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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Sonos Inc | NASDAQ:SONO | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.03 | -0.18% | 16.87 | 16.90 | 17.67 | 17.21 | 16.645 | 16.82 | 1,459,994 | 22:30:00 |
|
|
(Mark One)
|
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Delaware
|
|
03-0479476
|
|
(State or other jurisdiction
of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
614 Chapala Street
|
Santa Barbara
|
CA
|
93101
|
(Address of Principal Executive Offices)
|
|
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, $0.001 par value
|
SONO
|
The Nasdaq Stock Market LLC
|
Large accelerated filer
|
☒
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
|
|
Emerging growth company
|
☐
|
|
|
|
|
Page
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
|
|
|
||
SONOS, INC.
|
|||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|||||||
(unaudited, in thousands, except par values)
|
|||||||
|
As of
|
||||||
|
December 28,
2019 |
|
September 28,
2019 |
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
408,419
|
|
|
$
|
338,641
|
|
Restricted cash
|
183
|
|
|
179
|
|
||
Accounts receivable, net of allowances
|
135,902
|
|
|
102,743
|
|
||
Inventories
|
113,117
|
|
|
219,784
|
|
||
Prepaids and other current assets
|
30,986
|
|
|
17,762
|
|
||
Total current assets
|
688,607
|
|
|
679,109
|
|
||
Property and equipment, net
|
81,474
|
|
|
78,139
|
|
||
Operating lease right-of-use assets
|
60,007
|
|
|
—
|
|
||
Intangible assets and goodwill
|
40,539
|
|
|
1,018
|
|
||
Deferred tax assets
|
1,133
|
|
|
1,154
|
|
||
Other noncurrent assets
|
2,169
|
|
|
2,185
|
|
||
Total assets
|
$
|
873,929
|
|
|
$
|
761,605
|
|
|
|
|
|
||||
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
191,364
|
|
|
$
|
251,941
|
|
Accrued expenses
|
90,822
|
|
|
69,856
|
|
||
Accrued compensation
|
28,339
|
|
|
41,142
|
|
||
Short-term debt
|
9,439
|
|
|
8,333
|
|
||
Deferred revenue, current
|
14,604
|
|
|
13,654
|
|
||
Other current liabilities
|
40,552
|
|
|
17,548
|
|
||
Total current liabilities
|
375,120
|
|
|
402,474
|
|
||
Operating lease liabilities, noncurrent
|
58,589
|
|
|
—
|
|
||
Long-term debt
|
23,192
|
|
|
24,840
|
|
||
Deferred revenue, noncurrent
|
47,042
|
|
|
42,795
|
|
||
Other noncurrent liabilities
|
2,707
|
|
|
10,568
|
|
||
Total liabilities
|
506,650
|
|
|
480,677
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 8)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.001 par value
|
111
|
|
|
110
|
|
||
Treasury stock
|
(18,576
|
)
|
|
(13,498
|
)
|
||
Additional paid-in capital
|
523,929
|
|
|
502,757
|
|
||
Accumulated deficit
|
(137,602
|
)
|
|
(208,377
|
)
|
||
Accumulated other comprehensive loss
|
(583
|
)
|
|
(64
|
)
|
||
Total stockholders’ equity
|
367,279
|
|
|
280,928
|
|
||
Total liabilities and stockholders’ equity
|
$
|
873,929
|
|
|
$
|
761,605
|
|
SONOS, INC.
|
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
|
|||||||
(unaudited, in thousands, except share and per share amounts)
|
|||||||
|
Three Months Ended
|
||||||
|
December 28,
2019 |
|
December 29,
2018 |
||||
Revenue
|
$
|
562,083
|
|
|
$
|
496,371
|
|
Cost of revenue
|
334,463
|
|
|
301,082
|
|
||
Gross profit
|
227,620
|
|
|
195,289
|
|
||
Operating expenses
|
|
|
|
||||
Research and development
|
52,526
|
|
|
37,095
|
|
||
Sales and marketing
|
77,423
|
|
|
65,852
|
|
||
General and administrative
|
30,209
|
|
|
23,823
|
|
||
Total operating expenses
|
160,158
|
|
|
126,770
|
|
||
Operating income
|
67,462
|
|
|
68,519
|
|
||
Other income (expense), net
|
|
|
|
||||
Interest income
|
998
|
|
|
273
|
|
||
Interest expense
|
(453
|
)
|
|
(671
|
)
|
||
Other income (expense), net
|
4,424
|
|
|
(3,999
|
)
|
||
Total other income (expense), net
|
4,969
|
|
|
(4,397
|
)
|
||
Income before provision for income taxes
|
72,431
|
|
|
64,122
|
|
||
Provision for income taxes
|
1,656
|
|
|
2,455
|
|
||
Net income
|
$
|
70,775
|
|
|
$
|
61,667
|
|
|
|
|
|
||||
Net income attributable to common stockholders:
|
|
|
|
||||
Basic
|
$
|
70,775
|
|
|
$
|
61,667
|
|
Diluted
|
$
|
70,775
|
|
|
$
|
61,667
|
|
|
|
|
|
||||
Net income per share attributable to common stockholders:
|
|
|
|
||||
Basic
|
$
|
0.65
|
|
|
$
|
0.62
|
|
Diluted
|
$
|
0.60
|
|
|
$
|
0.55
|
|
|
|
|
|
||||
Weighted-average shares used in computing net income per share attributable to common stockholders:
|
|
|
|
||||
Basic
|
108,984,683
|
|
|
100,148,106
|
|
||
Diluted
|
118,415,968
|
|
|
112,088,672
|
|
||
|
|
|
|
||||
Total comprehensive income
|
|
|
|
||||
Net income
|
$
|
70,775
|
|
|
$
|
61,667
|
|
Change in foreign currency translation adjustment
|
(519
|
)
|
|
509
|
|
||
Comprehensive income
|
$
|
70,256
|
|
|
$
|
62,176
|
|
SONOS, INC.
