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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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03-0479476
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(State or other jurisdiction
of incorporation or organization)
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(I.R.S. Employer Identification No.)
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614 Chapala Street
Santa Barbara, CA
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93101
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(Address of principal executive offices)
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(Zip code)
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Registrant’s telephone number, including area code: (805) 965-3001
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Title of each class
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Name of each exchange on which registered
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Common Stock, $0.0001 par value
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The Nasdaq Global Select Market
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Large accelerated filer
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☐
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Accelerated Filer
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☐
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Non-accelerated filer
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x
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Smaller reporting company
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☐
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Emerging Growth Company
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☐
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Page
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•
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our expectations regarding our results of operations, including gross margin, financial condition and cash flows;
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•
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our expectations regarding the development and expansion of our business;
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•
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anticipated trends, challenges and opportunities in our business and in the markets in which we operate;
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•
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our ability to successfully develop and introduce new products at an increased pace;
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•
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our ability to manage our international expansion;
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•
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the effects of tariffs, trade barriers and retaliatory trade measures;
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•
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our ability to expand our customer base and expand sales to existing customers;
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•
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our expectations regarding development of our direct-to-consumer sales channels;
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•
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expansion of our partner network;
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•
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our ability to retain and hire necessary employees and staff our operations appropriately;
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•
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the timing and amount of certain expenses and our ability to achieve operating leverage over time; and
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•
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our ability to maintain, protect and enhance our intellectual propert
y.
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•
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Wireless speakers.
Our wireless speakers include Play:1, Play:3 and Play:5, as well as Sonos One, which includes native voice control.
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•
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Home theater speakers.
Our home theater products include speakers and a subwoofer designed to play audio content from TV/video. Our home theater products include Playbar, Playbase and Sub, as well as the recently released Sonos Beam, which includes native voice control.
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•
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Components.
Our Connect, Connect:Amp and Sonos Amp allow customers to convert third-party wired speakers, stereo systems or home theater setups into our easy-to-use, wirelessly controlled streaming music system.
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•
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Multi-room experience.
Our system enables our speakers to work individually or together in synchronized playback groups, powered by wireless mesh network capabilities to route and play audio optimally.
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•
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Enhanced functionality through software upgrades.
Our platform enables us to understand and enhance our customers’ listening and control experience, delivering feature updates and intelligent customization through remote software upgrades and cloud-based services.
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•
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Intuitive and flexible control.
Our customers can control their experiences through the Sonos app, voice control or an expanding number of third-party apps and smart devices. As our customers navigate across different controllers, our technology synchronizes the control experience across the Sonos platform to deliver the music and entertainment experience they desire.
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•
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Advanced acoustics.
We have made significant investments in our engineering team and audio technology, which have enabled us to create speakers that produce high-fidelity sound. For example, we invented technology to allow two of our speakers to pair wirelessly and create multi-channel sound, thereby enabling a much broader sound field. In addition, our Trueplay technology utilizes the microphones on an iOS device to analyze room attributes, speaker placement and other acoustic factors in order to improve sound quality.
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•
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Content
. We partner with a broad range of content providers, such as streaming music services, internet radio stations and podcast services, allowing our customers to enjoy their audio content from whichever source they desire.
|
•
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Control.
We provide our customers with multiple options to control their home audio experiences, including voice control and direct control from within selected streaming music service apps.
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•
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Third-party applications
. We partner with third-party developers, including home automation integrators such as Crestron. These partners are building new applications and services on top of the Sonos platform, increasing customer engagement and creating new experiences for our customers.
|
•
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Leading sound system
. We have developed and refined our sound system with a singular focus for over 15 years. Our effort has resulted in significant consumer awareness and market share among home audio professionals. For example, a 2018 product study by a leading home audio publication of the top 100 custom integrator professionals ranked Sonos as the leading brand in the wireless audio, soundbar and subwoofer categories. Our 84% share in the wireless audio category among these industry professionals significantly outpaces our competitors.
|
•
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Platform enables freedom of choice for consumers
. Our broad and growing network of partners provides our customers with access to voice control, streaming music, internet radio, podcasts and audiobook content, enabling them to listen to the content they love from the services they prefer. Our platform attracts a broad set of content providers, including leading streaming music services, and third-party developers.
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•
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Differentiated consumer experience creates engaged households
. We deliver a differentiated customer experience to millions of households every day, cultivating a passionate and engaged customer base. Long-term engagement with our products and our ability to continuously improve the functionality of our existing products through software updates leads to attractive economics as customers add products to their Sonos sound systems.
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•
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Commitment to innovation drives continuous improvement
. We have made significant investments in research and development for over 15 years and believe that we own the foundational intellectual property of wireless multi-room audio. We have significantly expanded the size of our patent portfolio in recent years. In 2017, the strength of our patent portfolio placed us 2
nd
in Electronics and 19
th
overall in IEEE’s Patent Power Report.
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•
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Sound system expansion drives attractive financial model
. We generate significant revenue from customers purchasing additional products to expand their Sonos sound systems, which has contributed to 13 consecutive years of sustained revenue growth. Existing households represented approximately
37%
of new product registrations in fiscal
2018
. We believe this aspect of our financial model will continue to be critical in sustaining our revenue growth over the long term.
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•
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Consistently introduce innovative products.
To address our market opportunity, we have developed a long-term roadmap to deliver innovative products and software enhancements, and intend to increase the pace of product introductions across multiple categories, including products designed for enjoyment in all the places and spaces that our customers listen to audio content, including outside of the home. Executing on our roadmap will position us to acquire new customers, increase sales to existing customers and improve the customer experience.
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•
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Invest in geographic expansion.
Geographic expansion represents a significant growth opportunity in currently unserved countries. We intend to expand into new countries by employing country-specific marketing campaigns and distribution channels.
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•
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Build direct relationships with existing and prospective customers.
We intend to continue to build direct relationships with current and prospective customers through sonos.com and the Sonos app to drive direct sales.
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•
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Expand partner ecosystem to enhance platform
. We intend to deepen our relationships with our current partners and expand our partner ecosystem to provide our customers access to streaming music services, voice assistants, internet radio, podcasts and audiobook content. For example, we introduced voice control with Amazon’s Alexa technology in 2017 and Apple’s Siri via Airplay 2 in 2018, and plan to introduce Google Assistant in 2019.
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•
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Increase brand awareness in existing geographic markets
. We intend to increase our household penetration rates in our existing geographic markets by investing in brand awareness, expanding our product offerings and growing our partner ecosystem.
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•
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research and development to continue to introduce innovative new products, enhance existing products and improve our customers’ listening experience;
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•
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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
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•
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legal, accounting, information technology and other administrative expenses to sustain our operations as a public company.
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•
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fluctuations in demand for our products, including seasonal variations;
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•
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the timing and success of new product introductions, which products initially tend to have a lower gross margin;
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•
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the timing and success of new product introductions by our competitors;
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•
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pricing pressure as a result of competition or otherwise;
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•
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shifts in product, geographic or channel mix;
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•
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the imposition of tariffs and other trade barriers, and the effects of retaliatory trade measures;
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•
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delays or disruptions in our supply, manufacturing or distribution chain;
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•
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fluctuations in costs and availability of raw materials and components, and in other manufacturing costs;
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•
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fluctuations in levels of channel inventory;
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•
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amount and timing of sales and marketing and other operating expenses related to maintenance and expansion of our business;
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•
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negative publicity about our products;
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•
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adverse litigation judgments, settlements or other litigation-related costs, especially from litigation involving alleged patent infringement or defense of our patents;
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•
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fluctuations in foreign exchange rates;
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•
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changes in tax rates or adverse changes in tax laws that expose us to additional income tax liabilities;
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•
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natural disasters, geopolitical unrest, war, terrorism and other catastrophes outside of our control; and
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•
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general economic conditions in domestic or international markets.
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•
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fluctuations in currency exchange rates;
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•
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political, social and/or economic instability;
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•
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risks related to governmental regulations in foreign jurisdictions and unexpected changes in regulatory requirements and enforcement;
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•
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higher levels of credit risk and payment fraud;
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•
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burdens of complying with a variety of foreign laws;
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•
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the cost of developing connected products for countries where Wi-Fi technology has been passed over in favor of more advanced cellular data networks;
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•
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tariffs, trade barriers and duties;
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•
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reduced protection for intellectual property rights in some countries;
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•
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difficulties in staffing and managing global operations and the increased travel, infrastructure and legal compliance costs associated due to having multiple international locations;
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•
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compliance with statutory equity requirements;
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•
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management of tax consequences;
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•
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protectionist laws and business practices that favor local businesses in some countries;
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•
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imposition of currency exchange controls;
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•
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greater fluctuations in sales to customers in developing countries, including longer payment cycles and greater difficulty collecting accounts receivable; and
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•
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delays from customs brokers or government agencies.
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•
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hiring of experienced additional accounting and financial reporting personnel; and
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•
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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.
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•
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overall performance of the equity markets and the economy as a whole;
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•
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changes in the financial projections we may provide to the public or our failure to meet these projections;
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•
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actual or anticipated changes in our growth rate relative to that of our competitors;
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•
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announcements of new products, or of acquisitions, strategic partnerships, joint ventures or capital- raising activities or commitments, by us or by our competitors;
|
•
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additions or departures of key personnel;
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•
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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;
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•
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rumors and market speculation involving us or other companies in our industry;
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•
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the expiration of contractual lock-up or market standoff agreements; and
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•
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sales of shares of our common stock by us or our stockholders.
