Sonos Inc

Previous wording

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding future operations, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "could," "would," "expect," "objective," "plan," "potential," "seek," "grow," "target," "if," and similar expressions intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations, objectives, restructuring efforts, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section titled "Risk Factors" set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and in our other SEC filings, including our Annual Report. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results may differ materially and adversely from those anticipated or implied in the forward-looking statements. You should read this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect. Except as required by law, we do not undertake any obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.

Current wording

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding future operations, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "could," "would," "expect," "objective," "plan," "potential," "seek," "grow," "target," "if," and similar expressions intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations, objectives, restructuring efforts, timing of certain tax impacts and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section titled "Risk Factors" set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and in our other SEC filings, including our Annual Report. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results may differ materially and adversely from those anticipated or implied in the forward-looking statements. You should read this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect. Except as required by law, we do not undertake any obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.

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 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.

Current wording

We pioneered multi-room, wireless audio products, debuting the world’s first multi-room wireless sound system in 2005. In June 2024, we introduced Sonos Ace, marking Sonos' entry into the personal listening category. Today, our product lineup includes wireless, portable, and home theater speakers, headphones, 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. In May 2024, we launched an extensive redesign of our Sonos app. We rebuilt the app from the ground up with the purpose of improving the user experience through a modern user interface and to provide a modular developer platform allowing us to drive more innovation faster in the future. 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

We generate revenue from the sale of our Sonos speaker products, including wireless speakers and home theater speakers, from our Sonos system products, which largely comprises our component products, and from partner products and other revenue, including partnerships with IKEA and Sonance, Sonos and third-party accessories, licensing, advertising, and subscription revenue.

Current wording

We generate revenue from the sale of our Sonos speaker products, including wireless speakers, home theater speakers and beginning in June 2024, headphones, from our Sonos system products, which largely comprises our component products, and from partner products and other revenue, including partnerships with IKEA and Sonance, Sonos and third-party accessories, licensing, advertising, and subscription revenue.

Previous wording

•do not reflect items that are not considered representative of our underlying operating performance which reduce cash available to us; and

Current wording

•do not reflect items that are not considered representative of our underlying operating performance which may reduce cash available to us; and

Previous wording

(2)Restructuring and abandonment costs for the three and six months ended March 30, 2024 are related to our restructuring plan initiated on June 14, 2023. Restructuring and abandonment costs for the three and six months ended April 1, 2023 are related to costs incurred in March 2023 related to the abandonment of portions of our office spaces for the remainder of their respective lease terms in support of operational efficiencies.

Current wording

(2)Restructuring and abandonment costs for the three and nine months ended June 29, 2024 and July 1, 2023, are primarily related to our restructuring plan initiated on June 14, 2023, and also costs incurred in March 2023 related to the abandonment of portions of our office spaces.

Previous wording

While we seek to increase sales through our direct-to-consumer sales channel, we expect that our partnerships with third-party retailers and custom installers will continue to be an important part of our ecosystem. We will continue to seek retail partners that can deliver differentiated in-store experiences to support customer demand for product demonstrations. Additionally, we intend to expand and strengthen our partnerships with custom installers who are valuable to our customer base and contribute to our new household growth. Our physical retail distribution relies on third-party retailers, our ability to maintain our diversified manufacturing footprint and base of component suppliers for production efficiency and flexibility across our global supply chain.

Current wording

While we seek to increase sales through our direct-to-consumer sales channel, we expect that our partnerships with third-party retailers and custom installers will continue to be an important part of our ecosystem. We will continue to seek retail partners that can deliver differentiated in-store experiences to support customer demand for product demonstrations. Additionally, we intend to expand and strengthen our partnerships with custom installers who are valuable to our customer base and contribute to our new household growth. Our physical retail distribution relies on third-party retailers and our ability to maintain our diversified manufacturing footprint and base of component suppliers for production efficiency and flexibility across our global supply chain.

Previous wording

Interest Income, Interest Expense and Other Income), Net

Current wording

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

Previous wording

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided to reduce our deferred tax assets to amounts that are more-likely-than-not to be realized. We have assessed, on a jurisdictional basis, the available means of recovering deferred tax assets, including the ability to carry back net operating losses, the existence of taxable temporary differences, the availability of tax planning strategies and available sources of future taxable income. We have concluded that a valuation allowance on deferred tax assets in the U.S. continues to be appropriate considering cumulative pre-tax losses in recent years and uncertainty with respect to future taxable income. Release of the remaining valuation allowance would result in a benefit to income tax expense for the period the release is recorded, which could have a material impact on net earnings. The timing and amount of the potential valuation allowance release are subject to significant management judgment, as well as prospective earnings in the U.S.

