|
|
(Mark One)
|
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Delaware
|
3577
|
03-0479476
|
(State or other jurisdiction
of incorporation or organization)
|
(Primary standard industrial code number)
|
(I.R.S. Employer Identification No.)
|
|
614 Chapala Street
Santa Barbara, CA 93101
(805) 965-3001
|
|
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
|
|
|
|
|
Page
|
|
||
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
As of
|
||||||
|
June 30,
2018 |
|
September 30,
2017 |
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
124,432
|
|
|
$
|
130,595
|
|
Restricted cash
|
191
|
|
|
193
|
|
||
Accounts receivable, net of allowances
|
53,095
|
|
|
47,363
|
|
||
Inventories
|
113,411
|
|
|
113,856
|
|
||
Other current assets
|
13,852
|
|
|
9,462
|
|
||
Total current assets
|
304,981
|
|
|
301,469
|
|
||
Property and equipment, net
|
89,600
|
|
|
95,130
|
|
||
Deferred tax assets
|
982
|
|
|
1,107
|
|
||
Other noncurrent assets
|
5,782
|
|
|
2,314
|
|
||
Total assets
|
$
|
401,345
|
|
|
$
|
400,020
|
|
|
|
|
|
||||
Liabilities, redeemable convertible preferred stock and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
117,222
|
|
|
$
|
114,494
|
|
Accrued expenses
|
29,600
|
|
|
57,348
|
|
||
Accrued compensation
|
27,605
|
|
|
32,007
|
|
||
Deferred revenue
|
17,248
|
|
|
10,920
|
|
||
Other current liabilities
|
9,346
|
|
|
8,497
|
|
||
Total current liabilities
|
201,021
|
|
|
223,266
|
|
||
Long-term debt
|
39,686
|
|
|
39,600
|
|
||
Deferred revenue
|
38,546
|
|
|
34,647
|
|
||
Other noncurrent liabilities
|
10,851
|
|
|
12,139
|
|
||
Total liabilities
|
290,104
|
|
|
309,652
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 11)
|
|
|
|
||||
Redeemable convertible preferred stock, $0.001 par value
|
90,341
|
|
|
90,341
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.001 par value
|
61
|
|
|
59
|
|
||
Treasury stock
|
(11,072
|
)
|
|
(10,161
|
)
|
||
Additional paid-in capital
|
235,444
|
|
|
200,301
|
|
||
Accumulated deficit
|
(201,891
|
)
|
|
(188,007
|
)
|
||
Accumulated other comprehensive loss
|
(1,642
|
)
|
|
(2,165
|
)
|
||
Total stockholders’ equity
|
20,900
|
|
|
27
|
|
||
Total liabilities, redeemable convertible preferred stock and stockholders’ equity
|
$
|
401,345
|
|
|
$
|
400,020
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
June 30,
2018 |
|
July 1,
2017 |
||||||||
Revenue
|
$
|
208,398
|
|
|
$
|
223,078
|
|
|
$
|
864,069
|
|
|
$
|
778,431
|
|
Cost of revenue
|
112,909
|
|
|
115,790
|
|
|
491,037
|
|
|
425,257
|
|
||||
Gross profit
|
95,489
|
|
|
107,288
|
|
|
373,032
|
|
|
353,174
|
|
||||
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Research and development
|
35,444
|
|
|
33,347
|
|
|
104,209
|
|
|
90,920
|
|
||||
Sales and marketing
|
60,819
|
|
|
70,074
|
|
|
214,077
|
|
|
207,225
|
|
||||
General and administrative
|
20,860
|
|
|
20,000
|
|
|
63,822
|
|
|
55,031
|
|
||||
Total operating expenses
|
117,123
|
|
|
123,421
|
|
|
382,108
|
|
|
353,176
|
|
||||
Operating loss
|
(21,634
|
)
|
|
(16,133
|
)
|
|
(9,076
|
)
|
|
(2
|
)
|
||||
Other income (expense), net
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
(1,116
|
)
|
|
(1,185
|
)
|
|
(3,367
|
)
|
|
(3,187
|
)
