Sonos Inc
For the period ended Jun 27, 2026. Filed Jul 29, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 27, 2026 · Filed Jul 29, 2026
SONO$16.41+0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-28; filed 2026-05-05.
0001314727-26-000061
Item 2. Management’s discussion and analysis of financial condition and results of operationsCurrent report: 10-Q
Period ended 2026-06-27; filed 2026-07-29.
0001314727-26-000086
Item 2. Management’s discussion and analysis of financial condition and results of operationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 93 previous paragraphs and 95 current paragraphs.
53 unchanged; 29 reworded; 12 added; 10 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
In fiscal 2026, we continued to optimize our organizational structure, workforce, and operational footprint. Key actions included reorganization of certain corporate functions and organizational changes driven by new leadership. Furthermore, we successfully completed the operational exit of a contract manufacturing partnership in the second quarter of fiscal 2026 (initiated in the third quarter of fiscal 2025) to improve supply chain efficiency, and optimized our real estate footprint by reducing office space. We remain focused on continually improving both our operational efficiency and effectiveness.
Current report
(2)See Note 7. Commitments and Contingencies for further information on tariff refunds.
Current report
Comparison of the three and nine months ended June 27, 2026 and June 28, 2025
Current report
Revenue
Current report
Total revenue increased $30.5 million, or 8.8%, for the three months ended June 27, 2026 compared to the three months ended June 28, 2025, due to the introduction of Era 100 SL and Play, partially offset by declines in Arc Ultra.
Current report
The volume of products sold increased 17.4% for the three months ended June 27, 2026 compared to the three months ended June 28, 2025, outpacing revenue growth due to a shift in product mix toward lower-priced offerings, including Era 100 SL and Play.
Current report
The volume of products sold increased 4.1% for the nine months ended June 27, 2026 compared to the nine months ended June 28, 2025, consistent with the increase in revenue.
Current report
Cost of revenue decreased $9.1 million, or 4.7%, for the three months ended June 27, 2026 compared to the three months ended June 28, 2025, primarily due to tariff refunds. Excluding the impact of tariff refunds, cost of revenue increased primarily due to higher memory costs, tariff expenses, and increased products sold, partially offset by a decrease in inventory-related write-downs.
Current report
Sales and marketing expenses, excluding restructuring and other charges, decreased slightly by $2.0 million, or 3.2%, for the three months ended June 27, 2026, compared to the three months ended June 28, 2025.
Current report
Provision for Income Taxes
Current report
Comparison of the three and nine months ended June 27, 2026 and June 28, 2025
Current report
Provision for income taxes increased $1.9 million, or 73.3%, for the three months ended June 27, 2026 compared to the three months ended June 28, 2025. Provision for income taxes increased $3.4 million, or 47.1%, for the nine months ended June 27, 2026 compared to the nine months ended June 28, 2025. These increases were primarily driven by shifts in our forecasted geographic earnings mix, which required us to apply a single consolidated estimated annual effective tax rate ("AETR") in the current year, whereas the prior year required separate U.S. and non-U.S. AETRs. These increases were partially offset by the favorable impact of the OBBBA, including the repeal of the requirement to capitalize research and experimental expenditures under Section 174 of the U.S. Internal Revenue Code, which reduced our current tax expense with no impact to deferred tax expense as a result of the full valuation allowance maintained against our net U.S. deferred tax assets.
Removed paragraphs (10)
Previous report
Our cost transformation initiative, which began in fiscal 2024, has delivered meaningful results. The organizational restructuring we completed—including workforce reductions of 6% in August 2024 and 12% in February 2025—has created a more streamlined, agile organization. We remain focused on transformation efforts to continually improve both our operational efficiency and effectiveness. Additionally, during the third quarter of fiscal 2025, we began the process of exiting a partnership with one of our contract manufacturers to consolidate and improve supply chain efficiency. We completed the operational exit with minimal disruption to our business during the second quarter of fiscal 2026. We continue to maintain diversified contract manufacturing partnerships.
Previous report
The volume of products sold increased 2.6 % for the three months ended March 28, 2026 compared to the three months ended March 29, 2025. Revenue growth exceeded volume growth primarily due to favorable foreign exchange rates, which benefited revenue but did not affect volume, and the impact of pricing actions.
