Sonos Reports Second Quarter Fiscal 2022 Results
Sonos, Inc. reported a 20.1% year-over-year increase in revenue for Q2 2022, totaling $399.8 million, with a constant-currency increase of 22.8%. However, gross margins fell by 500 basis points to 44.8%, leading to a GAAP net income decline to $8.6 million from $17.2 million the previous year. The non-GAAP net income also decreased to $35.8 million from $44.6 million. The company maintained its fiscal 2022 revenue outlook of $1.95 billion to $2.0 billion, but adjusted guidance showed a reduction in expected gross margins to 45.5% to 46.0%.
- Revenue growth of 20.1% YoY to $399.8 million.
- Maintained fiscal 2022 revenue outlook of $1.95 billion to $2.0 billion.
- Gross margin decreased by 500 basis points to 44.8%.
- GAAP net income fell to $8.6 million from $17.2 million YoY.
- Non-GAAP net income dropped to $35.8 million from $44.6 million YoY.
- Adjusted EBITDA margin decreased from 14.6% last year to 11.7%.
Delivers strong revenue growth of
Second Quarter 2022 Financial Highlights (unaudited)
-
Revenue increased
20.1% year-over-year to ; on a constant-currency basis, revenue increased approximately$399.8 million 22.8% year-over-year -
Gross margin decreased 500 basis points year-over-year to
44.8% -
GAAP net income of
compared to$8.6 million last year; non-GAAP net income excluding stock-based compensation and legal and transaction related fees of$17.2 million compared to$35.8 million last year$44.6 million -
GAAP diluted earnings per share (EPS) of
compared to$0.06 last year; non-GAAP diluted EPS excluding stock-based compensation and legal and transaction related fees of$0.12 compared to$0.26 last year$0.31 -
Adjusted EBITDA of
compared to$46.9 million last year$48.5 million -
Adjusted EBITDA margin of
11.7% compared to14.6% last year -
Cash flows used in operating activities of
( $97.6) million -
Free cash flow of
( $106.9) million
Fiscal 2022 Outlook
-
Maintaining Revenue outlook in the range of
to$1.95 billion , representing growth in the range of$2.0 billion 14% to16% from fiscal 2021. -
Gross margin updated to be in the range of
45.5% to46.0% . This compares to a prior outlook range of46% to47% , and is inline with our long-term guidance range of45.0% to47.0% . -
Adjusted EBITDA in the range of
to$290 million , representing growth in the range of$310 million 4% to11% . This has been narrowed relative to our prior outlook range of to$290 million representing growth in the range of$325 million 4% to17% -
Adjusted EBITDA margin in the range of
14.9% to15.5% , compared to prior outlook range of14.9% to16.2%
Sonos CEO
Spence continued, “Our consumer demand remains strong and we announced three exciting new products today. While the world remains unpredictable, we remain confident that we can deliver another record-setting year in Fiscal 2022.”
Supplemental Earnings Presentation
The company has posted a supplemental earnings presentation accompanying its second quarter fiscal 2022 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 second quarter fiscal 2022 results on
The conference call may also be accessed by dialing (888) 330-2454 with conference ID 8641747. Participants outside the
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.
