Sonos (SONO) investor relations material

Executive summary

• Q4 revenue grew 13% year over year, closing fiscal 2025 with positive adjusted EBITDA and improved operational discipline, supported by a shift to a system-centric strategy and leadership changes.

• Fiscal 2025 revenue reached $1.44 billion, down 5% year over year, with strong growth in home theater, EMEA, and growth markets, offsetting early-year challenges.

• Adjusted EBITDA for the year increased 23% to $132 million (9.2% margin), driven by cost transformation and operational efficiencies.

• Non-GAAP EPS grew 31% to $0.64, reflecting lower operating expenses and a reduced share count.

• Installed base expanded to 17.1 million households (+5% YoY), with average devices per household rising to 3.13.

Financial highlights

• Q4 revenue reached $288 million, near the high end of guidance, with strong demand and double-digit growth in EMEA and growth markets.

• Q4 GAAP gross margin was 43.7%, non-GAAP 45.2%, both at the high end of guidance and up year over year due to cost savings.

• Q4 adjusted EBITDA was $6.4 million, above guidance midpoint, a $29 million improvement year over year.

• Free cash flow for the year was $108 million, or $144 million excluding $35 million in non-recurring items.

• Non-GAAP operating expenses fell 10% year over year to $570 million, with normalized OpEx down 17% due to restructuring.

Outlook and guidance

• Q1 2026 revenue expected between $510–$560 million, down 7% to up 2% year over year, with new product launches in the second half.

• Q1 GAAP gross margin guided at 44–46%, with non-GAAP about 110 basis points higher; both up over 100 basis points year over year.

• Q1 adjusted EBITDA expected at $94–$137 million, up 27% year over year, with margin expansion of about 500 basis points.

• Operating expenses for Q1 expected to decline 19% at midpoint from last year, with non-GAAP OpEx ~$16 million lower than GAAP.