|
|||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
|
|||||||||||||||||||||||||||||
(unaudited, in thousands, except share amounts)
|
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Three Months Ended December 28, 2019
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Treasury Stock
|
|
Accumulated
Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders’ Equity
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
|
Shares
|
|
Amount
|
|
|
|
||||||||||||||||||
Balance at September 28, 2019
|
109,623,417
|
|
|
$
|
110
|
|
|
$
|
502,757
|
|
|
(1,020,775
|
)
|
|
$
|
(13,498
|
)
|
|
$
|
(208,377
|
)
|
|
$
|
(64
|
)
|
|
$
|
280,928
|
|
Issuance of common stock pursuant to equity incentive plans
|
1,561,696
|
|
|
1
|
|
|
7,968
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,969
|
|
||||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(372,149
|
)
|
|
(5,078
|
)
|
|
—
|
|
|
—
|
|
|
(5,078
|
)
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
13,204
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,204
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
70,775
|
|
|
—
|
|
|
70,775
|
|
||||||
Change in foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(519
|
)
|
|
(519
|
)
|
||||||
Balance at December 28, 2019
|
111,185,113
|
|
|
$
|
111
|
|
|
$
|
523,929
|
|
|
(1,392,924
|
)
|
|
$
|
(18,576
|
)
|
|
$
|
(137,602
|
)
|
|
$
|
(583
|
)
|
|
$
|
367,279
|
|
|
Three Months Ended December 29, 2018
|
||||||||||||||||||||||||||||
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Treasury Stock
|
|
Accumulated
Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders’ Equity
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
|
Shares
|
|
Amount
|
|
|
|
||||||||||||||||||
Balance at September 29, 2018
|
100,868,250
|
|
|
$
|
101
|
|
|
$
|
424,617
|
|
|
(807,040
|
)
|
|
$
|
(11,072
|
)
|
|
$
|
(203,611
|
)
|
|
$
|
(1,677
|
)
|
|
$
|
208,358
|
|
Issuance of common stock pursuant to equity incentive plans
|
174,453
|
|
|
—
|
|
|
462
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
462
|
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
9,032
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,032
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61,667
|
|
|
—
|
|
|
61,667
|
|
||||||
Change in foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
509
|
|
|
509
|
|
||||||
Balance at December 29, 2018
|
101,042,703
|
|
|
$
|
101
|
|
|
$
|
434,111
|
|
|
(807,040
|
)
|
|
$
|
(11,072
|
)
|
|
$
|
(141,944
|
)
|
|
$
|
(1,168
|
)
|
|
$
|
280,028
|
|
SONOS, INC.
|
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||
(unaudited, in thousands)
|
|||||||
|
Three Months Ended
|
||||||
|
December 28,
2019 |
|
December 29,
2018 |
||||
Cash flows from operating activities
|
|
|
|
||||
Net income
|
$
|
70,775
|
|
|
$
|
61,667
|
|
Adjustments to reconcile net income to net cash provided by operating activities
|
|
|
|
||||
Depreciation
|
9,105
|
|
|
9,867
|
|
||
Stock-based compensation expense
|
13,204
|
|
|
9,032
|
|
||
Other
|
1,471
|
|
|
475
|
|
||
Deferred income taxes
|
51
|
|
|
226
|
|
||
Foreign currency transaction (gain) loss
|
(1,924
|
)
|
|
1,318
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
(31,411
|
)
|
|
(49,324
|
)
|
||
Inventories, net
|
107,343
|
|
|
81,621
|
|
||
Other assets
|
(11,853
|
)
|
|
(3,092
|
)
|
||
Accounts payable and accrued expenses
|
(39,416
|
)
|
|
(21,413
|
)
|
||
Accrued compensation
|
(14,568
|
)
|
|
(14,450
|
)
|
||
Deferred revenue
|
4,879
|
|
|
4,598
|
|
||
Other liabilities
|
11,184
|
|
|
11,525
|
|
||
Net cash provided by operating activities
|
118,840
|
|
|
92,050
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Purchases of property and equipment
|
(15,914
|
)
|
|
