Sonos Inc

Previous wording

We pioneered multi-room, wireless audio products, debuting the world’s first multi-room wireless sound system in 2005. Today, our products include wireless, portable, and home theater speakers, components, and accessories to address consumers’ evolving audio needs. We are known for delivering unparalleled sound, thoughtful design aesthetic, simplicity of use, and an open platform. Our platform has attracted a broad range of more than 130 streaming content providers, such as Apple Music, Spotify, Deezer, and Pandora. These partners find value in our independent platform and access to our millions of desirable and engaged customers. We frequently introduce new services and features across our platform, providing our customers with enhanced functionality, improved sound, and an enriched user experience. We are committed to continuous technological innovation as reflected in our growing global patent portfolio. We believe our patents comprise the foundational intellectual property for wireless multi-room and other audio technologies.

Current wording

We pioneered multi-room, wireless audio products, debuting the world’s first multi-room wireless sound system in 2005. Today, our products include wireless, portable, and home theater speakers, components, and accessories to address consumers’ evolving audio needs. We are known for delivering unparalleled sound, thoughtful design aesthetic, simplicity of use, and an open platform. Our platform has attracted a broad range of more than 100 streaming content providers, such as Apple Music, Spotify, Deezer, and Pandora. These partners find value in our independent platform and access to our millions of desirable and engaged customers. We frequently introduce new services and features across our platform, providing our customers with enhanced functionality, improved sound, and an enriched user experience. We are committed to continuous technological innovation as reflected in our growing global patent portfolio. We believe our patents comprise the foundational intellectual property for wireless multi-room and other audio technologies.

Previous wording

In addition to the measures presented in our condensed consolidated financial statements, we use the following key metrics to evaluate our business, measure our performance, identify trends affecting our business and assist us in making operational and strategic decisions. Our key metrics are total revenue, products sold, Adjusted EBITDA, and Adjusted EBITDA margin. The most directly comparable financial measure calculated under U.S. GAAP for Adjusted EBITDA is net income. The most directly comparable financial measure calculated under U.S. GAAP for Adjusted EBITDA margin is net income margin.

Current wording

In addition to the measures presented in our condensed consolidated financial statements, we use the following key metrics to evaluate our business, measure our performance, identify trends affecting our business and assist us in making operational and strategic decisions. Our key metrics are total revenue, products sold, Adjusted EBITDA, and Adjusted EBITDA margin. The most directly comparable financial measure calculated under U.S. GAAP for Adjusted EBITDA is net income (loss). The most directly comparable financial measure calculated under U.S. GAAP for Adjusted EBITDA margin is net income (loss) margin.

Previous wording

Net income margin is calculated by dividing net income by revenue.

Current wording

(1)Net income (loss) margin is calculated by dividing net income (loss) by revenue.

Previous wording

For additional information regarding Adjusted EBITDA and Adjusted EBITDA margin (which are non-GAAP financial measures), including reconciliations of net income, to Adjusted EBITDA, see the sections titled "Adjusted EBITDA and Adjusted EBITDA Margin" and "Non-GAAP Financial Measures" below.

Current wording

(2)For additional information regarding Adjusted EBITDA and Adjusted EBITDA margin (which are non-GAAP financial measures), including reconciliations of net income (loss), to Adjusted EBITDA, see the section titled "Non-GAAP Financial Measures" below.

Previous wording

Products sold represents the number of products that are sold during a period, net of returns and includes the sale of products in the Sonos speakers and Sonos system products categories, as well as module units sold through our partnerships with IKEA and Sonance from our Partner products and other revenue category. Growth rates between products sold and revenue are not perfectly correlated because our revenue is affected by other variables, such as the mix of products sold during the period, promotional discount activity, the introduction of new products that may have higher or lower than average selling prices, as well as the impact of recognition of previously deferred revenue.