|
||||
Other income (expense), net
|
(3,744
|
)
|
|
2,975
|
|
|
(315
|
)
|
|
2,047
|
|
||||
Total other income (expense), net
|
(4,860
|
)
|
|
1,790
|
|
|
(3,682
|
)
|
|
(1,140
|
)
|
||||
Loss before provision for (benefit from) income taxes
|
(26,494
|
)
|
|
(14,343
|
)
|
|
(12,758
|
)
|
|
(1,142
|
)
|
||||
Provision for (benefit from) income taxes
|
494
|
|
|
196
|
|
|
1,126
|
|
|
(1,830
|
)
|
||||
Net income (loss)
|
$
|
(26,988
|
)
|
|
$
|
(14,539
|
)
|
|
$
|
(13,884
|
)
|
|
$
|
688
|
|
|
|
|
|
|
|
|
|
||||||||
Net loss attributable to common stockholders
|
$
|
(26,988
|
)
|
|
$
|
(14,539
|
)
|
|
$
|
(13,884
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Net loss per share attributable to common stockholders - basic and diluted
|
$
|
(0.45
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares used in computing net loss per share attributable to common stockholders - basic and diluted
|
60,074,763
|
|
|
56,334,641
|
|
|
59,484,761
|
|
|
55,776,325
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total comprehensive loss
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
(26,988
|
)
|
|
$
|
(14,539
|
)
|
|
$
|
(13,884
|
)
|
|
$
|
688
|
|
Change in foreign currency translation adjustment, net of tax
|
162
|
|
|
(406
|
)
|
|
523
|
|
|
(2,295
|
)
|
||||
Comprehensive loss
|
$
|
(26,826
|
)
|
|
$
|
(14,945
|
)
|
|
$
|
(13,361
|
)
|
|
$
|
(1,607
|
)
|
|
Redeemable
Convertible Preferred Stock |
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Treasury Stock
|
|
Accumulated
Deficit
|
|
Accumulated
Other Comprehensive
Loss
|
|
Total
Stockholders’ Equity |
|||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
|
Shares
|
|
Amount
|
|
|
Shares
|
|
Amount
|
|
|
|
|||||||||||||||||||||
Balance at September 30, 2017
|
32,482,590
|
|
|
$
|
90,341
|
|
|
59,339,336
|
|
|
$
|
59
|
|
|
$
|
200,301
|
|
|
(746,462
|
)
|
|
$
|
(10,161
|
)
|
|
$
|
(188,007
|
)
|
|
$
|
(2,165
|
)
|
|
$
|
27
|
|
|
Exercise of stock options
|
—
|
|
|
—
|
|
|
1,735,750
|
|
|
2
|
|
|
5,746
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,748
|
|
||||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(60,578
|
)
|
|
(911
|
)
|
|
—
|
|
|
—
|
|
|
(911
|
)
|
||||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,397
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,397
|
|
||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,884
|
)
|
|
—
|
|
|
(13,884
|
)
|
||||||||
Change in foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
523
|
|
|
523
|
|
||||||||
Balance at June 30, 2018
|
32,482,590
|
|
|
$
|
90,341
|
|
|
61,075,086
|
|
|
$
|
61
|
|
|
$
|
235,444
|
|
|
(807,040
|
)
|
|
$
|
(11,072
|
)
|
|
$
|
(201,891
|
)
|
|
$
|
(1,642
|
)
|
|
$
|
20,900
|
|
|
|
Nine Months Ended
|
||||||
|
|
June 30,
2018 |
|
July 1,
2017 |
||||
Cash flows from operating activities
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
(13,884
|
)
|
|
$
|
688
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation
|
|
28,647
|
|
|
24,447
|
|
||
Stock-based compensation expense
|
|
29,397
|
|
|
26,961
|
|
||
Other
|
|
639
|
|
|
493
|
|
||
Deferred income taxes
|
|
117
|
|
|
1,593
|
|
||
Foreign currency transaction (gain) loss
|
|
301
|
|
|
(2,499
