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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________________

FORM 10-Q


x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 29, 2025


o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38603

_________________________________________________________

SONOS, INC.

(Exact name of registrant as specified in its charter)

_________________________________________________________


Delaware		03-0479476
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

301 Coromar Drive	Santa Barbara	CA	93117
(Address of Principal Executive Offices)			(Zip Code)

(805) 965-3001

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x	Accelerated filer	o

Non-accelerated filer	o	Smaller reporting company	o

		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of April 21, 2025, the registrant had 120,087,493 shares of common stock outstanding.

Table of contents

TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial statements (unaudited)

	Condensed consolidated balance sheets	3

	Condensed consolidated statements of operations and comprehensive income (loss)	4

	Condensed consolidated statements of stockholders' equity	5

	Condensed consolidated statements of cash flows	6

	Notes to condensed consolidated financial statements	7

Item 2.	Management’s discussion and analysis of financial condition and results of operations	20

Item 3.	Quantitative and qualitative disclosures about market risk	29

Item 4.	Controls and procedures	29

PART II. OTHER INFORMATION

Item 1.	Legal proceedings	31

Item 1A.	Risk factors	31

Item 2.	Unregistered sales of equity securities and use of proceeds	31

Item 3.	Defaults upon senior securities	32

Item 4.	Mine safety disclosures	32

Item 5.	Other information	32

Item 6.	Exhibit index	33

SIGNATURES		34

Table of contents

PART I. FINANCIAL INFORMATION

Item 1. Financial statements

SONOS, INC.

CONDENSED 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 (Note 7)
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

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of contents

SONOS, INC.

CONDENSED 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 income (loss)	(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
Income (loss) 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 income (loss)	$	(70,144)	$	(69,709)	$	(19,907)	$	11,238

Net income (loss) 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 income (loss) 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 income (loss)
Net income (loss)	(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 income (loss)	$	(69,521)	$	(69,820)	$	(20,484)	$	10,264

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of contents

SONOS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(unaudited, in thousands, except share amounts)


	Three Months Ended				Six Months Ended
	March 29, 2025		March 30, 2024		March 29, 2025		March 30, 2024
Total stockholders' equity, beginning balances	$	469,127	$	594,409	$	428,620	$	518,657

Common stock
Beginning balances	$	125	$	127	$	123	$	130
Issuance of common stock pursuant to equity incentive plans	2		2		4		4
Retirement of treasury stock	(3)		(1)		(3)		(6)
Ending balances	$	124	$	128	$	124	$	128

Additional paid-in capital
Beginning balances	$	521,121	$	569,286	$	498,245	$	607,345
Issuance of common stock pursuant to equity incentive plans	242		8,364		2,650		11,901
Retirement of treasury stock	(36,803)		(23,483)		(41,669)		(84,437)
Stock-based compensation expense	23,245		23,673		48,579		43,031
Ending balances	$	507,805	$	577,840	$	507,805	$	577,840

Treasury stock
Beginning balances	$	(48,504)	$	(38,856)	$	(17,096)	$	(72,586)
Retirement of treasury stock	36,806		23,484		41,672		84,443
Repurchase of common stock, including excise tax and commission	(33,033)		(53,126)		(60,264)		(76,611)
Repurchase of common stock related to shares withheld for tax in connection with vesting of stock awards	(7,203)		(9,498)		(16,246)		(13,242)
Ending balances	$	(51,934)	$	(77,996)	$	(51,934)	$	(77,996)

Accumulated deficit
Beginning balances	$	(697)	$	68,159	$	(50,934)	$	(12,788)
Net income (loss)	(70,144)		(69,709)		(19,907)		11,238
Ending balances	$	(70,841)	$	(1,550)	$	(70,841)	$	(1,550)

Accumulated other comprehensive loss
Beginning balances	$	(2,918)	$	(4,307)	$	(1,718)	$	(3,444)
Change in foreign currency translation adjustment	656		(85)		(460)		(948)
Unrealized loss on investments	(33)		(26)		$	(117)	$	(26)
Ending balances	$	(2,295)	$	(4,418)	$	(2,295)	$	(4,418)

Total stockholders' equity, ending balances	$	382,859	$	494,004	$	382,859	$	494,004

Common stock shares:
Beginning balances	124,729,283		127,243,960		123,046,510		130,399,940
Issuance of common stock pursuant to equity incentive plans	1,573,594		2,059,833		3,677,577		3,328,353
Retirement of treasury stock	(2,542,709)		(1,478,597)		(2,963,919)		(5,903,097)
Ending balances	123,760,168		127,825,196		123,760,168		127,825,196

Treasury stock shares:
Beginning balances	(3,404,233)		(2,672,671)		(1,282,734)		(5,286,024)
Retirement of treasury stock	2,542,709		1,478,597		2,963,919		5,903,097
Repurchase of common stock	(2,282,549)		(3,045,143)		(4,167,203)		(4,523,740)
Repurchase of common stock related to shares withheld for tax in connection with vesting of stock awards	(548,209)		(508,185)		(1,206,264)		(840,735)
Ending balances	(3,692,282)		(4,747,402)		(3,692,282)		(4,747,402)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SONOS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Six Months Ended
	March 29, 2025		March 30, 2024
Cash flows from operating activities
Net income (loss)	$	(19,907)	$	11,238
Adjustments to reconcile net income (loss) 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 stock awards	(16,246)		(13,242)
Proceeds from exercise of common 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

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SONOS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Business Overview and Basis of Presentation

Description of business

Sonos, Inc. and its wholly owned subsidiaries (collectively, "Sonos," the "Company," "we," "us" or "our") designs, develops, manufactures, and sells audio products and services. The Sonos sound system provides customers with an immersive listening experience created by the design of its speakers, headphones and components, a proprietary software platform, and the ability to stream content from a variety of sources over the customer’s wireless network or over Bluetooth.

The Company’s products are sold through third-party physical retailers, including custom installers of home audio systems, select e-commerce retailers, and its website, sonos.com. The Company’s products are distributed in over 60 countries through its wholly owned subsidiaries: Sonos Europe B.V. in the Netherlands, Beijing Sonos Technology Co. Ltd. in China, Sonos Japan GK in Japan, and Sonos Australia Pty Ltd. in Australia.

Basis of presentation and preparation

The accompanying condensed consolidated financial statements are unaudited. The condensed consolidated balance sheet as of September 28, 2024, has been derived from the audited consolidated financial statements of the Company.

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all the information and footnotes required by U.S. GAAP for annual financial statements. They should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 28, 2024, (the "Annual Report"), filed with the SEC on November 15, 2024.

In management’s opinion, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of only normal recurring adjustments, necessary for the fair statement of the Company’s financial position, its results of operations, and its cash flows for the interim periods presented. The results of operations for the three and six months ended March 29, 2025, are not necessarily indicative of the results to be expected for the full fiscal year or any other period.

The Company operates on a 52- week or 53- week fiscal year ending on the Saturday nearest September 30 each year. The Company’s fiscal year is divided into four quarters of 13 weeks, each beginning on a Sunday and containing two 4-week periods followed by a 5-week period. An additional week is included in the fourth fiscal quarter approximately every five years to realign fiscal quarters with calendar quarters. This last occurred in the fourth quarter of the Company’s fiscal year ended October 3, 2020, and will reoccur in the fiscal year ending October 3, 2026. The six months ended March 29, 2025 and March 30, 2024, spanned 26 weeks each. As used in this Quarterly Report on Form 10-Q, "fiscal 2025" refers to the fiscal year ending September 27, 2025 and "fiscal 2024" refers to the fiscal year ended September 28, 2024.

Use of estimates and judgments

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported and disclosed in the condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, the Company evaluates its estimates and judgments compared to historical experience and expected trends.

2. Summary of Significant Accounting Policies

There have been no changes in the Company’s significant accounting policies, recently adopted accounting pronouncements, or recent accounting pronouncements pending adoption from those disclosed in the Annual Report, except as noted below.

Recent accounting pronouncements pending adoption

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This standard requires disclosure of disaggregated information about significant expenses within relevant income statement captions, such as purchases of inventory, employee compensation, depreciation, and amortization. Also

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(unaudited)

required is a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated. In January 2025, FASB issued ASU 2025-01, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarifies that the amendments in ASU 2024-03 are effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The amendments may be applied retrospectively or prospectively, with early adoption permitted. The Company is currently evaluating the pronouncement to determine the impact it may have on the Company's consolidated financial statements and related disclosures.

3. Financial Instruments

The carrying values of the Company’s accounts receivable and accounts payable, approximate their fair values due to the short period of time to maturity or repayment. The Company utilizes the following fair value hierarchy to establish priorities of the inputs used to measure fair value:

•Level 1: Quoted prices in active markets for identical assets or liabilities.