(5,372
|
)
|
||
Cash paid for acquisition, net of acquired cash
|
(35,622
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(51,536
|
)
|
|
(5,372
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Repayments of borrowings
|
(1,667
|
)
|
|
—
|
|
||
Payments for purchase of treasury stock
|
(5,078
|
)
|
|
—
|
|
||
Proceeds from exercise of common stock options
|
7,969
|
|
|
462
|
|
||
Payments of offering costs
|
—
|
|
|
(567
|
)
|
||
Net cash provided by (used in) financing activities
|
1,224
|
|
|
(105
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
1,254
|
|
|
(133
|
)
|
||
Net increase in cash, cash equivalents and restricted cash
|
69,782
|
|
|
86,440
|
|
||
Cash, cash equivalents and restricted cash
|
|
|
|
||||
Beginning of period
|
338,820
|
|
|
221,120
|
|
||
End of period
|
$
|
408,602
|
|
|
$
|
307,560
|
|
Supplemental disclosure
|
|
|
|
||||
Cash paid for interest
|
$
|
472
|
|
|
$
|
658
|
|
Cash paid for taxes, net of refunds
|
$
|
517
|
|
|
$
|
1,312
|
|
Cash paid for amounts included in the measurement of lease liabilities
|
$
|
4,304
|
|
|
$
|
—
|
|
Supplemental disclosure of non-cash investing and financing activities
|
|
|
|
||||
Purchases of property and equipment in accounts payable and accrued expenses
|
$
|
7,908
|
|
|
$
|
2,803
|
|
Right-of-use assets obtained in exchange for new operating lease liabilities
|
$
|
74,683
|
|
|
$
|
—
|
|
Deferred offering costs in accounts payable and accrued expenses
|
$
|
—
|
|
|
$
|
18
|
|
|
December 28, 2019
|
||||||||||||||
(In thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds (cash equivalents)
|
$
|
240,291
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
240,291
|
|
|
September 28, 2019
|
||||||||||||||
(In thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds (cash equivalents)
|
$
|
267,806
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
267,806
|
|
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
(In thousands)
|
|
|
|
||||
Americas
|
$
|
303,194
|
|
|
$
|
258,727
|
|
Europe, Middle East and Africa (“EMEA”)
|
212,738
|
|
|
216,080
|
|
||
Asia Pacific (“APAC”)
|
46,151
|
|
|
21,564
|
|
||
Total revenue
|
$
|
562,083
|
|
|
$
|
496,371
|
|
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
(In thousands)
|
|
|
|
||||
United States
|
$
|
277,273
|
|
|
$
|
237,112
|
|
Germany
|
58,988
|
|
|
56,055
|
|
||
United Kingdom
|
49,307
|
|
|
54,497
|
|
||
Other countries
|
176,515
|
|
|
148,707
|
|
||
Total revenue
|
$
|
562,083
|
|
|
$
|
496,371
|
|
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
(In thousands)
|
|
|
|
||||
Sonos speakers
|
$
|
466,677
|
|
|
$
|
436,105
|
|
Sonos system products
|
61,521
|
|
|
52,434
|
|
||
Partner products and other revenue
|
33,885
|
|
|
7,832
|
|
||
Total revenue
|
$
|
562,083
|
|
|
$
|
496,371
|
|
|
December 28, 2019
|
|
September 28, 2019
|
||||
(In thousands)
|
|
|
|
||||
Accounts receivable
|
$
|
188,910
|
|
|
$
|
124,049
|
|
Allowance for doubtful accounts
|
(1,372
|
)
|
|
(1,255
|
)
|
||
Allowance for sales incentives
|
(51,636
|
)
|
|
(20,051
|
)
|
||
Accounts receivable, net of allowances
|
$
|
135,902
|
|
|
$
|
102,743
|
|
|
December 28, 2019
|
|
September 28, 2019
|
||||
(In thousands)
|
|
|
|
||||
Finished goods
|
$
|
104,348
|
|
|
$
|
207,723
|
|
Component parts
|
8,769
|
|
|
12,061
|
|
||
Inventories
|
$
|
113,117
|
|
|
$
|
219,784
|
|
(In thousands)
|
|
||
Balance as of September 28, 2019
|
$
|
1,005
|
|
Goodwill acquired
|
14,282
|
|
|
Balance as of December 28, 2019
|
$
|
15,287
|
|
Fiscal years
|
(In thousands)
|
||
Remaining part of 2020
|
$
|
910
|
|
2021
|
1,040
|
|
|
2022
|
1,022
|
|
|
2023
|
1,020
|
|
|
2024
|
1,020
|
|
|
2025 and thereafter
|
128
|
|
|
Total future amortization expense
|
$
