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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 | |
---|---|---|---|---|---|---|---|---|---|---|
0.3965 | 2.83% | 14.3965 | 14.39 | 14.40 | 14.515 | 14.20 | 14.20 | 561,706 | 18:00:27 |
Sonos reaches inflection point demonstrating the power and profitability of its business model
Sonos, Inc. (Nasdaq: SONO) today reported record fourth quarter and fiscal 2020 results.
Fourth Quarter 2020 Financial Highlights (unaudited)
Fiscal 2020 Financial Highlights (unaudited)
Sonos CEO Patrick Spence commented, “We reached an inflection point in the fourth quarter that demonstrates the power and profitability of our model. As our customers recognize, Sonos products operate seamlessly together, with more products improving the experience. That’s why year in and year out, our existing customers add more products to their systems - every new household that we gain starts that cycle anew. Fiscal 2020 was the 15th year in a row we grew total households by at least 20%, while our existing customers once again showed strong repurchase habits, accounting for a record 41% of total product registrations. We deliver a consistent cadence of new, innovative products and services, and we have only started the process of realizing the lifetime value of our customers, both old and new.”
“In fiscal 2020, we delivered a record 8.2% adjusted EBITDA margin, or 10.6% excluding the effect of tariffs, and we project delivering 12% to 14% adjusted EBITDA margins next year, which is ahead of our prior targets,” continued Mr. Spence.
Mr. Spence concluded, “As we look ahead, we are focused on delivering innovative new products and services that customers love, strengthening our direct-to-consumer efforts, and supporting our incredible partnerships. We believe we are well positioned to deliver strong profit margins, cash flow, revenue growth and increased shareholder value over the long-term.”
Fiscal 2020 Company Highlights
Fiscal 2021 Outlook
Virtual Investor Event - Tuesday, March 9, 2021
Sonos will host a virtual investor event on Tuesday, March 9, 2021 highlighting its long-term strategic priorities and targets. Further details to come.
Supplemental Earnings Presentation
The Company has posted a supplemental earnings presentation accompanying its fourth quarter and fiscal 2020 results to the Earnings Reports section of its investor relations website at https://investors.sonos.com/reports-and-filings/default.aspx#section=earningsreports.
Conference Call, Webcast and Transcript
The Company will host a webcast of its conference call and Q&A related to its fourth quarter and fiscal 2020 results on November 18, 2020 at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). Participants may access the live webcast in listen-only mode on the Sonos investor relations website at https://investors.sonos.com/news-and-events/default.aspx. The conference call may also be accessed by dialing (833) 921-1637 with conference ID 7717309. Participants outside the U.S. can access the call by dialing (236) 714-2128 using the same conference ID.
An archived webcast of the conference call and a transcript of the company’s prepared remarks and Q&A session will also be available at https://investors.sonos.com/reports-and-filings/default.aspx#section=earningsreports following the call.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(unaudited, dollars in thousands, except share and per share amounts) 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
Cost of revenue
178,301
169,889
754,372
733,480
Gross profit
161,536
124,271
571,956
527,343
Operating expenses Research and development
54,783
49,644
214,672
171,174
Sales and marketing
58,338
70,894
263,539
247,599
General and administrative
32,986
28,565
120,978
102,871
Total operating expenses
146,107
149,103
599,189
521,644
Operating income (loss)
15,429
(24,832
)
(27,233
)
5,699
Other income (expense), net Interest income
43
1,416
1,998
4,349
Interest expense
(300
)
(584
)
(1,487
)
(2,499
)
Other income (expense), net
3,273
(4,985
)
6,639
(8,625
)
Total other income (expense), net
3,016
(4,153
)
7,150
(6,775
)
Income (loss) before provision for income taxes
18,445
(28,985
)
(20,083
)
(1,076
)
Provision for income taxes
34
615
32
3,690
Net income (loss)
18,411
(29,600
)
(20,115
)
(4,766
)
Net income (loss) attributable to common stockholders Basic
18,411
(29,600
)
(20,115
)
(4,766
)
Diluted
18,411
(29,600
)
(20,115
)
(4,766
)
Net income (loss) per share attributable to common stockholders Basic$
0.17
$
(0.28
)
$
(0.18
)
$
(0.05
)
Diluted$
0.15
$
(0.28
)
$
(0.18
)
$
(0.05
)
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders Basic
111,148,110
107,130,076
109,807,154
103,783,006
Diluted
122,598,225
107,130,076
109,807,154
103,783,006
Total comprehensive income (loss) Net income (loss)
18,411
(29,600
)
(20,115
)
(4,766
)
