EX-99.1 2 final2q25earningspressrele.htm EX-99.1 Document

Exhibit 99.1

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Sonos Reports Second Quarter Fiscal 2025 Results
Q2 revenue at high end of guidance range, Adjusted EBITDA above high end due to significant year over year expense declines


Santa Barbara, CA – May 7, 2025 - Sonos, Inc. (Nasdaq: SONO) today reported Second Quarter Fiscal 2025 results.

“We made significant progress in Q2 across our top initiatives,” said Tom Conrad, Sonos Interim Chief Executive Officer. “We’re firmly on track in restoring the reliability and responsiveness our customers expect, with nine major software updates delivered in the last 120 days and more on the way. We’re actively navigating the evolving tariff landscape with operational discipline and flexibility and we're reinvigorating demand through strategic pricing on Era 100, one of our most popular gateway products. Even in a complex environment, we’re operating with focus and confidence as we position Sonos for long-term success.”

“We stayed disciplined and continued to execute well in Q2 as we delivered revenue at the high end of our guidance with Adjusted EBITDA that exceeded our expectations,” commented Saori Casey, Sonos Chief Financial Officer. “We believe that our continued progress on our transformation efforts positions us well to navigate this uncertain macroeconomic environment.”

Second Quarter Fiscal 2025 Financial Highlights (unaudited)
●Revenue of $259.8 million
●GAAP gross margin of 43.7%
●GAAP net loss of ($70.1) million, GAAP diluted loss per share (EPS) of ($0.58)
●Non-GAAP net loss1 of ($21.7) million, Non-GAAP diluted EPS1 of ($0.18)
●Adjusted EBITDA1 of ($0.8) million

Notes:
(1) Non-GAAP net loss/Non-GAAP diluted loss per share (EPS) and Adjusted EBITDA exclude stock-based compensation, legal and transaction related fees, amortization of intangibles, and restructuring and other charges. See “Use of Non-GAAP Measures” and reconciliations to GAAP measures below.

Guidance
The company will provide guidance on its Second Quarter Fiscal 2025 earnings call.


Supplemental Earnings Presentation

The company has posted a supplemental earnings presentation accompanying its Second Quarter Fiscal 2025 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 2025 results on May 7, 2025, at 4:30 p.m. Eastern Time (1:30 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 (888) 330-2454 with conference ID 8641747. Participants outside the U.S. can access the call by dialing (240) 789-2714 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# following the call.


Consolidated Statements of Operations and Comprehensive Income (Loss)
(unaudited, in thousands, except share and per share amounts)











Three Months Ended

Six Months Ended


March 29,
2025

March 30,
2024

March 29,
2025

March 30,
2024
Revenue

$ 259,756

$ 252,662

$ 810,613

$ 865,531
Cost of revenue

146,147

140,624

455,597

470,815
Gross profit

113,609

112,038

355,016

394,716
Operating expenses








Research and development

77,423

80,322

158,261

159,557
Sales and marketing

64,210

61,835

150,854

145,785
General and administrative

33,200

40,841

59,032

80,639
Total operating expenses

174,833

182,998

368,147

385,981
Operating (loss) income

(61,224)

(70,960)

(13,131)

8,735
Other income (expense), net








Interest income

1,973

3,933

3,834

7,008
Interest expense

(109)

(122)

(219)

(227)
Other income (expense), net

193

(3,303)

(5,836)

6,971
Total other income (expense), net

2,057

508

(2,221)

13,752
(Loss) income before provision for (benefit from) income taxes

(59,167)

(70,452)

(15,352)

22,487
Provision for (benefit from) income taxes

10,977

(743)

4,555

11,249
Net (loss) income

$ (70,144)

$ (69,709)

$ (19,907)

$ 11,238









Net (loss) income per share:








Basic

$ (0.58)

$ (0.56)

$ (0.16)

$ 0.09
Diluted

$ (0.58)

$ (0.56)

$ (0.16)

$ 0.09









Weighted-average shares used in computing net (loss) income per share:








Basic

119,919,163

123,749,605

120,995,375

124,465,661


        
Diluted

119,919,163

123,749,605

120,995,375

128,206,823









Total comprehensive (loss) income








Net (loss) income

(70,144)

(69,709)

(19,907)

11,238
Change in foreign currency translation adjustment

656

(85)