•Level 2: Observable inputs other than quoted market prices included in Level 1, such as quoted prices for similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

The following table summarizes cash, cash equivalents and marketable securities by investment category as of March 29, 2025 and September 28, 2024:


	March 29, 2025
	Amortized Cost		Unrealized Gain		Unrealized Loss		Estimated Fair Value		Cash and Cash Equivalents		Marketable Securities
Cash	$	157,192	$	—	$	—	$	157,192	$	157,192	$	—
Level 1:
Money market funds	13,775		—		—		13,775		13,775		—
Subtotal	13,775		—		—		13,775		13,775		—
Level 2:
U.S. Treasury securities	52,535		15		(10)		52,540		2,191		50,349
Subtotal	52,535		15		(10)		52,540		2,191		50,349
Total	$	223,502	$	15	$	(10)	$	223,507	$	173,158	$	50,349

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(unaudited)


	September 28, 2024
	Amortized Cost		Unrealized Gain		Unrealized Loss		Estimated Fair Value		Cash and Cash Equivalents		Marketable Securities
Cash	$	144,184	$	—	$	—	$	144,184	$	144,184	$	—
Level 1:
Money market funds	25,548		—		—		25,548		25,548		—
Subtotal	25,548		—		—		25,548		25,548		—
Level 2:
U.S. Treasury securities	51,304		122		—		51,426		—		51,426
Subtotal	51,304		122		—		51,426		—		51,426
Total	$	221,036	$	122	$	—	$	221,158	$	169,732	$	51,426

Marketable securities

As of March 29, 2025, the Company held no securities with original maturities exceeding one year. Realized gains and losses on the sale of securities are recorded in other income (expense), net in the condensed consolidated statements of operations and comprehensive income.

There were no realized gains or losses on sales of marketable securities during the three and six months ended March 29, 2025. For securities in a loss position, the Company does not intend to sell the securities, and it is more-likely-than-not that it will not be required to sell before recovery of their amortized cost basis. The Company evaluated whether the decline in fair value resulted from credit losses or other factors and concluded these amounts were related to temporary fluctuations in value of the securities and were due primarily to changes in interest rates and market conditions of the underlying securities. Accordingly, an allowance for credit losses was deemed unnecessary for these securities as of March 29, 2025.

Accrued interest receivable related to our marketable securities was immaterial as of March 29, 2025. No accrued interest receivables were written off during the three and six months ended March 29, 2025.

4. Revenue and Geographic Information

Disaggregation of revenue

Revenue is attributed to each region based on ship-to address, and also includes the applicable service revenue for software upgrades and cloud-based services attributable to each region. Revenue by region is as follows:


	Three Months Ended				Six Months Ended
	March 29, 2025		March 30, 2024		March 29, 2025		March 30, 2024
(In thousands)
Americas	$	176,802	$	170,187	$	501,385	$	562,627
Europe, Middle East and Africa ("EMEA")	68,785		69,356		266,397		261,173
Asia Pacific ("APAC")	14,169		13,119		42,831		41,731
Total revenue	$	259,756	$	252,662	$	810,613	$	865,531

Revenue is attributed to individual countries based on ship-to address and also includes the applicable service revenue for software upgrades and cloud-based services attributable to each country. Revenue by significant countries is as follows:

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(unaudited)


	Three Months Ended				Six Months Ended
	March 29, 2025		March 30, 2024		March 29, 2025		March 30, 2024
(In thousands)
United States	$	167,102	$	155,695	$	461,732	$	517,544
Other countries	92,654		96,967		348,881		347,987
Total revenue	$	259,756	$	252,662	$	810,613	$	865,531

Revenue by product category also includes the applicable service revenue for software upgrades and cloud-based services attributable to each product category. Revenue by major product category is as follows:


	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

5. Balance Sheet Components

Accounts receivable, net

Accounts receivable, net consist of the following:


	March 29, 2025		September 28, 2024
(In thousands)
Accounts receivable	$	96,337	$	96,254
Allowance for credit losses	(2,785)		(2,619)
Allowance for sales incentives	(53,122)		(49,122)
Accounts receivable, net of allowances	$	40,430	$	44,513

Inventories

Inventories consist of the following:


	March 29, 2025		September 28, 2024
(In thousands)
Finished goods	$	112,910	$	199,825
Component parts	25,511		31,680
Inventories	$	138,421	$	231,505

As of March 29, 2025 and September 28, 2024, inventory write-downs were $29.8 million and $33.3 million, respectively.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(unaudited)

Property and equipment

Property and equipment net of accumulated depreciation were as follows:


	March 29, 2025		September 28, 2024
(In thousands)
Property and equipment	$	287,670	$	280,247
Less: accumulated depreciation	(201,635)		(178,099)
Property and equipment, net	$	86,035	$	102,148

Intangible assets

In the first quarter of fiscal year 2025, the Company determined that the underlying project related to the in-process research and development from the acquisition of Mayht Holding BV ("Mayht") was completed. As a result, the acquired $73.8 million of in-process research and development was reclassified as definite-lived developed technology and will amortize over its estimated economic life of 7 years. The following table reflects the changes in the net carrying amount of the components of intangible assets associated with the Company's acquisition activity:


	March 29, 2025
	Gross Carrying Amount		Accumulated Amortization		Foreign Currency Translation		Net Carrying Value		Weighted-Average Remaining Life (In years)
(In thousands, except weighted-average remaining life)
Trade name	$	451	$	(224)	$	(2)	$	225	3.00
Technology-based	94,419		(13,333)		-		81,086		6.22
Total intangible assets	$	94,870	$	(13,557)	$	(2)	$	81,311	6.21


	September 28, 2024
	Gross Carrying Amount		Accumulated Amortization		Foreign Currency Translation		Net Carrying Value		Weighted-Average Remaining Life (In years)
(In thousands, except weighted-average remaining life)
Trade name	$	451	$	(188)	$	7	$	270	3.50
Technology-based	31,480		(17,484)		-		13,996		4.52
Total finite-lived intangible assets	31,931		(17,672)		7		14,266		4.51
In-process research and development not subject to amortization	73,770		-		-		73,770
Total intangible assets	$	105,701	$	(17,672)	$	7	$	88,036

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(unaudited)

The following table summarizes the estimated future amortization expense of the Company's intangible assets as of March 29, 2025:


Fiscal years ending	Future Amortization Expense
(In thousands)
Remainder of fiscal 2025	$	5,971
2026	13,579
2027	13,563
2028	13,447
2029	12,453
2030 and thereafter	22,298
Total future amortization expense	$	81,311

Cloud Computing Arrangements

Capitalized costs to implement cloud computing arrangements net of accumulated amortization are reported as a component of other noncurrent assets on the Company's condensed consolidated balance sheets and were as follows:


	March 29, 2025		September 28, 2024
(In thousands)
Cloud computing implementation costs	$	26,288	$	25,038
Less: accumulated amortization	(11,411)		(9,697)
Cloud computing implementation costs, net	$	14,877	$	15,341

Amortization expense for implementation costs for cloud-based computing arrangements for the three months ended March 29, 2025 and March 30, 2024, were $0.9 million. Amortization expense for implementation costs for cloud-based computing arrangements for the six months ended March 29, 2025 and March 30, 2024, were $1.7 million.

Accrued expenses

Accrued expenses included the following:


	March 29, 2025		September 28, 2024
(In thousands)
Accrued inventory and supply chain costs	$	39,027	$	34,204
Accrued advertising and marketing	11,854		12,893
Accrued general and administrative expenses	7,974		10,870
Accrued taxes	6,843		19,084
Accrued product development	2,565		4,338
Other accrued payables	5,268		6,394
Total accrued expenses	$	73,531	$	87,783

Deferred revenue

Amounts invoiced in advance of revenue recognition are recorded as deferred revenue on the condensed consolidated balance sheets. For the six months ended March 29, 2025 and March 30, 2024, deferred revenue included revenue allocated to unspecified software upgrades and cloud-based services of $80.8 million and $82.7 million, respectively, as well as current deferred revenue related to newly launched products sold to resellers not recognized as revenue until the date of general availability was reached.

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SONOS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(unaudited)

The following table presents the changes in the Company’s deferred revenue:


	Six Months Ended
	March 29, 2025		March 30, 2024
(In thousands)
Deferred revenue, beginning of period	$	82,877	$	80,838
Recognition of revenue included in beginning of period deferred revenue	(12,229)		(12,775)
Revenue deferred, net of revenue recognized on contracts in the respective period	10,842		15,245
Deferred revenue, end of period	$	81,490	$	83,308

The Company expects the following recognition of deferred revenue as of March 29, 2025:


	For the fiscal years ending
	Remainder of 2025		2026		2027		2028		2029 and Beyond		Total
(In thousands)
Deferred revenue expected to be recognized	$	11,230	$	19,329	$	16,678	$	13,644	$	20,609	$	81,490

Other current liabilities

Other current liabilities consist of the following:


	March 29, 2025		September 28, 2024
(In thousands)
Reserve for returns	$	24,870	$	20,304
Warranty liability	9,974		10,565
Short-term operating lease liabilities	6,584		7,551
Other	9,358		7,857
Total other current liabilities	$	50,786	$	46,277

The following table presents the changes in the Company’s warranty liability:


	March 29, 2025		March 30, 2024
(In thousands)
Warranty liability, beginning of period	$	10,565	$	7,466
Provision for warranties issued during the period	7,428		8,126
Settlements of warranty claims during the period	(8,019)		(8,692)
Warranty liability, end of period	$	9,974	$	6,900