Current wording

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided to reduce our deferred tax assets to amounts that are more-likely-than-not to be realized. We have assessed, on a jurisdictional basis, the available means of recovering deferred tax assets, including the ability to carry back net operating losses, the existence of taxable temporary differences, the availability of tax planning strategies and available sources of future taxable income. We have concluded that a valuation allowance on deferred tax assets in the U.S. continues to be appropriate considering cumulative pre-tax losses in recent years and uncertainty with respect to future taxable income. It is possible that within the next 12 months there may be sufficient positive evidence to release a portion or all of the remaining valuation allowance. Release of the remaining valuation allowance would result in a benefit to income tax expense for the period the release is recorded, which could have a material impact on net earnings. The timing and amount of the potential valuation allowance release are subject to significant management judgment, as well as prospective earnings in the U.S.

Previous wording

Comparison of the three and six months ended March 30, 2024 and April 1, 2023

Current wording

Comparison of the three and nine months ended June 29, 2024 and July 1, 2023

Previous wording

Total revenue decreased $51.5 million, or 16.9%, for the three months ended March 30, 2024 compared to the three months ended April 1, 2023, primarily due to softer demand across all regions and challenging market conditions, partially offset by normalization of ordering levels in our installed solutions channel.

Current wording

Total revenue increased $23.8 million, or 6.4%, for the three months ended June 29, 2024 compared to the three months ended July 1, 2023, primarily driven by the introduction of our first-ever headphones, Sonos Ace, in June 2024, partially offset by softer demand across all regions and challenging market conditions.

Previous wording

Sonos speakers revenue represented 74.1% of total revenue for the three months ended March 30, 2024 and decreased 22.4% compared to the three months ended April 1, 2023, primarily driven by softer demand and challenging market conditions across the category, particularly in Arc, Sub, and Beam. 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, which was introduced in March 2023. Sonos system products represented 19.5% of total revenue for the three months ended March 30, 2024 and increased 11.7% compared to the three 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 6.4% of total revenue for the three months ended March 30, 2024 and decreased 14.6% compared to the three months ended April 1, 2023, primarily driven by decreases in orders of our partner products and accessories.

Current wording

Sonos speakers revenue represented 75.8% of total revenue for the three months ended June 29, 2024 and increased 3.9% compared to the three months ended July 1, 2023, primarily driven by the introduction of Sonos Ace in June 2024 and strong sales of Era 100. The increase was partially offset by expected declines in One as well as Sub. Sonos system products represented 18.9% of total revenue for the three months ended June 29, 2024 and increased 17.1% compared to the three months ended July 1, 2023, due to sales to our installed solutions channel relative to fiscal 2023. Partner products and other revenue represented 5.3% of total revenue for the three months ended June 29, 2024 and increased 7.5% compared to the three months ended July 1, 2023, primarily driven by increases in orders of our partner products.

Previous wording

The volume of products sold decreased 25.2% for the three months ended March 30, 2024 compared to the three months ended April 1, 2023, primarily driven by softer 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 strong sales of Era 100, the next generation of Sonos One, which was introduced in March 2023. Revenue outpaced products sold due to favorable mix from unit decreases in our lower-priced products.

Current wording

The volume of products sold increased 6.0% for the three months ended June 29, 2024 compared to the three months ended July 1, 2023, primarily driven by the introduction of Sonos Ace in June 2024, and strong sales of Era 100. The increase was partially offset by expected declines in One.

Previous 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.

Current wording

Total revenue decreased $87.4 million, or 6.5% for the nine months ended June 29, 2024 compared to the nine months ended July 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 introduction of Sonos Ace in June 2024, and the impact of favorable foreign exchange rates.

Previous 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.