Change in foreign currency translation adjustment
(1,095
)
1,107
(1,826
)
1,613
Comprehensive income (loss)
$
17,316
$
(28,493
)
$
(21,941
)
$
(3,153
)
Condensed Consolidated Balance Sheets (unaudited, dollars in thousands, except par values) As of October 3,2020 September 28,2019 Assets Current assets: Cash and cash equivalents$
407,100
$
338,641
Restricted cash
191
179
Accounts receivable, net of allowances
54,935
102,743
Inventories
180,830
219,784
Prepaids and other current assets
17,321
17,762
Total current assets
660,377
679,109
Property and equipment, net
60,784
78,139
Operating lease right-of-use assets
42,342
-
Goodwill
15,545
1,005
Intangible assets, net
26,394
13
Deferred tax assets
1,800
1,154
Other noncurrent assets
8,809
2,185
Total assets
$
816,051
$
761,605
Liabilities and stockholders’ equity Current liabilities: Accounts payable
$
250,328
$
251,941
Accrued expenses
45,049
69,856
Accrued compensation
44,517
41,142
Short-term debt
6,667
8,333
Deferred revenue, current
15,304
13,654
Other current liabilities
31,150
17,548
Total current liabilities
393,015
402,474
Operating lease liabilities, noncurrent
50,360
-
Long-term debt
18,251
24,840
Deferred revenue, noncurrent
47,085
42,795
Deferred tax liabilities
2,434
-
Other noncurrent liabilities
7,067
10,568
Total liabilities
518,212
480,677
Stockholders’ equity: Common stock, $0.001 par value
114
110
Treasury stock
(20,886
)
(13,498
)
Additional paid-in capital
548,993
502,757
Accumulated deficit
(228,492
)
(208,377
)
Accumulated other comprehensive loss
(1,890
)
(64
)
Total stockholders’ equity:
297,839
280,928
Total liabilities and stockholders’ equity:
$
816,051
$
761,605
Condensed Consolidated Statements of Cash Flows (unaudited, dollars in thousands) Twelve Months Ended October 3,2020 September 28,2019 Cash flows from operating activities Net loss
$
(20,115
)
$
(4,766
)
Adjustments to reconcile net loss to net cash provided by operating activities Depreciation and amortization
36,426
36,415
Impairment and abandonment charges
14,174
-
Stock-based compensation expense
57,610
46,575
Other
5,710
2,713
Deferred income taxes
(567
)
(268
)
Foreign currency transaction (gain) loss
(4,143
)
4,035
Changes in operating assets and liabilities:
Accounts receivable, net
49,593
(32,078
)
Inventories
38,010
(31,796
)
Other assets
(5,749
)
(7,605
)
Accounts payable and accrued expenses
(24,440
)
85,878
Accrued compensation
1,088
8,231
Deferred revenue
4,754
6,165
Other liabilities
9,635
7,137
Net cash provided by operating activities
161,986
120,636
Cash flows from investing activities Purchases of property and equipment and intangible assets
(33,035
)
(23,222
)
Cash paid for acquisition, net of acquired cash
(36,289
)
-
Net cash used in investing activities
(69,324
)
(23,222
)
Cash flows from financing activities Repayments of borrowings
(8,333
)
(6,667
)
Payments for repurchase of common stock under share repurchase program
(50,015
)
-
Payments for repurchase of common stock related to equity awards
(11,029
)
(2,426
)
Proceeds from exercise of common stock options
42,286
31,574
Payments of offering costs
-
(585
)
Net cash provided by (used in) financing activities
(27,091
)
21,896
Effect of exchange rate changes on cash, cash equivalents and restricted cash
2,900
(1,610
)
Net increase in cash, cash equivalents and restricted cash
68,471
117,700
Cash, cash equivalents and restricted cash Beginning of period
338,820
221,120
End of period
$
407,291
$
338,820
Supplemental disclosure Cash paid for interest
$
1,647
$
2,517
Cash paid for taxes, net of refunds
$
783
$
3,570
Cash paid for amounts included in the measurement of lease liabilities
$
17,194
$
-
Supplemental disclosure of non-cash investing and financing activities Purchases of property and equipment, accrued but not paid
$
3,911
$
11,687
Right-of-use assets obtained in exchange for lease liabilities
$
77,416
$
-
Reconciliation of Net Income (Loss) to Adjusted EBITDA (unaudited, dollars in thousands) Three Months Ended Twelve Months Ended October 3,2020 September 28,2019 October 3,2020 September 28,2019 Net income (loss)
$
18,411
$
(29,600
)
$
(20,115
)
$
(4,766
)
Add (deduct): Depreciation and amortization
8,733
9,012
36,426
36,415
Stock-based compensation expense
15,971
13,049
57,610
46,575
Interest income
(43
)
(1,416
)
(1,998
)
(4,349
)
Interest expense
300
584
1,487
2,499
Other (income) expense, net
(3,273
)
4,985
(6,639
)
8,625
Provision for income taxes
34
615
32
3,690
Restructuring and related charges
125
-
26,285
-
Legal and transaction related costs (1)
6,170
-
15,455
-
Adjusted EBITDA
$
46,428
$
(2,771
)
$
108,543
$
88,689
Revenue
$
339,837
$
294,160
$
1,326,328
$
1,260,823
Adjusted EBITDA margin
13.7
%
(0.9
)%
8.2
%
7.0
%