6. Debt

On October 13, 2021, the Company entered into a Revolving Credit Agreement with JPMorgan Chase Bank, N.A., as the administrative agent, and Bank of America N.A., Morgan Stanley Senior Funding, Inc., and Goldman Sachs Bank USA as the other lenders party thereto (the "Revolving Credit Agreement"). The Revolving Credit Agreement provides for (i) a five-year senior secured revolving credit facility in the amount of up to $100.0 million and (ii) an uncommitted incremental facility subject to certain conditions. Proceeds are to be used for working capital and general corporate purposes. In June 2023, the Company amended the Revolving Credit Agreement, replacing prior references to LIBOR with references to SOFR as a result of the discontinuation of LIBOR. The facility may be drawn as an Alternative Base Rate Loan (at 1.00% plus an applicable margin) or Term Benchmark Loan (at the Term SOFR Rate, plus the applicable Term SOFR Adjustment ranging from 0.11% to 0.43%, plus an applicable margin (in total, "Adjusted Term SOFR")). The

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Company must also pay (i) an unused commitment fee ranging from 0.200% to 0.275% per annum of the average daily unused portion of the aggregate revolving credit commitment under the agreement and (ii) a per annum fee equal to the applicable margin over Adjusted Term SOFR multiplied by the aggregate face amount of outstanding letters of credit. As of March 29, 2025, the Company did not have any outstanding borrowings and had $2.4 million in undrawn letters of credit that reduce the availability under the Revolving Credit Agreement.

The Company’s obligations under the Revolving Credit Agreement are secured by substantially all of the Company’s assets. The Revolving Credit Agreement contains customary representations and warranties, customary affirmative and negative covenants, a financial covenant that is tested quarterly and requires the Company to maintain a certain consolidated leverage ratio, and customary events of default. As of March 29, 2025, the Company was in compliance with all financial covenants under the Revolving Credit Agreement.

7. Commitments and Contingencies

Commitments to suppliers

As of March 29, 2025, the Company's open purchase orders to contract manufacturers for finished goods were approximately $98 million, the majority of which are expected to be paid over the next six months. As of March 29, 2025, the Company's expected commitments to suppliers for components were in the range of $180 million to $200 million, the majority of which is expected to be paid and/or utilized by our contract manufacturers in building finished goods within the next two years. The expected commitments are subject to change as a result of fluctuations in the demand forecast, as well as ongoing negotiations with contract manufacturers and suppliers. These commitments are related to components that can be specific to Sonos products and comprised 1) indirect obligations to third-party manufacturers and suppliers, 2) the inventory owned by contract manufacturers procured to manufacture Sonos products, and 3) purchase commitments made by contract manufacturers to their upstream suppliers.

Legal proceedings

From time to time, the Company is involved in legal proceedings in the ordinary course of business, including claims relating to employee relations, business practices, and patent infringement. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict, and the Company’s view of these matters may change in the future as the litigation and events related thereto unfold. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. An unfavorable outcome to any legal matter, if material, could have an adverse effect on the Company’s operations or its financial position, liquidity or results of operations.

The Company’s Lawsuits Against Google:

On January 7, 2020, the Company filed a complaint with the U.S. International Trade Commission ("ITC") against Alphabet Inc. ("Alphabet") and Google LLC ("Google") and a counterpart lawsuit in the U.S. District Court for the Central District of California against Google. The complaint and lawsuit each allege infringement by Alphabet and Google of certain Sonos patents related to its smart speakers and related technology. The counterpart lawsuit was stayed pending completion of the ITC investigation and appeal thereof. The ITC concluded its investigation in January 2022, finding all five of the Company’s asserted patents to be valid and infringed by Google, and further finding that one redesign per patent proposed by Google would avoid infringement. The ITC issued a limited exclusion order and a cease-and-desist order with respect to Google’s infringing products. The Company and Google each appealed the ITC’s determination, which was upheld in its entirety by a panel of the appeals court. Google's petition for rehearing by the full appeals court has been denied. The stay in the counterpart lawsuit has been lifted. No trial date has been set.

On September 29, 2020, the Company filed another lawsuit against Google alleging infringement of additional Sonos patents and seeking monetary damages and other non-monetary relief. A jury trial was held in May 2023, which found one Sonos patent to be infringed and another Sonos patent not infringed, and returned an award of $32.5 million based on a royalty rate of $2.30 per infringing unit. After trial, the court held Sonos’ patents unenforceable under the doctrine of prosecution laches and invalid as a result of amendments made during prosecution. The Company is appealing the ruling.

Google’s Lawsuits Against the Company:

On June 11, 2020, Google filed a lawsuit in the U.S. District Court for the Northern District of California against the Company alleging infringement by the Company of five Google patents and seeking monetary damages and other non-monetary relief. All five of

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(unaudited)

these patents have since been found invalid or non-infringed by the Court or by the U.S. Patent and Trademark Office or have been withdrawn from the case by Google. The Court has now entered final judgment for Sonos and against Google. Google has appealed.

On August 8, 2022, Google filed two complaints with the ITC against the Company and two counterpart lawsuits in the Northern District of California against the Company, collectively alleging infringement by the Company of seven Google patents generally related to wireless charging, device setup, and voice control, and seeking monetary damages and other non-monetary relief. The counterpart lawsuits are stayed pending completion of the ITC investigations. In the first ITC investigation, the ITC terminated the investigation as to one Google patent as a result of the expiration of that Google patent and found the other two Google patents invalid as indefinite, thus concluding the first investigation. The second ITC investigation concluded in December 2023 with a final determination of no violation by the Company. Google did not appeal this determination within the deadline but has since petitioned the ITC for acceptance of a petition for review out of time.

Implicit

On March 10, 2017, Implicit, LLC (“Implicit”) filed a patent infringement action in the United States District Court, District of Delaware against the Company. Implicit is asserting that the Company has infringed on certain claims of two patents in this case. The Company denies the allegations. The claims at issue have been held unpatentable by the U.S. Patent and Trademark Office. Implicit has appealed this ruling, which is currently scheduled to be heard by the appeals court by mid-2025. A range of loss, if any, associated with this matter is not probable or reasonably estimable as of March 29, 2025.

The Company is involved in certain other litigation matters not listed above but does not consider these matters to be material either individually or in the aggregate at this time. The Company’s view of the matters not listed may change in the future as the litigation and events related thereto unfold.

8. Stockholders' Equity

On November 15, 2023, the Board of Directors (the "Board") authorized a common stock repurchase program of up to $200.0 million (the "2023 Stock Repurchase Program"). On February 24, 2025, the Board authorized a new common stock repurchase program of up to $150.0 million (the "2025 Stock Repurchase Program") resulting in the expiration of the $11.1 million remaining under the 2023 Stock Repurchase Program.

During the six months ended March 29, 2025, the Company repurchased 4,167,203 shares for an aggregate purchase price of $60.0 million and at an average price of $14.39 per share under the 2023 Stock Repurchase Program. Aggregate purchase price and average price per share exclude commission and excise tax. The Company's share repurchases in excess of issuances are subject to a 1% excise tax enacted by the Inflation Reduction Act. Any excise tax incurred is recognized as part of the cost basis of the shares acquired in the condensed consolidated statements of equity. The Company has not made any repurchases under the 2025 Stock Repurchase Program.

Treasury stock during the six months ended March 29, 2025, included 1,206,264 shares withheld to satisfy employees' tax withholding requirements in connection with vesting of stock awards. Additionally, during the six months ended March 29, 2025, the Company retired 2,963,919 shares of treasury stock.

9. Stock-based Compensation

2018 Equity Incentive Plan

In July 2018, the Board adopted the 2018 Equity Incentive Plan (the "2018 Plan").

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SONOS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(unaudited)

Stock options

The summary of the Company’s stock option activity is as follows:


	Number of Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
				(In years)	(In thousands)
Outstanding at September 28, 2024	7,082,389	$	14.24	2.8	$	210
Exercised	(195,479)	$	13.59
Forfeited / expired	(235,600)	$	14.61
Outstanding at March 29, 2025	6,651,310	$	14.24	1.8	$	—

As of March 29, 2025 and September 28, 2024, all outstanding stock options have vested and the Company had no unrecognized stock-based compensation expense related to stock options.

Restricted stock units ("RSU")

Pursuant to the 2018 Plan, the Company issues RSUs to employees and directors. The summary of the Company’s RSU activity is as follows:


	Number of Units	Weighted-Average Grant Date Fair Value		Aggregate Intrinsic Value
				(In thousands)
Outstanding at September 28, 2024	10,763,098	$	14.79	$	130,772
Granted	7,089,087	$	12.45
Released	(3,474,904)	$	15.09
Forfeited	(2,808,466)	$	13.81
Outstanding at March 29, 2025	11,568,815	$	13.51	$	124,712

As of March 29, 2025 and September 28, 2024, the Company had $115.6 million and $115.4 million of unrecognized stock-based compensation expense related to RSUs, which are expected to be recognized over weighted-average periods of 2.4 years.