Current wording

Sonos speakers revenue represented 78.5% of total revenue for the nine months ended June 29, 2024 and decreased 7.4% compared to the nine months ended July 1, 2023, primarily driven by expected declines in One, softer demand across the category and challenging market conditions, particularly in Sub, Arc, and Beam, as well as Sub Mini. These declines were partially offset by strong sales of Era 100 and Era 300, which were introduced in March 2023, and by the introduction of Sonos Ace in June 2024. Sonos system products represented 16.6% of total revenue for the nine months ended June 29, 2024 and decreased 6.2% compared to the nine months ended July 1, 2023, due to continued normalization of ordering levels in our installed solutions channel relative to fiscal 2023. Partner products and other revenue represented 4.9% of total revenue for the nine months ended June 29, 2024 and increased 8.8% compared to the nine months ended July 1, 2023, primarily driven by increases in orders of our partner products.

Previous 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.

Current wording

The volume of products sold decreased 11.8% for the nine months ended June 29, 2024 compared to the nine months ended July 1, 2023, primarily driven by expected declines in units of One, and softer demand and challenging market conditions across the Sonos Speakers category. These declines were partially offset by sales of Era 100, and Era 300, as well as the introduction of Ace in June 2024. The decrease in volume of products sold outpaced that of revenue due to the impact of product mix.

Previous wording

Gross margin increased 294 basis points for the six months ended March 30, 2024 compared to the six months ended April 1, 2023. The increase was primarily due to a decrease in product and material costs, reduced spot market costs due to the normalization of the supply chain, favorability from product mix with decreases in sales of lower-margin products, as well as increases in higher-margin products, partially offset by increased promotional activity.

Current wording

Gross margin increased 230 basis points for the three months ended June 29, 2024 compared to the three months ended July 1, 2023, primarily due to a decrease in inventory-related write-downs, and decreased product and material costs, partially offset by increased promotional activity, as well as the absence of tariff refunds this year compared to last year.

Previous wording

Cost of revenue decreased $31.9 million, or 18.5%, for the three months ended March 30, 2024 compared to the three months ended April 1, 2023, primarily due to a decrease in products sold, as well as a decrease in product and material costs.

Current wording

Cost of revenue decreased $85.4 million, or 11.2%, for the nine months ended June 29, 2024 compared to the nine months ended July 1, 2023, primarily due to a decrease in products sold, decreased product and material costs, as well as decreased inventory-related write-downs, partially offset by the impact of product mix.

Previous wording

Gross margin increased 107 basis points for the three months ended March 30, 2024 compared to the three months ended April 1, 2023. The increase was primarily due to a decrease in product and material costs due to normalization of our supply chain, favorability from product mix with decreases in sales of lower-margin products, as well as increases in higher-margin products, partially offset by increased promotional activity.

Current wording

Gross margin increased 280 basis points for the nine months ended June 29, 2024 compared to the nine months ended July 1, 2023. The increase was primarily due to a decrease in product and material costs, decreased inventory-related write-downs, and favorability from product mix, partially offset by increased promotional activity.

Previous wording

Research and development expenses decreased $0.5 million, or 0.6%, for the three months ended March 30, 2024 compared to the three months ended April 1, 2023. This decrease was primarily driven by lease abandonment costs of $2.7 million incurred in the prior year, partially offset by $2.5 million of higher personnel-related expenses mainly due to lower variable compensation in the prior year.

Current wording

Research and development expenses decreased $3.5 million, or 4.5%, for the three months ended June 29, 2024 compared to the three months ended July 1, 2023. This decrease was primarily driven by lower personnel-related expenses of $6.3 million and a decrease in restructuring and abandonment costs of $3.2 million, partially offset by an increase in product development costs of $2.4 million.

Previous wording

Sales and marketing expenses increased $3.5 million, or 2.4%, for the six months ended March 30, 2024 compared to the six months ended April 1, 2023. The increase was primarily driven by an increase in depreciation of $2.3 million mainly related to our product displays, as well as an increase in our advertising and marketing expenses of $1.9 million related to higher spend incurred in the first quarter of fiscal 2024, partially offset by $1.0 million of lease abandonment costs incurred in the prior year.

Current wording

Sales and marketing expenses increased $8.5 million, or 4.1%, for the nine months ended June 29, 2024 compared to the nine months ended July 1, 2023. The increase was primarily driven by an increase in our advertising and marketing expenses of $9.1 million, and an increase in depreciation of $2.7 million mainly related to our product displays, partially offset by a decrease in restructuring and abandonment costs of $5.2 million.

Previous 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.

Current wording

General and administrative expenses decreased $15.5 million, or 31.8%, for the three months ended June 29, 2024 compared to the three months ended July 1, 2023, primarily related to a $13.6 million decrease in legal fees mainly related to our IP litigation, lower personnel-related costs of $2.3 million, and a decrease in restructuring and abandonment costs of $1.6 million.