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•
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a classified Board so that not all members of the Board are elected at one time;
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•
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the ability of the Board to determine the number of directors and to fill any vacancies and newly created directorships;
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•
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a requirement that our directors may only be removed for cause;
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•
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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;
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•
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authorization of the issuance of "blank check" preferred stock that the Board could use to implement a stockholder rights plan;
|
•
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an inability of our stockholders to call special meetings of stockholders; and
|
•
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a prohibition on stockholder actions by written consent, thereby requiring that all stockholder actions be taken at a meeting of our stockholders.
|
|
August 2,
2018 |
|
September 28,
2018 |
||||
Sonos, Inc.
|
$
|
100.00
|
|
|
$
|
80.56
|
|
Nasdaq composite index
|
$
|
100.00
|
|
|
$
|
103.34
|
|
S&P 500
|
$
|
100.00
|
|
|
$
|
103.43
|
|
|
Fiscal Year Ended
|
||||||||||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
October 1,
2016 |
|
October 3,
2015 |
|
September 27,
2014 |
||||||||||
(In thousands, except share and per share amounts and percentages)
|
|||||||||||||||||||
Revenue
|
$
|
1,137,008
|
|
|
$
|
992,526
|
|
|
$
|
901,284
|
|
|
$
|
843,524
|
|
|
$
|
774,512
|
|
Cost of revenue
(1)
|
647,700
|
|
|
536,461
|
|
|
497,885
|
|
|
461,387
|
|
|
425,191
|
|
|||||
Gross profit
|
489,308
|
|
|
456,065
|
|
|
403,399
|
|
|
382,137
|
|
|
349,321
|
|
|||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Research and development
(1)
|
142,109
|
|
|
124,394
|
|
|
107,729
|
|
|
100,653
|
|
|
70,623
|
|
|||||
Sales and marketing
(1)
|
270,869
|
|
|
270,162
|
|
|
258,012
|
|
|
272,427
|
|
|
204,847
|
|
|||||
General and administrative
(1)
|
85,205
|
|
|
77,118
|
|
|
68,531
|
|
|
64,805
|
|
|
46,911
|
|
|||||
Total operating expenses
|
498,183
|
|
|
471,674
|
|
|
434,272
|
|
|
437,885
|
|
|
322,381
|
|
|||||
Operating income (loss)
|
(8,875
|
)
|
|
(15,609
|
)
|
|
(30,873
|
)
|
|
(55,748
|
)
|
|
26,940
|
|
|||||
Other income (expense), net
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, net
|
(4,511
|
)
|
|
(4,260
|
)
|
|
(2,489
|
)
|
|
(156
|
)
|
|
(75
|
)
|
|||||
Other income (expense), net
|
(1,162
|
)
|
|
3,361
|
|
|
(2,208
|
)
|
|
(9,631
|
)
|
|
(3,556
|
)
|
|||||
Total other expense, net
|
(5,673
|
)
|
|
(899
|
)
|
|
(4,697
|
)
|
|
(9,787
|
)
|
|
(3,631
|
)
|
|||||
Income (loss) before provision for (benefit from) income taxes
|
(14,548
|
)
|
|
(16,508
|
)
|
|
(35,570
|
)
|
|
(65,535
|
)
|
|
23,309
|
|
|||||
Provision for (benefit from) income taxes
|
1,056
|
|
|
(2,291
|
)
|
|
2,644
|
|
|
3,242
|
|
|
1,448
|
|
|||||
Net income (loss)
|
$
|
(15,604
|
)
|
|
$
|
(14,217
|
)
|
|
$
|
(38,214
|
)
|
|
$
|
(68,777
|
)
|
|
$
|
21,861
|
|
Net income (loss) attributable to common stockholders
(2)
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
(0.24
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.71
|
)
|
|
$
|
(1.34
|
)
|
|
$
|
0.19
|
|
Diluted
|
$
|
(0.24
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.71
|
)
|
|
$
|
(1.34
|
)
|
|
$
|
0.15
|
|
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic
(2)
|
65,706,215
|
|
|
56,314,546
|
|
|
53,873,051
|
|
|
51,253,161
|
|
|
44,456,427
|
|
|||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, diluted
(2)
|
65,706,215
|
|
|
56,314,546
|
|
|
53,873,051
|
|
|
51,253,161
|
|
|
62,996,130
|
|
|||||
Other Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Products sold
|
5,078
|
|
|
3,935
|
|
|
3,514
|
|
|
3,401
|
|
|
2,938
|
|
|||||
Adjusted EBITDA
(3)
|
$
|
69,128
|
|
|
$
|
55,955
|
|
|
$
|
29,413
|
|
|
$
|
(4,613
|
)
|
|
$
|
56,818
|
|
Adjusted EBITDA margin
(3)
|
6.1
|
%
|
|
5.6
|
%
|
|
3.3
|
%
|
|
(0.5
|
)%
|
|
7.3
|
%
|
(1)
|
Stock-based compensation was allocated as follows:
|
|
Fiscal Year Ended
|
||||||||||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
October 1,
2016 |
|
October 3,
2015 |
|
September 27,
2014 |
||||||||||
(In thousands)
|
|||||||||||||||||||
Cost of revenue
|
$
|
198
|
|
|
$
|
240
|
|
|
$
|
211
|
|
|
$
|
236
|
|
|
$
|
143
|
|
Research and development
|
13,960
|
|
|
13,605
|
|
|
8,260
|
|
|
8,186
|
|
|
5,984
|
|
|||||
Sales and marketing
|
15,885
|
|
|
15,086
|
|
|
11,742
|
|
|
9,791
|
|
|
5,180
|
|
|||||
General and administrative
|
8,602
|
|
|
7,619
|
|
|
5,750
|
|
|
5,064
|
|
|
3,471
|
|
|||||
Total stock-based compensation expense
|
$
|
38,645
|
|
|
$
|
36,550
|
|
|
$
|
25,963
|
|
|
$
|
23,277
|
|
|
$
|
14,778
|
|
(2)
|
See Note 10 of the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for an explanation of the calculations of our net income (loss) per share attributable to common stockholders, basic and diluted.
|
(3)
|
Adjusted EBITDA and adjusted EBITDA margin are financial measures that are not calculated in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). See the section titled "—Non-GAAP Financial Measures" below for information regarding our use of these non-GAAP financial measures and a reconciliation of net income (loss) to adjusted EBITDA.
|
|
As of
|
||||||||||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
October 1,
2016 |
|
October 3,
2015 |
|
September 27,
2014 |
||||||||||
(In thousands)
|
|||||||||||||||||||
Consolidated balance sheet data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
220,930
|
|
|
$
|
130,595
|
|
|
$
|
74,913
|
|
|
$
|
76,352
|
|
|
$
|
70,613
|
|
Working capital
|
201,243
|
|
|
78,203
|
|
|
31,866
|
|
|
27,057
|
|
|
69,839
|
|
|||||
Total assets
|
587,498
|
|
|
400,020
|
|
|
278,879
|
|
|
278,970
|
|
|
210,967
|
|
|||||
Total long-term debt
|
33,097
|
|
|
39,600
|
|
|
24,501
|
|
|
20,000
|
|
|
—
|
|
|||||
Total liabilities
|
379,140
|
|
|
309,652
|
|
|
217,326
|
|
|
210,192
|
|
|
114,475
|
|
|||||
Redeemable convertible preferred stock
|
—
|
|
|
90,341
|
|
|
90,341
|
|
|
88,637
|
|
|
88,682
|
|
|||||
Accumulated deficit
|
(203,611
|
)
|
|
(188,007
|
)
|
|
(173,790
|
)
|
|
(135,576
|
)
|
|
(66,799
|
)
|
|||||
Total stockholders’ equity (deficit)
|
208,358
|
|
|
27
|
|
|
(28,788
|
)
|
|
(19,859
|
)
|
|
7,810
|
|
•
|
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.