Performance stock units ("PSU")

Pursuant to the 2018 Plan, the Company has issued and may issue certain PSUs that vest on the satisfaction of service and performance conditions. The number of outstanding PSUs is based on the target number of share awards. The number of shares vested at the end of the performance period is based on achievement of performance conditions and includes a performance adjustment to reflect the extent to which the corresponding performance goals have been achieved. The summary of the Company’s PSU activity is as follows:


	Number of Units	Weighted-Average Grant Date Fair Value		Aggregate Intrinsic Value
				(In thousands)
Outstanding at September 28, 2024	684,080	$	18.37	$	8,312
Granted	326,375	$	11.55
Released	(7,194)	$	17.54
Performance adjustment	(121,250)	$	21.80
Forfeited	(79,517)	$	17.42

Outstanding at March 29, 2025	802,494	$	15.18	$	8,651

As of March 29, 2025 and September 28, 2024, the Company had $3.8 million and $0.2 million of unrecognized stock-based compensation expense related to PSUs, which are expected to be recognized over weighted-average periods of 1.5 years.

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SONOS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(unaudited)

Stock-based compensation

Total stock-based compensation expense by functional category was as follows:


	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

10. Income Taxes

The Company’s income tax provision and the resulting effective tax rate for interim periods is generally determined based upon its estimated annual effective tax rate ("AETR"), adjusted for the effect of discrete items arising in that quarter. The impact of such inclusions could result in a higher or lower effective tax rate during a quarter, based upon the mix and timing of actual earnings or losses versus annual projections. In each quarter, the Company updates its estimate of the AETR, and if the estimated AETR changes, a cumulative adjustment is made in that quarter.

The Company recorded a provision for income taxes of $11.0 million and a benefit from income taxes of $0.7 million for the three months ended March 29, 2025 and March 30, 2024, respectively, related to U.S. and non-U.S. income taxes. The Company recorded a provision for income taxes of $4.6 million and $11.2 million for the six months ended March 29, 2025 and March 30, 2024, respectively, related to U.S. and non-U.S. income taxes.

For the three and six months ended March 29, 2025, the Company utilized the AETR method to calculate separate U.S. and foreign income tax provisions. Separate U.S. and foreign AETRs were calculated in accordance with U.S. GAAP since Sonos, Inc. is forecasted to a full-year loss with no corresponding deferred tax benefit while all non-U.S. entities are forecasted to profitability and, unlike the prior year, small fluctuations in forecasted pre-tax income (loss) are not expected to have a material impact on the estimated U.S. AETR. For the three and six months ended March 30, 2024, the Company calculated its U.S. income tax provision using the discrete method as though the interim period was an annual period since minor deviations in the projected pre-tax net income (loss) in the U.S. could have resulted in a disproportionate and unreliable effective tax rate under the AETR method.

For the three and six months ended March 29, 2025, the Company’s tax provision is comprised of a U.S. tax provision resulting from the application of a negative U.S. AETR to year-to-date U.S. pretax loss and a tax provision for non-U.S. income taxes. For the three and six months ended March 30, 2024, the Company's U.S. income tax provision was adversely impacted by Section 174 as the Company recorded a current U.S. tax expense with no corresponding deferred tax benefit due to the valuation allowance maintained against its U.S. deferred tax assets.

For the six months ended March 29, 2025, the Company concluded that a full valuation allowance on its deferred tax assets in the U.S. continued to be appropriate considering cumulative pre-tax losses in recent years and uncertainty with respect to future taxable income. Release of the valuation allowance in the U.S. would result in a benefit to the income tax provision in the period the release is recorded, which could have a material impact on net earnings. The timing and amount of the potential valuation allowance release are subject to significant management judgment, as well as prospective earnings in the U.S.

11. Net Income (Loss) Per Share

Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of shares of common stock outstanding less shares subject to repurchase. Diluted net income (loss) per share adjusts the basic net income (loss) per share and the weighted-average number of shares of common stock outstanding for the potentially dilutive impact of stock awards, using the treasury stock method.

The following table sets forth the computation of the Company’s basic and diluted net income (loss) per share:

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SONOS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(unaudited)


	Three Months Ended				Six Months Ended
	March 29, 2025		March 30, 2024		March 29, 2025		March 30, 2024
(In thousands, except share and per share data)
Numerator:
Net income (loss) - basic and diluted	$	(70,144)	$	(69,709)	$	(19,907)	$	11,238
Denominator:
Weighted-average shares of common stock—basic	119,919,163		123,749,605		120,995,375		124,465,661
Effect of potentially dilutive stock options	—		—		—		876,897
Effect of RSUs	—		—		—		2,856,594
Effect of PSUs	—		—		—		7,671
Weighted-average shares of common stock—diluted	119,919,163		123,749,605		120,995,375		128,206,823
Net income (loss) per share:
Basic	$	(0.58)	$	(0.56)	$	(0.16)	$	0.09
Diluted	$	(0.58)	$	(0.56)	$	(0.16)	$	0.09

The following shares were excluded from the computation of diluted net income (loss) per share because their effect would have been antidilutive:


	Three Months Ended		Six Months Ended
	March 29, 2025	March 30, 2024	March 29, 2025	March 30, 2024
Stock options to purchase common stock	6,713,001	7,945,226	6,841,022	7,312,304
Restricted stock units	13,555,418	14,314,063	14,659,903	9,964,490
Performance stock units	71,790	59,627	44,188	38,417
Total	20,340,209	22,318,916	21,545,113	17,315,211

12. Retirement Plans

The Company has a defined contribution 401(k) plan (the "401(k) Plan") for the Company’s U.S.-based employees, as well as various defined contribution plans for its international employees. Eligible U.S. employees may make tax-deferred contributions under the 401(k) plan but are limited to the maximum annual dollar amount allowable under the Internal Revenue Code of 1986, as amended. The Company matches contributions towards the 401(k) Plan and international defined contribution plans. The Company's matching contributions totaled $2.0 million and $2.3 million for the three months ended March 29, 2025 and March 30, 2024, respectively. The Company's matching contributions totaled $4.3 million and $4.9 million for the six months ended March 29, 2025 and March 30, 2024, respectively.

13. Restructuring and Other Charges

The Company started a cost transformation initiative in the second half of fiscal 2024 with the goal of optimizing investments for sustainable, long-term growth. This included the August 14, 2024 initiation of a restructuring plan (the "2024 restructuring plan") that involved a reduction in force of approximately 6% of its employees and a reduction to its real estate footprint. Building on this effort, the Company announced a subsequent restructuring on February 5, 2025, including a reduction in force involving approximately 12% of its employees (the “2025 restructuring plan”). This cost transformation also involved charges related to rationalization of its product roadmap. Furthermore, in January 2025, Patrick Spence stepped down from his role as Chief Executive Officer ("CEO") and as a member of the Board, resulting in the Company incurring costs related to this transition, which are also included in restructuring and other charges.

The following table summarizes the components of restructuring and other charges:

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SONOS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(unaudited)


	Three Months Ended				Six Months Ended
(in thousands)	March 29, 2025		March 30, 2024		March 29, 2025		March 30, 2024
Cash restructuring charges:
Employee-related costs	$	15,353	$	—	$	15,353	$	—
Other restructuring costs (1)	3,458		—		3,398		308
Total cash charges	$	18,811	$	—	$	18,751	$	308
Non-cash charges:
Stock-based awards (2)	$	3,143	$	—	$	3,143	$	—
Asset write-offs	1,746		6		1,746		266
Total non-cash charges	$	4,889	$	6	$	4,889	$	266

Total restructuring and other charges	$	23,700	$	6	$	23,640	$	574

(1)Other restructuring charges include costs primarily related to rationalization of the Company's product roadmap.

(2)Non-cash charges for stock-based awards were related to modifications for equity awards primarily in connection with the CEO transition. These modifications included accelerated vesting of certain RSUs and an extension of the post-termination exercise period for certain stock options.

The following table summarizes restructuring and other charges recorded in the Company's condensed consolidated statements of operations and comprehensive income (loss):


	Three Months Ended				Six Months Ended
(in thousands)	March 29, 2025		March 30, 2024		March 29, 2025		March 30, 2024
Cost of revenue	$	3,935	$	—	$	3,935	$	—
Research and development	12,766		—		12,706		323
Sales and marketing	2,792		—		2,792		113
General and administrative	4,207		6		4,207		138
Total restructuring and other charges	$	23,700	$	6	$	23,640	$	574

The following table summarizes the Company's restructuring and other charges recorded in accrued expenses and accrued compensation within the condensed consolidated balance sheets:


(in thousands)	Employee Related Costs		Other Restructuring Costs		Total
Balance as of September 28, 2024(1)	$	2,152	$	1,037	$	3,189
Restructuring charges	15,353		3,398		18,751
Cash paid	(12,984)		(900)		(13,884)
Balance as of March 29, 2025	$	4,521	$	3,535	$	8,056

(1)Balance as of September 28, 2024, relates to activities under the 2024 restructuring plan.

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Item 2. Management's discussion and analysis of financial condition and results of operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our Annual Report.