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Accounts receivable, net
|
|
(5,659
|
)
|
|
(6,973
|
)
|
||
Inventories, net
|
|
(79
|
)
|
|
14,202
|
|
||
Other assets
|
|
(4,901
|
)
|
|
335
|
|
||
Accounts payable and accrued expenses
|
|
(24,357
|
)
|
|
(20,702
|
)
|
||
Accrued compensation
|
|
(4,237
|
)
|
|
554
|
|
||
Deferred revenue
|
|
10,342
|
|
|
6,636
|
|
||
Other liabilities
|
|
(534
|
)
|
|
181
|
|
||
Net cash provided by operating activities
|
|
15,792
|
|
|
45,916
|
|
||
Cash flows from investing activities
|
|
|
|
|
||||
Purchases of property and equipment
|
|
(25,927
|
)
|
|
(21,073
|
)
|
||
Net cash used in investing activities
|
|
(25,927
|
)
|
|
(21,073
|
)
|
||
Cash flows from financing activities
|
|
|
|
|
||||
Proceeds from credit facilities and issuance of debt, net of issuance costs
|
|
30,000
|
|
|
14,987
|
|
||
Payments of principal on credit facilities
|
|
(30,000
|
)
|
|
—
|
|
||
Proceeds from issuance of common stock, net of issuance costs
|
|
—
|
|
|
10,078
|
|
||
Repurchase of common stock
|
|
(911
|
)
|
|
(10,016
|
)
|
||
Proceeds from exercise of common stock options
|
|
5,748
|
|
|
5,421
|
|
||
Payments of offering costs
|
|
(2,154
|
)
|
|
—
|
|
||
Net cash provided by financing activities
|
|
2,683
|
|
|
20,470
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
1,289
|
|
|
955
|
|
||
Net increase (decrease) in cash and cash equivalents
|
|
(6,163
|
)
|
|
46,268
|
|
||
Cash and cash equivalents
|
|
|
|
|
||||
Beginning of period
|
|
130,595
|
|
|
74,913
|
|
||
End of period
|
|
$
|
124,432
|
|
|
$
|
121,181
|
|
Supplemental disclosure
|
|
|
|
|
||||
Cash paid for interest
|
|
$
|
3,596
|
|
|
$
|
3,006
|
|
Cash paid for taxes, net of refunds
|
|
$
|
1,251
|
|
|
$
|
268
|
|
Supplemental disclosure of non-cash investing and financing activities
|
|
|
|
|
||||
Purchases of property and equipment in accounts payable and accrued expenses
|
|
$
|
7,187
|
|
|
$
|
10,732
|
|
Deferred offering costs in accounts payable and accrued expenses
|
|
$
|
972
|
|
|
$
|
—
|
|
|
June 30, 2018
|
||||||||||||||
(In thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds (cash equivalents)
|
$
|
50,362
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
50,362
|
|
|
September 30, 2017
|
||||||||||||||
(In thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds (cash equivalents)
|
$
|
40,072
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
40,072
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
(In thousands)
|
|
|
||||||||||||||
Americas
|
|
$
|
122,982
|
|
|
$
|
114,707
|
|
|
$
|
447,705
|
|
|
$
|
388,620
|
|
Europe, Middle East and Africa
|
|
75,585
|
|
|
95,802
|
|
|
374,790
|
|
|
349,327
|
|
||||
Asia Pacific
|
|
9,831
|
|
|
12,569
|
|
|
41,574
|
|
|
40,484
|
|
||||
Total revenue
|
|
$
|
208,398
|
|
|
$
|
223,078
|
|
|
$
|
864,069
|
|
|
$
|
778,431
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
(In thousands)
|
|
|
||||||||||||||
United States
|
|
$
|
113,558
|
|
|
$
|
106,364
|
|
|
$
|
409,701
|
|
|
$
|
352,194
|
|
United Kingdom
|
|
17,930
|
|
|
20,500
|
|
|
$
|
88,421
|
|
|
88,505
|
|
|||
Germany
|
|
18,512
|
|
|
25,973
|
|
|
$
|
95,720
|
|
|
86,308
|
|
|||
Other countries
|
|
58,398
|
|
|
70,241
|
|
|