Current wording

Products sold represents the number of products that are sold during a period, net of returns and includes the sale of products in the Sonos speakers and Sonos system products categories, as well as module units sold through our partnerships with IKEA and Sonance from our Partner products and other revenue category. Growth rates between products sold and revenue are not perfectly correlated because our revenue is affected by other variables, such as the mix of products sold during the period, promotional discount activity, the introduction of new products that may have higher or lower than average selling prices, changes to selling prices, as well as the impact of recognition of previously deferred revenue.

Previous wording

To supplement our condensed consolidated financial statements presented in accordance with U.S. GAAP, we monitor and consider Adjusted EBITDA and Adjusted EBITDA margin, which are non-GAAP financial measures. These non-GAAP financial measures are not based on any standardized methodology prescribed by U.S. GAAP and are not necessarily comparable to similarly titled measures presented by other companies.

Current wording

To supplement our condensed consolidated financial statements presented in accordance with U.S. GAAP, we monitor and consider Adjusted EBITDA, Adjusted EBITDA margin, and constant currency which are non-GAAP financial measures. These non-GAAP financial measures are not based on any standardized methodology prescribed by U.S. GAAP and are not necessarily comparable to similarly titled measures presented by other companies.

Previous wording

We define Adjusted EBITDA as net income adjusted to exclude the impact of depreciation and amortization, stock-based compensation expense, interest income, interest expense, other income (expense), income taxes, and other items that we do not consider representative of underlying operating performance. We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue.

Current wording

We define Adjusted EBITDA as net income (loss) adjusted to exclude the impact of depreciation and amortization, stock-based compensation expense, interest income, interest expense, other income (expense), income taxes, legal and transaction related costs, restructuring and abandonment costs, and other items that we do not consider representative of underlying operating performance. We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue.

Previous wording

In constant currency U.S. dollars, total revenue decreased 10.5% for the three months ended December 30, 2023, compared to the three months ended December 31, 2022. We calculate constant currency growth percentages by translating our current period financial results using the prior period average currency exchange rates and comparing these amounts to our prior period reported results.

Current wording

We also present percentage sales growth in constant currency to show performance unaffected by fluctuations in currency exchange rates. We calculate constant currency growth percentages by translating our current period financial results using the prior period average currency exchange rates and comparing these amounts to our prior period reported results.

Previous wording

Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures, and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with U.S. GAAP. There are a number of limitations related to the use of Adjusted EBITDA rather than net income, which is the nearest U.S. GAAP equivalent to Adjusted EBITDA, and the use of Adjusted EBITDA margin rather than net income margin, which is the nearest U.S. GAAP equivalent to Adjusted EBITDA margin. These limitations include that the non-GAAP financial measures:

Current wording

Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures, and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with U.S. GAAP. There are a number of limitations related to the use of Adjusted EBITDA rather than net income (loss), which is the nearest U.S. GAAP equivalent to Adjusted EBITDA, and the use of Adjusted EBITDA margin rather than net income (loss) margin, which is the nearest U.S. GAAP equivalent to Adjusted EBITDA margin. These limitations include that the non-GAAP financial measures:

Previous wording

do not reflect interest income, primarily resulting from interest income earned on our cash and cash equivalent balances;

Current wording

•do not reflect interest income, primarily resulting from interest income earned on our cash, cash equivalents, and marketable securities balances;

Previous wording

The following table presents a reconciliation of net income to Adjusted EBITDA:

Current wording

The following table presents a reconciliation of net income (loss) to Adjusted EBITDA:

Previous wording

Legal and transaction-related costs consist of expenses related to our intellectual property ("IP") litigation against Alphabet and Google, as well as legal and transaction costs associated with our acquisition activity, which we do not consider representative of our underlying operating performance.

Current wording

(1)Legal and transaction-related costs consist of expenses related to our intellectual property ("IP") litigation against Alphabet and Google, as well as legal and transaction costs associated with our acquisition activity, which we do not consider representative of our underlying operating performance.