Condensed Consolidated Statements of Operations and Comprehensive Income | ||||||||||||||||
(unaudited, in thousands, except share and per share amounts) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||
Revenue | $ |
399,781 |
|
$ |
332,949 |
|
$ |
1,064,262 |
|
$ |
978,532 |
|
||||
Cost of revenue |
|
220,747 |
|
|
167,173 |
|
|
567,843 |
|
|
513,331 |
|
||||
Gross profit |
|
179,034 |
|
|
165,776 |
|
|
496,419 |
|
|
465,201 |
|
||||
Operating expenses | ||||||||||||||||
Research and development |
|
64,947 |
|
|
56,370 |
|
|
126,277 |
|
|
108,717 |
|
||||
Sales and marketing |
|
59,955 |
|
|
57,205 |
|
|
143,691 |
|
|
131,658 |
|
||||
General and administrative |
|
44,090 |
|
|
39,806 |
|
|
83,816 |
|
|
75,047 |
|
||||
Total operating expenses |
|
168,992 |
|
|
153,381 |
|
|
353,784 |
|
|
315,422 |
|
||||
Operating income |
|
10,042 |
|
|
12,395 |
|
|
142,635 |
|
|
149,779 |
|
||||
Other income (expense), net | ||||||||||||||||
Interest income |
|
123 |
|
|
44 |
|
|
156 |
|
|
80 |
|
||||
Interest expense |
|
(90 |
) |
|
(182 |
) |
|
(187 |
) |
|
(448 |
) |
||||
Other income (expense), net |
|
(2,281 |
) |
|
(1,578 |
) |
|
(3,683 |
) |
|
2,680 |
|
||||
Total other income (expense), net |
|
(2,248 |
) |
|
(1,716 |
) |
|
(3,714 |
) |
|
2,312 |
|
||||
Income before provision for (benefit from) income taxes |
|
7,794 |
|
|
10,679 |
|
|
138,921 |
|
|
152,091 |
|
||||
Provision for (benefit from) income taxes |
|
(772 |
) |
|
(6,542 |
) |
|
6,874 |
|
|
2,578 |
|
||||
Net income | $ |
8,566 |
|
$ |
17,221 |
|
$ |
132,047 |
|
$ |
149,513 |
|
||||
Net income attributable to common stockholders: | ||||||||||||||||
Basic and diluted | $ |
8,566 |
|
$ |
17,221 |
|
$ |
132,047 |
|
$ |
149,513 |
|
||||
Net income per share attributable to common stockholders: | ||||||||||||||||
Basic | $ |
0.07 |
|
$ |
0.14 |
|
$ |
1.03 |
|
$ |
1.26 |
|
||||
Diluted | $ |
0.06 |
|
$ |
0.12 |
|
$ |
0.94 |
|
$ |
1.09 |
|
||||
Weighted-average shares used in computing net income per share attributable to common stockholders: | ||||||||||||||||
Basic |
|
128,112,234 |
|
|
121,880,615 |
|
|
127,887,530 |
|
|
118,745,569 |
|
||||
Diluted |
|
139,642,570 |
|
|
143,055,546 |
|
|
140,982,509 |
|
|
136,849,846 |
|
||||
Total comprehensive income | ||||||||||||||||
Net income |
|
8,566 |
|
|
17,221 |
|
|
132,047 |
|
|
149,513 |
|
||||
Change in foreign currency translation adjustment |
|
100 |
|
|
199 |
|
|
(260 |
) |
|
1,046 |
|
||||
Comprehensive income | $ |
8,666 |
|
$ |
17,420 |
|
$ |
131,787 |
|
$ |
150,559 |
|
||||
Condensed Consolidated Balance Sheets | ||||||||
(unaudited, dollars in thousands, except par values) | ||||||||
As of | ||||||||
2022 |
2021 |
|||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ |
606,744 |
|
$ |
640,101 |
|
||
Accounts receivable, net of allowances |
|
111,388 |
|
|
100,779 |
|
||
Inventories |
|
264,405 |
|
|
185,130 |
|
||
Prepaids and other current assets |
|
28,175 |
|
|
31,504 |
|
||
Total current assets |
|
1,010,712 |
|
|
957,514 |
|
||
Property and equipment, net |
|
71,973 |
|
|
71,341 |
|
||
Operating lease right-of-use assets |
|
30,660 |
|
|
33,841 |
|
||
|
37,726 |
|
|
15,545 |
|
|||
Intangible assets, net |
|
28,888 |
|
|
24,450 |
|
||
Deferred tax assets |
|
9,871 |
|
|
10,028 |
|
||
Other noncurrent assets |
|
36,401 |
|
|
26,085 |
|
||
Total assets | $ |
1,226,231 |
|
$ |
1,138,804 |
|
||
Liabilities and stockholders’ equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ |
271,005 |
|
$ |
214,996 |
|
||
Accrued expenses |
|
100,344 |
|
|
108,029 |
|
||
Accrued compensation |
|
32,365 |
|
|
77,695 |
|
||
Deferred revenue, current |
|
18,438 |
|
|
35,866 |
|
||
Other current liabilities |
|
41,584 |
|
|
39,544 |
|
||
Total current liabilities |
|