|
|
Fiscal Year Ended
|
||||||||||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
October 1,
2016 |
|
October 3,
2015 |
|
September 27,
2014 |
||||||||||
(In thousands, except percentages)
|
|||||||||||||||||||
Net income (loss)
|
$
|
(15,604
|
)
|
|
$
|
(14,217
|
)
|
|
$
|
(38,214
|
)
|
|
$
|
(68,777
|
)
|
|
$
|
21,861
|
|
Depreciation
|
39,358
|
|
|
35,014
|
|
|
34,323
|
|
|
27,858
|
|
|
15,100
|
|
|||||
Stock-based compensation expense
|
38,645
|
|
|
36,550
|
|
|
25,963
|
|
|
23,277
|
|
|
14,778
|
|
|||||
Interest expense, net
|
4,511
|
|
|
4,260
|
|
|
2,489
|
|
|
156
|
|
|
75
|
|
|||||
Other (income) expense, net
|
1,162
|
|
|
(3,361
|
)
|
|
2,208
|
|
|
9,631
|
|
|
3,556
|
|
|||||
Provision for (benefit from) income taxes
|
1,056
|
|
|
(2,291
|
)
|
|
2,644
|
|
|
3,242
|
|
|
1,448
|
|
|||||
Adjusted EBITDA
|
$
|
69,128
|
|
|
$
|
55,955
|
|
|
$
|
29,413
|
|
|
$
|
(4,613
|
)
|
|
$
|
56,818
|
|
Revenue
|
$
|
1,137,008
|
|
|
$
|
992,526
|
|
|
$
|
901,284
|
|
|
$
|
843,524
|
|
|
$
|
774,512
|
|
Adjusted EBITDA margin
|
6.1
|
%
|
|
5.6
|
%
|
|
3.3
|
%
|
|
(0.5
|
)%
|
|
7.3
|
%
|
|
Fiscal Year Ended
|
||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||
(In thousands, except percentages)
|
|
|
|
|
|
||||||
Products sold
|
5,078
|
|
|
3,935
|
|
|
3,514
|
|
|||
Adjusted EBITDA
|
$
|
69,128
|
|
|
$
|
55,955
|
|
|
$
|
29,413
|
|
Adjusted EBITDA margin
|
6.1
|
%
|
|
5.6
|
%
|
|
3.3
|
%
|
|
Fiscal Year Ended
|
||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||
(In thousands)
|
|||||||||||
Revenue
|
$
|
1,137,008
|
|
|
$
|
992,526
|
|
|
$
|
901,284
|
|
Cost of revenue
(1)
|
647,700
|
|
|
536,461
|
|
|
497,885
|
|
|||
Gross profit
|
489,308
|
|
|
456,065
|
|
|
403,399
|
|
|||
Operating expenses
|
|
|
|
|
|
||||||
Research and development
(1)
|
142,109
|
|
|
124,394
|
|
|
107,729
|
|
|||
Sales and marketing
(1)
|
270,869
|
|
|
270,162
|
|
|
258,012
|
|
|||
General and administrative
(1)
|
85,205
|
|
|
77,118
|
|
|
68,531
|
|
|||
Total operating expenses
|
498,183
|
|
|
471,674
|
|
|
434,272
|
|
|||
Operating loss
|
(8,875
|
)
|
|
(15,609
|
)
|
|
(30,873
|
)
|
|||
Other income (expense), net
|
|
|
|
|
|
||||||
Interest expense, net
|
(4,511
|
)
|
|
(4,260
|
)
|
|
(2,489
|
)
|
|||
Other income (expense), net
|
(1,162
|
)
|
|
3,361
|
|
|
(2,208
|
)
|
|||
Total other expense, net
|
(5,673
|
)
|
|
(899
|
)
|
|
(4,697
|
)
|
|||
|
|
|
|
|
|
||||||
Loss before provision for (benefit from) income taxes
|
(14,548
|
)
|
|
(16,508
|
)
|
|
(35,570
|
)
|
|||
Provision for (benefit from) income taxes
|
1,056
|
|
|
(2,291
|
)
|
|
2,644
|
|
|||
Net loss
|
$
|
(15,604
|
)
|
|
$
|
(14,217
|
)
|
|
$
|
(38,214
|
)
|
Adjusted EBITDA
(2)
|
$
|
69,128
|
|
|
$
|
55,955
|
|
|
$
|
29,413
|
|
(1)
|
Amounts include stock-based compensation expense as follows:
|
|
Fiscal Year Ended
|
||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||
(In thousands)
|
|||||||||||
Cost of revenue
|
$
|
198
|
|
|
$
|
240
|
|
|
$
|
211
|
|
Research and development
|
13,960
|
|
|
13,605
|
|
|
8,260
|
|
|||
Sales and marketing
|
15,885
|
|
|
15,086
|
|
|
11,742
|
|
|||
General and administrative
|
8,602
|
|
|
7,619
|
|
|
5,750
|
|
|||
Total stock-based compensation expense
|
$
|
38,645
|
|
|
$
|
36,550
|
|
|
$
|
25,963
|
|
(2)
|
Adjusted EBITDA is a financial measure that is not calculated in accordance with U.S. GAAP. See the section titled "Selected Consolidated Financial and Other Data—Non-GAAP Financial Measures."
|
|
Fiscal Year Ended
|
|||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
October 1,
2016 |
|||
Revenue
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Cost of revenue
(1)
|
57.0
|
|
|
54.1
|
|
|
55.2
|
|
Gross profit
|
43.0
|
|
|
45.9
|
|
|
44.8
|
|
Operating expenses
|
|
|
|
|
|
|||
Research and development
(1)
|
12.5
|
|
|
12.5
|
|
|
12.0
|
|
Sales and marketing
(1)
|
23.8
|
|
|
27.2
|
|
|
28.6
|
|
General and administrative
(1)
|
7.5
|
|
|
7.8
|
|
|
7.6
|
|
Total operating expenses
|
43.8
|
|
|
47.5
|
|
|
48.2
|
|
Operating loss
|
(0.8
|
)
|
|
(1.6
|
)
|
|
(3.4
|
)
|
Other income (expense), net
|
|
|
|
|
|
|||
Interest expense, net
|
(0.4
|
)
|
|
(0.4
|
)
|
|
(0.3
|
)
|
Other income (expense), net
|
(0.1
|
)
|
|
0.3
|
|
|
(0.2
|
)
|
Total other expense, net
|
(0.5
|
)
|
|
(0.1
|
)
|
|
(0.5
|
)
|
Loss before provision for (benefit from) income taxes
|
(1.3
|
)
|
|
(1.7
|
)
|
|
(3.9
|
)
|
Provision for (benefit from) income taxes
|
0.1
|
|
|
(0.2
|
)
|
|
0.3
|
|
Net loss
|
(1.4
|
)%
|
|
(1.4
|
)%
|
|
(4.2
|
)%
|
Adjusted EBITDA
(2)
|
6.1
|
%
|
|
5.6
|
%
|
|
3.3
|
%
|
|
Fiscal Year Ended
|
|||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
October 1,
2016 |
|||
Cost of revenue
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Research and development
|
1.2
|
|
|
1.4
|
|
|
0.9
|
|
Sales and marketing
|
1.4
|
|
|
1.5
|
|
|
1.3
|
|
General and administrative
|
0.8
|
|
|
0.8
|
|
|
0.6
|
|
Total stock-based compensation expense
|
3.4
|
%
|
|
3.7
|
%
|
|
2.9
|
%
|
|
Fiscal Year Ended
|
|
Change from Prior Fiscal Year
|
|
Fiscal Year Ended
|
|
Change from Prior Fiscal Year
|
||||||||||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
$
|
|
%
|
|
October 1,
2016 |
|
$
|
|
%
|
||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||||||
Revenue by geographical region:
|
|||||||||||||||||||||||||
Americas
|
$
|
603,450
|
|
|
$
|
496,668
|
|
|
$
|
106,782
|
|
|
21.5
|
%
|
|
$
|
443,314
|
|
|
$
|
53,354
|
|
|
12.0
|
%
|
Europe, Middle East and Africa ("EMEA")
|
478,518
|
|
|
442,081
|
|
|
36,437
|
|
|
8.2
|
|
|
415,689
|
|
|
26,392
|
|
|
6.3
|
|
|||||
Asia Pacific ("APAC")
|
55,040
|
|
|
53,777
|
|
|
1,263
|
|
|
2.3
|
|
|
42,281
|
|
|
11,496
|
|
|
27.2
|
|
|||||
Total revenue
|
$
|
1,137,008
|
|
|
$
|
992,526
|
|
|
$
|
144,482
|
|
|
14.6
|
%
|
|
$
|
901,284
|
|
|
$
|
91,242
|
|
|
10.1
|
%
|
Other data:
|
|||||||||||||||||||||||||
Total products sold
|
5,078
|
|
|
3,935
|
|
|
1,143
|
|
|
29.0
|
%
|
|
3,514
|
|
|
421
|
|
|
12.0
|
%
|
|
Fiscal Year Ended
|
|
Change from Prior Fiscal Year
|
|
Fiscal Year Ended
|
|
Change from Prior Fiscal Year
|
||||||||||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
$
|
|
%
|
|
October 1,
2016 |
|
$
|
|
%
|
||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||||||
Cost of revenue
|
$
|
647,700
|
|
|
$
|
536,461
|
|
|
$
|
111,239
|
|
|
20.7
|
%
|
|
$
|
497,885
|
|
|
$
|
38,576
|
|
|
7.7
|
%
|
Gross profit
|
$
|
489,308
|
|
|
$
|
456,065
|
|
|
$
|
33,243
|
|
|
7.3
|
%
|
|
$
|
403,399
|
|
|
$
|
52,666
|
|
|
13.1
|
%
|
Gross margin
|
43.0
|
%
|
|
45.9
|
%
|
|
|
|
|
|
44.8
|
%
|
|
|
|
|
|
Fiscal Year Ended
|
|
Change from Prior Fiscal Year
|
|
Fiscal Year Ended
|
|
Change from Prior Fiscal Year
|
||||||||||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
$
|
|
%
|
|
October 1,
2016 |
|
$
|
|
%
|
||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||||||
Research and development
|
$
|
142,109
|
|
|
$
|
124,394
|
|
|
$
|
17,715
|
|
|
14.2
|
%
|
|
$
|
107,729
|
|
|
$
|
16,665
|
|
|
15.5
|
%
|
Percentage of revenue
|
12.5
|
%
|
|
12.5
|
%
|
|
|
|
|
|
12.0
|
%
|
|
|
|
|
|
Fiscal Year Ended
|
|
Change from Prior Fiscal Year
|
|
Fiscal Year Ended
|
|
Change from Prior Fiscal Year
|
||||||||||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
$
|
|
%
|
|
October 1,
2016 |
|
$
|
|
%
|
||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||||||
Sales and marketing
|
$
|
270,869
|
|
|
$
|
270,162
|
|
|
$
|
707
|
|
|
0.3
|
%
|
|
$
|
258,012
|
|
|
$
|
12,150
|
|
|
4.7
|
%
|
Percentage of revenue
|
23.8
|
%
|
|
27.2
|
%
|
|
|
|
|
|
28.6
|
%
|
|
|
|
|
|
Fiscal Year Ended
|
|
Change from Prior Fiscal Year
|
|
Fiscal Year Ended
|
|
Change from Prior Fiscal Year
|
||||||||||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
$
|
|
%
|
|
October 1,
2016 |
|
$
|
|
%
|
||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||||||
General and administrative
|
$
|
85,205
|
|
|
$
|
77,118
|
|
|
$
|
8,087
|
|
|
10.5
|
%
|
|
$
|
68,531
|
|
|
$
|
8,587
|
|
|
12.5
|
%
|
Percentage of revenue
|
7.5
|
%
|
|
7.8
|
%
|
|
|
|
|
|
7.6
|
%
|
|
|
|
|
|
As of
|
||||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
||||||||||
|
Rate
|
|
Balance
|
|
Rate
|
|
Balance
|
||||||
(In thousands)
|
|
|
|
|
|
|
|
||||||
J.P. Morgan Chase Bank, N.A Secured Term Loan (the "New Term Loan")
(1)
|
4.8
|
%
|
|
$
|
40,000
|
|
|
—
|
%
|
|
$
|
—
|
|
J.P. Morgan Chase Bank, N.A Secured Credit Facility (the "Credit Facility")
(2)
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
||
Gordon Brothers Finance Company Secured Term Loan (the "Prior Term Loan")
(3)
|
—
|
%
|
|
—
|
|
|
10.7
|
%
|
|
40,000
|
|
||
Unamortized debt issuance costs
(4)
|
|
|
(236
|
)
|
|
|
|
(400
|
)
|
||||
Total indebtedness
|
|
|
$
|
39,764
|
|
|
|
|
$
|
39,600
|
|
||
Less short term portion
|
|
|
(6,667
|
)
|
|
|
|
—
|
|
||||
Long term debt
|
|
|
$
|
33,097
|
|
|
|
|
$
|
39,600
|
|
(1)
|
Bears interest at a variable rate equal to an adjusted LIBOR plus 2.25% and is payable quarterly. Due in October 2021, with quarterly principal payments beginning in July 2019.
