SEC Form 10-Q filed by Sonos Inc.

8/6/25 5:31:41 PM ET

$SONO

Consumer Electronics/Appliances

Consumer Staples

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sono-20250628

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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 June 28, 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 July 22, 2025, the registrant had 120,880,277 shares of common stock outstanding.

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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	31

Item 4.	Mine safety disclosures	31

Item 5.	Other information	32

Item 6.	Exhibit index	33

SIGNATURES		34

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PART I. FINANCIAL INFORMATION

Item 1. Financial statements

SONOS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except par values)


	As of
	June 28, 2025		September 28, 2024
Assets
Current assets:
Cash and cash equivalents	$	201,273	$	169,732
Marketable securities	52,681		51,426
Accounts receivable, net	94,201		44,513
Inventories	115,427		231,505
Prepaids and other current assets	39,559		53,910
Total current assets	503,141		551,086
Property and equipment, net	80,726		102,148
Operating lease right-of-use assets	46,625		50,175
Goodwill	82,854		82,854
Intangible assets, net
In-process research and development	—		73,770
Other intangible assets	78,008		14,266
Deferred tax assets	10,012		10,314
Other noncurrent assets	33,036		31,699
Total assets	$	834,402	$	916,312

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	143,992	$	194,590
Accrued expenses	75,872		87,783
Accrued compensation	26,408		15,701
Deferred revenue, current	21,867		21,802
Other current liabilities	47,464		46,277
Total current liabilities	315,603		366,153
Operating lease liabilities, noncurrent	55,147		56,588
Deferred revenue, noncurrent	61,098		61,075
Deferred tax liabilities	512		60
Other noncurrent liabilities	2,736		3,816
Total liabilities	435,096		487,692

Commitments and contingencies (Note 7)
Stockholders’ equity:
Common stock, $0.001 par value	122		123
Treasury stock	(16,322)		(17,096)
Additional paid-in capital	488,548		498,245
Accumulated deficit	(74,220)		(50,934)
Accumulated other comprehensive income (loss)	1,178		(1,718)
Total stockholders’ equity	399,306		428,620
Total liabilities and stockholders’ equity	$	834,402	$	916,312

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

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SONOS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands, except share and per share amounts)


	Three Months Ended				Nine Months Ended
	June 28, 2025		June 29, 2024		June 28, 2025		June 29, 2024
Revenue	$	344,764	$	397,146	$	1,155,376	$	1,262,676
Cost of revenue	195,040		205,505		650,637		676,320
Gross profit	149,724		191,641		504,739		586,356
Operating expenses
Research and development	59,750		74,223		218,011		233,780
Sales and marketing	62,576		71,643		213,430		217,428
General and administrative	30,327		33,186		89,357		113,825
Total operating expenses	152,653		179,052		520,798		565,033
Operating income (loss)	(2,929)		12,589		(16,059)		21,323
Other income (expense), net
Interest income	1,572		2,629		5,406		9,638
Interest expense	(117)		(106)		(336)		(333)
Other income (expense), net	661		(2,464)		(5,176)		4,507
Total other income (expense), net	2,116		59		(106)		13,812
Income (loss) before provision for income taxes	(813)		12,648		(16,165)		35,135
Provision for income taxes	2,566		8,939		7,121		20,188
Net income (loss)	$	(3,379)	$	3,709	$	(23,286)	$	14,947

Net income (loss) per share:
Basic	$	(0.03)	$	0.03	$	(0.19)	$	0.12
Diluted	$	(0.03)	$	0.03	$	(0.19)	$	0.12

Weighted-average shares used in computing net income (loss) per share:
Basic	120,423,439		122,553,129		120,804,730		123,828,150
Diluted	120,423,439		127,245,459		120,804,730		127,886,368

Total comprehensive income (loss)
Net income (loss)	(3,379)		3,709		(23,286)		14,947
Change in foreign currency translation adjustment	3,496		681		3,036		(267)
Net unrealized loss on marketable securities	(23)		(6)		(140)		(32)
Comprehensive income (loss)	$	94	$	4,384	$	(20,390)	$	14,648

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

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SONOS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(unaudited, in thousands, except share amounts)


	Three Months Ended				Nine Months Ended
	June 28, 2025		June 29, 2024		June 28, 2025		June 29, 2024
Total stockholders' equity, beginning balances	$	382,859	$	494,004	$	428,620	$	518,657

Common stock
Beginning balances	$	124	$	128	$	123	$	130
Issuance of common stock pursuant to equity incentive plans	1		2		5		6
Retirement of treasury stock	(3)		(4)		(6)		(10)
Ending balances	$	122	$	126	$	122	$	126

Additional paid-in capital
Beginning balances	$	507,805	$	577,840	$	498,245	$	607,345
Issuance of common stock pursuant to equity incentive plans	(1)		4,405		2,648		16,306
Retirement of treasury stock	(40,040)		(66,003)		(81,709)		(150,440)
Stock-based compensation expense	20,784		21,930		69,364		64,961
Ending balances	$	488,548	$	538,172	$	488,548	$	538,172

Treasury stock
Beginning balances	$	(51,934)	$	(77,996)	$	(17,096)	$	(72,586)
Retirement of treasury stock	40,042		66,007		81,715		150,450
Repurchase of common stock, including excise tax and commission	77		(52,820)		(60,187)		(129,430)
Repurchase of common stock related to shares withheld for tax in connection with vesting of stock awards	(4,507)		(7,514)		(20,754)		(20,757)
Ending balances	$	(16,322)	$	(72,323)	$	(16,322)	$	(72,323)