|
5,140
|
|
|
December 28, 2019
|
|
September 28, 2019
|
||||
(In thousands)
|
|
|
|
||||
Accrued advertising and marketing
|
$
|
31,205
|
|
|
$
|
25,662
|
|
Accrued taxes
|
13,041
|
|
|
4,388
|
|
||
Accrued inventory
|
8,600
|
|
|
6,494
|
|
||
Accrued manufacturing, logistics and product development
|
21,729
|
|
|
14,783
|
|
||
Accrued general and administrative expenses
|
8,615
|
|
|
12,455
|
|
||
Other accrued payables
|
7,632
|
|
|
6,074
|
|
||
Total accrued expenses
|
$
|
90,822
|
|
|
$
|
69,856
|
|
|
December 28, 2019
|
|
December 29, 2018
|
||||
(In thousands)
|
|
|
|
||||
Deferred revenue, beginning of period
|
$
|
56,449
|
|
|
$
|
50,967
|
|
Recognition of revenue included in beginning of period deferred revenue
|
(3,238
|
)
|
|
(2,986
|
)
|
||
Revenue deferred, net of revenue recognized on contracts in the respective period
|
8,435
|
|
|
7,472
|
|
||
Deferred revenue, end of period
|
$
|
61,646
|
|
|
$
|
55,453
|
|
|
For the fiscal years ending
|
|
|
||||||||||||||||||||
|
2020
|
|
2021
|
|
|
2022
|
|
2023
|
|
2024 and Beyond
|
|
Total
|
|||||||||||
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Deferred revenue expected to be recognized
|
$
|
11,085
|
|
|
$
|
13,384
|
|
|
$
|
11,537
|
|
|
$
|
9,609
|
|
|
$
|
16,031
|
|
|
$
|
61,646
|
|
|
December 28,
2019 |
|
September 28,
2019 |
||||
(In thousands)
|
|
|
|
||||
Reserve for returns
|
$
|
22,631
|
|
|
$
|
12,110
|
|
Short-term operating lease liabilities
|
10,792
|
|
|
—
|
|
||
Product warranty liability
|
5,701
|
|
|
3,254
|
|
||
Other
|
1,428
|
|
|
2,184
|
|
||
Total other current liabilities
|
$
|
40,552
|
|
|
$
|
17,548
|
|
|
December 28, 2019
|
|
December 29, 2018
|
||||
(In thousands)
|
|
|
|
||||
Warranty liability, beginning of period
|
$
|
3,254
|
|
|
$
|
2,450
|
|
Provision for warranties issued during the period
|
5,080
|
|
|
5,105
|
|
||
Settlements of warranty claims during the period
|
(2,633
|
)
|
|
(2,581
|
)
|
||
Warranty liability, end of period
|
$
|
5,701
|
|
|
$
|
4,974
|
|
|
Three Months Ended
|
||
|
December 28, 2019
|
||
(In thousands)
|
|
||
Operating lease cost
|
$
|
3,640
|
|
Short-term lease cost
|
57
|
|
|
Variable lease cost
|
1,389
|
|
|
Total lease cost
|
$
|
5,086
|
|
Fiscal years ending
|
Operating leases
|
||
(in thousands)
|
|
||
Remainder of fiscal 2020
|
$
|
10,489
|
|
2021
|
14,970
|
|
|
2022
|
14,261
|
|
|
2023
|
14,638
|
|
|
2024
|
13,606
|
|
|
2025
|
8,349
|
|
|
Thereafter
|
1,587
|
|
|
Total lease payments
|
77,900
|
|
|
Less imputed interest
|
(8,518
|
)
|
|
Total lease liabilities
|
$
|
69,382
|
|
Fiscal years ending
|
|
||
(in thousands)
|
|
||
2020
|
$
|
15,627
|
|
2021
|
14,759
|
|
|
2022
|
14,136
|
|
|
2023
|
14,395
|
|
|
2024
|
13,615
|
|
|
Thereafter
|
10,951
|
|
|
Total minimum lease commitments
|
$
|
83,483
|
|
|
December 28, 2019
|
|
September 28, 2019
|
||||||||||
|
Rate
|
|
Balance
|
|
Rate
|
|
Balance
|
||||||
(dollars in thousands)
|
|
|
|
|
|
|
|
||||||
Term loan (1)
|
4.2
|
%
|
|
$
|
31,666
|
|
|
4.6
|
%
|
|
$
|
33,333
|
|
Other debt (2)
|
|
|
1,106
|
|
|
|
|
—
|
|
||||
Unamortized debt issuance costs (3)
|
|
|
(141
|
)
|
|
|
|
(160
|
)
|
||||
Total indebtedness
|
|
|
32,631
|
|
|
|
|
33,173
|
|
||||
Less short-term portion
|
|
|
(9,439
|
)
|
|
|
|
(8,333
|
)
|
||||
Long-term debt
|
|
|
$
|
23,192
|
|
|
|
|
$
|
24,840
|
|
(1)
|
Due in October 2021 and bears interest at a variable rate equal to an adjusted LIBOR plus 2.25% and is payable quarterly.
|
(2)
|
Other debt consists of debt acquired through recent acquisition activity and was settled subsequent to the period of this report in January 2020.
|
(3)
|
Debt issuance costs are recorded as a debt discount and recorded as interest expense over the term of the agreement.