(1) Legal and transaction related costs consist of expenses related to our intellectual property ("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. Reconciliation of Cash Flows Provided by Operating Activities to Free Cash Flow (unaudited, dollars in thousands) Year Ended October 3,2020 September 28,2019 Cash flows provided by operating activities$
161,986
$
120,636
Less: purchases of property and equipment and intangible assets
(33,035
)
(23,222
)
Free cash flow$
128,951
$
97,414
Revenue by Product Category (unaudited, dollars in thousands) Three Months Ended Twelve Months Ended October 3,2020 September 28,2019 October 3,2020 September 28,2019 Sonos speakers
$
254,874
$
217,526
$
1,034,813
$
1,008,422
Sonos system products
67,901
49,686
218,788
187,172
Partner products and other revenue
17,062
26,948
72,727
65,229
Total revenue$
339,837
$
294,160
$
1,326,328
$
1,260,823
Revenue by Geographical Region (unaudited, dollars in thousands) Three Months Ended Twelve Months Ended October 3,2020 September 28,2019 October 3,2020 September 28,2019 Americas$
199,549
$
157,540
$
755,874
$
678,224
Europe, Middle East and Africa ("EMEA")
117,076
101,248
470,883
484,785
Asia Pacific ("APAC")
23,212
35,372
99,571
97,814
Total revenue$
339,837
$
294,160
$
1,326,328
$
1,260,823
Stock-based Compensation (unaudited, in thousands) Three Months Ended Twelve Months Ended October 3, 2020 September 28, 2019 October 3, 2020 September 28, 2019 Cost of revenue
239
284
1,106
985
Research and development
6,742
4,851
23,439
17,643
Sales and marketing
3,701
3,549
14,359
12,965
General and administrative
5,289
4,365
18,706
14,982
Total stock-based compensation expense$
15,971
$
13,049
$
57,610
$
46,575
Restructuring and Related Costs(1) (unaudited, in thousands) Three Months Ended Twelve Months Ended October 3,2020 October 3,2020 Research and development$
125
$
5,074
Sales and marketing
-
19,788
General and administrative
-
1,423
Total restructuring and related costs$
125
$
26,285
(1) On June 23, 2020, the Company initiated a restructuring plan as part of its efforts to reduce operating expenses and preserve liquidity due to the uncertainty and challenges stemming from the COVID-19 pandemic. As part of the 2020 restructuring plan, the Company eliminated approximately 12% of its global headcount and closed its New York retail store and six satellite offices. The Company believes these initiatives will better align resources to provide further operating flexibility and more efficiently position the business for its long-term strategy. The Company expects activities under the 2020 restructuring plan to be substantially complete in the first quarter of fiscal 2021.Use of Non-GAAP Measures
We have provided in this press release financial information that has not been prepared in accordance with generally accepted accounting principles (“U.S. GAAP”), including adjusted EBITDA, adjusted EBITDA margin, free cash flow, gross margin excluding the effect of tariffs, adjusted EBITDA excluding the effect of tariffs, adjusted EBITDA margin excluding the effect of tariffs, revenue excluding the 14th week, revenue excluding the 53rd week, net income (loss) excluding stock-based compensation, restructuring, and legal and transaction related fees, and diluted earnings per share (EPS) excluding stock-based compensation, restructuring, and legal and transaction related fees. These non-GAAP financial measures are not based on any standardized methodology prescribed by U.S. GAAP and are not necessarily comparable to similarly titled measures presented by other companies. 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 identify underlying trends in our business that could otherwise be masked by the effect of the expenses and other items that we exclude in these non-GAAP financial measures. Accordingly, we believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects, and allowing for greater transparency with respect to a key financial metric used by our management in its financial and operational decision-making. Non-GAAP financial measures should not be considered in isolation of, or as an alternative to, measures prepared in accordance with U.S. GAAP. Investors are encouraged to review the reconciliation of these financial measures to their nearest U.S. GAAP financial equivalents provided in the financial statement tables above. We define adjusted EBITDA as net income (loss) adjusted to exclude the impact of depreciation, stock-based compensation expense, interest income, interest expense, other income (expense), income taxes and other items that we do not consider representative of our underlying operating performance. We define adjusted EBITDA margin as adjusted EBITDA divided by revenue. We calculate gross margin excluding the effect of tariffs as gross profit dollars removing the effect of tariffs imposed on goods imported to the U.S. from China divided by revenue. We define free cash flow as defined as net cash from operations less purchases of property and equipment and intangible