Sonos, Inc.

Before I hand it over to Patrick, I'd like to remind everyone that today's discussion will include forward-looking statements regarding future events and our future financial performance. These statements reflect our views as of today only and should not be considered as representing our views of any subsequent date. These statements are also subject to material risks and uncertainties that could cause actual results to differ materially from expectations reflected in the forward-looking statements. A discussion of these risk factors is fully detailed under the caption risk factors in our filings of the SEC. During this call, we will also refer to certain non-GAAP financial measures. For information regarding our non-GAAP financials and a reconciliation of GAAP to non-GAAP measures, please refer to today's press release regarding our third quarter results posted to the Investor Relations portion of our website. As a reminder, the press release, supplemental earnings presentation, and conference call transcript will be available on our Investor Relations website at investors.sonos.com. I will now turn the call over to Patrick.

Thank you, Cameron. And hello, everyone. Before going into details on our record third quarter results, I want to recognize the tremendous work that our people and partners continue to do. As I reflect on our continued strong execution and performance, I'm extremely proud of what our team has been able to accomplish. The momentum in our business, the strength of our brand, and the unwavering consumer demand for our products makes me even more confident and excited about our future. We are pleased to report outstanding third quarter results driven in large part by the continued surging demand for our products. We're breaking records on both our top and bottom lines. We achieved a record third quarter adjusted EBITDA margin of 12.3% and delivered a record $379 million in revenue, up 52% from the prior year. As a result of our expected strong second half performance, we are raising our fiscal 2021 outlook. We now expect fiscal 2021 adjusted EBITDA of $275 million at the midpoint, up from our prior outlook of $238 million, and revenue of $1.702 billion at the midpoint compared to our prior outlook of $1.65 billion. This represents adjusted EBITDA growth of over 150%, adjusted EBITDA margin of over 16%, and revenue growth of over 30%, excluding the 53rd week in fiscal 2020. I think it's important to remember that this is not simply a favorable COVID comparison. This growth is on top of the growth we were able to deliver in fiscal 2020. And of course, we're doing it at much larger scale and doing it profitably. Our model is working. Our upwardly revised outlook calls for revenue growth of approximately 30% in the second half of fiscal 2021, adjusting for the extra week last year, up from our prior outlook of 20% growth. This is comparable to the 33% growth we delivered in the first half of the year despite the fact that supply chain constraints, which are broadly shared across our sector, have increasingly impacted our efforts to fulfill the ever-growing demand for our products. Fortunately, our customers have shown both patience and loyalty. Their willingness to wait for our products while we continue to work to build supply truly underscores the power of our system-based approach and our brand. Purchasing Sonos is a considered decision to enter our system. not just buy a single product like so much of consumer electronics. At this point, we expect to exit fiscal 2021 with a significant backlog, which we expect to work down in fiscal 2022. Given the exceptional momentum we are experiencing and the unwavering demand for our products, we are ahead of schedule toward achieving our fiscal 2024 targets outlined at our investor event back in March. and are on track for what we believe will be a promising fiscal year 2022. Stepping back from our immediate results for a minute, I want to revisit the three macro trends we identified earlier this year and we believe are and will continue to help fuel our continued growth as we look to the end of fiscal 2021 and beyond. First, the golden age of audio. The sheer volume of music, audio books, and podcasts we have access to now is incredible. According to FutureSource's recent audio tech lifestyle survey of audio product owners, the percentage of respondents listening at least an hour a week to streaming audio content in 2021 has increased to 73% across the US, Germany, and UK, compared to 63% in 2020. And we believe that as more and more people As the leading premium home audio brand, Sonos is well positioned to continue to capitalize on this. The second trend is Hollywood at home. With more and more video content going direct to home, there has been a decade of change in the past year, with companies bringing the newest movies right into our homes. The number of straight-to-streaming movie premieres tripled last year and is not showing any signs of letting up. As a result, consumers are demanding a theater-like audio experience in the home, and that is something we deliver better than anyone. And the third trend fueling our growth is the great reshuffling. This is the