SONOS(SONO)2025-05-07 21:39Financial Performance - Total revenue for the three months ended March 29, 2025, was $259.8 million, compared to $252.7 million for the same period in 2024, representing a growth of 2.3%[99] - Net loss for the three months ended March 29, 2025, was $70.1 million, compared to a net loss of $69.7 million for the same period in 2024, indicating a slight increase in losses[99] - Adjusted EBITDA for the three months ended March 29, 2025, was $(826) thousand, compared to $(33.6) million for the same period in 2024, showing an improvement in operational performance[99] - Total revenue for the six months ended March 29, 2025, decreased by $54.9 million, or 6.3%, compared to the same period in 2024, mainly due to softer demand and challenges from the 2024 app rollout[112] - The volume of products sold decreased by 8.3% for the six months ended March 29, 2025, primarily driven by declines in units sold of Sonos One and Arc[114] Product Sales and Revenue Composition - Products sold increased to 768 units in the three months ended March 29, 2025, from 747 units in the same period in 2024, reflecting a growth of 2.8%[99] - Sonos speakers revenue represented 74.9% of total revenue for the three months ended March 29, 2025, with a 3.9% increase compared to the same period in 2024[110] - Sonos system products represented 19.5% of total revenue for the three months ended March 29, 2025, with a 2.6% increase compared to the same period in 2024[110] - Partner products and other revenue represented 5.7% of total revenue for the three months ended March 29, 2025, decreasing by 8.9% compared to the same period in 2024[110] - Total revenue for the three months ended March 29, 2025, increased by $7.1 million, or 2.8%, compared to the same period in 2024, primarily due to the introduction of new products Arc Ultra and Ace[109] Cost Management and Operational Efficiency - The company initiated a cost transformation initiative, expecting approximately $42.0 million in savings during the remainder of fiscal 2025 due to workforce reductions of approximately 6% in August 2024 and 12% in February 2025[94] - Operating expenses for the three months ended March 29, 2025, decreased by $8.2 million, or 4.5%, compared to the same period in 2024[124] - Research and development expenses for the three months ended March 29, 2025, were $77.4 million, a decrease of 3.6% compared to the same period in 2024[124] - Research and development expenses decreased by $15.7 million, or 19.5%, for the three months ended March 29, 2025, compared to the same period in 2024, primarily due to lower personnel-related costs and product development spend[128] - Sales and marketing expenses decreased by $0.4 million, or 0.7%, for the three months ended March 29, 2025, driven by lower personnel-related costs, partially offset by increased depreciation costs[131] - General and administrative expenses decreased by $11.8 million, or 29.0%, for the three months ended March 29, 2025, mainly due to lower personnel-related costs and a decrease in legal fees[134] Margins and Profitability - The company reported a net income margin of (27.0%) for the three months ended March 29, 2025, compared to (27.6%) for the same period in 2024[99] - Adjusted EBITDA margin improved to (0.3%) for the three months ended March 29, 2025, from (13.3%) for the same period in 2024[99] - Gross profit for the three months ended March 29, 2025, was $113.6 million, reflecting a 1.4% increase compared to the same period in 2024[116] - Gross margin for the three months ended March 29, 2025, decreased by 60 basis points to 43.7% compared to the same period in 2024[121] Cash Flow and Financial Position - Cash flows from operating activities provided $96.5 million for the six months ended March 29, 2025, consisting of a net loss of $19.9 million and non-cash adjustments of $85.4 million[150] - Cash used in investing activities was $17.2 million for the six months ended March 29, 2025, primarily for purchases of marketable securities and property and equipment[151] - Cash used in financing activities was $74.2 million for the six months ended March 29, 2025, mainly for repurchases of common stock[152] - As of March 29, 2025, the company had cash and cash equivalents of $173.2 million, including $72.9 million held by foreign subsidiaries[143] - The company believes existing cash and cash equivalents, cash flows from operations, and committed credit lines will be sufficient to meet long-term working capital needs for at least the next 12 months[144] Foreign Currency Exposure - The company recognized a tax provision of $11.0 million for the three months ended March 29, 2025, compared to a tax benefit of $0.7 million for the same period in 2024[140] - For the three months ended March 29, 2025, the company recognized a gain from foreign currency exchange of $0.2 million, compared to a loss of $3.3 million for the same period in 2024[158] - For the six months ended March 29, 2025, the company reported a loss from foreign currency exchange of $5.8 million, while it had a gain of $6.8 million in the same period in 2024[158] - A hypothetical adverse change of 10% in foreign currency exchange rates would have resulted in an adverse impact on loss before provision for income taxes of approximately $1.6 million and $10.9 million for the three and six months ended March 29, 2025, respectively[158] - The company's international sales are primarily denominated in foreign currencies, which exposes it to fluctuations in exchange rates, particularly with the euro and the British pound[156] - The company has not entered into any material foreign exchange contracts or derivatives to hedge foreign currency exposures, increasing its risk from exchange rate fluctuations[157] - The company’s inventory purchases are primarily denominated in U.S. dollars, while a portion of its operating expenses are incurred in foreign currencies, leading to potential impacts from currency fluctuations[156] - The volatility of exchange rates is influenced by many unpredictable factors, which could significantly impact the company's future results of operations[157] Accounting Policies and Estimates - The company evaluates its estimates and assumptions regarding financial statements on an ongoing basis, based on historical experience and reasonable assumptions[154] - There have been no material changes to the company's critical accounting policies compared to those disclosed in its Annual Report on Form 10-K[155] - Actual results could differ materially from the company's estimates and assumptions used in financial reporting[154]