359.5 $339.8 ● Revenue +14% ex 14th week LY (+6% reported) due to strong product demand and partially $294.2 offset by continued constrained product availability ● Adjusted EBITDA declined to
Slide 10: Gross Margin Impacted by Industry-Wide Supply Chain Dynamics
Gross Margin Impacted by Industry-Wide Gross Margin Gross Margin ex Tariff Supply Chain Dynamics Duties and Refunds Gross margin -110 bps Y/Y (ex tariffs -260 bps). Key drivers: ● $7M tariff refund; $4M tariff expense ● Increased component costs ● Ongoing higher industry-wide shipping and logistics cost
Slide 11: Opex Investments to Support Long-Term Growth
Opex Investments to Support Long-Term Growth Q421 Q420 Y/Y Change Research and Development (GAAP) $65.8 $54.8 20.1% Restructuring and related charges - 0.1 n/m ● Excluding restructuring and related charges Adjusted Research and Development (Non-GAAP) $65.8 $54.7 20.4% and legal and transaction relat
Slide 12: Fiscal Year 2021 Highlights
Fiscal Year 2021 Highlights
Slide 13: Strong Household Growth; Continued Expansion in Products per Household
Strong Household Growth; Continued Expansion in Products per Household FY21 FY20 Y/Y Change ● Ending FY2021 with 12.6M households, Total Households (cumulative - in millions) 12.6 10.9 15% +15% vs LY on top of 20% growth last year % Registrations to Existing Households 46% 41% Average Registrations
Slide 14: Demonstrating Significant Scale and Profitability
Demonstrating Significant Scale and Profitability FY Revenue $1,716.7 ● Revenue +29% to $1.717B; excluding $1,326.3 53rd week, revenue +32% $1,260.8 ● Adjusted EBITDA +157%; adjusted EBITDA margin +800 bps to record 16.2% driven by strong demand, opex leverage on higher sales, and gross margin expansi
Slide 15: Continued Strong Gross Margin Expansion
Continued Strong Gross Margin Expansion Gross Margin Gross Margin ex Tariffs Gross margin +410 bps (ex tariffs, gross margin +130 bps). Key drivers: ● $18.3M tariff refunds; $13.7M tariff expense ● Lower promotional discounts (LY included "At Home With Sonos" campaign) ● Product and material cost saving
Slide 16: Significant Opex Leverage on Higher Sales
Significant Opex Leverage on Higher Sales FY21 FY20 Y/Y Change Research and Development (GAAP) 230.1 214.7 7.2% Restructuring and related charges - 5.1 (99.5)% ● R&D +10% ex restructuring primarily Adjusted Research and Development (Non-GAAP) 230.1 209.6 9.8% driven by increased headcount, higher % o
Slide 17: Significant Cash Flow and Strong Balance Sheet
Significant Cash Flow and Strong Balance Sheet ● Cash flow from operations of $253M, FY21 FY20 Y/Y Change +56% from LY Cash flow from operations $253.2 $162.0 56% ● Free cash flow of $208M, Capital expenditures $45.5 $33.0 38% +61% from LY Capex % of revenue 2.7% 2.5% Free cash flow $207.7 $129.0 61% ● F
Slide 18: FY22 Outlook: Continued Strong Demand Offset by Supply Constraints
FY22 Outlook: Continued Strong Demand Offset by Supply Constraints FY21 Actuals FY22 Outlook Revenue $1.717 billion $1.925 billion - $2.0 billion % growth 29% 12% - 16% Gross Margin 47.2% 46 - 47% Adjusted EBITDA $278.6 million $280 million - $325 million Adjusted EBITDA Margin 16.2% 14.5% - 16.2% Ot
Slide 19: Our Strategic Initiatives
Our Strategic Expand Our Brand Initiatives Expand Our Offerings Drive Operational Excellence
Slide 20: Trends Fueling Our Growth
Trends Fueling Our Growth 1 2 3 The Golden Age Hollywood at Home The Great Reshuffling of Audio
Slide 21: Our Opportunity: Homes
Our Opportunity: Homes PLUS Geographic Expansion 349M Households in Core Markets1 116M Affluent ($75k+2) Households 12.6M Sonos FY21 Households Source: Euromonitor CY2020 - CY2021 report not yet available and using CY2020 market data. 1. Core Markets include the United States, Canada, Australia, Unite
Slide 22: Our Opportunity: Revenue
Our Opportunity: Revenue PLUS Audio content, services & business $89B Global Audio $25B Global Home Audio $18B Premium Global Home Audio $1.7B Sonos FY21 Revenue Source: Futuresource CY2020, Premium defined as $100+ wireless speakers, $200+ soundbars, $300+ Hi-Fi systems, $250+ in-wall/in-ceiling spe
Slide 23: Confidence in FY2024 Financial Targets
Confidence in FY2024 Financial Targets Revenue Gross Margin Adjusted EBITDA Margin ~13% 45-47% 15-18% CAGR
Slide 24: Appendix
Appendix
Slide 25: 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
Slide 26: Reconciliation of Net Income (Loss) to Adjusted EBITDA
Reconciliation of Net Income (Loss) to Adjusted EBITDA Three Months Ended Twelve Months Ended October 2, 2021 October 3, 2020 October 2, 2021 October 3, 2020 Net income (loss) ($8,744) $18,411 $158,595 ($20,115) Add (deduct): Depreciation and amortization 8,093 8,733 33,882 36,426 Stock-based compen
Slide 27: Gross Profit and Margin Excluding the Impact of Tariffs
Gross Profit and Margin Excluding the Impact of Tariffs Three Months Ended Twelve Months Ended October 2, 2021 October 3, 2020 October 2, 2021 October 3, 2020 Revenue $359,539 $339,837 $1,716,744 $1,326,328 Reported gross profit 166,931 161,536 809,994 571,956 Add/deduct: Tariffs, net of refunds (2,705)
Slide 28: Reconciliation of Cash Flows from Operating Activities to Free Cash Flow
Reconciliation of Cash Flows Provided by Operating Activities to Free Cash Flow Twelve Months Ended October 2, 2021 October 3, 2020 Cash flows provided by operating activities $253,226 $161,986 Less: purchases of property and equipment, intangible and other assets (45,531) (33,035) Free cash flow 207,
Slide 29: SONOS
SONOS