Previous wording

We generate substantially all of our revenue from the sale of Sonos speakers and Sonos system products. We also generate a portion of revenue from Partner products and other revenue sources, such as module revenue from our IKEA partnership, architectural speakers from our Sonance partnership, and accessories such as speaker stands and wall mounts, as well as professional services, licensing, advertising, and subscription revenue. We attribute revenue from our IKEA partnership to our Asia Pacific ("APAC") region, as our regional revenue is defined by the shipment location. Our revenue is recognized net of allowances for returns, discounts, sales incentives, and any taxes collected from customers. We also defer a portion of our revenue that is allocated to unspecified software upgrades and cloud-based services, as well as for newly launched products sold to resellers not recognized until the date of general availability is reached. Our revenue is subject to fluctuation based on the foreign currency in which our products are sold, principally for sales denominated in the euro and the British pound. The introduction of new products may result in an increase in revenue but may also impact revenue generated from existing products as consumers shift purchases to new products.

Current wording

We generate substantially all of our revenue from the sale of Sonos speakers and Sonos system products. We also generate a portion of revenue from Partner products and other revenue sources, such as architectural speakers from our Sonance partnership, accessories such as speaker stands and wall mounts, professional services, licensing, advertising, and subscription revenue. We attribute revenue from our IKEA partnership to our Asia Pacific ("APAC") region, as our regional revenue is defined by the shipment location. Our revenue is recognized net of allowances for returns, discounts, sales incentives, and any taxes collected from customers. We also defer a portion of our revenue that is allocated to unspecified software upgrades and cloud-based services, as well as for newly launched products sold to resellers not recognized until the date of general availability is reached. Our revenue is subject to fluctuation based on the foreign currency in which our products are sold, principally for sales denominated in the euro and the British pound.

Previous wording

Our gross margin has fluctuated and may, in the future, fluctuate from period to period based on a number of factors, including the mix of products we sell, the channel mix through which we sell our products, fluctuations of the impacts of our product and material cost saving initiatives, the foreign currency in which our products are sold, and tariffs and duty costs implemented by governmental authorities.

Current wording

Our gross margin has fluctuated and may, in the future, fluctuate from period to period based on a number of factors, including the mix of products we sell, the mix of channels through which we sell our products, fluctuations in our product and material cost saving initiatives, fluctuations in our product and material markets, promotional activity, the foreign currency in which our products are sold, and tariffs and duty costs implemented by governmental authorities.

Previous wording

General and administrative. General and administrative expenses consist of personnel-related expenses for our finance, legal, human resources and administrative personnel, as well as the costs of professional services, information technology, litigation, patents, related overhead, and other administrative expenses.

Current wording

General and administrative. General and administrative expenses consist of administrative personnel-related expenses for our finance, legal, human resources and similar personnel, as well as the costs of professional services, information technology, litigation, patents, related overhead, and other administrative expenses.

Previous wording

Interest income. Interest income consists primarily of interest income earned on our cash and cash equivalents balances.

Current wording

Interest income. Interest income consists primarily of interest income earned on our cash, cash equivalents, and marketable securities balances.

Previous wording

(2)Adjusted EBITDA is a financial measure that is not calculated in accordance with U.S. GAAP. See the sections titled "Adjusted EBITDA and Adjusted EBITDA margin" and "Non-GAAP financial measures" above.

Current wording

(2)Adjusted EBITDA is a financial measure that is not calculated in accordance with U.S. GAAP. See the section titled "Non-GAAP Financial Measures" above.

Previous wording

Total revenue decreased $59.7 million, or 8.9%, for the three months ended December 30, 2023, compared to the three months ended December 31, 2022, primarily due to declines in our retail and other channels, as our channel partners normalized ordering levels, as well as softer demand across all regions and challenging market conditions, partially offset by the impact of favorable foreign exchange rates.

Current wording

Total revenue decreased $111.2 million, or 11.4% for the six months ended March 30, 2024 compared to the six months ended April 1, 2023, primarily due to softer demand across all regions and challenging market conditions, as well as declines in our retail and other channels as our channel partners normalized ordering levels, partially offset by the impact of favorable foreign exchange rates.

