Sonos, Inc. · NASDAQ:SONO
Sonos — Q4 FY2020 Earnings Presentation
28 slides from Sonos's earnings presentation, Nov 18, 2020
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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 an
Slide 3: FY20 Highlights
FY20 ● Record 10.6% fiscal 2020 adjusted EBITDA margin ex-tariffs and on track to deliver 12%-14% next year– Highlights ● ahead of prior targets 15th consecutive year of revenue growth fueled by demand for new products, with revenue +3% excluding 53rd week ● Record FY gross margin +370 bps ex-tariffs d
Slide 4: New Products Launched FY20
New Products Launched FY20 Arc - Launched June 2020 - $799 MSRP. Our premium smart soundbar that delivers our most immersive entertainment experience and sets a new standard for home theater sound. Five - Launched June 2020 - $499 MSRP. Our most powerful speaker, delivering the same studio-quality s
Slide 5: New Services
New Services Sonos Radio - Launched April 2020. Free, ad-supported streaming radio service pre-loaded in the Sonos app. We have experienced early customer success, and Sonos Radio is now the fourth most listened to service on Sonos. Sonos Radio HD - Launched November 2020 $7.99/month subscription. O
Slide 6: New Software
New Software Sonos S2 app – Launched June 2020 Delivers upgraded software platform powering the next generation of Sonos products and experiences. Includes support for higher resolution audio technologies, increased security and improved user interface. New design enables easier search functionality
Slide 7: New Partnerships
New Partnerships Disney+ Partnership - Fall 2020 Innovative, multifaceted strategic marketing campaign with Disney+ leading up to the widely-anticipated premiere of the second season of The Mandalorian on October 30, 2020. Disney+ partnership with Sonos highlights the quality of our brand and the va
Slide 8: Strong Financial Performance and Outlook
Strong Financial Performance and Outlook Net Revenue Gross Margin 45.6% $1,470 $1,326 $1,261 43.0% 43.1% $1,137 41.8% FY2018 FY2019 FY2020 FY2021 Midpoint FY2018 FY2019 FY2020 FY2021 Midpoint Adjusted EBITDA* $188 Free Cash Flow* $129 $97 $109 $89 $69 $(5) FY2018 FY2019 FY2020 FY2021 Midpoint FY2019
Slide 9: Q4 Highlights
Q4 Highlights
Slide 10: Record Profitability and Strong Revenue Growth
Record Profitability and Strong Revenue Growth Q4 Revenue ● Revenue +16%; excluding 14th week, revenue $339.8 +7% due to strong demand, success of recent $294.2 new product intros, and 67% DTC growth offset $272.9 by negative effect of COVID-19 on retail store partners and product availability constrai
Slide 11: Record Gross Margin
Record Gross Margin Gross Margin Gross Margin ex Tariffs Gross margin +530 bps Y/Y - key drivers: ● Mix shifts into higher margin products and channels ● Product and material cost reductions ● Cost leverage on higher volume 48.3% ● No promotions as compared to 4Q19 47.5% 42.6% 42.6% 42.7% 42.2% 4Q18
Slide 12: Strong Opex Leverage While Continuing to Invest in R&D
Strong Opex Leverage While Continuing to Invest in R&D Y/Y 4Q20 4Q19 Change Research and Development (GAAP) $54.8 $49.6 10.4% ● Excluding restructuring and legal costs, Restructuring and related charges 0.1 - NM Adjusted Research and Development drove 960 basis points of opex leverage $54.7 $49.6 10
Slide 13: FY20 Highlights
FY¥20 Highlights
Slide 14: 15th Consecutive Year of 20%+ Household Growth
15th Consecutive Year of 20%+ Household Growth FY20 FY19 Y/Y Change ● 15th consecutive year of 20%+ Total Households (cumulative - in millions) 10.9 9.1 20% total household growth - ended Net New Online Households (in millions) 1.8 1.7 9% fiscal 2020 with 10.9M % Registrations to Existing Households