|
|
Number of
Options
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Term
|
|
Aggregate Intrinsic Value
|
|||||
|
|
|
|
|
(in years)
|
|
(in thousands)
|
|||||
Outstanding at September 28, 2019
|
37,155,568
|
|
|
$
|
11.39
|
|
|
6.3
|
|
$
|
94,288
|
|
Granted
|
—
|
|
|
|
|
|
|
|
|
|||
Exercised
|
(1,136,193
|
)
|
|
|
|
|
|
|
|
|||
Forfeited
|
(414,872
|
)
|
|
|
|
|
|
|
|
|||
Outstanding at December 28, 2019
|
35,604,503
|
|
|
$
|
11.49
|
|
|
6.1
|
|
$
|
126,622
|
|
At December 28, 2019
|
|
|
|
|
|
|
|
|||||
Options exercisable
|
26,445,850
|
|
|
$
|
10.53
|
|
|
5.4
|
|
$
|
118,859
|
|
Options vested and expected to vest
|
34,363,895
|
|
|
$
|
11.39
|
|
|
6.0
|
|
$
|
125,725
|
|
|
Number of
Units
|
|
Weighted Average Grant Date Fair Value
|
|
Aggregate Intrinsic Value
|
|||||
|
|
|
|
|
(in thousands)
|
|||||
Unvested at September 28, 2019
|
6,716,786
|
|
|
$
|
11.40
|
|
|
$
|
90,744
|
|
Granted
|
1,012,300
|
|
|
|
|
|
||||
Vested
|
(425,503
|
)
|
|
|
|
|
||||
Forfeited
|
(70,471
|
)
|
|
|
|
|
||||
Unvested at December 28, 2019
|
7,233,112
|
|
|
$
|
11.84
|
|
|
$
|
108,569
|
|
At December 28, 2019
|
|
|
|
|
|
|||||
Units expected to vest
|
5,726,008
|
|
|
$
|
11.85
|
|
|
$
|
85,947
|
|
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
(In thousands)
|
|
|
|
||||
Cost of revenue
|
$
|
282
|
|
|
$
|
184
|
|
Research and development
|
5,116
|
|
|
3,604
|
|
||
Sales and marketing
|
3,541
|
|
|
2,681
|
|
||
General and administrative
|
4,265
|
|
|
2,563
|
|
||
Total stock-based compensation expense
|
$
|
13,204
|
|
|
$
|
9,032
|
|
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
(In thousands, except share and per share data)
|
|
|
|
||||
Numerator:
|
|
|
|
||||
Net income attributable to common stockholders - basic and diluted
|
$
|
70,775
|
|
|
$
|
61,667
|
|
Denominator:
|
|
|
|
||||
Weighted-average shares of common stock—basic
|
108,984,683
|
|
|
100,148,106
|
|
||
Effect of potentially dilutive stock options
|
6,751,412
|
|
|
11,918,193
|
|
||
Effect of RSUs
|
2,679,873
|
|
|
22,373
|
|
||
Weighted-average shares of common stock—diluted
|
118,415,968
|
|
|
112,088,672
|
|
||
Net income per share attributable to common stockholders:
|
|
|
|
||||
Net income per share attributable to common stockholders - basic
|
$
|
0.65
|
|
|
$
|
0.62
|
|
Net income per share attributable to common stockholders - diluted
|
$
|
0.60
|
|
|
$
|
0.55
|
|
|
Three Months Ended
|
||||
|
December 28, 2019
|
|
December 29, 2018
|
||
Stock options to purchase common stock
|
29,628,623
|
|
|
36,135,411
|
|
Restricted stock units
|
4,278,556
|
|
|
247,744
|
|
Total
|
33,907,179
|
|
|
36,383,155
|
|
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
(in thousands, except percentages)
|
|
|
|
||||
Total revenue
|
562,083
|
|
|
496,371
|
|
||
Products sold
|
2,940
|
|
|
2,408
|
|
||
Adjusted EBITDA
|
$
|
93,219
|
|
|
$
|
87,418
|
|
Adjusted EBITDA margin
|
16.6
|
%
|
|
17.6
|
%
|
•
|
these non-GAAP financial measures exclude depreciation and, although these are non-cash expenses, the assets being depreciated may be replaced in the future;
|
•
|
these non-GAAP financial measures exclude stock-based compensation expense, which has been, and will continue to be, a significant recurring expense for our business and an important part of our compensation strategy;
|
•
|
these non-GAAP financial measures do not reflect interest income, primarily resulting from interest income earned on our cash and cash equivalent balances;
|
•
|
these non-GAAP financial measures do not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our debt, which reduces cash available to us;
|
•
|
these non-GAAP financial measures do not reflect the effect of foreign currency exchange gains or losses, which is included in other income (expense), net;
|
•
|
these non-GAAP financial measures do not reflect the provision for or benefit from income tax that may result in payments that reduce cash available to us;
|
•
|
these non-GAAP financial measures do not reflect non-recurring expenses and other items that are not considered representative of our underlying operating performance which reduce cash available to us; and
|
•
|
the expenses and other items that we exclude in our calculation of these non-GAAP financial measures may differ from the expenses and other items, if any, that other companies may exclude from these non-GAAP financial measures when they report their operating results.