Retained earnings (accumulated deficit)
Beginning balances	$	(70,841)	$	(1,550)	$	(50,934)	$	(12,788)
Net income (loss)	(3,379)		3,709		(23,286)		14,947
Ending balances	$	(74,220)	$	2,159	$	(74,220)	$	2,159

Accumulated other comprehensive income (loss)
Beginning balances	$	(2,295)	$	(4,418)	$	(1,718)	$	(3,444)
Change in foreign currency translation adjustment	3,496		681		3,036		(267)
Unrealized loss on investments	(23)		(6)		$	(140)	$	(32)
Ending balances	$	1,178	$	(3,743)	$	1,178	$	(3,743)

Total stockholders' equity, ending balances	$	399,306	$	464,391	$	399,306	$	464,391

Common stock shares:
Beginning balances	123,760,168		127,825,196		123,046,510		130,399,940
Issuance of common stock pursuant to equity incentive plans	1,129,089		1,582,772		4,806,666		4,911,125
Retirement of treasury stock	(2,830,758)		(3,885,878)		(5,794,677)		(9,788,975)
Ending balances	122,058,499		125,522,090		122,058,499		125,522,090

Treasury stock shares:
Beginning balances	(3,692,282)		(4,747,402)		(1,282,734)		(5,286,024)
Retirement of treasury stock	2,830,758		3,885,878		5,794,677		9,788,975
Repurchase of common stock	0		(3,253,468)		(4,167,203)		(7,777,208)
Repurchase of common stock related to shares withheld for tax in connection with vesting of stock awards	(415,834)		(433,871)		(1,622,098)		(1,274,606)
Ending balances	(1,277,358)		(4,548,863)		(1,277,358)		(4,548,863)

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)


	Nine Months Ended
	June 28, 2025		June 29, 2024
Cash flows from operating activities
Net income (loss)	$	(23,286)	$	14,947
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock-based compensation expense	64,789		64,961
Depreciation and amortization	48,657		35,154
Provision for inventory obsolescence	9,242		2,005
Restructuring and other charges	6,323		266
Deferred income taxes	942		819
Other	2,432		2,973
Foreign currency transaction loss (gain)	572		(2,750)
Changes in operating assets and liabilities:
Accounts receivable	(49,010)		(64,218)
Inventories	106,223		189,613
Other assets	11,616		(15,285)
Accounts payable and accrued expenses	(55,341)		(16,942)
Accrued compensation	10,352		10,251
Deferred revenue	(1,033)		1,685
Other liabilities	1,470		4,161
Net cash provided by operating activities	133,948		227,640
Cash flows from investing activities
Purchases of marketable securities	(43,949)		(68,676)
Purchases of property and equipment	(23,418)		(39,477)
Maturities of marketable securities	43,200		20,000
Net cash used in investing activities	(24,167)		(88,153)
Cash flows from financing activities
Payments for repurchase of common stock, including excise tax and commission	(60,602)		(128,739)
Payments for repurchase of common stock related to shares withheld for tax in connection with vesting of stock awards	(20,754)		(20,757)
Proceeds from exercise of common stock options	2,653		16,312
Net cash used in financing activities	(78,703)		(133,184)
Effect of exchange rate changes on cash and cash equivalents	463		580
Net increase in cash and cash equivalents	31,541		6,883
Cash and cash equivalents
Beginning of period	169,732		220,231
End of period	$	201,273	$	227,114
Supplemental disclosure
Cash paid for interest	$	197	$	195
Cash paid for taxes, net of refunds	$	19,065	$	17,134
Cash paid for amounts included in the measurement of lease liabilities, net of tenant improvement reimbursements received	$	3,460	$	9,637
Supplemental disclosure of non-cash investing and financing activities
Purchases of property and equipment in accounts payable and accrued expenses	$	2,155	$	9,910
Right-of-use assets obtained in exchange for new operating lease liabilities	$	1,491	$	11,277
Excise tax on share repurchases, accrued but not paid	$	187	$	691

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 nine months ended June 28, 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 nine months ended June 28, 2025 and June 29, 2024, spanned 39 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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SONOS, INC.

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 June 28, 2025 and September 28, 2024:


	June 28, 2025
	Amortized Cost		Unrealized Gain		Unrealized Loss		Estimated Fair Value		Cash and Cash Equivalents		Marketable Securities
Cash	$	172,644	$	—	$	—	$	172,644	$	172,644	$	—
Level 1:
Money market funds	28,629		—		—		28,629		28,629		—
Subtotal	28,629		—		—		28,629		28,629		—
Level 2:
U.S. Treasury securities	52,699		2		(20)		52,681		—		52,681
Subtotal	52,699		2		(20)		52,681		—		52,681
Total	$	253,972	$	2	$	(20)	$	253,954	$	201,273	$	52,681


	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 June 28, 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.

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SONOS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(unaudited)

There were no realized gains or losses on sales of marketable securities during the three and nine months ended June 28, 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 June 28, 2025.