Slide 15: Demonstrating Significant Scale and Profitability
Demonstrating Significant Scale and Profitability FY Revenue $1,326.3 $1,260.8 $1,137.0 ● Revenue +5% to $1.326B; excluding 53rd week, revenue +3% ● Adjusted EBITDA +22%; ex-tariffs adjusted EBITDA +56% FY18 FY19 FY20 ● Adjusted EBITDA margin +120 bps to record 8.2%; ex-tariffs adjusted EBITDA +350 bps
Slide 16: Continued Strong Gross Margin Expansion
Continued Strong Gross Margin Expansion Gross Margin Gross Margin ex Tariffs Gross margin +130 bps; ex tariffs, +370 bps. Key drivers: ● Mix shifts into higher margin products and channels 45.6% ● Product and material cost reductions associated with the consolidation of our supplier base and successfu
Slide 17: Continued R&D Investment; S&M and G&A Leverage
Continued R&D Investment; S&M and G&A Leverage FY20 FY19 Y/Y Change Research and Development (GAAP) $214.7 $171.2 25.4% ● Continued investment in R&D coupled Restructuring and related charges 5.1 - NM with S&M and G&A leverage Adjusted Research and Development (Non-GAAP) $209.6 $171.2 22.4% ex-restr
Slide 18: Significant Cash Flow and Strong Balance Sheet
Significant Cash Flow and Strong Balance Sheet ● Cash flow from operations of $162.0M vs $120.6M LY Y/Y FY20 FY19 Change ● Free cash flow of $129.0M, +32% from LY Cash flow from operations $162.0 $120.6 34.3% Capital expenditures $33.0 $23.2 42.3% ● Free cash flow / adjusted EBITDA 119% % of revenue 2.5%
Slide 19: FY 21 Outlook
FY 21 Outlook
Slide 20: FY21 Priorities
FY21 ● Delivering innovative new products that both new and existing customers love Priorities ● Services that enhance and further differentiate the customer experience ● Strengthening our direct-to-consumer efforts ● Supporting our incredible partnerships ● Adjusted EBITDA margin expansion ● Industry
Slide 21: FY21 Outlook: Profit Margin Expansion Continues; Strong Demand
FY21 Outlook: Profit Margin Expansion Continues; Strong Demand FY20 Actuals FY21 Outlook Adjusted EBITDA $108.5 million $170 million - $205 million Adjusted EBITDA Margin 8.2% 12% - 14% Gross Margin 43.1% 45.3% - 45.8% Revenue $1.326 billion $1.44 billion - $1.5 billion % growth (52 wk vs 52 wk) 3% 1
Slide 22: Upcoming Investor Event
Upcoming Investor Event Tuesday, March 9, 2021 Save the Date! Sonos to host virtual investor event where leadership will further highlight its long-term strategy and outlook. Further details to come - stay tuned...
Slide 23: Appendix
Appendix
Slide 24: 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 25: Reconciliation of Net Income (Loss) to Adjusted EBITDA
Reconciliation of Net Income (Loss) to Adjusted EBITDA (unaudited, dollars in thousands) Three Months Ended Twelve Months Ended October 3, September 28, October 3, September 28, 2020 2019 2020 2019 Net income (loss) $ 18,411 $ (29,600) $ (20,115) $ (4,766) Add (deduct): Depreciation and amortization
Slide 26: Gross Profit and Margin Excluding the Impact of Tariffs
Gross Profit and Margin Excluding the Impact of Tariffs (unaudited, dollars in thousands) Three Months Ended Twelve months ended October 3, 2020 September 28, 2019 October 3, 2020 September 28, 2019 Revenue $339,837 $294,160 $1,326,328 $1,260,823 Reported gross profit $161,536 $124,271 $571,956 $527,34
Slide 27: Reconciliation of Cash Flows Provided by Operating Activities to Free Cash Flow
Reconciliation of Cash Flows Provided by Operating Activities to Free Cash Flow (unaudited, in thousands) Year Ended October 3, September 28, 2020 2019 Cash flows provided by operating activities $ 161,986 $ 120,636 Less: purchases of property and equipment and intangible assets $ (33,035) $ (23,222)
Slide 28: SONOS
SONOS