Previous wording

General and administrative expenses decreased $6.9 million, or 7.9%, for the six months ended March 30, 2024 compared to the six months ended April 1, 2023, primarily related to a $7.8 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 $2.6 million due to lower variable compensation in the prior year.

Current wording

General and administrative expenses decreased $22.4 million, or 16.4%, for the nine months ended June 29, 2024 compared to the nine months ended July 1, 2023, primarily related to a $20.4 million decrease in legal fees mainly related to our IP litigation and a decrease in restructuring and abandonment costs of $2.6 million.

Previous 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.

Current wording

Interest income for the three months ended June 29, 2024 compared to the three months ended July 1, 2023, increased due to higher yields on our marketable securities. Interest expense for the three months ended June 29, 2024 compared to the three months ended July 1, 2023, decreased primarily due to reduced expenses associated with our Revolving Credit Agreement and banking partners. Other income (expense), net for the three months ended June 29, 2024 compared to the three months ended July 1, 2023, decreased from other income of $1.4 million in July 1, 2023 to other expense of $2.5 million in June 29, 2024 due to foreign currency exchange fluctuations.

Previous wording

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

Current wording

Interest income for the nine months ended June 29, 2024 compared to the nine months ended July 1, 2023, increased due to higher yields on our cash and cash equivalents and marketable securities. Interest expense for the nine months ended June 29, 2024 compared to the nine months ended July 1, 2023, decreased primarily due to reduced expenses associated with our Revolving Credit Agreement and banking partners. Other income, net for the nine months ended June 29, 2024 compared to the nine months ended July 1, 2023, decreased due to foreign currency exchange fluctuations.

Previous 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.

Current wording

For the three months ended June 29, 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 March 30, 2024. The application of the annual effective tax rate ("AETR") method generally required by ASC 740 was not utilized to calculate the U.S. interim tax provision as 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

For the three months ended April 1, 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. For the three-months ended December 31, 2022, the U.S. was included in the AETR. As a result, the benefit from income taxes recorded in the period ended April 1, 2023 includes the change in the calculation methodology of the interim tax provision quarter-over-quarter.

Current wording

For the three months ended July 1, 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. This approach is consistent with the method used for the three months ended April 1, 2023.

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 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.

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 June 29, 2024, our principal sources of liquidity consisted of cash flows from operating activities, cash and cash equivalents of $227.1 million, including $86.4 million held by our foreign subsidiaries, marketable securities of $49.5 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 June 29, 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

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.

Current wording

Net cash provided by operating activities of $227.6 million for the nine months ended June 29, 2024, consisted of net income of $14.9 million, non-cash adjustments of $103.4 million, and a net increase in cash related to changes in operating assets and liabilities of $109.3 million. Non-cash adjustments primarily consisted of stock-based compensation expense of $65.0 million, depreciation and amortization of $35.2 million, provision for inventory obsolescence of $2.0 million, deferred income taxes of $0.8 million, and other adjustments of $3.0 million, partially offset by foreign currency transaction gains of $2.8 million. The net increase in cash from the change in operating assets and liabilities was primarily due to a decrease in inventories of $189.6 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 $10.3 million, an increase in other liabilities of $4.2 million primarily for provisions for our returns, and an increase in deferred revenue of $1.7 million. The net increase in cash from the change in operating assets and liabilities was partially offset by an increase in accounts receivable of $64.2 million, decreases in accounts payable and accrued expenses of $16.9 million, and an increase in other assets of $15.3 million due to timing of prepaid contracts.

Previous 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.

Current wording

Cash used in investing activities of $88.2 million for the nine months ended June 29, 2024, primarily consisted of the purchases of marketable securities of $68.7 million and purchases of property and equipment of $39.5 million mainly related to point-of-sale product displays and manufacturing-related tooling and test equipment to support the launch of new products, partially offset by cash provided by maturities of marketable securities of $20.0 million.

Previous 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.

Current wording

Cash used in financing activities of $133.2 million for the nine months ended June 29, 2024, primarily consisted of payments for repurchases of common stock of $128.7 million and payments for repurchases of common stock related to shares withheld for tax in connection with vesting of stock awards of $20.8 million, partially offset by proceeds from the exercise of stock options of $16.3 million.