270,227
|
|
|
251,424
|
|
||||
Total revenue
|
|
$
|
208,398
|
|
|
$
|
223,078
|
|
|
$
|
864,069
|
|
|
$
|
778,431
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
(In thousands)
|
|
|
||||||||||||||
Wireless speakers
|
|
$
|
93,867
|
|
|
$
|
92,797
|
|
|
$
|
453,185
|
|
|
$
|
389,300
|
|
Home theater speakers
|
|
66,732
|
|
|
83,928
|
|
|
283,952
|
|
|
266,972
|
|
||||
Components
|
|
42,283
|
|
|
44,160
|
|
|
113,530
|
|
|
114,007
|
|
||||
Other
|
|
5,516
|
|
|
2,193
|
|
|
13,402
|
|
|
8,152
|
|
||||
Total revenue
|
|
$
|
208,398
|
|
|
$
|
223,078
|
|
|
$
|
864,069
|
|
|
$
|
778,431
|
|
|
June 30, 2018
|
|
September 30, 2017
|
||||
(In thousands)
|
|
||||||
Finished goods
|
$
|
98,565
|
|
|
$
|
104,014
|
|
Components
|
14,846
|
|
|
9,842
|
|
||
Inventories
|
$
|
113,411
|
|
|
$
|
113,856
|
|
|
June 30, 2018
|
|
July 1, 2017
|
||||
|
|
|
|
||||
(In thousands)
|
|
|
|
||||
Deferred revenue, beginning of period
|
$
|
45,567
|
|
|
$
|
36,160
|
|
Recognition of revenue included in beginning of period deferred revenue
|
(8,367
|
)
|
|
(5,171
|
)
|
||
Revenue deferred, net of revenue recognized on contracts in the respective period
|
18,594
|
|
|
11,817
|
|
||
Deferred revenue, end of period
|
$
|
55,794
|
|
|
$
|
42,806
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
(In thousands)
|
|
|
|
|
|
|
|
||||||||
Cost of revenue
|
$
|
49
|
|
|
$
|
65
|
|
|
$
|
156
|
|
|
$
|
179
|
|
Research and development
|
3,651
|
|
|
3,529
|
|
|
10,417
|
|
|
10,136
|
|
||||
Sales and marketing
|
4,391
|
|
|
3,899
|
|
|
12,414
|
|
|
11,172
|
|
||||
General and administrative
|
2,242
|
|
|
2,045
|
|
|
6,410
|
|
|
5,474
|
|
||||
Total stock-based compensation expense
|
$
|
10,333
|
|
|
$
|
9,538
|
|
|
$
|
29,397
|
|
|
$
|
26,961
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
(In thousands, except per share data)
|
|
|
|
|
|
||||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
(26,988
|
)
|
|
$
|
(14,539
|
)
|
|
$
|
(13,884
|
)
|
|
$
|
688
|
|
Less: earnings attributable to preferred stockholders
|
—
|
|
|
—
|
|
|
—
|
|
|
(688
|
)
|
||||
Net loss attributable to common stockholders—basic and diluted
|
(26,988
|
)
|
|
(14,539
|
)
|
|
(13,884
|
)
|
|
—
|
|
||||
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares of common stock—basic and diluted
|
60,074,763
|
|
|
56,334,641
|
|
|
59,484,761
|
|
|
55,776,325
|
|
||||
Net loss per share attributable to common stockholders:
|
|
|
|
|
|
|
|
||||||||
Net loss per share attributable to common stockholders—basic and diluted
|
$
|
(0.45
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
—
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||
Stock options to purchase common stock
|
48,370,248
|
|
|
48,554,772
|
|
|
48,370,248
|
|
|
48,554,772
|
|
Convertible preferred stock
|
32,482,590
|
|
|
32,482,590
|
|
|
32,482,590
|
|
|
32,482,590
|
|
Shares subject to repurchase
|
53,892
|
|
|
53,892
|
|
|
53,892
|
|
|
53,892
|
|
Total
|
80,906,730
|
|
|
81,091,254
|
|
|
80,906,730
|
|
|
81,091,254
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in thousands, except percentages)
|
||||||||||||||
Products sold
|
887
|
|
|
796
|
|
|
3,957
|
|
|
3,173
|
|
||||
Adjusted EBITDA
|
$
|
(1,541
|
)
|
|
$
|
2,306