Previous wording

Sonos speakers revenue represented 82.1% of total revenue for the three months ended December 30, 2023, and decreased 6.7% compared to the three months ended December 31, 2022, primarily driven by expected declines in sales of Sonos One as we introduced the next generation of this product (Era 100), as well as Sub Mini due to the impact of lapping its launch in October 2022, and Beam, partially offset by Era 100 and Era 300 which were introduced in March 2023. Sonos system products represented 13.8% of total revenue for the three months ended December 30, 2023, and decreased 26.1% compared to the three months ended December 31, 2022, primarily due to normalization of ordering levels in this category. Partner products and other revenue represented 4.1% of total revenue for the three months ended December 30, 2023, and increased 33.5% compared to the three months ended December 31, 2022, primarily driven by increases in our accessories.

Current wording

Sonos speakers revenue represented 79.8% of total revenue for the six months ended March 30, 2024 and decreased 11.5% compared to the six months ended April 1, 2023, primarily driven by softer demand across the category and challenging market conditions, particularly in Arc, Sub, and Beam, as well as Sub Mini due to the impact of lapping its launch in October 2022. The decrease was also driven by expected declines in Sonos One, partially offset by strong sales of the next generation of this product, Era 100, and Era 300 which were introduced in March 2023. Sonos system products represented 15.5% of total revenue for the six months ended March 30, 2024 and decreased 15.6% compared to the six months ended April 1, 2023, due to continued normalization of ordering levels in our installed solutions channel relative to fiscal 2023. Partner products and other revenue represented 4.8% of total revenue for the six months ended March 30, 2024 and increased 9.5% compared to the six months ended April 1, 2023, primarily driven by increases in our accessories.

Previous wording

The volume of products sold decreased 15.0% for the three months ended December 30, 2023, compared to the three months ended December 31, 2022, primarily due to expected declines in units of Sonos One as we introduced the next generation of this product (Era 100), partially offset by strong performance of Era 100 and Era 300, which were introduced in March 2023. Products sold declined more than revenue on a percentage basis due to the impact of product mix with decreases in units with lower selling prices.

Current wording

The volume of products sold decreased 17.9% for the six months ended March 30, 2024 compared to the six months ended April 1, 2023, primarily driven by softening demand and challenging market conditions across the Sonos Speakers category, expected declines in units of Sonos One, and decreases in orders of our partner products. These declines were partially offset by sales of Era 100, the next generation of Sonos One, and Era 300. The decrease in volume of products sold outpaced that of revenue due to a large decrease in units with lower selling prices which contributed a smaller corresponding decrease in revenue.

Previous wording

Cost of revenue decreased $57.3 million, or 14.8%, for the three months ended December 30, 2023, compared to the three months ended December 31, 2022, primarily due to a decrease in products sold, as well as a decrease in product and material costs, reduced spot market component costs due to normalization of the supply chain, and a decrease in inventory-related write-downs. The decrease was partially offset by an increase in net tariff expense as we have recovered virtually all tariff refunds to which we were entitled by the end of fiscal 2023, compared to the first quarter of fiscal 2023 when we recognized tariff refunds.

Current wording

Cost of revenue decreased $89.3 million, or 15.9%, for the six months ended March 30, 2024 compared to the six months ended April 1, 2023, primarily due to a decrease in products sold, as well as a decrease in product and material costs, and reduced spot market component costs due to normalization of the supply chain, partially offset by the impact of product mix related to selling more products with higher costs per unit.

Previous wording

Sales and marketing expenses increased $5.3 million, or 6.7%, for the three months ended December 30, 2023, compared to the three months ended December 31, 2022. This increase was primarily driven by higher advertising and marketing expenses of $5.5 million, as well as increases in depreciation mainly related to our product displays, partially offset by lower revenue-related sales fees, and a decrease in personnel-related expenses due to decreased headcount related to the 2023 restructuring plan.

Current wording

Sales and marketing expenses decreased $1.8 million, or 2.8%, for the three months ended March 30, 2024 compared to the three months ended April 1, 2023. This decrease was primarily driven by timing of advertising and marketing expenses of $3.6 million, as well as lease abandonment costs of $1.0 million incurred in the prior year, partially offset by increases in depreciation of $1.2 million mainly related to our product displays, and an increase in personnel-related expenses due to lower variable compensation in the prior year.