We operate on a 52- week or 53- week fiscal year ending on the Saturday nearest September 30 each year. Our fiscal year is divided into four quarters of 13 weeks, each beginning on a Sunday and containing two 4-week periods followed by a 5-week period. An additional week is included in the fourth fiscal quarter approximately every five years to realign fiscal quarters with calendar quarters.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding future operations and performance, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "could," "would," "expect," "objective," "plan," "potential," "seek," "grow," "target," "if," and similar expressions intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations, objectives, restructuring efforts, cost initiatives, timing of certain tax impacts and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section titled "Risk Factors" set forth in Part I, Item 1A of the Annual Report and in our other SEC filings. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results may differ materially and adversely from those anticipated or implied in the forward-looking statements. You should read this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect. Except as required by law, we do not undertake any obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.

Overview

Sonos is one of the world's leading sound experience brands.

We pioneered multi-room, wireless audio products, debuting the world’s first multi-room wireless sound system in 2005. In October 2024, we introduced Arc Ultra, our new premium soundbar debuting Sound Motion TM, our revolutionary transducer technology, and Sonos Sub 4, the next generation of our iconic subwoofer with a refreshed design and internals. Today, our product lineup includes wireless, portable, and home theater speakers, headphones, components, and accessories to address consumers’ evolving audio needs. We are known for delivering unparalleled sound, thoughtful design aesthetic, simplicity of use, and an open platform. Our platform has attracted a broad range of more than 100 streaming content providers, such as Apple Music, Spotify, Deezer, and Pandora. These partners find value in our independent platform and access to our millions of desirable and engaged customers. We frequently introduce new services and features across our platform, providing our customers with enhanced functionality, improved sound, and an enriched user experience. In May 2024, we launched an extensive redesign of our Sonos app. We rebuilt the app from the ground up with the purpose of improving the user experience through a modern user interface and to provide a modular developer platform allowing us to drive more innovation faster in the future. We are committed to continuous technological innovation as reflected in our growing global patent portfolio. We believe our patents comprise the foundational intellectual property for wireless multi-room and other audio technologies.

We generate revenue from the sale of our Sonos speaker products, including wireless speakers, home theater speakers and beginning in June 2024, headphones, from our Sonos system products, including our component products, and from partner products and other revenue, including Sonos and third-party accessories and partnerships.

During the second half of fiscal 2024, we started a cost transformation initiative aimed at optimizing our investments for sustainable, long-term growth and enhance our agility. We've taken steps to streamline, reorganize and flatten our organizational structures, including workforce reductions of approximately 6% in August 2024 (the "2024 restructuring plan") and approximately 12% in February 2025 (the "2025 restructuring plan"). These restructuring efforts are expected to result in approximately $42.0 million in savings during the remainder of fiscal 2025. Furthermore, we've been working to rationalize our product roadmap and we intend to continue to take steps that drive operating efficiency. See Note 13. Restructuring and Other Charges in the notes to condensed consolidated financial statements for further information.

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Macroeconomic environment

Our business and financial performance depend significantly on worldwide economic conditions. We face global macroeconomic challenges such as inflation, ongoing geopolitical conflicts, uncertainty in the markets, volatility in exchange rates, low or negative growth in certain regions, declining consumer sentiment of international customers towards US-based companies as a result of US trade policy, and uncertainty in consumer demand. In addition, our business may be adversely impacted by the potential expansion of tariffs on goods imported into the U.S., as well as any retaliatory tariffs or policies enacted in other countries.

Global economic and political conditions and uncertainties, including global trade tensions, have caused and may continue to cause volatility in demand for our products as well as cost of materials and logistics, and as a result may impact our results of operations. We are continuing to evaluate and implement mitigating actions, including taking measures to manage our expenses and contain costs, leveraging our supply chain flexibility and evaluating potential pricing and promotion strategies.

For additional information, see Part II, Item 1A "Risk Factors."

Key Metrics

In addition to the measures presented in our condensed consolidated financial statements, we use the following key metrics to evaluate our business, measure our performance, identify trends affecting our business and assist us in making operational and strategic decisions. Our key metrics are total revenue, products sold, Adjusted EBITDA, and Adjusted EBITDA margin. The most directly comparable financial measure calculated under U.S. GAAP for Adjusted EBITDA is net income (loss). The most directly comparable financial measure calculated under U.S. GAAP for Adjusted EBITDA margin is net income (loss) margin.


	Three Months Ended						Six Months Ended
	March 29, 2025			March 30, 2024			March 29, 2025			March 30, 2024
(In thousands, except percentages)
Total revenue	$	259,756		$	252,662		$	810,613		$	865,531
Products sold	768			747			2,618			2,856
Net income (loss)	$	(70,144)		$	(69,709)		(19,907)			11,238
Net income (loss) margin(1)	(27.0		%)	(27.6		%)	(2.5		%)	1.3		%
Adjusted EBITDA(2)	$	(826)		$	(33,643)		90,347			81,601
Adjusted EBITDA margin(2)	(0.3		%)	(13.3		%)	11.1		%	9.4		%

(1)Net income (loss) margin is calculated by dividing net income (loss) by revenue.

(2)For additional information regarding Adjusted EBITDA and Adjusted EBITDA margin (which are non-GAAP financial measures), including reconciliations of net income (loss) to Adjusted EBITDA, see the section titled "Non-GAAP Financial Measures" below.

Products Sold

Products sold represents the number of products that are sold during a period, net of returns and includes the sale of products in the Sonos speakers and Sonos system products categories, as well as module units sold through our partnerships from our Partner products and other revenue category. Growth rates between products sold and revenue are not perfectly correlated because our revenue is affected by other variables, such as the mix of products sold during the period, promotional discount activity, the introduction of new products that may have higher or lower than average selling prices, changes to selling prices, as well as the impact of recognition of previously deferred revenue.

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements presented in accordance with U.S. GAAP, we use Adjusted EBITDA, Adjusted EBITDA margin, and constant currency which are non-GAAP financial measures. 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 from 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.

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We define Adjusted EBITDA as net income (loss) adjusted to exclude the impact of depreciation and amortization, stock-based compensation expense, interest income, interest expense, other income (expense), income taxes, legal and transaction related costs, restructuring and other costs, and other items that we do not consider representative of underlying operating performance. We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue.

We present percentage sales growth in constant currency to show performance unaffected by fluctuations in currency exchange rates. We calculate constant currency growth percentages by translating our current period financial results using the prior period average currency exchange rates and comparing these amounts to our prior period reported results.

These non-GAAP financial measures are not based on standardized methodology prescribed by U.S. GAAP and are not necessarily comparable to similarly titled measures presented by other companies. Furthermore, other companies may not publish these or similar metrics. These metrics may also have certain limitations as they do not include the impact of certain expenses that are reflected in our condensed consolidated statements of operations and comprehensive income, including stock-based compensation, which has been and will continue to be, a significant recurring expense for our business and an important part of our compensation strategy. Because of these limitations, these non-GAAP financial measures should be considered along with other operating and financial performance measures presented in accordance with U.S. GAAP.

The following table presents a reconciliation of net income (loss) to Adjusted EBITDA:


	Three Months Ended						Six Months Ended
	March 29, 2025			March 30, 2024			March 29, 2025			March 30, 2024
(In thousands, except percentages)
Net income (loss)	$	(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 (income) expense, 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 income (loss) 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)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. See Note 13. Restructuring and Other Charges in the notes to condensed consolidated financial statements for further information.

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Results of Operations

Comparison of the three and six months ended March 29, 2025 and March 30, 2024

Revenue by Product

Comparison of the three and six months ended March 29, 2025 and March 30, 2024


	Three Months Ended						Change				Six Months Ended						Change
	March 29, 2025			March 30, 2024			$		%		March 29, 2025			March 30, 2024			$		%
(In thousands)
Sonos speakers	$	194,519		$	187,262		$	7,257	3.9	%	$	661,661		$	690,273		$	(28,612)	(4.1)	%
% of total revenue	74.9		%	74.1		%					81.6		%	79.8		%
Sonos system products	50,540			49,265			1,275		2.6		110,814			$	133,826		(23,012)		(17.2)
% of total revenue	19.5		%	19.5		%					13.7		%	15.5		%
Partner products and other revenue	14,697			16,135			(1,438)		(8.9)		38,138			$	41,432		(3,294)		(8.0)
% of total revenue	5.7		%	6.4		%					4.7		%	4.8		%
Total revenue	$	259,756		$	252,662		$	7,094	2.8	%	$	810,613		$	865,531		$	(54,918)	(6.3)	%
Volume data (products sold in thousands)							Units		%								Units		%
Total products sold	768			747			21		2.8	%	2,618			2,856			(238)		(8.3)	%

We generate substantially all of our revenue from the sale of Sonos speakers and Sonos system products. We also generate a portion of revenue from Partner products and other revenue sources, including accessories such as speaker stands and wall mounts, and architectural speakers from our Sonance partnership.

Total revenue increased $7.1 million, or 2.8%, for the three months ended March 29, 2025 compared to the three months ended March 30, 2024, primarily due to the introduction of Arc Ultra in October 2024 and Ace in June 2024, partially offset by softer demand due to challenging market conditions and the impact of unfavorable foreign exchange rates.