|
|
|
$
|
48,968
|
|
|
$
|
51,406
|
|
Adjusted EBITDA margin
|
(0.7
|
)%
|
|
1.0
|
%
|
|
5.7
|
%
|
|
6.6
|
%
|
•
|
these non-GAAP financial measures exclude depreciation and, although these are non-cash expenses, the assets being depreciated may be replaced in the future;
|
•
|
these non-GAAP financial measures exclude stock-based compensation expense, which has been, and will continue to be, a significant recurring expense for our business and an important part of our compensation strategy;
|
•
|
these non-GAAP financial measures do not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our debt, which reduces cash available to us;
|
•
|
these non-GAAP financial measures do not reflect the effect of foreign currency exchange gains or losses, which is included in other income (expense), net;
|
•
|
these non-GAAP financial measures do not reflect income tax payments that reduce cash available to us; and
|
•
|
the expenses and other items that we exclude in our calculation of these non-GAAP financial measures may differ from the expenses and other items, if any, that other companies may exclude from these non-GAAP financial measures when they report their operating results.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
June 30,
2018 |
|
July 1,
2017 |
||||||||
|
(in thousands, except percentages)
|
||||||||||||||
Net income (loss)
|
$
|
(26,988
|
)
|
|
$
|
(14,539
|
)
|
|
$
|
(13,884
|
)
|
|
$
|
688
|
|
Depreciation
|
9,760
|
|
|
8,901
|
|
|
28,647
|
|
|
24,447
|
|
||||
Stock-based compensation expense
|
10,333
|
|
|
9,538
|
|
|
29,397
|
|
|
26,961
|
|
||||
Interest expense, net
|
1,116
|
|
|
1,185
|
|
|
3,367
|
|
|
3,187
|
|
||||
Other (income) expense, net
|
3,744
|
|
|
(2,975
|
)
|
|
315
|
|
|
(2,047
|
)
|
||||
Provision for (benefit from) income taxes
|
494
|
|
|
196
|
|
|
1,126
|
|
|
(1,830
|
)
|
||||
Adjusted EBITDA
|
$
|
(1,541
|
)
|
|
$
|
2,306
|
|
|
$
|
48,968
|
|
|
$
|
51,406
|
|
Revenue
|
$
|
208,398
|
|
|
$
|
223,078
|
|
|
$
|
864,069
|
|
|
$
|
778,431
|
|
Adjusted EBITDA margin
|
(0.7
|
)%
|
|
1.0
|
%
|
|
5.7
|
%
|
|
6.6
|
%
|
|
Three Months Ended
|
|
Change
|
|
Nine Months Ended
|
|
Change
|
||||||||||||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
||||||||||||||
|
(dollars and products sold in thousands)
|
||||||||||||||||||||||||||||
Americas
|
$
|
122,982
|
|
|
$
|
114,707
|
|
|
$
|
8,275
|
|
|
7.2
|
%
|
|
$
|
447,705
|
|
|
$
|
388,620
|
|
|
$
|
59,085
|
|
|
15.2
|
%
|
Europe, Middle East and Africa
|
75,585
|
|
|
95,802
|
|
|
(20,217
|
)
|
|
(21.1
|
)%
|
|
374,790
|
|
|
349,327
|
|
|
25,463
|
|
|
7.3
|
%
|
||||||
Asia Pacific
|
9,831
|
|
|
12,569
|
|
|
(2,738
|
)
|
|
(21.8
|
)%
|
|
41,574
|
|
|
40,484
|
|
|
1,090
|
|
|
2.7
|
%
|
||||||
Total revenue
|
$
|
208,398
|
|
|
$
|
223,078
|
|
|
$
|
(14,680
|
)
|
|
(6.6
|
)%
|
|
$
|
864,069
|
|
|
$
|
778,431
|
|
|
$
|
85,638
|
|
|
11.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total products sold
|
887
|
|
|
796
|
|
|
91
|
|
|
11.4
|
%
|
|
3,957
|
|
|
3,173
|
|
|
784
|
|
|
24.7
|
%
|
|
Three Months Ended
|
|
Change
|
|
Nine Months Ended
|
|
Change
|
||||||||||||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||||||
Cost of revenue
|
$
|
112,909
|
|
|