|
(2)
|
Allows us to borrow up to
$80.0
million restricted to the value of the borrowing base which is based on the value of inventory and accounts receivable and is subject to monthly redeterminations. Also includes up to
$10.0
million for the issuance of letters of credit and up to
$8.0
million for swing line loans. The Credit Facility matures in October 2021 and may be drawn as Commercial Bank Floating Rate Loans (at the higher of prime rate or adjusted LIBOR plus 2.50%) or Eurocurrency Loans (at LIBOR plus an applicable margin). The unused portion is subject to an annual commitment fee of 0.2%.
|
(3)
|
In July 2018, all outstanding principal, accrued interest and fees were paid in full and the Prior Term Loan was terminated. While outstanding, it bore interest at LIBOR plus 9.5%.
|
(4)
|
Debt issuance costs are recorded as a debt discount and charged to interest expense over the term of the agreement.
|
|
|
Fiscal Year Ended
|
||||||||||
|
|
Sep 29,
2018 |
|
Sep 30,
2017 |
|
Oct 1,
2016 |
||||||
(In thousands)
|
||||||||||||
Net cash provided by (used in):
|
|
|
|
|
|
|
||||||
Operating activities
|
|
$
|
30,570
|
|
|
$
|
63,960
|
|
|
$
|
43,294
|
|
Investing activities
|
|
(35,747
|
)
|
|
(33,553
|
)
|
|
(52,520
|
)
|
|||
Financing activities
|
|
94,374
|
|
|
23,955
|
|
|
7,969
|
|
|||
Effect of exchange rate changes
|
|
1,138
|
|
|
1,320
|
|
|
(182
|
)
|
|||
Net change in cash and cash equivalents
|
|
$
|
90,335
|
|
|
$
|
55,682
|
|
|
$
|
(1,439
|
)
|
|
|
|
|
Payments due by fiscal year
|
||||||||||||||||||||||||
|
|
Total
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Beyond
|
||||||||||||||
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Debt principal and interest
(1) (2)
|
|
$
|
45,482
|
|
|
$
|
8,863
|
|
|
$
|
8,433
|
|
|
$
|
8,080
|
|
|
$
|
20,106
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating leases
(3)
|
|
85,546
|
|
|
16,830
|
|
|
14,120
|
|
|
12,391
|
|
|
11,654
|
|
|
11,870
|
|
|
18,681
|
|
|||||||
Inventory
(4)
|
|
70,900
|
|
|
70,900
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other noncancelable agreements
|
|
8,696
|
|
|
3,279
|
|
|
3,574
|
|
|
1,843
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total contractual commitments
|
|
$
|
210,624
|
|
|
$
|
99,872
|
|
|
$
|
26,127
|
|
|
$
|
22,314
|
|
|
$
|
31,760
|
|
|
$
|
11,870
|
|
|
$
|
18,681
|
|
(1)
|
Interest payments were calculated using the applicable interest rate as of
September 29, 2018
.
|
(2)
|
In July 2018, we amended the 2015 Credit Facility with J.P. Morgan Chase Bank, N.A. In connection with the amendment, we borrowed $40.0 million under the New Term Loan, which we used to pay off all outstanding borrowings, accrued interest and fees under our then-outstanding term loan, as described below. The New Term Loan has a maturity date of October 2021 and bears interest at a variable rate equal to an adjusted LIBOR plus 2.25%. We will make our first principal payment under the New Term Loan in July 2019 and will make quarterly principal payments thereafter. We pay interest on the New Term Loan quarterly.
|
(3)
|
We lease our facilities under long-term operating leases, which expire at various dates through 2025. The lease agreements frequently include provisions which require us to pay taxes, insurance or maintenance costs.
|
(4)
|
We enter into various inventory-related purchase agreements with suppliers. Under these agreements, 100% of orders are cancelable by giving sufficient notice prior to the expected shipment date.
|
|
|
Fiscal Year Ended
|
|||||||
|
|
September 29,
2018 |
|
September 30,
2017 |
|
October 1,
2016 |
|||
|
|
|
|
|
|
|
|||
Expected term (years)
|
|
6.25
|
|
|
6.25
|
|
|
6.25
|
|
Risk-free interest rate
|
|
2.73
|
%
|
|
1.95
|
%
|
|
1.29
|
%
|
Expected volatility
|
|
30.19
|
%
|
|
32.40
|
%
|
|
36.64
|
%
|
Expected dividend yield
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
Page
|
|
As of
|
||||||
|
September 29,
2018 |
|
September 30,
2017 |
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
220,930
|
|
|
$
|
130,595
|
|
Restricted cash
|
190
|
|
|
193
|
|
||
Accounts receivable, net
|
73,214
|
|
|
47,363
|
|
||
Inventories
|
193,193
|
|
|
113,856
|
|
||
Prepaid and other current assets
|
10,073
|
|
|
9,462
|
|
||
Total current assets
|
497,600
|
|
|
301,469
|
|
||
Property and equipment, net
|
85,371
|
|
|
95,130
|
|
||
Deferred tax assets
|
941
|
|
|
1,107
|
|
||
Other noncurrent assets
|
3,586
|
|
|
2,314
|
|
||
Total assets
|
$
|
587,498
|
|
|
$
|
400,020
|
|
|
|
|
|
||||
Liabilities, redeemable convertible preferred stock and stockholders’
equity |
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
195,159
|
|
|
$
|
114,494
|
|
Accrued expenses
|
38,687
|
|
|
57,348
|
|
||
Accrued compensation
|
33,371
|
|
|
32,007
|
|
||
Short-term debt
|
6,667
|
|
|
—
|
|
||
Deferred revenue
|
11,615
|
|
|
10,920
|
|
||
Other current liabilities
|
10,858
|
|
|
8,497
|
|
||
Total current liabilities
|
296,357
|
|
|
223,266
|
|
||
Long-term debt
|
33,097
|
|
|
39,600
|
|
||
Deferred revenue
|
39,352
|
|
|
34,647
|
|
||
Other noncurrent liabilities
|
10,334
|
|
|
12,139
|
|
||
Total liabilities
|
379,140
|
|
|
309,652
|
|
||
Commitments and contingencies (Note 11)
|
|
|
|
||||
Redeemable convertible preferred stock, $0.001 par value; liquidation preference of
$90,976 as of September 30, 2017; 0 and 32,675,074 shares authorized; 0 and
32,482,590 shares issued and outstanding as of September 29, 2018 and
September 30, 2017, respectively
|
—
|
|
|
90,341
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.001 par value; 500,000,000 and 151,458,824 shares authorized
100,868,250 and 59,339,336 shares issued; 100,061,210 and 58,592,874 shares
outstanding, as of September 29, 2018 and September 30, 2017, respectively
|
101
|
|
|
59
|
|
||
Treasury stock, 807,040 and 746,462 shares at cost as of September 29, 2018
and September 30, 2017, respectively
|
(11,072
|
)
|
|
(10,161
|
)
|
||
Additional paid-in capital
|
424,617
|
|
|
200,301
|
|
||
Accumulated deficit
|
(203,611
|
)
|
|
(188,007
|
)
|
||
Accumulated other comprehensive loss
|
(1,677
|
)
|
|
(2,165
|
)
|
||
Total stockholders’ equity
|
208,358
|
|
|
27
|
|
||
Total liabilities, redeemable convertible preferred stock and stockholders’ equity
|
$
|
587,498
|
|
|
$
|
400,020
|
|
|
Year Ended
|
||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||
|
|
|
|
|
|
||||||
Revenue
|
$
|
1,137,008
|
|
|
$
|
992,526
|
|
|
$
|
901,284
|
|
Cost of revenue
|
647,700
|
|
|
536,461
|
|
|
497,885
|
|
|||
Gross profit
|
489,308
|
|
|
456,065
|
|
|
403,399
|
|
|||
Operating expenses
|
|
|
|
|
|
||||||
Research and development
|
142,109
|
|
|
124,394
|
|
|
107,729
|
|
|||
Sales and marketing
|
270,869
|
|
|
270,162
|
|
|
258,012
|
|
|||
General and administrative
|
85,205
|
|
|
77,118
|
|
|
68,531
|
|
|||
Total operating expenses
|
498,183
|
|
|
471,674
|
|
|
434,272
|
|
|||
Operating loss
|
(8,875
|
)
|
|
(15,609
|
)
|
|
(30,873
|
)
|
|||
Other income (expense), net
|
|
|
|
|
|
||||||
Interest expense, net
|
(4,511
|
)
|
|
(4,260
|
)
|
|
(2,489
|
)
|
|||
Other income (expense), net
|
(1,162
|
)
|
|
3,361
|
|
|
(2,208
|
)
|
|||
Total other expense, net
|
(5,673
|
)
|
|
(899
|
)
|
|
(4,697
|
)
|
|||
Loss before provision for (benefit from) income taxes
|
(14,548
|
)
|
|
(16,508
|
)
|
|
(35,570
|
)
|
|||
Provision for (benefit from) income taxes
|
1,056
|
|
|
(2,291
|
)
|
|
2,644
|
|
|||
Net loss
|
$
|
(15,604
|
)
|
|
$
|
(14,217
|
)
|
|
$
|
(38,214
|
)
|
|
|
|
|
|
|
||||||
Net loss per share attributable to common stockholders - basic and diluted
|
$
|
(0.24
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.71
|
)
|
|
|
|
|
|
|
||||||
Weighted-average shares used in computing net loss per share attributable to common stockholders - basic and diluted
|
65,706,215
|
|
|
56,314,546
|
|
|
53,873,051
|
|
|||
|
|
|
|
|
|
||||||
Total comprehensive loss
|
|
|
|
|
|
||||||
Net loss
|
$
|
(15,604
|
)
|
|
$
|
(14,217
|
)
|
|
$
|
(38,214
|
)
|