Sonos speakers revenue represented 74.9% of total revenue for the three months ended March 29, 2025 and increased 3.9% compared to the three months ended March 30, 2024, primarily driven by the introduction of Arc Ultra and Ace, partially offset by expected declines in sales of Arc. Sonos system products represented 19.5% of total revenue for the three months ended March 29, 2025 and increased 2.6% compared to the three months ended March 30, 2024. Partner products and other revenue represented 5.7% of total revenue for the three months ended March 29, 2025 and decreased 8.9% compared to the three months ended March 30, 2024.

The volume of products sold increased 2.8% for the three months ended March 29, 2025 compared to the three months ended March 30, 2024, primarily driven by the introduction of Arc Ultra and Ace, partially offset by expected declines in sales of Arc.

Total revenue decreased $54.9 million, or 6.3%, for the six months ended March 29, 2025 compared to the six months ended March 30, 2024, primarily due to softer demand due to market conditions and challenges resulting from our 2024 app rollout, partially offset by the introduction of Arc Ultra in October 2024 and Ace in June 2024.

Sonos speakers revenue represented 81.6% of total revenue for the six months ended March 29, 2025 and decreased 4.1% compared to the six months ended March 30, 2024, primarily driven by expected declines in sales of Arc and Sonos One, as well as Move. These declines were partially offset by the introduction of Arc Ultra and Ace, as well as Era 100. Sonos system products represented 13.7% of total revenue for the six months ended March 29, 2025 and decreased 17.2% compared to the six months ended March 30, 2024, due to lower sales to our installed solutions channel. Partner products and other revenue represented 4.7% of total revenue for the six months ended March 29, 2025 and decreased 8.0% compared to the six months ended March 30, 2024.

The volume of products sold decreased 8.3% for the six months ended March 29, 2025 compared to the six months ended March 30, 2024, primarily driven by expected declines in units sold of Sonos One and Arc, as well as Roam and Move. These declines were partially offset by the introduction of Arc Ultra and Ace, as well as increases in sales of Era 100.

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Revenue by Region

The following table presents the change in revenue for the three and six months ended March 29, 2025 compared with the three and six months ended March 30, 2024:


	Three Months Ended March 29, 2025				Six Months Ended March 29, 2025
	Change (%)		Constant Currency Change (%)(1)		Change (%)		Constant Currency Change (%)(1)
Americas	3.9	%	4.9	%	(10.9)	%	(10.3)	%
EMEA	(0.8)	%	1.7	%	2.0	%	2.0	%
APAC	8.0	%	12.6	%	2.6	%	2.9	%

(1)Constant currency is a financial measure that is not calculated in accordance with U.S. GAAP. For additional information, see the section titled "Non-GAAP Financial Measures" above.

Cost of Revenue and Gross Profit

Comparison of the three and six months ended March 29, 2025 and March 30, 2024


	Three Months Ended						Change				Six Months Ended						Change
	March 29, 2025			March 30, 2024			$		%		March 29, 2025			March 30, 2024			$		%
(In thousands, except percentages)
Cost of revenue	$	146,147		$	140,624		$	5,523	3.9	%	$	455,597		$	470,815		$	(15,218)	(3.2)	%
Gross profit	$	113,609		$	112,038		$	1,571	1.4	%	$	355,016		$	394,716		$	(39,700)	(10.1)	%
Gross margin	43.7		%	44.3		%					43.8		%	45.6		%

Cost of Revenue

Cost of revenue consists of product costs, including costs of our contract manufacturers for production, components, shipping and handling, tariffs, duty costs, warranty replacement costs, packaging, fulfillment costs, manufacturing and tooling equipment depreciation, warehousing costs, hosting costs, and excess and obsolete inventory write-downs. It also includes licensing costs, such as royalties to third parties, and attributable amortization of acquired developed technology. In addition, we allocate certain costs related to management and facilities, personnel-related expenses, and supply chain logistic costs. Personnel-related expenses consist of salaries, bonuses, benefits, and stock-based compensation expenses.

Cost of revenue increased $5.5 million, or 3.9%, for the three months ended March 29, 2025 compared to the three months ended March 30, 2024, primarily due to shift into higher cost products, and the impact of reorganization efforts, partially offset by a decrease in inventory-related write-downs and a decrease in product and material costs.

Cost of revenue decreased $15.2 million, or 3.2%, for the six months ended March 29, 2025 compared to the six months ended March 30, 2024, primarily due to a decrease in products sold as well as a decrease in product and material costs, partially offset by a shift into higher cost products, the impact of reorganization efforts, and increased depreciation and amortization primarily related to the completion of our Mayht in-process research and development project and related reclassification into finite-lived intangible assets.

Gross Margin

Our gross margin has fluctuated and may, in the future, fluctuate from period to period based on a number of factors, including the mix of products we sell, the mix of channels through which we sell our products, fluctuations of our product and material cost savings, fluctuations in our product and material and logistics markets, product pricing strategies and promotional activity, the foreign currency in which our products are sold, and tariffs and duty costs implemented by governmental authorities.

Gross margin decreased 60 basis points for the three months ended March 29, 2025 compared to the three months ended March 30, 2024, primarily due to the impact of reorganization efforts, and the impact of unfavorable foreign exchange rates, partially offset by decreased inventory-related write-downs and decreased product and material costs.

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Gross margin decreased 180 basis points for the six months ended March 29, 2025 compared to the six months ended March 30, 2024, primarily due to unfavorable channel mix, the impact of reorganization efforts, and increased depreciation and amortization primarily related to the completion of our Mayht in-process research and development project and related reclassification into finite-lived intangible assets, partially offset by decreased product and material costs and favorable product mix.

Operating Expenses

Comparison of the three and six months ended March 29, 2025 and March 30, 2024


	Three Months Ended				Change				Six Months Ended				Change
	March 29, 2025		March 30, 2024		$		%		March 29, 2025		March 30, 2024		$		%
(Dollars in thousands)
Research and development	$	77,423	$	80,322	$	(2,899)	(3.6	%)	$	158,261	$	159,557	$	(1,296)	(0.8	%)
Less restructuring and other charges(1)	12,766		—		12,766		*		12,706		323		12,383		*
Research and development, net of restructuring and other charges	$	64,657	$	80,322	$	(15,665)	(19.5	%)	$	145,555	$	159,234	$	(13,679)	(8.6	%)

Sales and marketing	$	64,210	$	61,835	$	2,375	3.8	%	$	150,854	$	145,785	$	5,069	3.5	%
Less restructuring and other charges(1)	2,792		—		2,792		*		2,792		113		2,679		*
Sales and marketing, net of restructuring and other charges	$	61,418	$	61,835	$	(417)	(0.7)	%	$	148,062	$	145,672	$	2,390	1.6	%

General and administrative	$	33,200	$	40,841	$	(7,641)	(18.7)	%	$	59,032	$	80,639	$	(21,607)	(26.8)	%
Less restructuring and other charges(1)	4,207		6		4,201		*		4,207		138		4,069		*
General and administrative, net of restructuring and other charges	$	28,993	$	40,835	$	(11,842)	(29.0)	%	$	54,825	$	80,501	$	(25,676)	(31.9)	%

Operating expenses	$	174,833	$	182,998	$	(8,165)	(4.5)	%	$	368,147	$	385,981	$	(17,834)	(4.6)	%
Less restructuring and other charges(1)	19,765		6		19,759		*		19,705		574		19,131		*
Operating expenses, net of restructuring and other charges	$	155,068	$	182,992	$	(27,924)	(15.3)	%	$	348,442	$	385,407	$	(36,965)	(9.6)	%
* Not meaningful

(1)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. See Note 13. Restructuring and Other Charges in the notes to condensed consolidated financial statements for further information.

Research and Development

Research and development expenses consist primarily of personnel-related expenses, consulting and contractor expenses, tooling, test equipment, prototype materials, and related overhead costs. To date, software development costs have been expensed as incurred because the period between achieving technological feasibility and the release of the software has been short and development costs qualifying for capitalization have been insignificant.

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Research and development expenses excluding restructuring and other costs decreased $15.7 million, or 19.5%, for the three months ended March 29, 2025 compared to the three months ended March 30, 2024. This decrease was primarily driven by lower personnel-related costs due to lower headcount and lower product development spend.

Research and development expenses excluding restructuring and other costs decreased $13.7 million, or 8.6%, for the six months ended March 29, 2025 compared to the six months ended March 30, 2024. This decrease was primarily driven by lower personnel-related costs due to lower headcount and lower product development spend, partially offset by stock-based compensation expense related to retention of key personnel.

Sales and Marketing

Sales and marketing expenses consist primarily of advertising and marketing activity for our products and personnel-related expenses, depreciation for product displays, as well as related maintenance and repair expenses, customer experience expenses, revenue related sales fees from our direct-to-consumer business, and related overhead costs.

Sales and marketing expenses excluding restructuring and other costs decreased $0.4 million, or 0.7%, for the three months ended March 29, 2025 compared to the three months ended March 30, 2024. This decrease was primarily driven by lower personnel-related costs due to lower headcount, partially offset by increased depreciation costs associated with our product displays.

