Sonos, Inc.

Hello and welcome to the Sonos second quarter fiscal 2025 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star one on your telephone keypad. I would now like to turn the conference over to James Baglanis, head of corporate finance. You may begin.

Good afternoon and welcome to Sonos second quarter fiscal 2025 earnings conference call. I'm James Baglanis and with me today are Sonos interim CEO Tom Conrad, CFO Sayori Casey, and Chief Legal and Strategy Officer Eddie Lazarus. Before I hand it over to Tom, I would 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 with 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 second quarter results posted to the investor relations portion of our website. As a reminder, the press release, supplemental earnings presentation including our guidance, and conference call transcript will be available on our investor relations website, investors.sonos.com. I will now turn the call over to Tom.

Thank you, James, and thank you all for joining us today. We delivered a solid second quarter with revenue up 3% year over year and adjusted EBITDA increasing by $33 million, driven by a combination of strong gross margin and disciplined execution on our restructuring. These efforts led to a 14% year-over-year decline in non-GAAP operating expenses. We're executing with more focus and efficiency, and the progress we've made gives us the confidence to further reduce our annual run rate expense targets, which Sayori will speak to in more detail shortly. Let me start with an update on the core Sonos experience, which remains central to our differentiation and long-term success. My view here is simple. Our software must be responsive, reliable, and intuitive. No exceptions. In the last 120 days, we've delivered nine software updates focused on quality, responsiveness, and fit and finish. Another is just days away and more are planned for spring and summer. Our core product metrics now reflect performance and reliability levels that exceed those of our previous generation software. But we're doing more than just making progress on performance and reliability. We fully operationalize the reorganization I described on our Q1 call. In the process, we've sharpened our priorities, restructured how our teams organize and execute, and uncovered new efficiencies. At the same time, we're tapping into a deep well of creativity and innovation that had been waiting for clearer lanes of expression in our products. This is an incredibly powerful dimension for Sonos. Just last week, IEEE Spectrum ranked Sonos fourth in patent power for consumer electronics, trailing only Apple, Samsung, and LG. By streamlining how we work and where we focus, we're clearing the way for a bold new chapter of innovation across the Sonos platform. Speaking of innovation, powered by our category defining sound motion architecture, Sonos continued to gain dollar share in home theater year over year in both the US and EMEA. Our Arc Ultra soundbar sets the industry standard for performance and our customers are consistently choosing Sonos over the competition. This quarter, we also made a decisive move to invigorate our customer acquisition flywheel through the pricing of one of our most popular gateway products, the Arrow 100. Millions of our customers with multiple products in their homes started with our original flagship plug-in speaker, the Play One, and its successor, the Sonos One. These products received great critical acclaim when they were in market and the Arrow 100 is a step function improvement. That's why I'm so excited that we are now offering the Arrow 100 for the same price as its predecessors at under $200. This combination of performance and value is a powerful unlock for attracting new households and feeding long-term Sonos system expansion through repurchase. While it's early days, we're pleased with the initial customer response to the pricing change. As we look ahead, we're operating in a dynamic global environment shaped by macroeconomic forces and an evolving tariff landscape. But Sonos is not on its heels. We're well positioned thanks to the proactive steps we've taken over the past few years. We moved the vast majority of our U.S.-bound production out of China and into Malaysia and Vietnam, significantly limiting our exposure to China tariffs. Our remaining China exposure is limited to a few accessories like speaker stands and our Sonance co-branded products, which are a very small part of our total business. These actions afford us flexibility as to what products we manufacture in each country and provide critical optionality as new tariff structures take shape. We are managing this moment to improve our position. We're accelerating production to take advantage of the current pause and reciprocal tariffs for Vietnam and Malaysia. We're scenario planning with our contract manufacturers to ensure we maintain maximum flexibility on country of origin. We're collaborating closely with both our partners and retailers to limit downstream impact to the consumer. And we're evaluating pricing and promotion strategies that keep our products compelling while balancing margin and volume to optimize for gross profit dollars. Meanwhile, our investments in global sales expansion are right on time, as this moment reinforces the strategic importance of a broader international footprint. Against this backdrop, we're controlling what we can. We've sharpened our focus on the initiatives that matter most, improving our core experience, investing in profitable growth, and driving cost efficiency while delivering innovative new experiences. With a strong balance sheet, a nimble operational posture, and an experienced team that's executing with discipline, we're setting ourselves up to win. Tremendous opportunity lies ahead. The team and I are moving forward to build the future of Sonos with a renewed sense of purpose and energy. Now let me turn things over to Sayori to discuss our Q2 results in greater detail.