Accrued interest receivable related to our marketable securities was immaterial as of June 28, 2025. No accrued interest receivables were written off during the three and nine months ended June 28, 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				Nine Months Ended
	June 28, 2025		June 29, 2024		June 28, 2025		June 29, 2024
(In thousands)
Americas	$	229,656	$	264,611	$	731,041	$	827,238
Europe, Middle East and Africa ("EMEA")	97,245		110,902		363,642		372,074
Asia Pacific ("APAC")	17,863		21,633		60,693		63,364
Total revenue	$	344,764	$	397,146	$	1,155,376	$	1,262,676

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:


	Three Months Ended				Nine Months Ended
	June 28, 2025		June 29, 2024		June 28, 2025		June 29, 2024
(In thousands)
United States	$	213,815	$	248,094	$	675,546	$	765,639
Other countries	130,949		149,052		479,830		497,037
Total revenue	$	344,764	$	397,146	$	1,155,376	$	1,262,676

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				Nine Months Ended
	June 28, 2025		June 29, 2024		June 28, 2025		June 29, 2024
(In thousands)
Sonos speakers	$	253,669	$	301,105	$	915,330	$	991,378
Sonos system products	73,179		75,186		183,993		209,013
Partner products and other revenue	17,916		20,855		56,053		62,285
Total revenue	$	344,764	$	397,146	$	1,155,376	$	1,262,676

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SONOS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(unaudited)

5. Balance Sheet Components

Accounts receivable, net

Accounts receivable, net consist of the following:


	June 28, 2025		September 28, 2024
(In thousands)
Accounts receivable	$	147,287	$	96,254
Allowance for credit losses	(2,904)		(2,619)
Allowance for sales incentives	(50,182)		(49,122)
Accounts receivable, net of allowances	$	94,201	$	44,513

Inventories

Inventories consist of the following:


	June 28, 2025		September 28, 2024
(In thousands)
Finished goods	$	93,264	$	199,825
Component parts	22,163		31,680
Inventories	$	115,427	$	231,505

As of June 28, 2025 and September 28, 2024, inventory write-downs were $39.0 million and $33.3 million, respectively.

Property and equipment

Property and equipment net of accumulated depreciation were as follows:


	June 28, 2025		September 28, 2024
(In thousands)
Property and equipment	$	296,833	$	280,247
Less: accumulated depreciation	(216,107)		(178,099)
Property and equipment, net	$	80,726	$	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 is being amortized 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:

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SONOS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(unaudited)


	June 28, 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	$	(244)	$	16	$	223	2.75
Technology-based	94,419		(16,634)		-		77,785		5.97
Total intangible assets	$	94,870	$	(16,878)	$	16	$	78,008	5.96


	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

The following table summarizes the estimated future amortization expense of the Company's intangible assets as of June 28, 2025:


Fiscal years ending	Future Amortization Expense
(In thousands)
Remainder of fiscal 2025	$	2,651
2026	13,585
2027	13,570
2028	13,451
2029	12,453
2030 and thereafter	22,298
Total future amortization expense	$	78,008

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:


	June 28, 2025		September 28, 2024
(In thousands)
Cloud computing implementation costs	$	26,844	$	25,038
Less: accumulated amortization	(12,314)		(9,697)
Cloud computing implementation costs, net	$	14,530	$	15,341

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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Amortization expense for implementation costs for cloud-based computing arrangements for the three months ended June 28, 2025 and June 29, 2024, were $0.9 million. Amortization expense for implementation costs for cloud-based computing arrangements for the nine months ended June 28, 2025 and June 29, 2024, were $2.6 million.

Accrued expenses

Accrued expenses included the following:


	June 28, 2025		September 28, 2024
(In thousands)
Accrued inventory and supply chain costs	$	36,773	$	34,204
Accrued taxes	10,668		19,084
Accrued advertising and marketing	10,562		12,893
Accrued general and administrative expenses	8,969		10,870
Accrued product development	4,928		4,338
Other accrued payables	3,972		6,394
Total accrued expenses	$	75,872	$	87,783

Deferred revenue

Amounts invoiced in advance of revenue recognition are recorded as deferred revenue on the condensed consolidated balance sheets. For the nine months ended June 28, 2025 and June 29, 2024, deferred revenue included revenue allocated to unspecified software upgrades and cloud-based services of $82.3 million and $82.4 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.

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


	Nine Months Ended
	June 28, 2025		June 29, 2024
(In thousands)
Deferred revenue, beginning of period	$	82,877	$	80,838
Recognition of revenue included in beginning of period deferred revenue	(15,041)		(17,723)
Revenue deferred, net of revenue recognized on contracts in the respective period	15,129		19,871
Deferred revenue, end of period	$	82,965	$	82,986

The Company expects the following recognition of deferred revenue as of June 28, 2025:


	For the fiscal years ending
	Remainder of 2025		2026		2027		2028		2029 and Beyond		Total
(In thousands)
Deferred revenue expected to be recognized	$	6,225	$	20,546	$	17,813	$	14,690	$	23,691	$	82,965

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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Other current liabilities

Other current liabilities consist of the following:


	June 28, 2025		September 28, 2024
(In thousands)
Reserve for returns	$	23,108	$	20,304
Warranty liability	9,708		10,565
Short-term operating lease liabilities	7,023		7,551
Other	7,625		7,857
Total other current liabilities	$	47,464	$	46,277

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


	June 28, 2025		June 29, 2024
(In thousands)
Warranty liability, beginning of period	$	10,565	$	7,466
Provision for warranties issued during the period	10,312		13,363
Settlements of warranty claims during the period	(11,169)		(12,039)
Warranty liability, end of period	$	9,708	$	8,790

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 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 June 28, 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 June 28, 2025, the Company was in compliance with all financial covenants under the Revolving Credit Agreement.

7. Commitments and Contingencies

Commitments to suppliers

As of June 28, 2025, the Company's open purchase orders to contract manufacturers for finished goods were approximately $147 million, the majority of which are expected to be paid over the next six months. As of June 28, 2025, the Company's expected commitments to suppliers for components were in the range of $216 million to $244 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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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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. Google moved to file counterclaims on two of its own patents related to device setup and the court has added those patents to the case. 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 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. Google’s time to appeal the decision of indefiniteness has not yet expired. The second ITC investigation concluded in December 2023 with a final determination of no violation by the Company. Google did not appeal this determination.