Change in foreign currency translation adjustment, net of tax
|
488
|
|
|
(2,486
|
)
|
|
(203
|
)
|
|||
Comprehensive loss
|
$
|
(15,116
|
)
|
|
$
|
(16,703
|
)
|
|
$
|
(38,417
|
)
|
|
Redeemable
Convertible Preferred Stock |
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Treasury Stock
|
|
Accumulated
Deficit
|
|
Accumulated
Other Comprehensive
Loss
|
|
Total
Stockholders’ Equity (Deficit) |
|||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
|
Shares
|
|
Amount
|
|
|
Shares
|
|
Amount
|
|
|
|
|||||||||||||||||||||
Balance at October 3, 2015
|
32,395,828
|
|
|
$
|
88,637
|
|
|
|
78,546,014
|
|
|
$
|
79
|
|
|
$
|
333,459
|
|
|
(24,982,950
|
)
|
|
$
|
(218,345
|
)
|
|
$
|
(135,576
|
)
|
|
$
|
524
|
|
|
$
|
(19,859
|
)
|
Net exercise of Series C preferred stock warrants
|
86,762
|
|
|
1,704
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Exercise of stock options
|
—
|
|
|
—
|
|
|
|
1,278,150
|
|
|
1
|
|
|
3,669
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,670
|
|
|||||||
Retirement of treasury stock
|
—
|
|
|
—
|
|
|
|
(24,982,950
|
)
|
|
(25
|
)
|
|
(218,320
|
)
|
|
24,982,950
|
|
|
218,345
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,780
|
)
|
|
(145
|
)
|
|
—
|
|
|
—
|
|
|
(145
|
)
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
25,963
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,963
|
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38,214
|
)
|
|
—
|
|
|
(38,214
|
)
|
|||||||
Change in foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(203
|
)
|
|
(203
|
)
|
|||||||
Balance at October 1, 2016
|
32,482,590
|
|
|
90,341
|
|
|
|
54,841,214
|
|
|
55
|
|
|
144,771
|
|
|
(7,780
|
)
|
|
(145
|
)
|
|
(173,790
|
)
|
|
321
|
|
|
(28,788
|
)
|
|||||||
Common stock issued, net of issuance costs
|
—
|
|
|
—
|
|
|
|
742,034
|
|
|
1
|
|
|
10,077
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,078
|
|
|||||||
Exercise of stock options
|
—
|
|
|
—
|
|
|
|
3,756,088
|
|
|
3
|
|
|
8,903
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,906
|
|
|||||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(738,682
|
)
|
|
(10,016
|
)
|
|
—
|
|
|
—
|
|
|
(10,016
|
)
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
36,550
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36,550
|
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,217
|
)
|
|
—
|
|
|
(14,217
|
)
|
|||||||
Change in foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,486
|
)
|
|
(2,486
|
)
|
|||||||
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
|
|
|||||||
Issuance of common stock upon initial public offering, net of offering costs
|
—
|
|
|
—
|
|
|
|
6,388,888
|
|
|
6
|
|
|
86,021
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
86,027
|
|
|||||||
Conversion of redeemable convertible preferred stock to common stock upon initial public offering
|
(32,482,590
|
)
|
|
(90,341
|
)
|
|
|
32,482,590
|
|
|
33
|
|
|
90,308
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
90,341
|
|
|||||||
Exercise of stock options
|
—
|
|
|
—
|
|
|
|
2,657,436
|
|
|
3
|
|
|
9,342
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,345
|
|
|||||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(60,578
|
)
|
|
(911
|
)
|
|
—
|
|
|
—
|
|
|
(911
|
)
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
38,645
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38,645
|
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,604
|
)
|
|
—
|
|
|
(15,604
|
)
|
|||||||
Change in foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
488
|
|
|
488
|
|
|||||||
Balance at September 29, 2018
|
—
|
|
|
$
|
—
|
|
|
|
100,868,250
|
|
|
$
|
101
|
|
|
$
|
424,617
|
|
|
(807,040
|
)
|
|
$
|
(11,072
|
)
|
|
$
|
(203,611
|
)
|
|
$
|
(1,677
|
)
|
|
$
|
208,358
|
|
|
Year Ended
|
||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||
Cash flows from operating activities
|
|
|
|
|
|
||||||
Net loss
|
$
|
(15,604
|
)
|
|
$
|
(14,217
|
)
|
|
$
|
(38,214
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
39,358
|
|
|
35,014
|
|
|
34,323
|
|
|||
Stock-based compensation expense
|
38,645
|
|
|
36,550
|
|
|
25,963
|
|
|||
Other
|
1,676
|
|
|
713
|
|
|
4,098
|
|
|||
Deferred income taxes
|
152
|
|
|
1,443
|
|
|
(857
|
)
|
|||
Foreign currency transaction (gain) loss
|
941
|
|
|
(3,568
|
)
|
|
782
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
(26,505
|
)
|
|
(2,727
|
)
|
|
(4,590
|
)
|
|||
Inventories, net
|
(80,107
|
)
|
|
(60,270
|
)
|
|
5,878
|
|
|||
Other assets
|
(2,140
|
)
|
|
36
|
|
|
2,908
|
|
|||
Accounts payable and accrued expenses
|
66,473
|
|
|
54,895
|
|
|
(5,715
|
)
|
|||
Accrued compensation
|
1,625
|
|
|
5,123
|
|
|
2,094
|
|
|||
Deferred revenue
|
5,566
|
|
|
9,411
|
|
|
8,556
|
|
|||
Other liabilities
|
490
|
|
|
1,557
|
|
|
8,068
|
|
|||
Net cash provided by operating activities
|
30,570
|
|
|
63,960
|
|
|
43,294
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(35,747
|
)
|
|
(33,553
|
)
|
|
(52,520
|
)
|
|||
Net cash used in investing activities
|
(35,747
|
)
|
|
(33,553
|
)
|
|
(52,520
|
)
|
|||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Proceeds from initial public offering, net of underwriting discounts and commissions
|
90,562
|
|
|
—
|
|
|
—
|
|
|||
Payments of offering costs
|
(3,950
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of common stock, net of issuance costs
|
—
|
|
|
10,078
|
|
|
—
|
|
|||
Proceeds from exercise of stock options
|
9,345
|
|
|
8,906
|
|
|
3,670
|
|
|||
Payments for purchase of treasury stock
|
(911
|
)
|
|
(10,016
|
)
|
|
(145
|
)
|
|||
Proceeds from borrowings, net of borrowing costs
|
69,748
|
|
|
14,987
|
|
|
89,844
|
|
|||
Repayments of borrowings
|
(70,000
|
)
|
|
—
|
|
|
(85,400
|
)
|
|||
Payments for debt extinguishment costs
|
(420
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash provided by financing activities
|
94,374
|
|
|
23,955
|
|
|
7,969
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
1,138
|
|
|
1,320
|
|
|
(182
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
90,335
|
|
|
55,682
|
|
|
(1,439
|
)
|
|||
Cash and cash equivalents
|
|
|
|
|
|
||||||
Beginning of period
|
130,595
|
|
|
74,913
|
|
|
76,352
|
|
|||
End of period
|
$
|
220,930
|
|
|
$
|
130,595
|
|
|
$
|
74,913
|
|
Supplemental disclosure
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
3,750
|
|
|
$
|
4,114
|
|
|
$
|
2,326
|
|
Cash paid for taxes, net of refunds
|
$
|
1,430
|
|
|
$
|
461
|
|
|
$
|
233
|
|
Supplemental disclosure of non-cash investing and financing activities
|
|
|
|
|
|
||||||
Conversion of redeemable convertible preferred stock to common stock
|
$
|
90,341
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Purchases of property and equipment, accrued but not paid
|
$
|
4,075
|
|
|
$
|
9,665
|
|
|
$
|
3,939
|
|
Net exercise of Series C preferred stock warrants
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,704
|
|
Deferred offering costs in accounts payable and accrued expenses
|
$
|
585
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
(In thousands)
|
|
|
|
|
|
|
||||||
Beginning balance
|
|
$
|
804
|
|
|
$
|
726
|
|
|
$
|
679
|
|
Increases
|
|
635
|
|
|
449
|
|
|
962
|
|
|||
Write-offs
|
|
(567
|
)
|
|
(371
|
)
|
|
(915
|
)
|
|||
Ending balance
|
|
$
|
872
|
|
|
$
|
804
|
|
|
$
|
726
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
(In thousands)
|
|
|
|
|
|
|
||||||
Beginning balance
|
|
$
|
11,195
|
|
|
$
|
8,913
|
|
|
$
|
6,235
|
|
Charged to revenue
|
|
90,246
|
|
|
65,879
|
|
|
34,627
|
|
|||
Utilization of sales incentive allowance
|
|
(89,687
|
)
|
|
(63,597
|
)
|
|
(31,949
|
)
|
|||
Ending balance
|
|
$
|
11,754
|
|
|
$
|
11,195
|
|
|
$
|
8,913
|
|
Computer hardware and software
|
2-3 years
|
Furniture and fixtures
|
3-5 years
|
Tooling and production line test equipment
|
2-4 years
|
Leasehold improvements
|
2-10 years
|
Product displays
|
1-3 years
|
Level Input
|
|
Input Definition
|
Level 1
|
|
Quoted prices for identical assets or liabilities in active markets at the measurement date.