Previous wording

General and administrative expenses decreased $3.3 million, 7.7%, for the three months ended December 30, 2023, compared to the three months ended December 31, 2022, primarily related to a $2.5 million decrease in legal fees incurred in connection with our IP litigation and a $1.2 million decrease in investments in information technology to replace our legacy ERP system in fiscal 2022.

Current wording

General and administrative expenses decreased $3.6 million, or 8.1%, for the three months ended March 30, 2024 compared to the three months ended April 1, 2023, primarily related to a $5.9 million decrease in legal fees mainly related to our IP litigation and $1.1 million lease abandonment costs incurred in the prior year, partially offset by an increase in personnel-related costs of $3.3 million due to lower variable compensation in the prior year.

Previous wording

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

Current wording

Interest Income, Interest Expense and Other Income), Net

Previous wording

Interest income for the three months ended December 30, 2023, compared to the three months ended December 31, 2022, increased due to higher yields on our cash and cash equivalents. Interest expense for the three months ended December 30, 2023, compared to the three months ended December 31, 2022, decreased primarily due to reduced expenses associated with our Revolving Credit Agreement. The decrease in other income, net for the three months ended December 30, 2023, compared to the three months ended December 31, 2022, was due to foreign currency exchange fluctuations.

Current wording

Interest income for the three months ended March 30, 2024 compared to the three months ended April 1, 2023, increased due to higher yields on our cash and cash equivalents. Interest expense for the three months ended March 30, 2024 compared to the three months ended April 1, 2023, decreased primarily due to reduced expenses associated with our Revolving Credit Agreement and banking partners. Other expense, net for the three months ended March 30, 2024 compared to the three months ended April 1, 2023, increased due to foreign currency exchange fluctuations.

Previous wording

The provision for income taxes decreased from $36.5 million for the three months ended December 31, 2022, to $12.0 million for the three months ended December 30, 2023.

Current wording

The benefit from income taxes decreased from $26.4 million for the three months ended April 1, 2023, to $0.7 million for the three months ended March 30, 2024.

Previous wording

For the three months ended December 30, 2023, we calculated our U.S. income tax provision using the discrete method as though the interim year-to-date period was an annual period. The application of the annual effective tax rate ("AETR") method generally required by ASC 740 was impractical for the U.S. interim tax provision as normal deviations in the projected pre-tax net income (loss) in the U.S. could have resulted in a disproportionate and unreliable effective tax rate under the AETR method. For the three months ended December 30, 2023, our U.S. tax expense was adversely impacted by the requirement to capitalize and amortize research and development expenses under Section 174 of the U.S. Internal Revenue Code ("Section 174") as we recorded a U.S. current tax expense with no corresponding deferred tax benefit due to the valuation allowance maintained against our U.S. deferred tax assets.

Current wording

For the three months ended March 30, 2024, we calculated our U.S. income tax provision using the discrete method as though the interim year-to-date period was an annual period. This approach is consistent with the method used for the three months ended December 30, 2023. The application of the annual effective tax rate ("AETR") method generally required by ASC 740 was impractical for the U.S. interim tax provision as normal deviations in the projected pre-tax net income (loss) in the U.S. could have resulted in a disproportionate and unreliable effective tax rate under the AETR method.

Previous wording

Our operations are financed primarily through cash flows from operating activities and net proceeds from the sale of our equity securities. As of December 30, 2023, our principal sources of liquidity consisted of cash flows from operating activities, cash and cash equivalents of $467.3 million, including $77.7 million held by our foreign subsidiaries, proceeds from the exercise of stock options and borrowing capacity under the credit facility under our Revolving Credit Agreement. In accordance with our policy, the undistributed earnings of our non-U.S. subsidiaries remain indefinitely reinvested outside of the United States as of December 30, 2023, as they are required to fund needs outside of the United States. In the event funds from foreign operations are needed to fund operations in the United States and if U.S. tax has not already been previously provided, we may be required to accrue and pay additional U.S. taxes to repatriate these funds.