(460)

(948)
Net unrealized loss on marketable securities

(33)

(26)

(117)

(26)
Comprehensive (loss) income

$ (69,521)

$ (69,820)

$ (20,484)

$ 10,264

Consolidated Balance Sheets
(unaudited, in thousands, except par values)

As of

March 29,
2025

September 28,
2024
Assets



Current assets:



Cash and cash equivalents
$ 173,158

$ 169,732
Marketable securities
50,349

51,426
Accounts receivable, net
40,430

44,513
Inventories
138,421

231,505
Prepaids and other current assets
50,666

53,910
Total current assets
453,024

551,086
Property and equipment, net
86,035

102,148
Operating lease right-of-use assets
48,011

50,175
Goodwill
82,854

82,854
Intangible assets, net



In-process research and development
—

73,770
Other intangible assets
81,311

14,266
Deferred tax assets
9,197

10,314
Other noncurrent assets
31,746

31,699
Total assets
$ 792,178

$ 916,312




Liabilities and stockholders’ equity



Current liabilities:



Accounts payable
$ 117,946

$ 194,590
Accrued expenses
73,531

87,783
Accrued compensation
26,113

15,701
Deferred revenue, current
21,214

21,802
Other current liabilities
50,786

46,277
Total current liabilities
289,590

366,153
Operating lease liabilities, noncurrent
56,442

56,588
Deferred revenue, noncurrent
60,276

61,075
Deferred tax liabilities
311

60
Other noncurrent liabilities
2,700

3,816
Total liabilities
409,319

487,692




Commitments and contingencies





        
Stockholders’ equity:



Common stock, $0.001 par value
124

123
Treasury stock
(51,934)

(17,096)
Additional paid-in capital
507,805

498,245
Accumulated deficit
(70,841)

(50,934)
Accumulated other comprehensive loss
(2,295)

(1,718)
Total stockholders’ equity
382,859

428,620
Total liabilities and stockholders’ equity
$ 792,178

$ 916,312


Consolidated Statements of Cash Flows
(unaudited, dollars in thousands)

Six Months Ended

March 29,
2025

March 30,
2024
Cash flows from operating activities



Net (loss) income
$ (19,907)

$ 11,238
Adjustments to reconcile net (loss) income to net cash provided by operating activities:



Stock-based compensation expense
45,436

43,031
Depreciation and amortization
32,778

23,121
Provision for inventory obsolescence
(143)

5,293
Restructuring and other charges
4,889

266
Deferred income taxes
997

(31)
Other
1,528

2,188
Foreign currency transaction gain
(72)

(3,441)
Changes in operating assets and liabilities:



Accounts receivable
4,702

(2,793)
Inventories
92,615

161,683
Other assets
1,328

(15,169)
Accounts payable and accrued expenses
(83,634)

(89,151)
Accrued compensation
10,456

16,040
Deferred revenue
(257)

1,857
Other liabilities
5,791

10,025
Net cash provided by operating activities
96,507

164,157
Cash flows from investing activities



Purchases of marketable securities
(25,900)

(45,280)
Purchases of property and equipment
(18,662)

(16,263)
Maturities of marketable securities
27,400

—
Net cash used in investing activities
(17,162)

(61,543)
Cash flows from financing activities



Payments for repurchase of common stock, including excise tax and commission
(60,602)

(76,250)


        
Payments for repurchase of common stock related to shares withheld for tax in connection with vesting of restricted stock units
(16,246)

(13,242)
Proceeds from exercise of stock options
2,654

11,905
Net cash used in financing activities
(74,194)

(77,587)
Effect of exchange rate changes on cash and cash equivalents
(1,725)

704
Net increase in cash and cash equivalents
3,426

25,731
Cash and cash equivalents



Beginning of period
169,732

220,231
End of period
$ 173,158

$ 245,962
Supplemental disclosure



Cash paid for interest
$ 126

$ 134
Cash paid for taxes, net of refunds
$ 16,493

$ 12,247
Cash paid for amounts included in the measurement of lease liabilities, net of tenant improvement reimbursements received
$ 1,149

$ 6,670
Supplemental disclosure of non-cash investing and financing activities



Purchases of property and equipment in accounts payable and accrued expenses
$ 1,311