$
|
115,790
|
|
|
$
|
(2,881
|
)
|
|
(2.5
|
)%
|
|
$
|
491,037
|
|
|
$
|
425,257
|
|
|
$
|
65,780
|
|
|
15.5
|
%
|
Gross profit
|
$
|
95,489
|
|
|
$
|
107,288
|
|
|
$
|
(11,799
|
)
|
|
(11.0
|
)%
|
|
$
|
373,032
|
|
|
$
|
353,174
|
|
|
$
|
19,858
|
|
|
5.6
|
%
|
Gross margin
|
45.8
|
%
|
|
48.1
|
%
|
|
|
|
|
|
43.2
|
%
|
|
45.4
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Change
|
|
Nine Months Ended
|
|
Change
|
||||||||||||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||||||
Research and development
|
$
|
35,444
|
|
|
$
|
33,347
|
|
|
$
|
2,097
|
|
|
6.3
|
%
|
|
$
|
104,209
|
|
|
$
|
90,920
|
|
|
$
|
13,289
|
|
|
14.6
|
%
|
Percentage of revenue
|
17.0
|
%
|
|
14.9
|
%
|
|
|
|
|
|
12.1
|
%
|
|
11.7
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Change
|
|
Nine Months Ended
|
|
Change
|
||||||||||||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||||||
Sales and marketing
|
$
|
60,819
|
|
|
$
|
70,074
|
|
|
$
|
(9,255
|
)
|
|
(13.2
|
)%
|
|
$
|
214,077
|
|
|
$
|
207,225
|
|
|
$
|
6,852
|
|
|
3.3
|
%
|
Percentage of revenue
|
29.2
|
%
|
|
31.4
|
%
|
|
|
|
|
|
24.8
|
%
|
|
26.6
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Change
|
|
Nine Months Ended
|
|
Change
|
||||||||||||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||||||
General and administrative
|
$
|
20,860
|
|
|
$
|
20,000
|
|
|
$
|
860
|
|
|
4.3
|
%
|
|
$
|
63,822
|
|
|
$
|
55,031
|
|
|
$
|
8,791
|
|
|
16.0
|
%
|
Percentage of revenue
|
10.0
|
%
|
|
9.0
|
%
|
|
|
|
|
|
7.4
|
%
|
|
7.1
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Change
|
|
Nine Months Ended
|
|
Change
|
||||||||||||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||||||
Interest expense, net
|
$
|
(1,116
|
)
|
|
$
|
(1,185
|
)
|
|
$
|
69
|
|
|
5.8
|
%
|
|
$
|
(3,367
|
)
|
|
$
|
(3,187
|
)
|
|
$
|
(180
|
)
|
|
5.6
|
%
|
Other income (expense), net
|
$
|
(3,744
|
)
|
|
$
|
2,975
|
|
|
$
|
(6,719
|
)
|
|
(225.8
|
)%
|
|
$
|
(315
|
)
|
|
$
|
2,047
|
|
|
$
|
(2,362
|
)
|
|
(115.4
|
)%
|
|
Three Months Ended
|
|
Change
|
|
Nine Months Ended
|
|
Change
|
||||||||||||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||||||
Provision for (benefit from) income taxes
|
$
|
494
|
|
|
$
|
196
|
|
|
$
|
298
|
|
|
152.0
|
%
|
|
$
|
1,126
|
|
|
$
|
(1,830
|
)
|
|
$
|
2,956
|
|
|
(161.5
|
)%
|
|
Nine Months Ended
|
||||||
|
June 30, 2018
|
|
July 1, 2017
|
||||
|
(in thousands)
|
||||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
15,792
|
|
|
$
|
45,916
|
|
Investing activities
|
(25,927
|
)
|
|
(21,073
|
)
|
||
Financing activities
|
2,683
|
|
|
20,470
|
|
||
Effect of exchange rate changes
|
1,289
|
|
|
955
|
|
||
Net change in cash and cash equivalents
|
$
|
(6,163
|
)
|
|
$
|
46,268
|
|
•
|
research and development to continue to introduce innovative new products, enhance existing products and improve our customers’ listening experience;
|
•
|
sales and marketing to expand our global brand awareness, promote new products, increase our customer base and expand sales within our existing customer base; and
|
•
|
legal, accounting, information technology and other administrative expenses to facilitate our transition to, and sustain our operations as, a public company.