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 in 2025. A range of loss, if any, associated with this matter is not probable or reasonably estimable as of June 28, 2025.

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SONOS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(unaudited)

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 nine months ended June 28, 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. The Company has not made any repurchases under the 2025 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.

Treasury stock during the nine months ended June 28, 2025, included 1,622,098 shares withheld to satisfy employees' tax withholding requirements in connection with vesting of stock awards. Additionally, during the nine months ended June 28, 2025, the Company retired 5,794,677 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").

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	(1,010,510)	$	14.24
Outstanding at June 28, 2025	5,876,400	$	14.26	1.7	$	—

As of June 28, 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.

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SONOS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(unaudited)

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	7,252,030	$	12.41
Released	(4,603,993)	$	15.17
Forfeited	(3,322,526)	$	13.66
Outstanding at June 28, 2025	10,088,609	$	13.28	$	108,251

As of June 28, 2025 and September 28, 2024, the Company had $94.7 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 2.3 years and 2.4 years, respectively.

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	339,837	$	11.53
Released	(7,194)	$	17.54
Performance adjustment	(121,250)	$	21.80
Forfeited	(137,914)	$	17.40

Outstanding at June 28, 2025	757,559	$	14.93	$	8,129

As of June 28, 2025 and September 28, 2024, the Company had $4.3 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 1.3 years and 1.5 years, respectively.

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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				Nine Months Ended
	June 28, 2025		June 29, 2024		June 28, 2025		June 29, 2024
(In thousands)
Cost of revenue	$	1,633	$	655	$	4,588	$	1,995
Research and development	7,944		9,735		29,816		29,133
Sales and marketing	3,568		4,510		13,227		13,297
General and administrative	7,639		7,030		21,733		20,536
Total stock-based compensation expense	$	20,784	$	21,930	$	69,364	$	64,961

For the three and nine months ended June 28, 2025, the Company incurred non-recurring stock-based compensation expenses related to restructuring activities.

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 $2.6 million and $8.9 million for the three months ended June 28, 2025 and June 29, 2024, respectively, related to U.S. and non-U.S. income taxes. The Company recorded a provision for income taxes of $7.1 million and $20.2 million for the nine months ended June 28, 2025 and June 29, 2024, respectively, related to U.S. and non-U.S. income taxes.

For the three and nine months ended June 28, 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 nine months ended June 29, 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 nine months ended June 28, 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 nine months ended June 29, 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 nine months ended June 28, 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.

On July 4, 2025, H.R.1, commonly referred to as the One Big Beautiful Bill Act (“OBBBA”) was enacted. The Company continues to evaluate the bill's impact on its consolidated financial statements.

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(unaudited)

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:


	Three Months Ended				Nine Months Ended
	June 28, 2025		June 29, 2024		June 28, 2025		June 29, 2024
(In thousands, except share and per share data)
Numerator:
Net income (loss) - basic and diluted	$	(3,379)	$	3,709	$	(23,286)	$	14,947
Denominator:
Weighted-average shares of common stock—basic	120,423,439		122,553,129		120,804,730		123,828,150
Effect of potentially dilutive stock options	—		1,116,000		—		956,598
Effect of RSUs	—		3,543,526		—		3,085,571
Effect of PSUs	—		32,804		—		16,049
Weighted-average shares of common stock—diluted	120,423,439		127,245,459		120,804,730		127,886,368
Net income (loss) per share:
Basic	$	(0.03)	$	0.03	$	(0.19)	$	0.12
Diluted	$	(0.03)	$	0.03	$	(0.19)	$	0.12

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		Nine Months Ended
	June 28, 2025	June 29, 2024	June 28, 2025	June 29, 2024
Stock options to purchase common stock	6,338,165	6,371,604	6,673,403	6,998,738
Restricted stock units	10,863,006	9,556,879	13,394,270	9,828,619
Performance stock units	516,697	187,255	201,691	88,030
Total	17,717,868	16,115,738	20,269,364	16,915,387

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 $1.6 million and $2.5 million for the three months ended June 28, 2025 and June 29, 2024, respectively. The Company's matching contributions totaled $5.9 million and $7.4 million for the nine months ended June 28, 2025 and June 29, 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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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


	Three Months Ended				Nine Months Ended
(in thousands)	June 28, 2025		June 29, 2024		June 28, 2025		June 29, 2024
Cash restructuring charges:
Employee-related costs	$	1,874	$	443	$	17,227	$	443
Other restructuring costs (1)	(1,327)		850		2,071		1,157
Total cash charges	$	547	$	1,293	$	19,298	$	1,600
Non-cash charges:
Stock-based awards (2)	$	1,434	$	—	$	4,577	$	—
Asset write-offs	—		—		1,746		266
Total non-cash charges	$	1,434	$	—	$	6,323	$	266

Total restructuring and other charges	$	1,981	$	1,293	$	25,621	$	1,866

(1)Other restructuring charges include estimated costs primarily related to rationalization of the Company's product roadmap, including a benefit for the three months ended June 28, 2025, related to a change in estimate resulting from favorable contract negotiations with one of the Company's contract manufacturers.