|
|
Three Months Ended
|
||||||
|
December 28,
2019 |
|
December 29,
2018 |
||||
(in thousands, except percentages)
|
|
|
|
||||
Net income
|
$
|
70,775
|
|
|
$
|
61,667
|
|
Add (deduct):
|
|
|
|
||||
Depreciation
|
9,105
|
|
|
9,867
|
|
||
Stock-based compensation expense
|
13,204
|
|
|
9,032
|
|
||
Interest income
|
(998
|
)
|
|
(273
|
)
|
||
Interest expense
|
453
|
|
|
671
|
|
||
Other (income) expense, net
|
(4,424
|
)
|
|
3,999
|
|
||
Provision for income taxes
|
1,656
|
|
|
2,455
|
|
||
Legal and transaction related costs (1)
|
3,448
|
|
|
—
|
|
||
Adjusted EBITDA
|
$
|
93,219
|
|
|
$
|
87,418
|
|
Revenue
|
$
|
562,083
|
|
|
$
|
496,371
|
|
Adjusted EBITDA margin
|
16.6
|
%
|
|
17.6
|
%
|
(1)
|
Legal and transaction related costs consist of expenses related to our IP litigation against Alphabet Inc. and Google LLC as well as legal and transaction costs associated with our recent acquisition activity which we do not consider representative of our underlying operating performance.
|
|
Three Months Ended
|
||||||||||||
|
December 28,
2019 |
|
December 29,
2018 |
||||||||||
(Dollars in thousands)
|
$
|
|
%
|
|
$
|
|
%
|
||||||
Revenue
|
$
|
562,083
|
|
|
100.0
|
%
|
|
$
|
496,371
|
|
|
100.0
|
%
|
Cost of revenue (1)
|
334,463
|
|
|
59.5
|
|
|
301,082
|
|
|
60.7
|
|
||
Gross profit
|
227,620
|
|
|
40.5
|
|
|
195,289
|
|
|
39.3
|
|
||
Operating expenses
|
|
|
|
|
|
|
|
||||||
Research and development (1)
|
52,526
|
|
|
9.3
|
|
|
37,095
|
|
|
7.5
|
|
||
Sales and marketing (1)
|
77,423
|
|
|
13.8
|
|
|
65,852
|
|
|
13.3
|
|
||
General and administrative (1)
|
30,209
|
|
|
5.4
|
|
|
23,823
|
|
|
4.8
|
|
||
Total operating expenses
|
160,158
|
|
|
28.5
|
|
|
126,770
|
|
|
25.5
|
|
||
Operating income
|
67,462
|
|
|
12.0
|
|
|
68,519
|
|
|
13.8
|
|
||
Other income (expense), net
|
|
|
|
|
|
|
|
||||||
Interest income
|
998
|
|
|
0.2
|
|
|
273
|
|
|
0.1
|
|
||
Interest expense
|
(453
|
)
|
|
(0.1
|
)
|
|
(671
|
)
|
|
(0.1
|
)
|
||
Other income (expense), net
|
4,424
|
|
|
0.8
|
|
|
(3,999
|
)
|
|
(0.8
|
)
|
||
Total other income (expense), net
|
4,969
|
|
|
0.9
|
|
|
(4,397
|
)
|
|
(0.9
|
)
|
||
|
|
|
|
|
|
|
|
||||||
Income before provision for income taxes
|
72,431
|
|
|
12.9
|
|
|
64,122
|
|
|
12.9
|
|
||
Provision for income taxes
|
1,656
|
|
|
0.3
|
|
|
2,455
|
|
|
0.5
|
|
||
Net income
|
$
|
70,775
|
|
|
12.6
|
%
|
|
$
|
61,667
|
|
|
12.4
|
%
|
Adjusted EBITDA (2)
|
$
|
93,219
|
|
|
16.6
|
%
|
|
$
|
87,418
|
|
|
17.6
|
%
|
(1)
|
Amounts include stock-based compensation expense as follows:
|
|
Three Months Ended
|
||||||||||||
|
December 28,
2019 |
|
December 29,
2018 |
||||||||||
|
$
|
|
%
|
|
$
|
|
%
|
||||||
Cost of revenue
|
$
|
282
|
|
|
0.1
|
%
|
|
$
|
184
|
|
|
—
|
%
|
Research and development
|
5,116
|
|
|
0.9
|
|
|
3,604
|
|
|
0.7
|
|
||
Sales and marketing
|
3,541
|
|
|
0.6
|
|
|
2,681
|
|
|
0.5
|
|
||
General and administrative
|
4,265
|
|
|
0.8
|
|
|
2,563
|
|
|
0.5
|
|
||
Total stock-based compensation expense
|
$
|
13,204
|
|
|
2.3
|
%
|
|
$
|
9,032
|
|
|
1.8
|
%
|
(2)
|
Adjusted EBITDA is a financial measure that is not calculated in accordance with U.S. GAAP. See the section titled “Non-GAAP financial measures” above.