$ 7,582
Right-of-use assets obtained in exchange for new operating lease liabilities
$ 1,491

$ 7,637
Excise tax on share repurchases, accrued but not paid
$ 264

$ 361

Reconciliation of GAAP to Non-GAAP Cost of Revenue and Gross Profit
(unaudited, in thousands, except percentages)


Three Months Ended

Six Months Ended


March 29,
2025

March 30,
2024

March 29,
2025

March 30,
2024
Reconciliation of GAAP cost of revenue








GAAP cost of revenue

$ 146,147

$ 140,624

$ 455,597

$ 470,815
Stock-based compensation expense

1,606

686

2,955

1,340
Amortization of intangibles

3,144

973

6,474

1,945
Restructuring and other charges

3,935

—

3,935

—
Non-GAAP cost of revenue

$ 137,462

$ 138,965

$ 442,233

$ 467,530









Reconciliation of GAAP gross profit








GAAP gross profit

$ 113,609

$ 112,038

$ 355,016

$ 394,716
Stock-based compensation expense

1,606

686

2,955

1,340
Amortization of intangibles

3,144

973

6,474

1,945
Restructuring and other charges

3,935

—

3,935

—
Non-GAAP gross profit

$ 122,294

$ 113,697

$ 368,380

$ 398,001











        
GAAP gross margin

43.7%

44.3%

43.8%

45.6%
Non-GAAP gross margin

47.1%

45.0%

45.4%

46.0%

Reconciliation of Selected Non-GAAP Financial Measures
(unaudited, dollars in thousands)


Three Months Ended

Six Months Ended


March 29,
2025

March 30,
2024

March 29,
2025

March 30,
2024
Research and Development (GAAP)

$ 77,423

$ 80,322

$ 158,261

$ 159,557
Stock-based compensation

8,021

10,419

21,336

19,398
Amortization of intangibles

18

496

196

992
Restructuring and other charges

12,766

-

12,706

323
Research and Development (Non-GAAP)

$ 56,618

$ 69,407

$ 124,023

$ 138,844









Sales and Marketing (GAAP)

$ 64,210

$ 61,835

$ 150,854

$ 145,785
Stock-based compensation

3,980

4,972

9,612

8,787
Amortization of intangibles

-

-

-

-
Restructuring and other charges

2,792

-

2,792

113
Sales and Marketing (Non-GAAP)

$ 57,438

$ 56,863

$ 138,450

$ 136,885









General and Administrative (GAAP)

33,200

40,841

59,032

80,639
Stock-based compensation

6,495

7,596

11,533

13,506
Legal and transaction related costs

1,429

2,395

1,624

6,140
Amortization of intangibles

24

24

47

48
Restructuring and other charges

4,207

6

4,207

138
General and Administrative (Non-GAAP)

$ 21,045

$ 30,820

$ 41,621

$ 60,807









Total Operating Expenses (GAAP)

$ 174,833

$ 182,998

$ 368,147

$ 385,981
Stock-based compensation

18,496

22,987

42,481

41,691
Legal and transaction related costs

1,429

2,395

1,624

6,140
Amortization of intangibles

42

520

243

1,040
Restructuring and other charges

19,765

6

19,705

574
Operating Expenses (Non-GAAP)

$ 135,101

$ 157,090

$ 304,094

$ 336,536









Total Operating (Loss) Income (GAAP)

$ (61,224)

$ (70,960)

$ (13,131)

$ 8,735
Stock-based compensation

20,102

23,673

45,436

43,031
Legal and transaction related costs

1,429

2,395

1,624

6,140
Amortization of intangibles

3,186

1,493

6,717

2,985
Restructuring and other charges

23,700

6

23,640

574
Operating (Loss) Income (Non-GAAP)

$ (12,807)

$ (43,393)

$ 64,286

$ 61,465
Depreciation

11,981

9,750

26,061

20,136
Adjusted EBITDA (Non-GAAP)

$ (826)

$ (33,643)

$ 90,347

$ 81,601






        
Reconciliation of Net (Loss) Income to Adjusted EBITDA
(unaudited, dollars in thousands except percentages)


Three Months Ended

Six Months Ended


March 29,
2025

March 30,
2024

March 29,
2025

March 30,
2024
(In thousands, except percentages)








Net (loss) income

$ (70,144)

$ (69,709)

$ (19,907)