Current wording

Our operations are financed primarily through cash flows from operating activities and net proceeds from the sale of our equity securities. As of March 30, 2024, our principal sources of liquidity consisted of cash flows from operating activities, cash and cash equivalents of $246.0 million, including $48.2 million held by our foreign subsidiaries, marketable securities of $45.6 million, proceeds from the exercise of stock options and borrowing capacity under the credit facility under our Revolving Credit Agreement. In accordance with our policy, the undistributed earnings of our non-U.S. subsidiaries remain indefinitely reinvested outside of the United States as of March 30, 2024, as they are required to fund needs outside of the United States. In the event funds from foreign operations are needed to fund operations in the United States and if U.S. tax has not already been previously provided, we may be required to accrue and pay additional U.S. taxes to repatriate these funds.

Previous wording

We believe our existing cash and cash equivalent balances, cash flows from operations and committed credit lines will be sufficient to meet our long-term working capital and capital expenditure needs for at least the next 12 months. We hold our cash with a diverse group of major financial institutions and have processes and safeguards in place to manage our cash balances and mitigate the risk of loss. In October 2021, we entered into a Revolving Credit Agreement with JPMorgan Chase Bank, N.A., as the administrative agent, Bank of America N.A., Morgan Stanley Senior Funding, Inc., and Goldman Sachs Bank USA, which allows us to borrow up to $100.0 million, with a maturity date of October 2026. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending on research and development efforts and other business initiatives, our planned sales and marketing activities, the timing of new product introductions, our potential merger and acquisition activity, market acceptance of our products, and overall economic conditions. To the extent that current and anticipated sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in increased dilution to our stockholders. If we were to incur additional debt financing, it would result in increased debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations.

Current wording

We believe our existing cash and cash equivalent balances, cash flows from operations and committed credit lines will be sufficient to meet our long-term working capital and capital expenditure needs for at least the next 12 months. We hold our cash with a diverse group of major financial institutions and have processes and safeguards in place to manage our cash balances and mitigate the risk of loss. In October 2021, we entered into the Revolving Credit Agreement , which allows us to borrow up to $100 million, with a maturity date of October 2026. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending on research and development efforts and other business initiatives, our planned sales and marketing activities, the timing of new product introductions, our potential merger and acquisition activity, market acceptance of our products, and overall economic conditions. To the extent that current and anticipated sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in increased dilution to our stockholders. If we were to incur additional debt financing, it would result in increased debt service obligations and the instruments governing such debt could require additional operating and financing covenants that would restrict our operations.

Previous wording

On October 13, 2021, we entered into the Revolving Credit Agreement. The Revolving Credit Agreement provides for (i) a five-year senior secured revolving credit facility in the amount of up to $100.0 million and (ii) an uncommitted incremental facility subject to certain conditions. Proceeds are to be used for working capital and general corporate purposes. The facility may be drawn as an Alternative Base Rate Loan (at 1.00% plus an applicable margin) or Term Benchmark Loan (SOFR plus an applicable margin). We must also pay (i) an unused commitment fee ranging from 0.200% to 0.275% per annum of the average daily unused portion of the aggregate revolving credit commitment under the agreement and (ii) a per annum fee equal to the applicable margin over SOFR multiplied by the aggregate face amount of outstanding letters of credit. As of December 30, 2023, we did not have any outstanding borrowings and had $1.8 million in undrawn letters of credit that reduce the availability under the Revolving Credit Agreement.