463,736 |
|
|
476,130 |
|
||
Operating lease liabilities, noncurrent |
|
29,342 |
|
|
33,960 |
|
||
Deferred revenue, noncurrent |
|
58,196 |
|
|
53,632 |
|
||
Deferred tax liabilities |
|
2,394 |
|
|
2,394 |
|
||
Other noncurrent liabilities |
|
879 |
|
|
3,646 |
|
||
Total liabilities |
|
554,547 |
|
|
569,762 |
|
||
Stockholders’ equity: | ||||||||
Common stock, |
|
130 |
|
|
129 |
|
||
|
(36,831 |
) |
|
(50,276 |
) |
|||
Additional paid-in capital |
|
647,871 |
|
|
690,462 |
|
||
Retained earnings (accumulated deficit) |
|
62,150 |
|
|
(69,897 |
) |
||
Accumulated other comprehensive loss |
|
(1,636 |
) |
|
(1,376 |
) |
||
Total stockholders’ equity |
|
671,684 |
|
|
569,042 |
|
||
Total liabilities and stockholders’ equity | $ |
1,226,231 |
|
$ |
1,138,804 |
|
||
Condensed Consolidated Statements of Cash Flows | ||||||||
(unaudited, dollars in thousands) | ||||||||
Six Months Ended | ||||||||
2022 |
2021 |
|||||||
Cash flows from operating activities | ||||||||
Net income | $ |
132,047 |
|
$ |
149,513 |
|
||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization |
|
18,792 |
|
|
16,725 |
|
||
Stock-based compensation expense |
|
38,684 |
|
|
31,207 |
|
||
Other |
|
4,357 |
|
|
344 |
|
||
Deferred income taxes |
|
(129 |
) |
|
(146 |
) |
||
Foreign currency transaction (gain) loss |
|
2,267 |
|
|
(1,047 |
) |
||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net |
|
(12,786 |
) |
|
(13,260 |
) |
||
Inventories |
|
(86,153 |
) |
|
39,631 |
|
||
Other assets |
|
(6,082 |
) |
|
(21,982 |
) |
||
Accounts payable and accrued expenses |
|
51,643 |
|
|
(36,485 |
) |
||
Accrued compensation |
|
(45,084 |
) |
|
2,087 |
|
||
Deferred revenue |
|
(11,834 |
) |
|
8,374 |
|
||
Other liabilities |
|
(3,348 |
) |
|
992 |
|
||
Net cash provided by operating activities |
|
82,374 |
|
|
175,953 |
|
||
Cash flows from investing activities | ||||||||
Purchases of property and equipment, intangible and other assets |
|
(15,665 |
) |
|
(19,927 |
) |
||
Cash paid for acquisitions, net of acquired cash |
|
(27,101 |
) |
|
— |
|
||
Net cash used in investing activities |
|
(42,766 |
) |
|
(19,927 |
) |
||
Cash flows from financing activities | ||||||||
Payments for debt issuance costs |
|
(929 |
) |
|
— |
|
||
Payments of borrowings |
|
— |
|
|
(25,000 |
) |
||
Payments for repurchase of common stock |
|
(74,482 |
) |
|
(682 |
) |
||
Proceeds from exercise of common stock options |
|
29,254 |
|
|
119,166 |
|
||
Payments for repurchase of common stock related to shares withheld for tax in connection with vesting of restricted stock units |
|
(22,601 |
) |
|
(18,821 |
) |
||
Net cash provided by (used in) financing activities |
|
(68,758 |
) |
|
74,663 |
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
(4,207 |
) |
|
1,139 |
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
(33,357 |
) |
|
231,828 |
|
||
Cash, cash equivalents and restricted cash | ||||||||
Beginning of period |
|
640,101 |
|
|
407,291 |
|
||
End of period | $ |
606,744 |
|
$ |
639,119 |
|
||
Supplemental disclosure | ||||||||
Cash paid for interest | $ |
85 |
|
$ |
357 |
|
||
Cash paid for taxes, net of refunds | $ |
8,916 |
|
$ |
3,255 |
|
||
Cash paid for amounts included in the measurement of lease liabilities | $ |
7,800 |
|
$ |
11,683 |
|
||
Supplemental disclosure of non-cash investing and financing activities | ||||||||
Purchases of property and equipment in accounts payable and accrued expenses | $ |
7,869 |
|
$ |
8,910 |
|
||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ |
2,245 |
|
$ |
1,622 |
|
||
Reconciliation of Net Income to Adjusted EBITDA | ||||||||||||||||
(unaudited, dollars in thousands except percentage) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
2022 |
2021 |
2022 |