$ 11,238
Add (deduct):








Depreciation and amortization

15,167

11,243

32,778

23,121
Stock-based compensation expense

20,102

23,673

45,436

43,031
Interest income

(1,973)

(3,933)

(3,834)

(7,008)
Interest expense

109

122

219

227
Other expense (income), net

(193)

3,303

5,836

(6,971)
Provision for (benefit from) income taxes

10,977

(743)

4,555

11,249
Legal and transaction related costs (1)

1,429

2,395

1,624

6,140
Restructuring and other charges (2)

23,700

6

23,640

574
Adjusted EBITDA

$ (826)

$ (33,643)

$ 90,347

$ 81,601
Revenue

$ 259,756

$ 252,662

$ 810,613

$ 865,531
Net (loss) income margin

(27.0)%

(27.6)%

(2.5)%

1.3%
Adjusted EBITDA margin

(0.3)%

(13.3)%

11.1%

9.4%
(1) Legal and transaction-related costs consist of expenses related to our intellectual property ("IP") litigation against Alphabet and Google, as well as legal and transaction costs associated with our acquisition activity, which we do not consider representative of our underlying operating performance.
(2) On February 5, 2025, we initiated a restructuring plan to reduce our cost base involving 12% of our employees (the "2025 restructuring plan"). Restructuring and other charges for the three and six months ended March 29, 2025, primarily reflect costs associated with our cost transformation initiative including the 2025 restructuring plan and rationalization of our product roadmap, as well as non-recurring CEO transition costs related to modifications to equity awards.



Reconciliation of GAAP Net (Loss) Income to Non-GAAP Net (Loss) Income
(unaudited, in thousands, except share and per share amounts)


Three Months Ended

Six Months Ended


March 29,
2025

March 30,
2024

March 29,
2025

March 30,
2024
Reconciliation of GAAP net (loss) income








GAAP net (loss) income

$ (70,144)

$ (69,709)

$ (19,907)

$ 11,238
Stock-based compensation expense

20,102

23,673

45,436

43,031
Legal and transaction related costs

1,429

2,395

1,624

6,140
Amortization of intangibles

3,186

1,493

6,717

2,985
Restructuring and other charges

23,700

6

23,640

574
Non-GAAP net (loss) income

$ (21,727)

$ (42,142)

$ 57,510

$ 63,968











        
Net (loss) income per share








GAAP net (loss) income per share, diluted

$ (0.58)

$ (0.56)

$ (0.16)

$ 0.09
Non-GAAP net (loss) income per share, diluted

$ (0.18)

$ (0.34)

$ 0.46

$ 0.50









Shares used to calculate net (loss) income per share








Weighted-average shares GAAP, diluted

119,919,163

123,749,605

120,995,375

128,206,823
Weighted-average shares non-GAAP, diluted

119,919,163

123,749,605

123,750,251

128,206,823


Reconciliation of Cash Flows (Used in) Provided by Operating Activities to Free Cash Flow
(unaudited, dollars in thousands)

Three Months Ended

Six Months Ended

March 29,
2025

March 30,
2024

March 29,
2025

March 30,
2024
Cash flows (used in) provided by operating activities
$ (59,666)

$ (111,244)

$ 96,507

$ 164,157
Less: Purchases of property and equipment
(5,556)

(10,186)

(18,662)

(16,263)
Free cash flow
$ (65,222)

$ (121,430)

$ 77,845

$ 147,894


Revenue by Product Category
(unaudited, dollars in thousands)

Three Months Ended

Six Months Ended

March 29,
2025

March 30,
2024

March 29,
2025

March 30,
2024
(In thousands)







Sonos speakers
$ 194,519

$ 187,262

$ 661,661

$ 690,273
Sonos system products
50,540

49,265

110,814

133,826
Partner products and other revenue
14,697

16,135

38,138

41,432
Total revenue
$ 259,756

$ 252,662

$ 810,613

$ 865,531


Revenue by Geographical Region
(unaudited, dollars in thousands)

Three Months Ended

Six Months Ended

March 29,
2025

March 30,
2024

March 29,
2025

March 30,
2024
Americas
$ 176,802

$ 170,187

$ 501,385

$ 562,627
Europe, Middle East and Africa
68,785

69,356

266,397

261,173


        
Asia Pacific
14,169

13,119

42,831

41,731
Total revenue
$ 259,756

$ 252,662

$ 810,613

$ 865,531


Stock-based Compensation
(unaudited, dollars in thousands)

