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, 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.

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 and performance, 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 I, Item 1A of the Annual Report and in our other SEC filings. 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. 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.

Current wording

We pioneered multi-room, wireless audio products, debuting the world’s first multi-room wireless sound system in 2005. In October 2024, we introduced Arc Ultra, our new premium soundbar debuting Sound Motion TM, our revolutionary transducer technology, and Sonos Sub 4, the next generation of our iconic subwoofer with a refreshed design and internals. 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, 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.

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, including our component products, and from partner products and other revenue, including Sonos and third-party accessories and partnerships.

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 (loss). The most directly comparable financial measure calculated under U.S. GAAP for Adjusted EBITDA margin is net income (loss) 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. The most directly comparable financial measure calculated under U.S. GAAP for Adjusted EBITDA margin is net income margin.

Previous wording

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

Current wording

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

Previous 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.

Current wording

(2)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 section titled "Non-GAAP Financial Measures" below.

Previous wording

We use these non-GAAP financial measures to evaluate our operating performance and trends and make planning decisions. We believe that these non-GAAP financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses and other items that we exclude from these non-GAAP financial measures. Accordingly, we believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects, and allowing for greater transparency with respect to a key financial metric used by our management in its financial and operational decision-making.

Current wording

To supplement our condensed consolidated financial statements presented in accordance with U.S. GAAP, we use Adjusted EBITDA, Adjusted EBITDA margin, and constant currency which are non-GAAP financial measures. We use these non-GAAP financial measures to evaluate our operating performance and trends and make planning decisions. We believe that these non-GAAP financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses and other items that we exclude from these non-GAAP financial measures. Accordingly, we believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects, and allowing for greater transparency with respect to a key financial metric used by our management in its financial and operational decision-making.

Previous 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.

Current 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, 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

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.

Current wording

We 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

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.

Current wording

These non-GAAP financial measures are not based on standardized methodology prescribed by U.S. GAAP and are not necessarily comparable to similarly titled measures presented by other companies. Furthermore, other companies may not publish these or similar metrics. These metrics may also have certain limitations as they do not include the impact of certain expenses that are reflected in our condensed consolidated statements of operations and comprehensive income, including stock-based compensation, which has been and will continue to be, a significant recurring expense for our business and an important part of our compensation strategy. Because of these limitations, these non-GAAP financial measures should be considered along with other operating and financial performance measures presented in accordance with U.S. GAAP.

Previous wording

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

Current wording

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

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 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.

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, including accessories such as speaker stands and wall mounts, and architectural speakers from our Sonance partnership.

Previous 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.

Current wording

Sonos speakers revenue represented 84.8% of total revenue for the three months ended December 28, 2024 and decreased 7.1% compared to the three months ended December 30, 2023, primarily driven by expected declines in Arc and Sonos One, as well as Move, partially offset by the introduction of Arc Ultra and Ace, as well as Era 100. Sonos system products represented 10.9% of total revenue for the three months ended December 28, 2024 and decreased 28.7% compared to the three months ended December 30, 2023, due to lower sales to our installed solutions channel. Partner products and other revenue represented 4.3% of total revenue for the three months ended December 28, 2024 and decreased 7.3% compared to the three months ended December 30, 2023.

Previous 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.

Current wording

The volume of products sold decreased 12.3% for the three months ended December 28, 2024 compared to the three months ended December 30, 2023, primarily driven by expected declines in Arc and Sonos One, as well as Move, and partially offset by the introduction of Arc Ultra and Ace, as well as Era 100.

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 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.

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 of 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

Cost of revenue increased $3.9 million, or 1.9%, for the three months ended June 29, 2024 compared to the three months ended July 1, 2023, primarily due to an increase in products sold, partially offset by a decrease in product and material costs.

Current wording

Cost of revenue decreased $20.7 million, or 6.3%, for the three months ended December 28, 2024 compared to the three months ended December 30, 2023, primarily due to a decrease in products sold as well as a decrease in product and material costs, partially offset by a shift into higher cost products.

Previous 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.

Current wording

Gross margin decreased 230 basis points for the three months ended December 28, 2024 compared to the three months ended December 30, 2023, primarily due to an increase in inventory-related write-downs, unfavorable channel mix, and increased depreciation and amortization primarily related to the reclassification of our Mayht in-process research and development into finite-lived intangible assets, partially offset by decreased product and material costs.

Previous wording

Research and development. Research and development expenses consist primarily of personnel-related expenses, consulting and contractor expenses, tooling, test equipment, prototype materials, and related overhead costs. To date, software development costs have been expensed as incurred because the period between achieving technological feasibility and the release of the software has been short and development costs qualifying for capitalization have been insignificant.

Current wording

Research and development expenses consist primarily of personnel-related expenses, consulting and contractor expenses, tooling, test equipment, prototype materials, and related overhead costs. To date, software development costs have been expensed as incurred because the period between achieving technological feasibility and the release of the software has been short and development costs qualifying for capitalization have been insignificant.