|
Level 2
|
|
Inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities, in active markets or other inputs that are observable or can be corroborated with market data at the measurement date.
|
Level 3
|
|
Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date.
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
(In thousands)
|
|
|
|
|
|
|
||||||
Deferred revenue, beginning of period
|
|
$
|
45,567
|
|
|
$
|
36,160
|
|
|
$
|
27,373
|
|
Recognition of revenue included in beginning of period
deferred revenue
|
|
(10,627
|
)
|
|
(6,878
|
)
|
|
(4,553
|
)
|
|||
Revenue deferred, net of revenue recognized on contracts
in the respective period
|
|
16,027
|
|
|
16,285
|
|
|
13,340
|
|
|||
Deferred revenue, end of period
|
|
$
|
50,967
|
|
|
$
|
45,567
|
|
|
$
|
36,160
|
|
|
|
For the fiscal years ending
|
|
|
||||||||||||||||||||
(In thousands)
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023 and Beyond
|
|
Total
|
||||||||||||
Revenue expected to be recognized
|
|
$
|
11,615
|
|
|
$
|
10,905
|
|
|
$
|
9,602
|
|
|
$
|
7,756
|
|
|
$
|
11,089
|
|
|
$
|
50,967
|
|
|
2016
|
||||||||||
(In thousands)
|
As previously
reported
|
|
Impact of
adoption
|
|
As adjusted
|
||||||
Accounts receivable, net
|
$
|
48,569
|
|
|
$
|
(3,262
|
)
|
|
$
|
45,307
|
|
Inventories, net
|
53,553
|
|
|
9
|
|
|
53,562
|
|
|||
Deferred costs of revenue
|
27,478
|
|
|
(27,478
|
)
|
|
—
|
|
|||
Other current assets
|
8,850
|
|
|
587
|
|
|
9,437
|
|
|||
Deferred tax assets
|
6,207
|
|
|
(3,663
|
)
|
|
2,544
|
|
|||
Deferred revenue
|
96,696
|
|
|
(60,536
|
)
|
|
36,160
|
|
|||
Other current liabilities
|
4,599
|
|
|
1,936
|
|
|
6,535
|
|
|||
Stockholders’ equity (deficit)
|
(53,581
|
)
|
|
24,793
|
|
|
(28,788
|
)
|
|
2016
|
|
2015
|
||||||||||||||||||||
(In thousands)
|
As previously
reported |
|
Impact of
adoption |
|
As adjusted
|
|
As previously
reported |
|
Impact of
adoption |
|
As adjusted
|
||||||||||||
Net revenue
|
$
|
904,049
|
|
|
$
|
(2,765
|
)
|
|
$
|
901,284
|
|
|
$
|
860,652
|
|
|
$
|
(17,128
|
)
|
|
$
|
843,524
|
|
Cost of revenue
|
494,673
|
|
|
3,212
|
|
|
497,885
|
|
|
468,229
|
|
|
(6,842
|
)
|
|
461,387
|
|
||||||
Provision for income taxes
|
2,930
|
|
|
(286
|
)
|
|
2,644
|
|
|
2,734
|
|
|
508
|
|
|
3,242
|
|
||||||
Net loss
|
(32,523
|
)
|
|
(5,691
|
)
|
|
(38,214
|
)
|
|
(57,983
|
)
|
|
(10,794
|
)
|
|
(68,777
|
)
|
|
2018
|
||||||||||||||
(In thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds (cash equivalents)
|
$
|
140,588
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
140,588
|
|
|
2017
|
||||||||||||||
(In thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds (cash equivalents)
|
$
|
40,072
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
40,072
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
(In thousands)
|
|
|
|
|
|
||||||
Americas
|
$
|
603,450
|
|
|
$
|
496,668
|
|
|
$
|
443,314
|
|
Europe, Middle East and Africa
|
478,518
|
|
|
442,081
|
|
|
415,689
|
|
|||
Asia Pacific
|
55,040
|
|
|
53,777
|
|
|
42,281
|
|
|||
Total revenue
|
$
|
1,137,008
|
|
|
$
|
992,526
|
|
|
$
|
901,284
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
(In thousands)
|
|
|
|
|
|
||||||
United States
|
$
|
554,896
|
|
|
$
|
449,261
|
|
|
$
|
399,531
|
|
Germany
|
121,546
|
|
|
111,065
|
|
|
93,824
|
|
|||
United Kingdom
|
114,790
|
|
|
110,695
|
|
|
120,732
|
|
|||
Other countries
|
345,776
|
|
|
321,505
|
|
|
287,197
|
|
|||
Total revenue
|
$
|
1,137,008
|
|
|
$
|
992,526
|
|
|
$
|
901,284
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
(In thousands)
|
|
|
|
|
|
||||||
Wireless speakers
|
$
|
546,649
|
|
|
$
|
480,977
|
|
|
$
|
462,967
|
|
Home theater speakers
|
418,416
|
|
|
348,899
|
|
|
274,268
|
|
|||
Components
|
150,436
|
|
|
151,965
|
|
|
151,658
|
|
|||
Other
|
21,507
|
|
|
10,685
|
|
|
12,391
|
|
|||
Total revenue
|
$
|
1,137,008
|
|
|
$
|
992,526
|
|
|
$
|
901,284
|
|
|
2018
|
|
2017
|
||||
(In thousands)
|
|
|
|
||||
United States
|
$
|
48,441
|
|
|
$
|
59,738
|
|
China
|
18,729
|
|
|
22,672
|
|
||
Other countries
|
18,201
|
|
|
12,720
|
|
||
Property and equipment, net
|
$
|
85,371
|
|
|
$
|
95,130
|
|
|
2018
|
|
2017
|
||||
(In thousands)
|
|||||||
Finished goods
|
$
|
176,181
|
|
|
$
|
104,014
|
|
Components
|
17,012
|
|
|
9,842
|
|
||
Inventories
|
$
|
193,193
|
|
|
$
|
113,856
|
|
|
2018
|
|
2017
|
||||
(In thousands)
|
|||||||
Computer hardware and software
|
$
|
46,385
|
|
|
$
|
42,928
|
|
Furniture and fixtures
|
9,696
|
|
|
9,840
|
|
||
Tooling and production line test equipment
|
47,297
|
|
|
42,368
|
|
||
Leasehold improvements
|
53,962
|
|
|
53,479
|
|
||
Product displays
|
40,265
|
|
|
55,855
|
|
||
Total property and equipment
|
197,605
|
|
|
204,470
|
|
||
Accumulated depreciation and amortization
|
(112,234
|
)
|
|
(109,340
|
)
|
||
Property and equipment, net
|
$
|
85,371
|
|
|
$
|
95,130
|
|
|
2018
|
|
2017
|
||||
(In thousands)
|
|||||||
Accrued advertising and marketing
|
$
|
11,613
|
|
|
$
|
10,880
|
|
Accrued taxes
|
4,175
|
|
|
4,800
|
|
||
Accrued inventory
|
4,179
|
|
|
22,563
|
|
||
Accrued manufacturing, logistics and product development
|
8,290
|
|
|
4,921
|
|
||
Other accrued payables
|
10,430
|
|
|
14,184
|
|
||
Total accrued expenses
|
$
|
38,687
|
|
|
$
|
57,348
|
|
|
2018
|
|
2017
|
||||||||||
|
Rate
|
|
Balance
|
|
Rate
|
|
Balance
|
||||||
(In thousands)
|
|
|
|
|
|
|
|
||||||
J.P. Morgan Chase Bank, N.A Secured Term Loan (the "New Term Loan") (1)
|
4.8
|
%
|
|
$
|
40,000
|
|
|
—
|
%
|
|
$
|
—
|
|
J.P. Morgan Chase Bank, N.A Secured Credit Facility (the "Credit Facility") (2)
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
||
Gordon Brothers Finance Company Secured Term Loan (the "Prior Term Loan") (3)
|
—
|
%
|
|
—
|
|
|
10.7
|
%
|
|
40,000
|
|
||
Unamortized debt issuance costs
(4)
|
|
|
(236
|
)
|
|
|
|
(400
|
)
|
||||
Total indebtedness
|
|
|
39,764
|
|
|
|
|
39,600
|
|
||||
Less short term portion
|
|
|
(6,667
|
)
|
|
|
|
—
|
|
||||
Long term debt
|
|
|
$
|
33,097
|
|
|
|
|
$
|
39,600
|
|
(1)
|
Bears interest at a variable rate equal to an adjusted LIBOR plus
2.25%
and is payable quarterly. Due in October 2021, with quarterly principal payments beginning in July 2019.