Three Months Ended

Six Months Ended

March 29,
2025

March 30,
2024

March 29,
2025

March 30,
2024
(In thousands)







Cost of revenue
$ 1,606

$ 686

$ 2,955

$ 1,340
Research and development
8,557

10,419

21,872

19,398
Sales and marketing
4,027

4,972

9,659

8,787
General and administrative
9,055

7,596

14,093

13,506
Total stock-based compensation expense
$ 23,245

$ 23,673

$ 48,579

$ 43,031


Amortization of Intangibles
(unaudited, dollars in thousands)


Three Months Ended

Six Months Ended


March 29,
2025

March 30,
2024

March 29,
2025

March 30,
2024
Cost of revenue

$ 3,144

$ 973

$ 6,474

$ 1,945
Research and development

18

496

196

992
Sales and marketing

-

-

-

-
General and administrative

24

24

47

48
Total amortization of intangibles

$ 3,186

$ 1,493

$ 6,717

$ 2,985

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, non-GAAP gross margin, net (loss) income excluding stock-based compensation, legal and transaction related fees, amortization of intangibles, and restructuring and other charges and diluted earnings per share excluding stock-based compensation, legal and transaction related fees, amortization of intangibles and restructuring and other charges. 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 (loss) income adjusted to exclude the impact of depreciation and amortization, stock-based compensation expense, interest income, interest expense, other income, income taxes, restructuring and other charges, legal and transaction related fees 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 define free cash flow as net cash from operations less purchases of property and equipment. We define non-GAAP gross margin as GAAP gross margin, excluding stock-based compensation, amortization of intangible assets and restructuring and other changes. We calculate non-GAAP net (loss) income excluding stock-based compensation, legal and transaction related fees, amortization of intangibles and restructuring and other charges as net income less stock-based compensation, legal and transaction related fees, amortization of intangibles and restructuring and other charges. We calculate non-GAAP diluted earnings per share excluding stock-based compensation, legal and transaction related fees, amortization of intangibles and restructuring and other charges as net income less stock-based compensation, legal and transaction related fees, amortization of intangibles and restructuring and other charges 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 long-term outlook, financial, growth and business strategies and opportunities, our ability to expand our footprint with existing customers, market growth and our market share, our operating model and cost structure including our transformation efforts, our app recovery efforts and related software updates, tariffs and our ability to mitigate the effects of any tariffs, the macroeconomic environment and our ability to weather it, 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: difficulties in and effect of implementing improvements to our operating model and cost structure; the risk that restructuring and related charges may be greater than anticipated or not occur in the expected time frame; local law requirements in various jurisdictions regarding elimination of positions; our ability to accurately forecast product demand and effectively forecast and manage owned and channel inventory levels; our ability to introduce software updates to our redesigned app on a timely basis and otherwise deliver on our action plan to address issues caused by our redesigned app and related customer commitments; our ability to maintain, enhance and protect our brand image; the impact of global economic, market and political events, including tariffs, global trade tensions, continued inflationary pressures, high interest rates and, in certain markets, foreign currency exchange rate fluctuations; changes in consumer income and overall consumer spending as a result of economic or political uncertainty or conditions, including tariffs; changes in consumer spending patterns; our ability to successfully introduce new products and services and maintain or expand 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


        
compete in the market and maintain or expand market share; our ability to maintain relationships with our channel, distribution and technology partners; our ability to meet product demand and manage any product availability delays; supply chain challenges, including shipping and logistics challenges and component supply-related challenges; our ability to protect our brand and intellectual property; our use of artificial intelligence; and the other risk factors identified in our filings with the Securities and Exchange Commission (the “SEC”), including our most recent Annual Report on Form 10-K and subsequent filings. Copies of our SEC filings are available free of charge at the SEC’s website at www.sec.gov, on our investor relations website at https://investors.sonos.com/reports-and-filings/default.aspx or upon request from our investor relations department. All forward-looking statements herein reflect our opinions only as of the date of this press release, 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.

Investor Contact
James Baglanis
IR@sonos.com

Press Contact
Erin Pategas
PR@sonos.com

Source: Sonos