(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				Nine Months Ended
(in thousands)	June 28, 2025		June 29, 2024		June 28, 2025		June 29, 2024
Cost of revenue	$	(514)	$	—	$	3,420	$	—
Research and development	(824)		478		11,882		801
Sales and marketing	1,038		185		3,831		297
General and administrative	2,281		630		6,488		768
Total restructuring and other charges	$	1,981	$	1,293	$	25,621	$	1,866

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	17,227		2,071		19,298
Cash paid	(16,294)		(1,529)		(17,823)
Balance as of June 28, 2025	$	3,085	$	1,579	$	4,664

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

14. Subsequent Event

On July 22, 2025, the Board of Directors (the “Board”) appointed Tom Conrad Chief Executive Officer and President effective immediately, following his tenure as interim Chief Executive Officer since January 13, 2025. Mr. Conrad will remain on the Board.

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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.

On July 22, 2025, our board of directors appointed Tom Conrad as our new Chief Executive Officer, following his tenure as interim Chief Executive Officer since January 13, 2025. Under Mr. Conrad's direction, we have significantly improved our software products, reorganized our operations to improve our efficiency and effectiveness and recommitted to delivering the kind of premium experience our customers expect. With every new product, software feature and integration, the Sonos platform becomes more powerful and provides greater value to our customers.

During the second half of fiscal 2024, we started a cost transformation initiative aimed at optimizing our investments for sustainable, long-term growth and to 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

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February 2025 (the "2025 restructuring plan") which are expected to result in approximately $20 million in savings during the remainder of fiscal 2025. See Note 13. Restructuring and Other Charges in the notes to condensed consolidated financial statements for further information. Furthermore, we remain focused on additional transformation efforts to improve both our operational efficiency and effectiveness. Additionally, during the third quarter of fiscal 2025, we began the process of exiting a partnership with one of our contract manufacturers to consolidate and improve supply chain efficiency. We expect to complete this exit with minimal disruption to our business by the second quarter of fiscal 2026. This exit did not impact the third quarter fiscal 2025. We continue to maintain diversified contract manufacturing partnerships.

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 U.S.-based companies as a result of U.S. 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						Nine Months Ended
	June 28, 2025			June 29, 2024			June 28, 2025			June 29, 2024
(In thousands, except percentages)
Total revenue	$	344,764		$	397,146		$	1,155,376		$	1,262,676
Products sold	1,078			1,280			3,696			4,135
Net income (loss)	$	(3,379)		$	3,709		(23,286)			14,947
Net income (loss) margin(1)	(1.0		%)	0.9		%	(2.0		%)	1.2		%
Adjusted EBITDA(2)	$	35,589		$	48,906		125,936			130,506
Adjusted EBITDA margin(2)	10.3		%	12.3		%	10.9		%	10.3		%

(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 units sold from the Sonos speakers and Sonos system products categories, and 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, the impact of foreign exchange rate fluctuations, as well as the impact of recognition of previously deferred revenue.

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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.

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						Nine Months Ended
	June 28, 2025			June 29, 2024			June 28, 2025			June 29, 2024
(In thousands, except percentages)
Net income (loss)	$	(3,379)		$	3,709		$	(23,286)		$	14,947
Add (deduct):
Depreciation and amortization	15,879			12,032			48,657			35,154
Stock-based compensation expense	19,352			21,930			64,789			64,961
Interest income	(1,572)			(2,629)			(5,406)			(9,638)
Interest expense	117			106			336			333
Other (income) expense, net	(661)			2,464			5,176			(4,507)
Provision for income taxes	2,566			8,939			7,121			20,188
Legal and transaction related costs(1)	1,306			1,062			2,928			7,202
Restructuring and other charges(2)	1,981			1,293			25,621			1,866
Adjusted EBITDA	$	35,589		$	48,906		$	125,936		$	130,506
Revenue	$	344,764		$	397,146		$	1,155,376		$	1,262,676
Net income (loss) margin	(1.0		%)	0.9		%	(2.0		%)	1.2		%
Adjusted EBITDA margin	10.3		%	12.3		%	10.9		%	10.3		%

(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 nine months ended June 28, 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-

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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.

Results of Operations

Comparison of the three and nine months ended June 28, 2025 and June 29, 2024

Revenue by Product

Comparison of the three and nine months ended June 28, 2025 and June 29, 2024


	Three Months Ended						Change				Nine Months Ended						Change
	June 28, 2025			June 29, 2024			$		%		June 28, 2025			June 29, 2024			$		%
(In thousands)
Sonos speakers	$	253,669		$	301,105		$	(47,436)	(15.8)	%	$	915,330		$	991,378		$	(76,048)	(7.7)	%
% of total revenue	73.6		%	75.8		%					79.2		%	78.5		%
Sonos system products	73,179			75,186			(2,007)		(2.7)		183,993			$	209,013		(25,020)		(12.0)
% of total revenue	21.2		%	18.9		%					15.9		%	16.6		%
Partner products and other revenue	17,916			20,855			(2,939)		(14.1)		56,053			$	62,285		(6,232)		(10.0)
% of total revenue	5.2		%	5.3		%					4.9		%	4.9		%
Total revenue	$	344,764		$	397,146		$	(52,382)	(13.2)	%	$	1,155,376		$	1,262,676		$	(107,300)	(8.5)	%
Volume data (products sold in thousands)							Units		%								Units		%
Total products sold	1,078			1,280			(202)		(15.8)	%	3,696			4,135			(439)		(10.6)	%

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 decreased $52.4 million, or 13.2%, for the three months ended June 28, 2025 compared to the three months ended June 29, 2024, primarily due to lapping the launch of Ace in the previous year and softer demand due to challenging market conditions, partially offset by the introduction of Arc Ultra in October 2024.