|
|
Three Months Ended
|
|
Change
|
|||||||||||
|
December 28, 2019
|
|
December 29, 2018
|
|
$
|
|
%
|
|||||||
(dollars in thousands)
|
|
|
|
|
|
|
|
|||||||
Sonos speakers
|
$
|
466,677
|
|
|
$
|
436,105
|
|
|
$
|
30,572
|
|
|
7.0
|
%
|
Sonos system products
|
61,521
|
|
|
52,434
|
|
|
9,087
|
|
|
17.3
|
%
|
|||
Partner products and other revenue
|
33,885
|
|
|
7,832
|
|
|
26,053
|
|
|
332.6
|
%
|
|||
Total revenue
|
$
|
562,083
|
|
|
$
|
496,371
|
|
|
$
|
65,712
|
|
|
13.2
|
%
|
|
Three Months Ended
|
|
Change
|
||||||||
|
December 28, 2019
|
|
December 29, 2018
|
|
$
|
|
%
|
||||
(products sold units in thousands)
|
|
|
|
|
|
|
|
||||
Total products sold
|
2,940
|
|
|
2,408
|
|
|
532
|
|
|
22.1
|
%
|
|
Three Months Ended
|
|
Change
|
|||||||||||
|
December 28, 2019
|
|
December 29, 2018
|
|
$
|
|
%
|
|||||||
(dollars in thousands)
|
|
|
|
|
|
|
|
|||||||
Cost of revenue
|
$
|
334,463
|
|
|
$
|
301,082
|
|
|
$
|
33,381
|
|
|
11.1
|
%
|
Gross profit
|
$
|
227,620
|
|
|
$
|
195,289
|
|
|
$
|
32,331
|
|
|
16.6
|
%
|
Gross margin
|
40.5
|
%
|
|
39.3
|
%
|
|
|
|
|
|
|
Three Months Ended
|
|
Change
|
|||||||||||
|
December 28, 2019
|
|
December 29, 2018
|
|
$
|
|
%
|
|||||||
(dollars in thousands)
|
|
|
|
|
|
|
|
|||||||
Research and development
|
$
|
52,526
|
|
|
$
|
37,095
|
|
|
$
|
15,431
|
|
|
41.6
|
%
|
Percentage of revenue
|
9.3
|
%
|
|
7.5
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Change
|
|||||||||||
|
December 28, 2019
|
|
December 29, 2018
|
|
$
|
|
%
|
|||||||
(dollars in thousands)
|
|
|
|
|
|
|
|
|||||||
Sales and marketing
|
$
|
77,423
|
|
|
$
|
65,852
|
|
|
$
|
11,571
|
|
|
17.6
|
%
|
Percentage of revenue
|
13.8
|
%
|
|
13.3
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Change
|
|||||||||||
|
December 28, 2019
|
|
December 29, 2018
|
|
$
|
|
%
|
|||||||
(dollars in thousands)
|
|
|
|
|
|
|
|
|||||||
General and administrative
|
$
|
30,209
|
|
|
$
|
23,823
|
|
|
$
|
6,386
|
|
|
26.8
|
%
|
Percentage of revenue
|
5.4
|
%
|
|
4.8
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Change
|
||||||||||
|
December 28, 2019
|
|
December 29, 2018
|
|
$
|
|
%
|
||||||
(dollars in thousands)
|
|
|
|
|
|
|
|
||||||
Provision for income taxes
|
$
|
1,656
|
|
|
$
|
2,455
|
|
|
$
|
(799
|
)
|
|
(32.5)%
|
|
As of
|
||||||||||||
|
December 28, 2019
|
|
September 28, 2019
|
||||||||||
|
Rate
|
|
Balance
|
|
Rate
|
|
Balance
|
||||||
(dollars in thousands)
|
|
|
|
|
|
|
|
||||||
Term Loan (1)
|
4.2
|
%
|
|
$
|
31,666
|
|
|
4.6
|
%
|
|
$
|
33,333
|
|
Other debt (2)
|
|
|
1,106
|
|
|
|
|
—
|
|
||||
Unamortized debt issuance costs (3)
|
|
|
(141
|
)
|
|
|
|
(160
|
)
|
||||
Total indebtedness
|
|
|
32,631
|
|
|
|
|
33,173
|
|
||||
Less short-term portion
|
|
|
(9,439
|
)
|
|
|
|
(8,333
|
)
|
||||
Long-term debt
|
|
|
$
|
23,192
|
|
|
|
|
$
|
24,840
|
|
(1)
|
Due in October 2021, bears interest at a variable rate equal to an adjusted LIBOR plus 2.25% and is payable quarterly.
|
(2)
|
Other debt consists of debt acquired through recent acquisition activity and was settled subsequent to the period of this report in January 2020.
|
(3)
|
Debt issuance costs are recorded as a debt discount and recorded as interest expense over the term of the agreement.
|
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
(In thousands)
|
|
|
|
||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
118,840
|
|
|
$
|
92,050
|
|
Investing activities
|
(51,536
|
)
|
|
(5,372
|
)
|
||
Financing activities
|
1,224
|
|
|
(105
|
)
|
||
Effect of exchange rate changes
|
1,254
|
|
|
(133
|
)
|
||
Net change in cash, cash equivalents and restricted cash
|
$
|
69,782
|
|
|
$
|
86,440
|
|
•
|
research and development to continue to introduce innovative new products, enhance existing products and improve our customers’ listening experience;
|
•
|
sales and marketing to expand our global brand awareness, promote new products, increase our customer base and expand sales within our existing customer base; and
|
•
|
legal, accounting, information technology and other administrative expenses to sustain our operations as a public company.