|
•
|
fluctuations in demand for our products, including seasonal variations;
|
•
|
the timing and success of new product introductions, which products initially tend to have a lower gross margin;
|
•
|
the timing and success of new product introductions by our competitors;
|
•
|
pricing pressure as a result of competition or otherwise;
|
•
|
shifts in product, geographic or channel mix;
|
•
|
the imposition of tariffs and other trade barriers, and the effects of retaliatory trade measures;
|
•
|
delays or disruptions in our supply, manufacturing or distribution chain;
|
•
|
fluctuations in costs and availability of raw materials and components, and in other manufacturing costs;
|
•
|
fluctuations in levels of channel inventory;
|
•
|
amount and timing of sales and marketing and other operating expenses related to maintenance and expansion of our business;
|
•
|
negative publicity about our products;
|
•
|
adverse litigation judgments, settlements or other litigation-related costs, especially from litigation involving alleged patent infringement or defense of our patents;
|
•
|
fluctuations in foreign exchange rates;
|
•
|
changes in tax rates or adverse changes in tax laws that expose us to additional income tax liabilities;
|
•
|
natural disasters, geopolitical unrest, war, terrorism and other catastrophes outside of our control; and
|
•
|
general economic conditions in domestic or international markets.
|
•
|
fluctuations in currency exchange rates;
|
•
|
political, social and/or economic instability;
|
•
|
risks related to governmental regulations in foreign jurisdictions and unexpected changes in regulatory requirements and enforcement;
|
•
|
higher levels of credit risk and payment fraud;
|
•
|
burdens of complying with a variety of foreign laws;
|
•
|
the cost of developing connected products for countries where Wi-Fi technology has been passed over in favor of more advanced cellular data networks;
|
•
|
tariffs, trade barriers and duties;
|
•
|
reduced protection for intellectual property rights in some countries;
|
•
|
difficulties in staffing and managing global operations and the increased travel, infrastructure and legal compliance costs associated due to having multiple international locations;
|
•
|
compliance with statutory equity requirements;
|
•
|
management of tax consequences;
|
•
|
protectionist laws and business practices that favor local businesses in some countries;
|
•
|
imposition of currency exchange controls;
|
•
|
greater fluctuations in sales to customers in developing countries, including longer payment cycles and greater difficulty collecting accounts receivable; and
|
•
|
delays from customs brokers or government agencies.
|
•
|
hiring of experienced additional accounting and financial reporting personnel; and
|
•
|
creation of additional controls including those designed to strengthen our review processes around financial statement disclosures and accounting for non-routine, unusual or complex transactions.
|
•
|
overall performance of the equity markets and the economy as a whole;
|
•
|
changes in the financial projections we may provide to the public or our failure to meet these projections;
|
•
|
actual or anticipated changes in our growth rate relative to that of our competitors;
|
•
|
announcements of new products, or of acquisitions, strategic partnerships, joint ventures or capital- raising activities or commitments, by us or by our competitors;
|
•
|
additions or departures of key personnel;
|
•
|
failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors;
|
•
|
rumors and market speculation involving us or other companies in our industry;
|
•
|
the expiration of contractual lock-up or market standoff agreements; and
|
•
|
sales of shares of our common stock by us or our stockholders.
|
•
|
a classified Board so that not all members of the Board are elected at one time;
|
•
|
the ability of the Board to determine the number of directors and to fill any vacancies and newly created directorships;
|
•
|
a requirement that our directors may only be removed for cause;
|
•
|
a prohibition on cumulative voting for directors;
|
•
|
the requirement of a super-majority to amend some provisions in our restated certificate of incorporation and restated bylaws;
|
•
|
authorization of the issuance of “blank check” preferred stock that the Board could use to implement a stockholder rights plan;
|
•
|
an inability of our stockholders to call special meetings of stockholders; and
|
•
|
a prohibition on stockholder actions by written consent, thereby requiring that all stockholder actions be taken at a meeting of our stockholders.