Sonos speakers revenue represented 73.6% of total revenue for the three months ended June 28, 2025 and decreased 15.8% compared to the three months ended June 29, 2024, primarily driven by expected declines in sales of Arc, lapping the launch of Ace, and softer demand due to challenging market conditions, partially offset by the introduction of Arc Ultra. Sonos system products represented 21.2% of total revenue for the three months ended June 28, 2025 and decreased 2.7% compared to the three months ended June 29, 2024. Partner products and other revenue represented 5.2% of total revenue for the three months ended June 28, 2025 and decreased 14.1% compared to the three months ended June 29, 2024.

The volume of products sold decreased 15.8% for the three months ended June 28, 2025 compared to the three months ended June 29, 2024, consistent with the decline in revenue.

Total revenue decreased $107.3 million, or 8.5%, for the nine months ended June 28, 2025 compared to the nine months ended June 29, 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.

Sonos speakers revenue represented 79.2% of total revenue for the nine months ended June 28, 2025 and decreased 7.7% compared to the nine months ended June 29, 2024, primarily driven by expected declines in sales of Arc and Sonos One, as well as Move and Beam. These declines were partially offset by the introduction of Arc Ultra, as well as Era 100. Sonos system products represented 15.9% of total revenue for the nine months ended June 28, 2025 and decreased 12.0% compared to the nine months ended June 29, 2024, due to lower sales to our installed solutions channel. Partner products and other revenue represented 4.9% of total revenue for the nine months ended June 28, 2025 and decreased 10.0% compared to the nine months ended June 29, 2024.

The volume of products sold decreased 10.6% for the nine months ended June 28, 2025 compared to the nine months ended June 29, 2024, consistent with the decline in revenue.

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Revenue by Region

The following table presents the change in revenue for the three and nine months ended June 28, 2025 compared with the three and nine months ended June 29, 2024:


	Three Months Ended June 28, 2025				Nine Months Ended June 28, 2025
	Change (%)		Constant Currency Change (%)(1)		Change (%)		Constant Currency Change (%)(1)
Americas	(13.2)	%	(13.0)	%	(11.6)	%	(11.2)	%
EMEA	(12.3)	%	(16.4)	%	(2.3)	%	(3.5)	%
APAC	(17.4)	%	(15.7)	%	(4.2)	%	(3.4)	%

(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 nine months ended June 28, 2025 and June 29, 2024


	Three Months Ended						Change				Nine Months Ended						Change
	June 28, 2025			June 29, 2024			$		%		June 28, 2025			June 29, 2024			$		%
(In thousands, except percentages)
Cost of revenue	$	195,040		$	205,505		$	(10,465)	(5.1)	%	$	650,637		$	676,320		$	(25,683)	(3.8)	%
Gross profit	$	149,724		$	191,641		$	(41,917)	(21.9)	%	$	504,739		$	586,356		$	(81,617)	(13.9)	%
Gross margin	43.4		%	48.3		%					43.7		%	46.4		%

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 decreased $10.5 million, or 5.1%, for the three months ended June 28, 2025 compared to the three months ended June 29, 2024, primarily due to a decrease in products sold and a decrease in product and material costs, partially offset by an increase in inventory-related write-downs.

Cost of revenue decreased $25.7 million, or 3.8%, for the nine months ended June 28, 2025 compared to the nine months ended June 29, 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 fluctuates 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 490 basis points for the three months ended June 28, 2025 compared to the three months ended June 29, 2024, primarily due to an increase in inventory-related write-downs, the impact of reorganization efforts, and deleverage resulting from lower revenue, partially offset by a decrease in product and material costs.

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Gross margin decreased 270 basis points for the nine months ended June 28, 2025 compared to the nine months ended June 29, 2024, primarily due to the impact of reorganization efforts, unfavorable channel mix, an increase in inventory-related write-downs, 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 nine months ended June 28, 2025 and June 29, 2024


	Three Months Ended				Change				Nine Months Ended				Change
	June 28, 2025		June 29, 2024		$		%		June 28, 2025		June 29, 2024		$		%
(Dollars in thousands)
Research and development	$	59,750	$	74,223	$	(14,473)	(19.5	%)	$	218,011	$	233,780	$	(15,769)	(6.7	%)
Less restructuring and other charges(1)	(824)		478		(1,302)		*		11,882		801		11,081		*
Research and development, net of restructuring and other charges	$	60,574	$	73,745	$	(13,171)	(17.9	%)	$	206,129	$	232,979	$	(26,850)	(11.5	%)

Sales and marketing	$	62,576	$	71,643	$	(9,067)	(12.7)	%	$	213,430	$	217,428	$	(3,998)	(1.8)	%
Less restructuring and other charges(1)	1,038		185		853		*		3,831		297		3,534		*
Sales and marketing, net of restructuring and other charges	$	61,538	$	71,458	$	(9,920)	(13.9)	%	$	209,599	$	217,131	$	(7,532)	(3.5)	%

General and administrative	$	30,327	$	33,186	$	(2,859)	(8.6)	%	$	89,357	$	113,825	$	(24,468)	(21.5)	%
Less restructuring and other charges(1)	2,281		630		1,651		*		6,488		768		5,720		*
General and administrative, net of restructuring and other charges	$	28,046	$	32,556	$	(4,510)	(13.9)	%	$	82,869	$	113,057	$	(30,188)	(26.7)	%

Operating expenses	$	152,653	$	179,052	$	(26,399)	(14.7)	%	$	520,798	$	565,033	$	(44,235)	(7.8)	%
Less restructuring and other charges(1)	2,495		1,293		1,202		93.0		22,201		1,866		20,335		*
Operating expenses, net of restructuring and other charges	$	150,158	$	177,759	$	(27,601)	(15.5)	%	$	498,597	$	563,167	$	(64,570)	(11.5)	%
* Not meaningful

(1)Restructuring and other charges for the three and nine months ended June 28, 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 $13.2 million, or 17.9%, for the three months ended June 28, 2025, compared to the three months ended June 29, 2024. This decrease was primarily driven by lower personnel-related costs due to lower headcount, our reorganization efforts, and timing of product development costs.