|
(2)
|
Allows the Company to borrow up to
$80.0
million restricted to the value of the borrowing base which is based on the value of inventory and accounts receivable and is subject to monthly redetermination. Also includes up to
$10.0
million for the issuance of letters of credit and up to
$8.0
million for swing line loans. The Credit Facility matures in October 2021 and may be drawn as Commercial Bank Floating Rate Loans (at the higher of prime rate or adjusted LIBOR plus
2.50%
) or Eurocurrency Loans (at LIBOR plus an applicable margin). The unused portion is subject to an annual commitment fee of
0.2%
.
|
(3)
|
In July 2018, all outstanding principal, accrued interest and fees were paid in full and the Prior Term Loan was terminated. While outstanding, it bore interest at LIBOR plus
9.5%
.
|
(4)
|
Debt issuance costs are recorded as debt discount and recorded as interest expense over the term of the agreement.
|
(In thousands, except share amounts)
|
|
|
|
|
|
|
|
|
||||||
|
|
Authorized Shares
|
|
Issued and
Outstanding
Shares
|
|
Carrying
Value
|
|
Liquidation
Preference
|
||||||
Series A preferred stock
|
|
10,035,000
|
|
|
10,005,000
|
|
|
$
|
15,060
|
|
|
$
|
15,008
|
|
Series B preferred stock
|
|
3,881,250
|
|
|
3,730,000
|
|
|
5,926
|
|
|
5,968
|
|
||
Series C preferred stock
|
|
11,700,000
|
|
|
11,688,766
|
|
|
26,556
|
|
|
25,000
|
|
||
Series D preferred stock
|
|
7,058,824
|
|
|
7,058,824
|
|
|
42,799
|
|
|
45,000
|
|
||
Total
|
|
32,675,074
|
|
|
32,482,590
|
|
|
$
|
90,341
|
|
|
$
|
90,976
|
|
|
Number of
Options
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Term
|
|
Weighted Average Intrinsic Value
|
|||||
|
|
|
|
|
(in years)
|
|
(in thousands)
|
|||||
Outstanding at September 30, 2017
|
45,817,252
|
|
|
$
|
9.20
|
|
|
6.9
|
|
$
|
199,663
|
|
Granted
|
9,316,926
|
|
|
15.12
|
|
|
|
|
|
|
||
Exercised
|
(2,657,436
|
)
|
|
3.52
|
|
|
|
|
|
|
||
Forfeited
|
(3,971,280
|
)
|
|
13.14
|
|
|
|
|
|
|||
Expired
|
(1,280
|
)
|
|
15.11
|
|
|
|
|
|
|
||
Outstanding at September 29, 2018
|
48,504,182
|
|
|
$
|
10.33
|
|
|
6.6
|
|
$
|
276,959
|
|
|
|
|
|
|
|
|
|
|||||
At September 29, 2018
|
|
|
|
|
|
|
|
|||||
Options exercisable
|
31,194,219
|
|
|
$
|
8.13
|
|
|
5.4
|
|
$
|
246,847
|
|
Options vested and expected to vest
|
45,662,090
|
|
|
$
|
10.07
|
|
|
6.5
|
|
$
|
272,699
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
|||
Expected term (years)
|
6.25
|
|
|
6.25
|
|
|
6.25
|
|
Risk-free interest rate
|
2.73
|
%
|
|
1.95
|
%
|
|
1.29
|
%
|
Expected volatility
|
30.19
|
%
|
|
32.40
|
%
|
|
36.64
|
%
|
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
2018
|
|
2017
|
|
2016
|
||||||
(In thousands)
|
|
|
|
|
|
||||||
Cost of revenue
|
$
|
198
|
|
|
$
|
240
|
|
|
$
|
211
|
|
Research and development
|
13,960
|
|
|
13,605
|
|
|
8,260
|
|
|||
Sales and marketing
|
15,885
|
|
|
15,086
|
|
|
11,742
|
|
|||
General and administrative
|
8,602
|
|
|
7,619
|
|
|
5,750
|
|
|||
Total stock-based compensation expense
|
$
|
38,645
|
|
|
$
|
36,550
|
|
|
$
|
25,963
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
(In thousands)
|
|||||||||||
Domestic
|
$
|
2,803
|
|
|
$
|
(25,005
|
)
|
|
$
|
(47,285
|
)
|
Foreign
|
(17,351
|
)
|
|
8,497
|
|
|
11,715
|
|
|||
Income (loss) before provision for (benefit from) income taxes
|
$
|
(14,548
|
)
|
|
$
|
(16,508
|
)
|
|
$
|
(35,570
|
)
|
|
2018
|
|
2017
|
|
2016
|
||||||
(In thousands)
|
|||||||||||
Current:
|
|
|
|
|
|
||||||
U.S. Federal
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
129
|
|
U.S. State
|
177
|
|
|
62
|
|
|
59
|
|
|||
Foreign
|
816
|
|
|
(3,791
|
)
|
|
3,344
|
|
|||
Total current
|
993
|
|
|
(3,729
|
)
|
|
3,532
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
U.S. Federal
|
(168
|
)
|
|
—
|
|
|
—
|
|
|||
U.S. State
|
—
|
|
|
—
|
|
|
—
|
|
|||
Foreign
|
231
|
|
|
1,438
|
|
|
(888
|
)
|
|||
Total deferred
|
63
|
|
|
1,438
|
|
|
(888
|
)
|
|||
Provision for (benefit from) income taxes
|
$
|
1,056
|
|
|
$
|
(2,291
|
)
|
|
$
|
2,644
|
|
|
2018
|
|
2017
|
||||
(In thousands)
|
|||||||
Deferred tax assets
|
|
|
|
||||
Accrued expenses and reserves
|
$
|
5,639
|
|
|
$
|
8,828
|
|
Deferred revenue
|
10,317
|
|
|
218
|
|
||
Inventory deferral
|
—
|
|
|
3,259
|
|
||
U.S. net operating loss carryforwards
|
18,385
|
|
|
53,589
|
|
||
Foreign net operating loss carryforwards
|
5,625
|
|
|
1,147
|
|
||
Tax credit carryforwards
|
22,969
|
|
|
17,553
|
|
||
Stock-based compensation
|
7,237
|
|
|
7,976
|
|
||
Amortization
|
3,237
|
|
|
3,859
|
|
||
Other
|
427
|
|
|
324
|
|
||
Total deferred tax assets
|
73,836
|
|
|
96,753
|
|
||
Valuation allowance
|
(72,380
|
)
|
|
(94,956
|
)
|
||
Deferred tax assets, net of valuation allowance
|
1,456
|
|
|
1,797
|
|
||
Deferred tax liabilities
|
|
|
|
||||
Depreciation
|
(515
|
)
|
|
(690
|
)
|
||
Total deferred tax liabilities
|
(515
|
)
|
|
(690
|
)
|
||
Net deferred tax assets
|
$
|
941
|
|
|
$
|
1,107
|
|
(In thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Beginning balance
|
$
|
94,956
|
|
|
$
|
95,882
|
|
|
$
|
33,264
|
|
Increase (decrease) during the period
|
(22,576
|
)
|
|
(926
|
)
|
|
19,535
|
|
|||
Increase due to adoption of ASU 2016-09
|
—
|
|
|
—
|
|
|
43,083
|
|
|||
Ending balance
|
$
|
72,380
|
|
|
$
|
94,956
|
|
|
$
|
95,882
|
|
(In thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
U.S. federal income taxes at statutory rate
|
$
|
(3,570
|
)
|
|
$
|
(5,778
|
)
|
|
$
|
(12,450
|
)
|
U.S. state and local income taxes
|
(1,441
|
)
|
|
(2,454
|
)
|
|
(1,813
|
)
|
|||
Foreign income tax rate differential
|
(53
|
)
|
|
(1,101
|
)
|
|
(4,680
|
)
|
|||
Dutch tax settlement
|
—
|
|
|
7,361
|
|
|
—
|
|
|||
Stock-based compensation
|
4,025
|
|
|
1,503
|
|
|
6,521
|
|
|||
Research tax credits
|
(2,343
|
)
|
|
(1,787
|
)
|
|
(4,036
|
)
|
|||
Change in tax rate
|
25,725
|
|
|
—
|
|
|
(624
|
)
|
|||
Other
|
259
|
|
|
1,197
|
|
|
191
|
|
|||
Change in valuation allowance
|
(21,546
|
)
|
|
(1,232
|
)
|
|
19,535
|
|
|||
Provision for (benefit from) income taxes
|
$
|
1,056
|
|
|
$
|
(2,291
|
)
|
|
$
|
2,644
|
|
|
2018
|
|
2017
|
||||
(In thousands)
|
|||||||
Beginning balance
|
$
|
13,780
|
|
|
$
|
11,496
|
|
Increase (decrease) - tax positions in prior periods
|
636
|
|
|
(23
|
)
|
||
Increase (decrease) - tax positions in current periods
|
3,378
|
|
|
2,307
|
|
||
Ending balance
|
$
|
17,794
|
|
|
$
|
13,780
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
(In thousands, except share and per share data)
|
|
|
|
|
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net loss attributable to common stockholders—basic and diluted
|
$
|
(15,604
|
)
|
|
$
|
(14,217
|
)
|
|
$
|
(38,214
|
)
|
Denominator:
|
|
|
|
|
|
||||||
Weighted-average shares of common stock—basic and diluted
|
65,706,215
|
|
|
56,314,546
|
|
|
53,873,051
|
|
|||
Net loss per share attributable to common stockholders:
|
|
|
|
|
|
||||||
Net loss per share attributable to common stockholders—basic and diluted
|
$
|
(0.24
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.71
|
)
|
|
|
|
|
Fiscal years ended
|
||||||||||||||||||||||||
(In thousands)
|
|
Total
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Beyond
|
||||||||||||||
Operating leases
|
|
$
|
85,546
|
|
|
$
|
16,830
|
|
|
$
|
14,120
|
|
|
$
|
12,391
|
|
|
$
|
11,654
|
|
|
$
|
11,870
|
|
|
$
|
18,681
|
|
Inventory
|
|
70,900
|
|
|
70,900
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other noncancelable agreements
|
|
8,696
|
|
|
3,279
|
|
|
3,574
|
|
|
1,843
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total contractual obligations
|
|
$
|
165,142
|
|
|
$
|
91,009
|
|
|
$
|
17,694
|
|
|
$
|
14,234
|
|
|
$
|
11,654
|
|
|
$
|
11,870
|
|
|
$
|
18,681
|
|
(In thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Warranty liability at beginning of year
|
$
|
2,437
|
|
|
$
|
2,491
|
|
|
$
|
2,722
|
|
Provision for warranties issued during the year
|
10,678
|
|
|
5,867
|
|
|
5,412
|
|
|||
Settlements of warranty claims during the year
|
(10,665
|
)
|
|
(5,921
|
)
|
|
(5,643
|
)
|
|||
Warranty liability at end of year
|
$
|
2,450
|
|
|
$
|
2,437
|
|
|
$
|
2,491
|
|
|
Three Months Ended
|
||||||||||||||
|
September 29,
2018 |
|
June 30,
2018 |
|
March 31,
2018 |
|
December 30,
2017 |
||||||||
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
272,940
|
|
|
$
|
208,398
|
|
|
$
|
186,720
|
|
|
$
|
468,950
|
|
Gross profit
|
116,277
|
|
|
95,489
|
|
|
81,341
|
|
|
196,201
|
|
||||
Net income (loss)
|
(1,720
|
)
|
|
(26,988
|
)
|
|
(32,592
|
)
|
|
45,697
|
|
||||
Net income (loss) per share - basic
|
$
|
(0.02
|
)
|
|
$
|
(0.45
|
)
|
|
$
|
(0.55
|
)
|
|
$
|
0.42
|
|
Net income (loss) per share - diluted
|
$
|
(0.02
|
)
|
|
$
|
(0.45
|
)
|
|
$
|
(0.55
|
)
|
|
$
|
0.36
|
|
|
Three Months Ended
|
||||||||||||||
|
September 30,
2017 |
|
July 1,
2017 |
|
April 1,
2017 |
|
December 31,
2016 |
||||||||
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
214,095
|
|
|
$
|
223,078
|
|
|
$
|
182,546
|
|
|
$
|
372,807
|
|
Gross profit
|
102,891
|
|
|
107,288
|
|
|
86,105
|
|
|
159,782
|
|
||||
Net income (loss)
|
(14,906
|
)
|
|
(14,539
|
)
|
|
(19,790
|
)
|
|
35,017
|
|
||||
Net income (loss) per share - basic
|
$
|
(0.26
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
0.32
|
|
Net income (loss) per share - diluted
|
$
|
(0.26
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
0.26
|
|
Exhibit
Number
|
|
|
|
Incorporated By Reference
|
|
Filed or Furnished
Herewith
|
||||||
Exhibit Title
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
|||
|
|
10-Q
|
|
001-38603
|
|
3.1
|
|
9/11/2018
|
|
|
||
|
|
10-Q
|
|
001-38603
|
|
3.2
|
|
9/11/2018
|
|
|
||
|
|
S-1
|
|
333-226076
|
|
4.01
|
|
7/6/2018
|
|
|
||
|
|
S-1
|
|
333-226076
|
|
4.02
|
|
7/6/2018
|
|
|
||
|
|
S-1
|
|
333-226076
|
|
10.01
|
|
7/6/2018
|
|
|
||
|
|
S-1
|
|
333-226076
|
|
10.02
|
|
7/6/2018
|
|
|
||
|
|
S-1/A
|
|
333-226076
|
|
10.03
|
|
7/23/2018
|
|
|
||
|
|
S-1
|
|
333-226076
|
|
10.04
|
|
7/6/2018
|
|
|
||
|
|
S-1
|
|
333-226076
|
|
10.05
|
|
7/6/2018
|
|
|
||
|
|
S-1
|
|
333-226076
|
|
10.06
|
|
7/6/2018
|
|
|
||
|
|
S-1
|
|
333-226076
|
|
10.07
|
|
7/6/2018
|
|
|
||
|
|
S-1
|
|
333-226076
|
|
10.08
|
|
7/6/2018
|
|
|
||
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
S-1
|
|
333-226076
|
|
21.1
|
|
7/6/2018
|
|
|
||
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
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X
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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X
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Date: November 28, 2018
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By:
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/s/ Patrick Spence
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Patrick Spence
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Chief Executive Officer and Director
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(Principal Executive Officer)
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Date: November 28, 2018
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By:
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/s/ Michael Giannetto
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Michael Giannetto
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Chief Financial Officer