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 |
|
|
16,363 |
|
|
38,684 |
|
|
31,207 |
|
||||
Interest income |
|
(123 |
) |
|
(44 |
) |
|
(156 |
) |
|
(80 |
) |
||||
Interest expense |
|
90 |
|
|
182 |
|
|
187 |
|
|
448 |
|
||||
Other income (expense), net |
|
2,281 |
|
|
1,578 |
|
|
3,683 |
|
|
(2,680 |
) |
||||
Provision for (benefit from) income taxes |
|
(772 |
) |
|
(6,542 |
) |
|
6,874 |
|
|
2,578 |
|
||||
Restructuring and related expenses(1) |
|
— |
|
|
— |
|
|
— |
|
|
(2,611 |
) |
||||
Legal and transaction related costs(2) |
|
6,012 |
|
|
11,013 |
|
|
9,885 |
|
|
19,679 |
|
||||
Adjusted EBITDA | $ |
46,854 |
|
$ |
48,513 |
|
$ |
209,996 |
|
$ |
214,779 |
|
||||
Revenue | $ |
399,781 |
|
$ |
332,949 |
|
$ |
1,064,262 |
|
$ |
978,532 |
|
||||
Adjusted EBITDA margin |
|
11.7 |
% |
|
14.6 |
% |
|
19.7 |
% |
|
21.9 |
% |
(1) Restructuring and related expenses for the three months ended |
||||||||
(2) Legal and transaction related costs consist of expenses related to our intellectual property litigation against Alphabet Inc. and |
||||||||
Reconciliation of Cash Flows Provided by Operating Activities to Free Cash Flow | ||||||||||||||||
(unaudited, dollars in thousands) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||
Cash flows provided by operating activities | $ |
(97,562 |
) |
$ |
(38,559 |
) |
$ |
82,374 |
|
$ |
175,953 |
|
||||
Less: Purchases of property and equipment, intangible and other assets |
|
(9,310 |
) |
|
(8,594 |
) |
|
(15,665 |
) |
|
(19,927 |
) |
||||
Free cash flow | $ |
(106,872 |
) |
$ |
(47,153 |
) |
$ |
66,709 |
|
$ |
156,026 |
|
||||
Revenue by Product Category | ||||||||||||||||
(unaudited, dollars in thousands) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||
Sonos speakers | $ |
317,734 |
$ |
267,534 |
$ |
819,620 |
$ |
795,050 |
||||||||
Sonos system products |
|
61,220 |
|
|
52,062 |
|
|
195,965 |
|
|
149,820 |
|
||||
Partner products and other revenue |
|
20,827 |
|
|
13,353 |
|
|
48,677 |
|
|
33,662 |
|
||||
Total revenue | $ |
399,781 |
|
$ |
332,949 |
|
$ |
1,064,262 |
|
$ |
978,532 |
|
||||
Revenue by |
||||||||||||||||
(unaudited, dollars in thousands) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||
(In thousands) | ||||||||||||||||
$ |
238,193 |
$ |
193,938 |
$ |
612,006 |
$ |
561,177 |
|||||||||
|
128,431 |
|
|
114,306 |
|
|
373,912 |
|
|
354,313 |
|
|||||
|
33,157 |
|
|
24,705 |
|
|
78,344 |
|
|
63,042 |
|
|||||
Total revenue | $ |
399,781 |
|
$ |
332,949 |
|
$ |
1,064,262 |
|
$ |
978,532 |
|
||||
Stock-based Compensation | ||||||||||||||||
(unaudited, dollars in thousands) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||
Cost of revenue | $ |
377 |
$ |
261 |
$ |
705 |
$ |
474 |
||||||||
Research and development |
|
8,091 |
|
|
6,683 |
|
|
14,829 |
|
|
12,942 |
|
||||
Sales and marketing |
|
4,177 |
|
|
3,632 |
|
|
7,824 |
|
|
7,040 |
|
||||
General and administrative |
|
8,580 |
|
|
5,787 |
|
|
15,326 |
|
|
10,751 |
|
||||
Total stock-based compensation expense | $ |
21,225 |
|
$ |
16,363 |
|
$ |
38,684 |
|
$ |
31,207 |
|
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, net income excluding stock-based compensation and legal and transaction related fees, and diluted earnings per share (EPS) excluding stock-based compensation and legal and transaction related fees. These non-GAAP financial measures are not based on any standardized methodology prescribed by
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 ending
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
View source version on businesswire.com: https://www.businesswire.com/news/home/20220511005390/en/
Investor Contact
IR@sonos.com
Press Contact
PR@sonos.com
Source: Sonos
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