Previous report
Total revenue increased $16.6 million, or 2.0%, for the six months ended March 28, 2026 compared to the six months ended March 29, 2025, primarily due to favorability from foreign exchange rates and continued strength in Era 100, partially offset by softer demand due to market conditions.
Previous report
The volume of products sold decreased 1.4% for the six months ended March 28, 2026 compared to the six months ended March 29, 2025. Revenue grew while volume declined, primarily due to favorable foreign exchange rates, which benefited revenue but did not impact volume, and the impact of pricing actions.
Previous report
Cost of revenue decreased $6.5 million, or 1.4%, for the six months ended March 28, 2026 compared to the six months ended March 29, 2025, primarily due to a decrease in product and material costs and fewer inventory-related write-downs, partially offset by increased tariff expenses and higher memory costs.
Previous report
Sales and marketing expenses, excluding restructuring and other charges, decreased $0.5 million, or 0.8 %, for the three months ended March 28, 2026, compared to the three months ended March 29, 2025. This decrease was primarily driven by ongoing savings efforts associated with cost transformation initiatives, offset by costs associated with announced product launches.
Previous report
Provision for (Benefit from) Income Taxes
Previous report
We recognized an income tax benefit of $2.2 million and an income tax provision of $11.0 million for the three months ended March 28, 2026 and March 29, 2025, respectively. For the three months ended March 28, 2026, the repeal of the requirement to capitalize research and experimental expenditures under the OBBBA resulted in a reduction in the Company’s U.S. current tax expense with no impact to deferred tax expense as a result of the full valuation allowance maintained against the Company’s net U.S. deferred tax assets. The tax provision for the three months ended March 29, 2025 primarily resulted from the application of a negative annual effective tax rate to year-to-date U.S. pre-tax loss for the quarter, which was driven in part by the capitalization of research and experimental expenditures under Section 174 and the valuation allowance maintained against U.S. deferred tax assets. We recognized tax provisions of $6.0 million and $4.6 million for the six months ended March 28, 2026 and March 29, 2025, respectively. This increase was driven by a change in the prescribed U.S. GAAP method to calculate the interim income tax benefit for the period ending March 28, 2026 versus the method used to calculate the income tax provision for the period ending March 29, 2025.
Previous report
Debt Obligations
Previous report
On October 13, 2021, we entered into the Revolving Credit Agreement which was amended in October 2025 with JPMorgan Chase Bank, N.A., KeyBank National Association and Goldman Sachs Bank USA. Amendment No. 2 to the Revolving Credit Agreement provides for (i) a five-year senior secured revolving credit facility in the amount of up to $80.0 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 March 28, 2026, 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.
Reworded paragraphs (29)
Previous wording
We are building on the strong foundation established during our transformational year in fiscal 2025. With Tom Conrad now in place as our Chief Executive Officer we are well-positioned to continue building upon the improvements we have made to our software products and operational efficiency. Under Mr. Conrad's direction, we have restored our software with reliability now exceeding historical levels, reorganized our operations to improve our efficiency and effectiveness and recommitted to delivering the kind of premium experience our customers expect. We recommitted to new product introductions, including the announcement of Amp Multi in January 2026, followed by Sonos Play™ and Sonos Era 100™ SL in March 2026. With every new product, software feature and integration, the Sonos platform becomes more powerful, provides greater value to our customers, and further strengthens as the differentiated system for connected home audio. Additionally, we are refining our go-to-market strategy around a full-funnel brand architecture designed to align our long-term brand narrative with a consistent messaging system.
Current wording
Entering the second half of fiscal 2026, we continue to leverage the strong foundation established during our transformational prior fiscal year. With our Chief Executive Officer, Tom Conrad's strategic direction in motion, we have restored our software with reliability now exceeding historical levels, reorganized our operations to improve our efficiency and effectiveness and recommitted to delivering the kind of premium experience our customers expect. We recommitted to new product introductions, including the announcement of Amp Multi in January 2026, followed by Sonos Play™ and Sonos Era 100™ SL in March 2026. With every new product, software feature and integration, the Sonos platform becomes more powerful, provides greater value to our customers, and further strengthens our position as the differentiated system for connected home audio. Additionally, we are evolving our marketing strategy to build a strong system narrative aligned with our long-term brand differentiation.