assets. We calculate adjusted EBITDA excluding the effect of tariffs as net income (loss) excluding the effect of tariffs imposed on goods manufactured in China and adjusted to exclude the impact of depreciation, stock-based compensation expense, interest income, interest expense, other income (expense), income taxes and other items that we do not consider representative of our underlying operating performance. We calculate non-GAAP net income excluding stock-based compensation, restructuring and legal and transaction related fees as net income less stock-based compensation, restructuring fees and legal and transaction related fees. We calculate non-GAAP diluted earnings per share (EPS) excluding stock-based compensation, restructuring, and legal and transaction related fees as net income less stock-based compensation, restructuring costs and legal and transaction related fees divided by our number of shares at fiscal year end. We do not provide a reconciliation of forward-looking non-GAAP financial measures to their comparable GAAP financial measures because we cannot do so without unreasonable effort due to unavailability of information needed to calculate reconciling items and due to the variability, complexity and limited visibility of the adjusting items that would be excluded from the non-GAAP financial measures in future periods. When planning, forecasting and analyzing future periods, we do so primarily on a non-GAAP basis without preparing a GAAP analysis as that would require estimates for items such as stock-based compensation, which is inherently difficult to predict with reasonable accuracy. Stock-based compensation expense is difficult to estimate because it depends on our future hiring and retention needs, as well as the future fair market value of our common stock, all of which are difficult to predict and subject to constant change. In addition, for purposes of setting annual guidance, it would be difficult to quantify stock-based compensation expense for the year with reasonable accuracy in the current quarter. As a result, we do not believe that a GAAP reconciliation would provide meaningful supplemental information about our outlook.
Forward Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding our outlook for the fiscal year ended October 2, 2021, our long-term focus, financial, growth and business strategies and opportunities, growth metrics and targets, new products, software, services and partnerships, profitability and gross margins, our restructuring efforts, our tariff expense and other factors affecting variability in our financial results. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors, including, but not limited to the duration and impact of the COVID-19 pandemic and related mitigation efforts on our industry; changes in general economic or market conditions that could affect consumer income and overall consumer spending; our ability to successfully introduce new products and services and maintain the success of our existing products; the success of our efforts to expand our direct-to-consumer channel; the success of our financial, growth and business strategies; our ability to accurately forecast consumer demand for our products and manage our inventory in response to changing demands; and the other risk factors set forth under the caption “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended June 27, 2020 and our other filings filed with the Securities and Exchange Commission (the “SEC”), copies of which are available free of charge at the SEC’s website at www.sec.gov or upon request from our investor relations department. All forward-looking statements herein reflect our opinions only as of the date of this letter, and we undertake no obligation, and expressly disclaim any obligation, to update forward-looking statements herein in light of new information or future events. Sonos and Sonos product names are trademarks or registered trademarks of Sonos, Inc. All other product names and services may be trademarks or service marks of their respective owners.
About Sonos
Sonos (Nasdaq: SONO) is one of the world’s leading sound experience brands. As the inventor of multi-room wireless home audio, Sonos innovation helps the world listen better by giving people access to the content they love and allowing them to control it however they choose. Known for delivering an unparalleled sound experience, thoughtful home design aesthetic, simplicity of use and an open platform, Sonos makes the breadth of audio content available to anyone. Sonos is headquartered in Santa Barbara, California. Learn more at www.sonos.com.
View source version on businesswire.com: https://www.businesswire.com/news/home/20201118005984/en/
Investor Contact Cammeron McLaughlin IR@sonos.com
Press Contact Tom Lodge PR@sonos.com
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