|
•
|
seasonality in the demand for our products;
|
•
|
the timing and success of new product introductions;
|
•
|
competition;
|
•
|
the imposition of tariffs and other trade barriers, and the effects of retaliatory trade measures;
|
•
|
fluctuations in component and manufacturing costs; and
|
•
|
adverse litigation judgments, settlements or other litigation-related costs, especially from litigation involving alleged patent infringement or defense of our patents.
|
•
|
fluctuations in currency exchange rates and costs of imposing currency exchange controls;
|
•
|
political, social and/or economic instability such as such as the United Kingdom's withdraw from the European Union, commonly known as "Brexit”;
|
•
|
higher levels of credit risk and payment fraud and longer payment cycles associated with, and increased difficulty of payment collections from certain international customers;
|
•
|
burdens and risks of complying with a number and variety of foreign laws and regulations, including the Foreign Corrupt Practices Act
|
•
|
laws and regulations may change from time to time unexpectedly and may be unpredictably enforced;
|
•
|
potential negative consequences from changes in or interpretations of U.S. and foreign tax laws;
|
•
|
the cost of developing connected products for countries where Wi-Fi technology has been passed over in favor of more advanced cellular data networks;
|
•
|
tariffs, trade barriers and duties;
|
•
|
protectionist laws and business practices that favor local businesses in some countries;
|
•
|
reduced protection for intellectual property rights in some countries;
|
•
|
difficulties and associated costs in managing multiple international locations; and
|
•
|
delays from customs brokers or government agencies.
|
•
|
overall performance of the equity markets and the economy as a whole;
|
•
|
changes in the financial projections we or third parties may provide to the public or our failure to meet these projections;
|
•
|
actual or anticipated changes in our growth rate relative to that of our competitors;
|
•
|
announcements of new products, or of acquisitions, strategic partnerships, joint ventures or capital- raising activities or commitments, by us or by our competitors;
|
•
|
additions or departures of key personnel;
|
•
|
failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors;
|
•
|
rumors and market speculation involving us or other companies in our industry;
|
•
|
sales of shares of our common stock by us or our stockholders particularly sales by our directors, executive officers and significant stockholders, or the perception that these sales could occur; and
|
•
|
additional stock issuances that result in significant dilution to shareholders.
|
•
|
a classified Board so that not all members of the Board are elected at one time;
|
•
|
the ability of the Board to determine the number of directors and fill any vacancies and newly created directorships;
|
•
|
a requirement that our directors may only be removed for cause;
|
•
|
a prohibition on cumulative voting for directors;
|
•
|
the requirement of a super-majority to amend some provisions in our restated certificate of incorporation and restated bylaws;
|
•
|
authorization of the issuance of “blank check” preferred stock that the Board could use to implement a stockholder rights plan;
|
•
|
an inability of our stockholders to call special meetings of stockholders; and
|
•
|
a prohibition on stockholder actions by written consent, thereby requiring that all stockholder actions be taken at a meeting of our stockholders.
|
Period
|
|
Total Number of Shares Purchased(1)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
|
||||||
Sept 29 - Oct 26
|
|
107,602
|
|
|
$
|
12.89
|
|
|
107,602
|
|
|
$
|
48,611
|
|
Oct 27 - Nov 23
|
|
115,339
|
|
|
$
|
12.81
|
|
|
115,339
|
|
|
$
|
47,131
|
|
Nov 24 - Dec 28
|
|
4,300
|
|
|
$
|
12.98
|
|
|
4,300
|
|
|
$
|
47,075
|
|
Total
|
|
227,241
|
|
|
|
|
227,241
|
|
|
|
Exhibit
number
|
|
|
|
Incorporated by reference
|
|
Filed or furnished
herewith
|
||||||
Exhibit title
|
|
Form
|
|
File no.
|
|
Exhibit
|
|
Filing date
|
|
|||
10.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
10.2
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
X
|
|
32.1*
|
|
|
|
|
|
|
|
|
|
|
X
|
|
32.2*
|
|
|
|
|
|
|
|
|
|
|
X
|
|
101
|
|
The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended December 28, 2019, formatted in Inline XBRL: (i) Condensed consolidated balance sheets, (ii) Condensed consolidated statements of operations and comprehensive income, (iv) Condensed consolidated statements of stockholders' equity, (v) Condensed consolidated statements of cash flows and (vi) Notes to condensed consolidated financial statements, tagged as blocks of text and including detailed tags
|
|
|
|
|
|
|
|
|
|
X
|
104
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
|
|
|
|
|
|
|
|
|
X
|
|
|
Sonos, Inc.
|
|
|
|
Date: February 5, 2020
|
By:
|
/s/ Patrick Spence
|
|
|
Patrick Spence
|
|
|
Chief Executive Officer and Director
|
|
|
(Principal Executive Officer)
|
Date: February 5, 2020
|
By:
|
/s/ Brittany Bagley
|
|
|
Brittany Bagley
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
1 Year Sonos Chart |
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