Sonos, Inc. · NASDAQ:SONO

Sonos — Q2 2022 Earnings Presentation

19 slides from Sonos's earnings presentation, May 11, 2022

1. Slide 1: Q2 2022 Financial Summary

   Q2 2022 Financial Summary May 11, 2022

2. Slide 2: Forward Looking Statements; Non-GAAP Measures

   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, a

3. Slide 3: Q2 Highlights

   Q2 Highlights ● Record Q2 revenue of $399.8M, +20% from LY driven by strong product demand and improved availability of supply ● Q2 gross margin of 44.8%, -300 bps from Q1 driven primarily by increased component costs and higher shipping and logistics costs ● Q2 adjusted EBITDA of $46.9M, -3% from L

4. Slide 4: Record Q2 revenue, strong growth, and stable profitability

   Record Q2 revenue, strong growth, and stable profitability Q2 Revenue $399.8 ● Revenue +20% to a record Q2 of $399.8M. Driven $332.9 by: +20% +90% ○ Strong product demand, supported by $175.1 improved availability of supply ■ The introduction of Roam, along with -17% continued success of One and Arc

5. Slide 5: Increased supply chain costs

   Increased supply chain costs Gross margin declined -500 bps YoY driven by: ● The need for spot buys given component shortages, higher shipping and logistics costs, FX and product mix ● Partially offset by higher selling prices following September 2021 price increase ● Gross Margin declined 300 bps Qo

6. Slide 6: Investing in the business & driving opex leverage in Q2

   Investing in the business & driving opex leverage in Q2 Q2’22 Q2’21 Y/Y Change ● Adjusted Opex leverage of 200 bps YoY: Research and Development (GAAP) $64.9 $56.4 15.2% Legal and transaction related costs 0.0 0.0 NM Adjusted Research and Development (Non-GAAP) $64.9 $56.4 15.2% ○ R&D +15.2% primari

7. Slide 7: Cash flow & balance sheet highlights

   Cash flow & balance sheet highlights ● Cash flow from operations of $82.4M, -53% YTD22 YTD21 Y/Y Change from LY, mainly due to investments in Cash flow from operations $82.4 $176.0 (53.2)% inventory Capital expenditures $15.7 $19.9 (21.4)% % of revenue 1.5% 2.0% ● Share repurchases of $74.5M YTD; $75.5

8. Slide 8: FY22 Outlook

   FY22 Outlook

9. Slide 9: FY22 Outlook: Maintain revenue guidance, reduced gross margin, narrowed adjusted EBITDA range

   FY22 Outlook: Maintain revenue guidance, reduced gross margin, narrowed adjusted EBITDA range. Remain on track to deliver another record fiscal year FY21 Actuals Prior FY22 Outlook New FY22 Outlook Revenue $1.717 billion $1.95 billion - $2.0 billion $1.95 billion - $2.0 billion ● Re-confirming revenue

10. Slide 10: Long Term Opportunity

    Long Term Opportunity

11. Slide 11: FY2024 Financial Targets

    FY2024 Financial Targets Revenue Gross Margin Adjusted EBITDA Margin ~$2.5B 45-47% 15-18% Note: Adjusted EBITDA Margin is a non-GAAP measures. We do not provide a reconciliation of forward-looking non-GAAP measures to their comparable GAAP financial measures. See “Non-GAAP Measures” for more informat

12. Slide 12: Key Drivers of Long Term Growth

    Key Drivers of Long Term Growth “The Sonos Flywheel” ● New household growth + existing household repurchases Expansion of our product offerings ● Launch at least 2 products per year to delight existing households and attract new ones Large, growing addressable market ● Just scratching the surface: Cu

13. Slide 13: Our Long Term Opportunity: Households

    Our Long Term Opportunity: Households PLUS Geographic Expansion 348M Households in Core Markets1 ~9% Current Penetration of Total Affluent Households 145M Affluent ($75k+2) Households 13M Sonos FY21 Households Source: Euromonitor 2021 1. Core Markets include the United States, Canada, Australia, United

14. Slide 14: Our Long Term Opportunity: Revenue

    Our Long Term Opportunity: Revenue PLUS Audio content, services & business $96B Global Audio ~2% Current Penetration of Global Audio Market $29B Global Home Audio $22B Premium Global Home Audio $1.7B Sonos FY21 Revenue Source: Futuresource CY2021, Premium defined as $100+ wireless speakers, $200+ sou

15. Slide 15: Appendix

    Appendix

16. Slide 16: Non-GAAP Measures

    Non-GAAP Measures We have provided in this presentation financial information that has not been prepared in accordance with US generally accepted accounting principles (“GAAP”). We use these non-GAAP financial measures to evaluate our operating performance and trends and make planning decisions. We be

17. Slide 17: Reconciliation of Net Income to Adjusted EBITDA

    Reconciliation of Net Income to Adjusted EBITDA Three Months Ended Six Months Ended April 2, 2022 April 3, 2021 April 2, 2022 April 3, 2021 Net income $8,566 $ 17,221 $132,047 $ 149,513 Add (deduct): Depreciation and amortization 9,575 8,742 18,792 16,725 Stock-based compensation expense 21,225 16,3

18. Slide 18: 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 2, 2022 April 3, 2021 Cash flows provided by operating activities $82,374 $175,953 Less: Purchases of property and equipment, intangible and other assets (15,665) (19,927) Free cash flow $66,709 $156

19. Slide 19: SONOS

    SONOS

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