Sales and marketing expenses excluding restructuring and other costs increased $2.4 million, or 1.6%, for the six months ended March 29, 2025 compared to the six months ended March 30, 2024. This was primarily driven by app recovery spend and depreciation costs associated with our product displays, partially offset by decreased advertising and marketing activity, lower personnel-related costs due to lower headcount, and lower revenue-related sales fees.

General and Administrative

General and administrative expenses consist of administrative personnel-related expenses for our finance, legal, human resources and similar personnel, as well as the costs of professional services, information technology, litigation, patents, related overhead, and other administrative expenses.

General and administrative expenses excluding restructuring and other costs decreased $11.8 million, or 29.0%, for the three months ended March 29, 2025 compared to the three months ended March 30, 2024. This decrease was primarily driven by lower personnel-related costs due to lower headcount and a decrease in legal fees mainly related to our IP litigation.

General and administrative expenses excluding restructuring and other costs decreased $25.7 million, or 31.9%, for the six months ended March 29, 2025 compared to the six months ended March 30, 2024. This decrease was primarily driven by lower personnel-related costs due to lower headcount and a decrease in legal fees mainly related to our IP litigation.

Interest Income, Interest Expense, and Other Income (Expense), Net

Comparison of the three and six months ended March 29, 2025 and March 30, 2024


	Three Months Ended				Change				Six Months Ended				Change
	March 29, 2025		March 30, 2024		$		%		March 29, 2025		March 30, 2024		$		%
(In thousands, except percentages)
Interest income	$	1,973	$	3,933	$	(1,960)	(49.8	%)	$	3,834	$	7,008	$	(3,174)	(45.3	%)
Interest expense	(109)		(122)		13		(10.7)		(219)		(227)		8		(3.5)
Other income (expense), net	193		(3,303)		3,496		(105.8)		(5,836)		6,971		(12,807)		(183.7)
Total other income, net	$	2,057	$	508	$	1,549	*		$	(2,221)	$	13,752	$	(15,973)	(116.2)	%
* not meaningful

Interest income consists primarily of interest income earned on our cash, cash equivalents, and marketable securities balances. Interest expense consists primarily of interest expense associated with our debt financing arrangements and amortization of debt issuance costs. Other income, net consists primarily of our foreign currency exchange gains and losses relating to transactions and remeasurement of asset and liability balances denominated in currencies other than the U.S. dollar. We expect our foreign currency gains and losses to continue to fluctuate in the future due to changes in foreign currency exchange rates.

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Interest income for the three months ended March 29, 2025 compared to the three months ended March 30, 2024, decreased due to lower cash balances. Interest expense for the three months ended March 29, 2025 compared to the three months ended March 30, 2024, decreased primarily due to lower interest expense on a foreign income tax obligation. Other income (expense), net for the three months ended March 29, 2025 compared to the three months ended March 30, 2024, increased from other expenses of $3.3 million for the three months ended March 30, 2024 to other income of $0.2 million for the three months ended March 29, 2025 due to foreign currency exchange fluctuations.

Interest income for the six months ended March 29, 2025 compared to the six months ended March 30, 2024, decreased due to lower cash balances. Other income (expense), net for the six months ended March 29, 2025 compared to the six months ended March 30, 2024, decreased from other income of $7.0 million for the six months ended March 30, 2024 to other expense of $5.8 million for the six months ended March 29, 2025 due to foreign currency exchange fluctuations.

Provision for (Benefit from) Income Taxes

Comparison of the three and six months ended March 29, 2025 and March 30, 2024


	Three Months Ended				Change			Six Months Ended				Change
	March 29, 2025		March 30, 2024		$		%	March 29, 2025		March 30, 2024		$		%
(In thousands, except percentages)
Provision for (benefit from) income taxes	$	10,977	$	(743)	$	11,720	*	$	4,555	$	11,249	$	(6,694)	(59.5)	%
* not meaningful

We recognized a tax provision of $11.0 million for the three months ended March 29, 2025, compared to a benefit from income taxes of $0.7 million for the three months ended March 30, 2024. This increase was driven by a change in the prescribed U.S. GAAP method to calculate the interim income tax provision for the period ending March 29, 2025 versus the discrete method used to calculate the income tax benefit for the period ending March 30, 2024.

For the three months ended March 29, 2025, we utilized the AETR method to calculate separate U.S. and foreign income tax provisions. Separate U.S. and non-U.S. AETRs were calculated in accordance with interim U.S. GAAP reporting requirements since, unlike the prior year, small fluctuations in forecasted pre-tax income (loss) are not expected to have a material impact on the estimated U.S. AETR. For the three months ended March 30, 2024, we calculated our U.S. income tax provision using the discrete method as though the interim period was an annual period, since minor deviations in the projected pre-tax loss in the U.S. could have resulted in a disproportionate and unreliable effective tax rate under the AETR method.

We recognized tax provisions of $4.6 million and $11.2 million for the six months ended March 29, 2025 and March 30, 2024, respectively. This decrease was driven by a change in the prescribed U.S. GAAP method to calculate the interim income tax benefit for the period ending March 29, 2025 versus the method used to calculate the income tax provision for the period ending March 30, 2024.

Liquidity and Capital Resources

Our operations are financed primarily through cash flows from operating activities. As of March 29, 2025, our principal sources of liquidity consisted of cash flows from operating activities, cash and cash equivalents of $173.2 million, including $72.9 million held by our foreign subsidiaries, marketable securities of $50.3 million, proceeds from the exercise of stock options, and borrowing capacity under the credit facility under our Revolving Credit Agreement. In accordance with our policy, the undistributed earnings of our non-U.S. subsidiaries remain indefinitely reinvested outside of the United States as of March 29, 2025, as they are required to fund needs outside of the United States. In the event funds from foreign operations are needed to fund operations in the United States and if U.S. tax has not already been previously provided, we may be required to accrue and pay additional U.S. taxes to repatriate these funds.

We believe our existing cash and cash equivalent balances, cash flows from operations and committed credit lines will be sufficient to meet our long-term working capital and capital expenditure needs for at least the next 12 months. We hold our cash with a diverse group of major financial institutions and have processes and safeguards in place to manage our cash balances and mitigate the risk of loss. In October 2021, we entered into the Revolving Credit Agreement, which allows us to borrow up to $100 million, with a maturity date of October 2026. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending on research and development efforts and other business initiatives, our planned sales and marketing activities, the timing of new product introductions, our potential merger and acquisition activity, market acceptance of our products, and overall economic conditions. To the extent that current and anticipated sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of

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additional equity would result in increased dilution to our stockholders. If we were to incur additional debt financing, it would result in increased debt service obligations and the instruments governing such debt could require additional operating and financing covenants that would restrict our operations.

Debt Obligations

On October 13, 2021, we entered into the Revolving Credit Agreement. The Revolving Credit Agreement provides for (i) a five year senior secured revolving credit facility in the amount of up to $100 million and (ii) an uncommitted incremental facility subject to certain conditions. Proceeds are to be used for working capital and general corporate purposes. The facility may be drawn as an Alternative Base Rate Loan (at 1.00% plus an applicable margin) or Term Benchmark Loan (SOFR plus an applicable margin). We must also pay (i) an unused commitment fee ranging from 0.200% to 0.275% per annum of the average daily unused portion of the aggregate revolving credit commitment under the agreement and (ii) a per annum fee equal to the applicable margin over SOFR multiplied by the aggregate face amount of outstanding letters of credit. As of March 29, 2025, we did not have any outstanding borrowings and had $2.4 million in undrawn letters of credit that reduce the availability under the Revolving Credit Agreement.

Our obligations under the Revolving Credit Agreement are secured by substantially all of our assets. The Revolving Credit Agreement contains customary representations and warranties, customary affirmative and negative covenants, a financial covenant that is tested quarterly and requires us to maintain a certain consolidated leverage ratio, and customary events of default. As of March 29, 2025, we were in compliance with all financial covenants under the Revolving Credit Agreement.

Cash Flows

The following table summarizes our cash flows for the periods indicated:


	Six Months Ended
	March 29, 2025		March 30, 2024
(In thousands)
Net cash provided by (used in):
Operating activities	$	96,507	$	164,157
Investing activities	(17,162)		(61,543)
Financing activities	(74,194)		(77,587)
Effect of exchange rate changes	(1,725)		704
Net increase in cash and cash equivalents	$	3,426	$	25,731

Cash flows from operating activities

Net cash provided by operating activities of $96.5 million for the six months ended March 29, 2025, consisted of net loss of $19.9 million, non-cash adjustments of $85.4 million, and a favorable impact of net changes in operating assets and liabilities of $31.0 million. Non-cash adjustments primarily consisted of stock-based compensation expense, depreciation and amortization, as well as non-cash restructuring and other charges. The net increase in cash from the change in operating assets and liabilities was primarily due to a decrease in inventories of $92.6 million due to seasonality and as the result of measures taken to more efficiently manage inventory, an increase in accrued compensation of $10.5 million, an increase in other liabilities of $5.8 million primarily for provisions for our returns, and a decrease in accounts receivable of $4.7 million. The net increase in cash from the change in operating assets and liabilities was partially offset by a decrease in accounts payable of $83.6 million driven by payments for inventory purchases and payment of a non-recurring non-U.S. income tax due on the intercompany transfer of intellectual property to the U.S.