|
Exhibit
Number
|
|
|
|
Incorporated By Reference
|
|
Filed or Furnished
Herewith
|
||||||
Exhibit Title
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
|||
3.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
3.2
|
|
|
|
|
|
|
|
|
|
|
X
|
|
4.1
|
|
|
S-1
|
|
333-226076
|
|
4.01
|
|
7/6/18
|
|
|
|
10.1
|
|
|
S-1
|
|
333-226076
|
|
10.01
|
|
7/6/18
|
|
|
|
10.2
|
|
|
S-1
|
|
333-226076
|
|
10.02
|
|
7/6/18
|
|
|
|
10.3
|
|
|
S-1/A
|
|
333-226076
|
|
10.03
|
|
7/23/18
|
|
|
|
10.4
|
|
|
S-1
|
|
333-226076
|
|
10.04
|
|
7/6/18
|
|
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
X
|
|
32.1*
|
|
|
|
|
|
|
|
|
|
|
X
|
|
32.2*
|
|
|
|
|
|
|
|
|
|
|
X
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
X
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
|
X
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
Date: September 11, 2018
|
By:
|
/s/ Patrick Spence
|
|
|
Patrick Spence
|
|
|
Chief Executive Officer and Director
|
|
|
(Principal Executive Officer)
|
Date: September 11, 2018
|
By:
|
/s/ Michael Giannetto
|
|
|
Michael Giannetto
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
Section 1.1:
|
Annual Meetings 1
|
Section 1.2:
|
Special Meetings 1
|
Section 1.3:
|
Notice of Meetings 1
|
Section 1.4:
|
Adjournments 1
|
Section 1.5:
|
Quorum 1
|
Section 1.6:
|
Organization 2
|
Section 1.7:
|
Voting; Proxies 2
|
Section 1.8:
|
Fixing Date for Determination of Stockholders of Record 2
|
Section 1.9:
|
List of Stockholders Entitled to Vote 3
|
Section 1.10:
|
Inspectors of Elections 3
|
Section 1.11:
|
Notice of Stockholder Business; Nominations 4
|
Section 2.1:
|
Number; Qualifications 10
|
Section 2.2:
|
Election; Resignation; Removal; Vacancies 10
|
Section 2.3:
|
Regular Meetings 10
|
Section 2.4:
|
Special Meetings 11
|
Section 2.5:
|
Remote Meetings Permitted 11
|
Section 2.6:
|
Quorum; Vote Required for Action 11
|
Section 2.7:
|
Organization 11
|
Section 2.8:
|
Unanimous Action by Directors in Lieu of a Meeting 11
|
Section 2.9:
|
Powers 11
|
Section 2.10:
|
Compensation of Directors 11
|
Section 2.11:
|
Confidentiality. 11
|
Section 3.1:
|
Committees 12
|
Section 3.2:
|
Committee Rules 12
|
Section 4.1:
|
Generally 12
|
Section 4.2:
|
Chief Executive Officer 13
|
Section 4.3:
|
Chairperson of the Board 13
|
Section 4.4:
|
President 13
|
Section 4.5:
|
Chief Financial Officer 13
|
Section 4.6:
|
Treasurer 13
|
Section 4.7:
|
Vice President 14
|
Section 4.8:
|
Secretary 14
|
Section 4.9:
|
Delegation of Authority 14
|
Section 4.10:
|
Removal 14
|
Section 5.1:
|
Certificates; Uncertificated Shares 14
|
Section 5.2:
|
Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates or Uncertificated Shares 14
|
Section 5.3:
|
Other Regulations 15
|
Section 6.1:
|
Indemnification of Officers and Directors 15
|
Section 6.2:
|
Advance of Expenses 15
|
Section 6.3:
|
Non-Exclusivity of Rights 15
|
Section 6.4:
|
Indemnification Contracts 15
|
Section 6.5:
|
Right of Indemnitee to Bring Suit 16
|
Section 6.6:
|
Nature of Rights 16
|
Section 6.7:
|
Insurance 16
|
Section 7.1:
|
Notice 16
|
Section 7.2:
|
Waiver of Notice 17
|
Section 8.1:
|
Interested Directors 17
|
Section 8.2:
|
Quorum 18
|
Section 9.1:
|
Fiscal Year 18
|
Section 9.2:
|
Seal 18
|
Section 9.3:
|
Form of Records 18
|
Section 9.4:
|
Reliance Upon Books and Records 18
|
Section 9.5:
|
Certificate of Incorporation Governs 18
|
Section 9.6:
|
Severability 18
|
Section 9.7:
|
Time Periods. 19
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Sonos, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
c.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
Date: September 11, 2018
|
/s/ Patrick Spence
|
|
Patrick Spence
|
|
Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Sonos, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
c.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
Date: September 11, 2018
|
/s/ Michael Giannetto
|
|
Michael Giannetto
|
|
Chief Financial Officer
(Principal Financial Officer
and Principal Accounting Officer)
|
Date: September 11, 2018
|
|
By:
|
|
/s/ Patrick Spence
|
|
|
|
|
Patrick Spence
|
|
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
Date: September 11, 2018
|
|
By:
|
|
/s/ Michael Giannetto
|
|
|
|
|
Michael Giannetto
|
|
|
|
|
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
|