Sonos, Inc. · NASDAQ:SONO
Sonos — Q3 2022 Earnings Presentation
19 slides from Sonos's earnings presentation, Aug 10, 2022
Slide 1: Q3 2022 Financial Summary
Q3 2022 Financial Summary August 10, 2022
Slide 2: Forward Looking Statements and 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 long-term outlook; our long-term focus, financial, growth,
Slide 3: Q3 Highlights
Q3 Highlights ● Q3 revenue of $372M, -2% from LY (+2% constant currency) driven by softer consumer demand, supply constraints, and unfavorable FX ● Q3 gross margin of 47.3%, +250 bps from Q2 driven primarily by timing of expenses related to higher component costs ○ +30bps from LY driven by higher se
Slide 4: Q3 revenue, constant currency growth, and stable profitability
Q3 revenue, constant currency growth, and stable profitability Q3 Revenue ● Revenue +2.2% constant currency, or -1.8% $378.7 $371.8 reported to $371.8M Driven by: CC: +45% CC: +2% Reported: +52% Reported: -2% ○ Softer consumer demand $249.3 ○ Lapping Roam launch LY, with softer Ray CC: -3% performan
Slide 5: Continued healthy gross margins
Continued healthy gross margins Gross margin expanded 30 bps YoY driven by: ● Higher selling prices ● Partially offset by higher cost of components ● Gross Margin expanded 250 bps QoQ due to timing of expenses related to higher component costs 47.3% 47.0% 44.0% 3Q20 3Q21 3Q22 Note: Unaudited. See ap
Slide 6: Investing in the business in Q3
Investing in the business in Q3 Q3'22 Q3'21 Y/Y Change ● Adjusted Opex deleverage of 230 bps YoY: Research and Development (GAAP) $ 62.5 $ 55.6 12.5% % of revenue 16.8% 14.7% 210 bps ○ R&D +12.5% primarily due product development costs and Sales and Marketing (GAAP) $ 64.0 $ 67.2 -4.8% professional
Slide 7: Cash flow & balance sheet highlights
Cash flow & balance sheet highlights YTD22 YTD21 Y/Y Change ● YTD cash flow from operations of $76M, - Cash flow from operations $ 75.7 $ 246.7 (69.3)% 69% from LY, mainly due to investments in inventory Capital expenditures $ 24.9 $ 34.8 (28.3)% % of revenue 1.7% 2.6% ● Share repurchases of $117M Y
Slide 8: FY22 Outlook
FY22 Outlook
Slide 9: FY22 Outlook: Reduced revenue and adjusted EBITDA guidance
FY22 Outlook: Reduced revenue and adjusted EBITDA guidance, narrowing gross margin range FY21 Actuals Prior FY22 Outlook New FY22 Outlook ● Reducing revenue outlook to Revenue $1.717 billion $1.95 billion - $2.0 billion $1.730 billion - $1.755 billion $1.730-1.755bn, +1-2% growth % growth 29% 14% -
Slide 10: Long Term Opportunity
Long Term Opportunity
Slide 11: Long Term Financial Targets
Long Term Financial Targets Due to the uncertain and evolving macroeconomic backdrop, we are extending the timeline beyond FY24 to achieve our previously issued 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 pro
Slide 12: Key Drivers of Long Term Growth
Key Drivers of Long Term Growth “The Sonos Expansion of our Large, growing addressable Long term secular Flywheel” product offerings market tailwinds New household growth Launch at least 2 products Just scratching the surface: Continued growth in audio + existing household per year to delight existi
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, Uni
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+ so
Slide 15: Appendix
Appendix
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
Slide 17: Reconciliation of Net Income (Loss) to Adjusted EBITDA
Reconciliation of Net Income (Loss) to Adjusted EBITDA Three Months Ended Nine Months Ended July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Net income (loss) $ (597) $ 17,826 $ 131,451 $ 167,339 Add (deduct): Depreciation and amortization 8,907 9,065 27,699 25,789 Stock-based compensation expens
Slide 18: Reconciliation of Operating Cash Flows to Free Cash Flow
Reconciliation of Cash Flows Provided by (Used in) Operating Activities to Free Cash Flow Three Months Ended Nine Months Ended July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Cash flows provided by (used in) operating activities $ (6,717) $ 70,786 $ 75,657 $ 246,741 Less: Purchases of property a
Slide 19: SONOS
SONOS