Research and development expenses excluding restructuring and other costs decreased $26.9 million, or 11.5%, for the nine months ended June 28, 2025, compared to the nine months ended June 29, 2024. This decrease was primarily driven by lower personnel-related costs due to lower headcount and our reorganization efforts.

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 $9.9 million, or 13.9%, for the three months ended June 28, 2025, compared to the three months ended June 29, 2024. This decrease was primarily driven by lower marketing costs compared to the prior year when we incurred costs associated with our launch of Sonos Ace in June 2024, and 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 decreased $7.5 million, or 3.5%, for the nine months ended June 28, 2025, compared to the nine months ended June 29, 2024. This decrease was primarily driven by lower marketing costs compared to the prior year when we incurred costs associated with our launch of Sonos Ace in June 2024, lower personnel-related costs due to lower headcount, partially offset by increased depreciation costs associated with our product displays, and increased investment in customer experience.

General and Administrative

General and administrative expenses consist of administrative personnel-related expenses for our information technology, 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 $4.5 million, or 13.9%, for the three months ended June 28, 2025, compared to the three months ended June 29, 2024. This decrease was primarily driven by lower personnel-related costs due to lower headcount, and lower professional and information technology costs as a result of our cost transformation efforts.

General and administrative expenses excluding restructuring and other costs decreased $30.2 million, or 26.7%, for the nine months ended June 28, 2025, compared to the nine months ended June 29, 2024. This decrease was primarily driven by lower personnel-related costs due to lower headcount, and lower professional and information technology costs as a result of our cost transformation efforts.

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

Comparison of the three and nine months ended June 28, 2025 and June 29, 2024


	Three Months Ended				Change				Nine Months Ended				Change
	June 28, 2025		June 29, 2024		$		%		June 28, 2025		June 29, 2024		$		%
(In thousands, except percentages)
Interest income	$	1,572	$	2,629	$	(1,057)	(40.2	%)	$	5,406	$	9,638	$	(4,232)	(43.9	%)
Interest expense	(117)		(106)		(11)		10.4		(336)		(333)		(3)		0.9
Other income (expense), net	661		(2,464)		3,125		(126.8)		(5,176)		4,507		(9,683)		(214.8)
Total other income, net	$	2,116	$	59	$	2,057	*		$	(106)	$	13,812	$	(13,918)	(100.8)	%
* 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 June 28, 2025 compared to the three months ended June 29, 2024, decreased due to lower cash balances. Interest expense for the three months ended June 28, 2025 compared to the three months ended June 29, 2024, remained relatively consistent. Other income (expense), net for the three months ended June 28, 2025 compared to the three months ended June 29, 2024, increased from other expenses of $2.5 million for the three months ended June 29, 2024 to other income of $0.7 million for the three months ended June 28, 2025 due to foreign currency exchange fluctuations.

Interest income for the nine months ended June 28, 2025 compared to the nine months ended June 29, 2024, decreased due to lower cash balances. Other income (expense), net for the nine months ended June 28, 2025 compared to the nine months ended June 29, 2024, decreased from other income of $4.5 million for the nine months ended June 29, 2024 to other expense of $5.2 million for the nine months ended June 28, 2025 due to foreign currency exchange fluctuations.

Provision for Income Taxes

Comparison of the three and nine months ended June 28, 2025 and June 29, 2024


	Three Months Ended				Change				Nine Months Ended				Change
	June 28, 2025		June 29, 2024		$		%		June 28, 2025		June 29, 2024		$		%
(In thousands, except percentages)
Provision for income taxes	$	2,566	$	8,939	$	(6,373)	(71.3)	%	$	7,121	$	20,188	$	(13,067)	(64.7)	%

We are subject to income taxes in the United States and foreign jurisdictions in which we operate. Foreign jurisdictions have statutory tax rates different from those in the United States. Accordingly, our effective tax rate will vary depending on jurisdictional mix of earnings, and changes in tax laws. In addition, certain U.S. tax regulations subject the earnings of our non-U.S. subsidiaries to current taxation in the United States. Our effective tax rate will be impacted by our ability to claim deductions and foreign tax credits to offset the taxation of foreign earnings in the United States. On July 4, 2025, H.R.1, commonly referred to as the One Big Beautiful Bill Act (“OBBBA”) was enacted. We continue to evaluate the bill's impact on our consolidated financial statements.

We recognized tax provisions of $2.6 million and $8.9 million for the three months ended June 28, 2025 and ended June 29, 2024, respectively. This decrease was driven by a change in the prescribed U.S. GAAP method to calculate the interim income tax provision for the period ending June 28, 2025 versus the discrete method used to calculate the income tax provision for the period ending June 29, 2024.

For the three months ended June 28, 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 June 29, 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 $7.1 million and $20.2 million for the nine months ended June 28, 2025 and June 29, 2024, respectively. This decrease was driven by a change in the prescribed U.S. GAAP method to calculate the interim income tax provision for the period ending June 28, 2025 versus the method used to calculate the income tax provision for the period ending June 29, 2024.