Current wording

On October 13, 2021, we entered into the Revolving Credit Agreement. The Revolving Credit Agreement provides for (i) a five year senior secured revolving credit facility in the amount of up to $100 million and (ii) an uncommitted incremental facility subject to certain conditions. Proceeds are to be used for working capital and general corporate purposes. The facility may be drawn as an Alternative Base Rate Loan (at 1.00% plus an applicable margin) or Term Benchmark Loan (SOFR plus an applicable margin). We must also pay (i) an unused commitment fee ranging from 0.200% to 0.275% per annum of the average daily unused portion of the aggregate revolving credit commitment under the agreement and (ii) a per annum fee equal to the applicable margin over SOFR multiplied by the aggregate face amount of outstanding letters of credit. As of March 30, 2024, we did not have any outstanding borrowings and had $1.8 million in undrawn letters of credit that reduce the availability under the Revolving Credit Agreement.

Previous wording

Net cash provided by operating activities of $275.4 million for the three months ended December 30, 2023, consisted of net income of $80.9 million, non-cash adjustments of $31.1 million, and a net increase in cash related to changes in operating assets and liabilities of $163.3 million. Non-cash adjustments primarily consisted of stock-based compensation expense of $19.4 million, depreciation and amortization of $11.9 million, provision for inventory obsolescence of $5.8 million, and other adjustments of $1.2 million, partially offset by foreign currency transaction gains of $7.4 million. The net increase in cash from the change in operating assets and liabilities was primarily due to a decrease in inventories of $167.6 million due to the seasonality of our business with higher sales during the holiday season, measures taken to more efficiently manage inventory, as well as the implementation of new payment terms with our suppliers, an increase in other liabilities of $18.6 million primarily for provisions for our returns consistent with the increase in revenue, an increase in accrued compensation of $6.0 million, and an increase in deferred revenue of $3.7 million. The net increase in cash from the change in operating assets and liabilities was partially offset by an increase in other assets of $12.9 million due to timing of prepaid contracts, an increase in accounts receivable of $12.2 million, and decreases in accounts payable and accrued expenses of $7.4 million due to lower inventory purchases.

Current wording

Net cash provided by operating activities of $164.2 million for the six months ended March 30, 2024, consisted of net income of $11.2 million, non-cash adjustments of $70.4 million, and a net increase in cash related to changes in operating assets and liabilities of $82.5 million. Non-cash adjustments primarily consisted of stock-based compensation expense of $43.0 million, depreciation and amortization of $23.1 million, provision for inventory obsolescence of $5.3 million, and other adjustments of $2.2 million, partially offset by foreign currency transaction gains of $3.4 million. The net increase in cash from the change in operating assets and liabilities was primarily due to a decrease in inventories of $161.7 million as the result of measures taken to more efficiently manage inventory and the implementation of new payment terms with suppliers, an increase in accrued compensation of $16.0 million, an increase in other liabilities of $10.0 million primarily for provisions for our returns, and an increase in deferred revenue of $1.9 million. The net increase in cash from the change in operating assets and liabilities was partially offset by decreases in accounts payable and accrued expenses of $89.2 million due to lower inventory purchases, an increase in other assets of $15.2 million due to timing of prepaid contracts, and an increase in accounts receivable of $2.8 million.

Previous wording

Cash used in investing activities of $6.1 million for the three months ended December 30, 2023, primarily consisted of purchases of property and equipment mainly related to point-of-sale product displays and manufacturing-related tooling and test equipment to support the launch of new products.

Current wording

Cash used in investing activities of $61.5 million for the six months ended March 30, 2024, primarily consisted of the purchases of marketable securities of $45.3 million and purchases of property and equipment of $16.3 million mainly related to point-of-sale product displays and manufacturing-related tooling and test equipment to support the launch of new products.

Previous wording

Cash used in financing activities of $23.7 million for the three months ended December 30, 2023, consisted of payments for repurchases of common stock of $23.5 million and payments for repurchases of common stock related to shares withheld for tax in connection with vesting of stock awards of $3.7 million, offset by proceeds from the exercise of stock options of $3.5 million.

Current wording

Cash used in financing activities of $77.6 million for the six months ended March 30, 2024, primarily consisted of payments for repurchases of common stock of $76.3 million and payments for repurchases of common stock related to shares withheld for tax in connection with vesting of stock awards of $13.2 million, partially offset by proceeds from the exercise of stock options of $11.9 million.