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(Principal Financial Officer and Principal Accounting Officer)
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Signature
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Title
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Date
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/s/ Patrick Spence
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Chief Executive Officer
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November 28, 2018
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Patrick Spence
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(Principal Executive Officer)
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/s/ Michael Giannetto
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Chief Financial Officer
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November 28, 2018
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Michael Giannetto
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(Principal Financial Officer and
Principal Accounting Officer)
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/s/ Robert Bach
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Director
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November 28, 2018
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Robert Bach
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/s/ Brittany Bagley
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Director
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November 28, 2018
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Brittany Bagley
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/s/ Karen Boone
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Director
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November 28, 2018
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Karen Boone
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/s/ Thomas Conrad
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Director
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November 28, 2018
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Thomas Conrad
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/s/ Julius Genachowski
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Director
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November 28, 2018
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Julius Genachowski
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/s/ John Maeda
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Director
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November 28, 2018
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John Maeda
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/s/ Michelangelo Volpi
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Director and Chairperson of the Board of Directors
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November 28, 2018
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Michelangelo Volpi
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•
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Move of personal goods, including the cost to ship your car and your household pets to your new home
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Utility costs for service hookups & related service charges
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Temporary housing (first month)
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Storage expenses (first month)
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One travel trip to your new home (1 trip per employee & 1 trip per employee’s dependents)
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Use of personal vehicle at the rate .19 per mile
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Expenses of buying or selling a home (including closing costs, mortgage fees, and points)
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•
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Return trips to your former residence
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Lease cancellations Furniture
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Driver’s license
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Temporary housing and storage expenses (after 1st month)
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•
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Meals
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Personal Services
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Signature
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Title
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Date
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/s/ Patrick Spence
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Chief Executive Officer
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November 28, 2018
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Patrick Spence
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(Principal Executive Officer)
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/s/ Michael Giannetto
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Chief Financial Officer
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November 28, 2018
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Michael Giannetto
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(Principal Financial Officer and
Principal Accounting Officer)
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/s/ Robert Bach
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Director
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November 28, 2018
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Robert Bach
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/s/ Brittany Bagley
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Director
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November 28, 2018
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Brittany Bagley
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/s/ Karen Boone
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Director
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November 28, 2018
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Karen Boone
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/s/ Thomas Conrad
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Director
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November 28, 2018
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Thomas Conrad
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/s/ Julius Genachowski
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Director
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November 28, 2018
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Julius Genachowski
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/s/ John Maeda
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Director
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November 28, 2018
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John Maeda
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/s/ Michelangelo Volpi
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Director and Chairperson of the Board of Directors
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November 28, 2018
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Michelangelo Volpi
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1.
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I have reviewed this annual report on Form 10-K of Sonos, Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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a.
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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;
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b.
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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
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c.
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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
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5.
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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):
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a.
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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
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b.
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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.
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Date: November 28, 2018
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/s/ Patrick Spence
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Patrick Spence
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Chief Executive Officer
(Principal Executive Officer)
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1.
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I have reviewed this annual report on Form 10-K of Sonos, Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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a.
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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;
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b.
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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
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c.
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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
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5.
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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):
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a.
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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
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b.
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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.
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Date: November 28, 2018
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/s/ Michael Giannetto
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Michael Giannetto
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Chief Financial Officer
(Principal Financial Officer
and Principal Accounting Officer)
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Date: November 28, 2018
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By:
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/s/ Patrick Spence
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Patrick Spence
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Chief Executive Officer
(Principal Executive Officer)
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Date: November 28, 2018
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By:
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/s/ Michael Giannetto
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Michael Giannetto
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Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
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