untethering of people from their commutes and offices, which has enabled them to reevaluate how and where they want to live. According to recent Zillow research, fast-rising home values and new location options resulting from remote work drove U.S. movers toward even larger homes last year, with a shift from urban to suburban zip codes being the most prevalent. We believe this will be a multi-year cultural trend that benefits Sonos significantly as consumers will continue to invest in their homes and have even more spaces to fill with sound. As we look toward the long term, we remain focused on our three strategic initiatives. First, the expansion of our brand. This is all about understanding our customers better than anyone and how we're evolving our brand and marketing strategies to reach more of those customers. As you have seen in recent weeks, we have announced exciting new partnerships that provide opportunities To celebrate the launch of Roam, our first ultra-portable smart speaker, we recently kicked off a multifaceted partnership with The North Face, a heritage brand that inspires all of us to get outside and explore the world. First up, a Sonos radio station called Never Stop Exploring, which invites all of us to sonically experience some of its athletes' farthest-flung adventures. And just yesterday, we announced a new exciting partnership with Liverpool Football Club, marking Sonos' first-ever sports team partnership. After a year of empty stands, Sonos and Liverpool FC are excited to welcome back the 12th man, the name for the fans whose very energy and sound can win games and intimidate the opposition. And with millions of Reds supporters globally, Liverpool FC's sound sits well outside the walls of the stadium, reverberating through countless towns and cities, connecting people all around the world. As part of the multi-year agreement, Sonos will amplify the Reds' passion for sound by creating immersive sound experiences within the stadium, focusing on internal lounges and player areas, as well as at the AXA Training Center, the club's training base. Starting on August 21st, we will also be featured at Anfield's Pitchside LED at every Premier League home game, with animation sequences featuring Sonos products, branding, and key messaging. We have a tremendous opportunity ahead in the categories we play today, and we have ambitious plans to expand into new categories. to expand into new customer segments, and to layer services on top of everything. Our newest product, Roam, fits this profile. And it's been a huge hit, driving strong demand from both existing and new customers alike. In fact, Roam set a new record for the number of registrations for a new product released in the first full week after its launch. We remain focused on our efforts to introduce at least two new products each year and have already exceeded this target for fiscal 2021 with the introductions of Sonos Radio HD, Roam, and new partner products with Audi and IKEA. In July, IKEA introduced the latest product stemming from our long-term partnership, the Symphonic Picture Frame, a Wi-Fi speaker enabling consumers to enjoy both room-filling sounds and a beautiful piece of art. As we look ahead, our long-term product roadmap remains robust and we are excited to unveil what comes next. Third, driving operational excellence to achieve sustainable, profitable growth for the long-term. You are seeing us continue to execute ahead of our plan and deliver margin expansion and healthy top-line growth. We're laser-focused on extending our trend lines as well as investing for the long-term. I've never been more excited about the future of Sonos. We continue to see strong demand, and we are in the best position we have ever been. We have a huge opportunity in front of us, and we are just getting started. Now I'll turn the call over to Eddie to provide an update on our IP litigation.

Thank you, Patrick. With the judge's initial decision in our International Trade Commission patent case expected on Friday, I thought I'd give everyone a brief refresher. As I shared at our investor event in March, We estimate that Google infringes over 150 US utility patents from 30 different patent families. All of those patent families are still alive, and we continue to obtain high-value patents from them. We included five patents in our action against Google at the IPC. That's basically the limit of what you can fit in one case before that tribunal. Those five patents were directed to grouping and synchronizing playback amongst smart devices, volume control for a group and individual devices, stereo pairing, and setup. Google has thrown everything at us in this case, but we believe that the evidence before the ITC demonstrates Google to be a serial infringer of Sonos' valid patents, and that the ITC case represents just the tip of the iceberg. We'll have more to say once the judge issues his initial decision. But for now, we remain confident that the ITC will find Google to be a patent infringer and, as happened recently in Sonos' case against Google in Germany, that other courts will do the same. Let me now turn the call over to Brittany to provide more details on our results and our outlook.