Cash flows from investing activities

Cash used in investing activities of $17.2 million for the six months ended March 29, 2025, primarily consisted of the purchases of marketable securities of $25.9 million and purchases of property and equipment of $18.7 million mainly related to point-of-sale product displays and manufacturing-related tooling and test equipment to support the launch of new products, partially offset by cash provided by maturities of marketable securities of $27.4 million.

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Cash flows from financing activities

Cash used in financing activities of $74.2 million for the six months ended March 29, 2025, primarily consisted of payments for repurchases of common stock of $60.6 million and payments for repurchases of common stock related to shares withheld for tax in connection with vesting of stock awards of $16.2 million, partially offset by proceeds from the exercise of stock options of $2.7 million.

Commitments and Contingencies

See Note 7. Commitments and Contingencies in the notes to condensed consolidated financial statements.

Critical Accounting Policies and Estimates

Our unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from those estimates.

Other than items discussed in Note 2 of our condensed consolidated financial statements, there have been no material changes to our critical accounting policies as compared to the critical accounting policies and significant judgments and estimates disclosed in our Annual Report on Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to financial market risks, including changes in currency exchange rates and interest rates. For quantitative and qualitative disclosures about market risk, refer to Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in our Annual Report on Form 10-K. Our exposure to market risk has not changed materially, except as follows:

Foreign Currency Risk

Our inventory purchases are primarily denominated in U.S. dollars. Our international sales are primarily denominated in foreign currencies and any movement in the exchange rate between the U.S. dollar and the currencies in which we conduct sales in foreign countries could have an impact on our revenue, principally for sales denominated in the euro and the British pound. A portion of our operating expenses are incurred outside the United States and are denominated in foreign currencies, which are also subject to foreign currency exchange rate fluctuations. In certain countries where we may invoice customers in the local currency our revenues benefit from a weaker dollar and are adversely affected by a stronger dollar. The opposite impact occurs in countries where we record expenses in local currencies. In those cases, our costs and expenses benefit from a stronger dollar and are adversely affected by a weaker dollar.

We have not entered into any material foreign exchange contracts or derivatives to hedge any foreign currency exposures. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy. Our continued international expansion increases our exposure to exchange rate fluctuations and, as a result, such fluctuations could have a significant impact on our future results of operations.

For the three months ended March 29, 2025 and March 30, 2024, we recognized a gain from foreign currency exchange of $0.2 million and loss of $3.3 million, respectively. For the six months ended March 29, 2025 and March 30, 2024, we recognized a loss from foreign currency exchange of $5.8 million and gain of $6.8 million, respectively. Based on transactions denominated in currencies other than the U.S. dollar as of March 29, 2025, a hypothetical adverse change of 10% 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.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Interim Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required under Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended ("Exchange Act") as of March 29, 2025. Based on that evaluation, the Interim Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures were effective at a reasonable assurance level as of the end of the period covered by this Quarterly Report on Form 10-Q.

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Changes in Internal Control

There were no changes in our internal control over financial reporting in management's evaluation pursuant to Rule 13a-15(f) during the quarter ended March 29, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. Other than the matters described in Note 7. Commitments and Contingencies of the notes to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, we were not a party to any legal proceedings that in the opinion of our management, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition, or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

Item 1A. Risk Factors

Our operations and financial results are subject to various risks and uncertainties, including the factors discussed in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended September 28, 2024, which could adversely affect our business, reputation, financial condition and operating results, and affect the trading price of our common stock. Except as set forth below, there have been no material changes to the risk factors disclosed in our Annual Report.

Changes in international trade policies, including the imposition of tariffs have had, and may continue to have, an adverse effect on our business, financial condition and results of operations.

Starting in 2018, the U.S. government imposed significant tariffs on China for U.S.-bound goods in our product categories. We received exemptions to almost all of those tariffs until such time as we were able to diversify our supply chain, primarily to Vietnam and Malaysia. As a result, our reliance on China for our U.S.-bound products is expected to be very modest.

There is significant uncertainty about the future of trade relationships around the world, including potential changes to trade laws and regulations, trade policies, and tariffs. For example, the U.S. government has recently instituted or proposed changes to international trade policy and agreements including the imposition of tariffs on China and countries other than China, in many cases significantly and including countries in Southeast Asia and EMEA. Our business may be impacted by the potential expansion of tariffs on U.S.-bound goods imported from other countries including, but not limited to, Vietnam and Malaysia. In addition, many countries have considered or instituted retaliatory policies, including reciprocal tariffs, in response to these proposed U.S. tariffs. To the extent that tariffs imposed by the United States or by other countries increase the price of, or limit the amount or availability of, our products or components or materials used in our products, or increase logistics costs or cause delays, our business and results of operations may be adversely affected. We may be required to raise our prices, which may result in the loss of customers, or we may choose to pay for these tariffs or additional costs without raising prices, either of which may negatively impact our business and results of operation. In addition, a trade war, and uncertainty regarding international trade policies, could have a significant adverse effect on the domestic and world economies and on consumer confidence, sentiment and spending with a corresponding adverse effect on our business and results of operations. It remains unclear what actions the U.S. or foreign governments will take with respect to tariffs, international trade agreements and policies on a short-term or long-term basis. The U.S. and other countries may announce new or changed restrictions with little advance notice. While we are engaged in ongoing efforts to reduce the effect of tariffs, these efforts may take time and be costly to implement and ultimately ineffective. In the event of an expansion of trade restrictions, the imposition of future tariffs on the import of our products or other governmental actions related to tariffs or trade agreements, our business and results of operations may be adversely impacted.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

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The following table presents information with respect to the Company's repurchase of common stock during the three months ended March 29, 2025:


Period	Total Number of Shares Purchased	Average Price Paid per Share(1)		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 (in thousands)(2)
Dec 29- Jan 25	2,260,018	$	14.38	2,260,018	$	11,429
Jan 26 - Feb 22	22,531	$	14.14	22,531	$	11,111
Feb 23 - Mar 29	—	$	—	—	$	150,000
Total	2,282,549			2,282,549

(1)Aggregate purchase price and average price per share exclude commission and excise tax. See Note 8. Stockholders' Equity of the Company's condensed consolidated financial statements for further information.

(2)Approximate dollar value of shares that may yet to be purchased under the plans or programs does not include the impact of direct costs incurred to acquire shares.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

Rule 10b5-1 Trading Plans and Non-Rule 10b5-1 Trading Arrangements

On January 13, 2025, Shamayne Braman, the Company's Chief People Officer, terminated her trading plan intended to satisfy the requirements of Rule 10b5-1(c), originally adopted on March 2, 2024 for the sale of up to 27,838 shares of the Company's common stock subject to restricted stock units granted under our equity incentive plan, as decreased by the number of shares withheld by the Company in connection with the vesting of such restricted stock units to satisfy applicable tax withholding requirements. The plan was originally scheduled to terminate on the earlier of the date all shares under the plan were sold or March 4, 2025.

On February 13, 2025, Nick Millington, the Company's Chief Innovation Officer, adopted a trading plan intended to satisfy the requirements of Rule 10b5-1(c). The plan provides that Mr. Millington may sell up to an aggregate of 19,948 shares of the Company's common stock subject to options granted under our equity incentive plan. The plan terminates on the earlier of the date all shares under the plan are sold or February 12, 2026.

Table of contents

Item 6. Exhibit Index

Incorporated by reference

Exhibit

number

Exhibit title

Form

File no.

Exhibit

Filing
date

Filed or
furnished
herewith

3.1

Restated Certificate of Incorporation

3.2

R estated Bylaws

10.1+

T ransition Agree ment with Patrick Spence dated J anuary 12, 2 025.

8-K

001-38603

10.1

1/13/2025

10.2+

L etter Agree ment with T ho mas Conrad dated January 12, 202 5.

8-K

001-38603

10.2

1/13/2025

10.3+

S ev erance Agreeme nt with Maxime Bouva t-Merlin dated March 3, 2025.

8-K/A

001-38603

10.1

3/5/2025

10.4+

Trans ition A greeme nt with Dei rd re Find lay dated Fe bruary 20, 2025.

8-K

001-38603

10.1

2/24/2025

31.1

Certification of Interim Chief Executive Officer pursuant to Rules 13a-14(a) and Rule 15d-14(a) of the Exchange Act

31.2

Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and Rule 15d-14(a) of the Exchange Act

32.1*

Certification of Interim Chief Executive Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*

Certification of Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101

The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended March 29, 2025, 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

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Form 10-Q and are not deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

+ Indicates a management contract or compensatory plan or arrangement.

Table of contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		Sonos, Inc.

Date: May 7, 2025	By:	/s/ Tom Conrad
		Tom Conrad

		Interim Chief Executive Officer

		(Principal Executive Officer)

Date: May 7, 2025	By:	/s/ Saori Casey
		Saori Casey

		Chief Financial Officer

		(Principal Financial Officer and Principal Accounting Officer)

Sonos Inc 10-Q