Liquidity and Capital Resources

Our operations are financed primarily through cash flows from operating activities. As of June 28, 2025, our principal sources of liquidity consisted of cash flows from operating activities, cash and cash equivalents of $201.3 million, including $91.8 million held by our foreign subsidiaries, marketable securities of $52.7 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 June 28, 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,

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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 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 June 28, 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 June 28, 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:


	Nine Months Ended
	June 28, 2025		June 29, 2024
(In thousands)
Net cash provided by (used in):
Operating activities	$	133,948	$	227,640
Investing activities	(24,167)		(88,153)
Financing activities	(78,703)		(133,184)
Effect of exchange rate changes	463		580
Net increase in cash and cash equivalents	$	31,541	$	6,883

Cash flows from operating activities

Net cash provided by operating activities of $133.9 million for the nine months ended June 28, 2025, consisted of net loss of $23.3 million, non-cash adjustments of $133.0 million, and a favorable impact of net changes in operating assets and liabilities of $24.3 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 $106.2 million due to seasonality and as the result of measures taken to more efficiently manage inventory, a decrease in other assets of $11.6 million, and an increase in accrued compensation of $10.4 million. The net increase in cash from the change in operating assets and liabilities was partially offset by a decrease in accounts payable of $55.3 million due to lower inventory purchases, and an increase in accounts receivable of $49.0 million.

Cash flows from investing activities

Cash used in investing activities of $24.2 million for the nine months ended June 28, 2025, primarily consisted of the purchases of marketable securities of $43.9 million and purchases of property and equipment of $23.4 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 $43.2 million.

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Cash flows from financing activities

Cash used in financing activities of $78.7 million for the nine months ended June 28, 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 $20.8 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 June 28, 2025 and June 29, 2024, we recognized a gain from foreign currency exchange of $0.6 million and loss of $2.6 million, respectively. For the nine months ended June 28, 2025 and June 29, 2024, we recognized a loss from foreign currency exchange of $5.2 million and gain of $4.2 million, respectively. Based on transactions denominated in currencies other than the U.S. dollar as of June 28, 2025, a hypothetical adverse change of 10% would have resulted in an adverse impact on loss before provision for income taxes of approximately $4.3 million and $15.2 million for the three and nine months ended June 28, 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 June 28, 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 June 28, 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 and in Part II, Item 1A of in our Quarterly Report on Form 10-Q for the quarter ended March 29, 2025 (the “Second Quarter Form 10-Q”), which could adversely affect our business, reputation, financial condition and operating results, and affect the trading price of our common stock. There have been no material changes to the risk factors disclosed in our Annual Report and Second Quarter Form 10-Q.

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

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

On November 15, 2023, 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.

The following table presents information with respect to the Company's repurchase of common stock during the three months ended June 28, 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)
Mar 30 - Apr 26	—	$	—	—	$	150,000
Apr 27 - May 24	—	$	—	—	$	150,000
May 25 - Jun 28	—	$	—	—	$	150,000
Total	—			—

(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.

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Item 5. Other Information

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

None.

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Item 6. Exhibit Index

Incorporated by reference

Exhibit

number

Exhibit title

Form

File no.

Exhibit

Filing
date

Filed or
furnished
herewith

31.1

Certification of 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 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 June 28, 2025, formatted in Inline XBRL: (i) Condensed consolidated balance sheets, (ii) Condensed consolidated statements of operations and comprehensive income (loss), (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.

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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: August 6, 2025	By:	/s/ Tom Conrad
		Tom Conrad

		Chief Executive Officer

		(Principal Executive Officer)

Date: August 6, 2025	By:	/s/ Saori Casey
		Saori Casey

		Chief Financial Officer

		(Principal Financial Officer and Principal Accounting Officer)

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Date	Price Target	Rating	Analyst
9/26/2024	$25.00 → $11.00	Overweight → Underweight	Morgan Stanley
8/8/2024	$25.00 → $10.00	Buy → Hold	Craig Hallum
12/12/2023	$17.00 → $20.00	Equal-Weight → Overweight	Morgan Stanley
11/7/2023	$20.00 → $12.00	Buy → Neutral	BofA Securities
9/20/2023	$20.00	Buy	Rosenblatt
9/8/2023	$20.00	Buy	Craig Hallum
6/15/2022	$38.00 → $28.00	Overweight → Equal-Weight	Morgan Stanley
2/3/2022	$49.00 → $45.00	Overweight	Morgan Stanley

SEC Form 10-Q filed by Sonos Inc.

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Insider Purchases

Large owner Coliseum Capital Management, Llc bought $1,968,328 worth of shares (182,406 units at $10.79) (SEC Form 4)

Director Darrell Bracken bought $250,000 worth of shares (22,412 units at $11.15), increasing direct ownership by 83% to 49,452 units (SEC Form 4)

Chief Financial Officer Casey Saori bought $248,688 worth of shares (22,727 units at $10.94), increasing direct ownership by 27% to 107,000 units (SEC Form 4)

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Insider Trading

Chief Innovation Officer Millington Nicholas converted options into 14,511 shares and covered exercise/tax liability with 5,019 shares, increasing direct ownership by 2% to 437,943 units (SEC Form 4)

Chief Legal & Bus Dev Officer Lazarus Edward P converted options into 41,870 shares and covered exercise/tax liability with 20,761 shares, increasing direct ownership by 5% to 414,110 units (SEC Form 4)

Chief Financial Officer Casey Saori converted options into 35,417 shares and covered exercise/tax liability with 17,561 shares, increasing direct ownership by 17% to 124,856 units (SEC Form 4)

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SEC Filings