Previous wording

Sales and marketing. Sales and marketing expenses consist primarily of advertising and marketing activity for our products and personnel-related expenses, as well as trade show and event costs, sponsorship costs, consulting and contractor expenses, travel costs, depreciation for product displays, as well as related maintenance and repair expenses, customer experience and technology support tool expenses, revenue related sales fees from our direct-to-consumer business, and overhead costs.

Current wording

Sales and marketing expenses consist primarily of advertising and marketing activity for our products and personnel-related expenses, as well as trade show and event costs, sponsorship costs, consulting and contractor expenses, travel costs, depreciation for product displays, as well as related maintenance and repair expenses, customer experience and technology support tool expenses, revenue related sales fees from our direct-to-consumer business, and related overhead costs.

Previous 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.

Current wording

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

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.

Current wording

General and administrative expenses decreased $14.0 million, or 35.1%, for the three months ended December 28, 2024 compared to the three months ended December 30, 2023. This decrease was primarily driven by lower personnel and facilities costs following the 2024 restructuring plan and a decrease in legal fees mainly related to our IP litigation.

Previous wording

Other income (expense), net. Other income (expense), net consists primarily of our foreign currency exchange gains and losses relating to transactions and remeasurement of asset and liability balances denominated in currencies other than the U.S. dollar. We expect our foreign currency gains and losses to continue to fluctuate in the future due to changes in foreign currency exchange rates.

Current wording

Interest income consists primarily of interest income earned on our cash, cash equivalents, and marketable securities balances. Interest expense consists primarily of interest expense associated with our debt financing arrangements and amortization of debt issuance costs. Other income, net consists primarily of our foreign currency exchange gains and losses relating to transactions and remeasurement of asset and liability balances denominated in currencies other than the U.S. dollar. We expect our foreign currency gains and losses to continue to fluctuate in the future due to changes in foreign currency exchange rates.

Previous 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.

Current wording

Interest income for the three months ended December 28, 2024 compared to the three months ended December 30, 2023, decreased due to lower cash balances. Interest expense for the three months ended December 28, 2024 compared to the three months ended December 30, 2023, increased primarily due to increased expenses associated with our Revolving Credit Agreement and banking partners. Other income (expense), net for the three months ended December 28, 2024 compared to the three months ended December 30, 2023, decreased from other income of $10.3 million for the three months ended December 30, 2023 to other expense of $6.0 million for the three months ended December 28, 2024 due to foreign currency exchange fluctuations.

Previous 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.

Current wording

For the three months ended December 28, 2024, we utilized the AETR method to calculate separate U.S. and foreign income tax provisions. Separate U.S. and non-U.S. AETRs were calculated in accordance with interim US GAAP reporting requirements since, unlike the prior year, small fluctuations in forecasted pre-tax income (loss) are not expected to have a material impact on the estimated U.S. AETR. For the three months ended December 30, 2023, we calculated our U.S. income tax provision using the discrete method as though the interim period was an annual period, since minor deviations in the projected pre-tax 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 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.

Current wording

Our operations are financed primarily through cash flows from operating activities. As of December 28, 2024, our principal sources of liquidity consisted of cash flows from operating activities, cash and cash equivalents of $280.0 million, including $143.3 million held by our foreign subsidiaries, marketable securities of $47.9 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 December 28, 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

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 June 29, 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.

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 December 28, 2024, we did not have any outstanding borrowings and had $2.4 million in undrawn letters of credit that reduce the availability under the Revolving Credit Agreement.

Previous 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.

Current wording

Net cash provided by operating activities of $156.2 million for the three months ended December 28, 2024, consisted of net income of $50.2 million, non-cash adjustments of $47.3 million, and a favorable impact of net changes in operating assets and liabilities of $58.6 million. Non-cash adjustments primarily consisted of stock-based compensation expense and depreciation and amortization. The net increase in cash from the change in operating assets and liabilities was primarily due to a decrease in inventories of $89.3 million as the result of measures taken to more efficiently manage inventory, an increase in accrued compensation of $12.4 million, and an increase in other liabilities of $9.1 million primarily for provisions for our returns. The net increase in cash from the change in operating assets and liabilities was partially offset by an increase in accounts receivable of $41.4 million.

Previous 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.

Current wording

Cash used in investing activities of $9.3 million for the three months ended December 28, 2024, primarily consisted of the purchases of marketable securities of $10.1 million and purchases of property and equipment of $13.1 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 $13.9 million.

Previous 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.

Current wording

Cash used in financing activities of $33.8 million for the three months ended December 28, 2024, primarily consisted of payments for repurchases of common stock of $27.2 million and payments for repurchases of common stock related to shares withheld for tax in connection with vesting of stock awards of $9.0 million, partially offset by proceeds from the exercise of stock options of $2.4 million.