Previous wording
Our business has been, and may continue to be, adversely impacted by the potential expansion of tariffs on goods imported into the U.S., as well as any retaliatory tariffs or policies enacted in other countries or any "trade wars." In addition, we have been and may continue to be affected by the increases in demand for memory chips and other components caused by the build out of new AI technologies and data centers. We also face global macroeconomic challenges such as inflation, ongoing geopolitical conflicts, uncertainty in the financial markets, volatility in exchange rates, and low or negative growth in certain regions.
Current wording
Our business has been, and may continue to be, adversely impacted by the potential expansion of tariffs on goods imported into the U.S., as well as any retaliatory tariffs or policies enacted in other countries or any "trade wars." In addition, we have been and expect to continue to be affected by the increases in demand for memory chips and other components caused by the build out of new AI technologies and data centers. We also face global macroeconomic challenges such as inflation, ongoing geopolitical conflicts, uncertainty in the financial markets, volatility in exchange rates, and low or negative growth in certain regions.
Previous wording
(2)Restructuring and other charges for the three and six months ended March 28, 2026, include costs associated with non-recurring organizational changes driven by new leadership, charges related to the partial abandonment of office space in support of operational efficiencies, and costs associated with exiting a partnership with one of our contract manufacturers to consolidate and improve supply chain efficiency.
Current wording
(3)Restructuring and other charges for the three and nine months ended June 27, 2026, include employee-related costs resulting from a reorganization of certain corporate functions and organizational changes driven by new leadership. Additionally, the charges include costs related to exiting a contract manufacturing partnership to consolidate and improve supply chain efficiency and exit costs associated with the partial abandonment of office space.
Previous wording
(3)Restructuring and other charges for the three and six months ended March 29, 2025 primarily reflect costs associated with our cost transformation initiative including the 2025 restructuring plan and rationalization of our product roadmap, as well as non-recurring CEO transition costs related to modifications to equity awards.
Current wording
(4)Restructuring and other charges for the three and nine months ended June 28, 2025 reflect costs associated fiscal 2025 actions including a reduction-in-force announced in February 2025, rationalization of our product roadmap, as well as non-recurring CEO transition costs related to modifications to equity awards.
Previous wording
Sonos speakers revenue represented 74.6% of total revenue for the three months ended March 28, 2026 and increased 8.0 % compared to the three months ended March 29, 2025, primarily driven by Era 100 and Beam. Sonos system products represented 18.6% of total revenue for the three months ended March 28, 2026 and increased 3.7% compared to the three months ended March 29, 2025. Partner products and other revenue represented 6.8% of total revenue for the three months ended March 28, 2026 and increased 29.9% compared to the three months ended March 29, 2025.
Current wording
Sonos speakers revenue represented 76.0% of total revenue for the three months ended June 27, 2026, and increased 12.5% compared to the three months ended June 28, 2025, driven by Era 100 SL, Play, and Beam, partially offset by the impact of the introduction of Arc Ultra in the prior year and by expected declines in Era 100. Sonos system products represented 18.5% of total revenue for the three months ended June 27, 2026, and decreased 5.4% compared to the three months ended June 28, 2025. Partner products and other revenue represented 5.5% of total revenue for the three months ended June 27, 2026, and increased 15.4% compared to the three months ended June 28, 2025.
Previous wording
Total revenue increased $21.8 million, or 8.4 %, for the three months ended March 28, 2026 compared to the three months ended March 29, 2025, due to favorability from foreign exchange rates and continued strength in Era 100.
Current wording
Total revenue increased $47.1 million, or 4.1%, for the nine months ended June 27, 2026 compared to the nine months ended June 28, 2025, primarily due to the introduction of Era 100 SL and favorability from foreign exchange rates, partially offset by the phase-out of Arc sales.
Previous wording
Sonos speakers revenue represented 80.9% of total revenue for the six months ended March 28, 2026 and increased 1.1% compared to the six months ended March 29, 2025, primarily driven by Arc Ultra and Era 100, partially offset by declines in Arc and Sub. Sonos system products represented 14.2% of total revenue for the six months ended March 28, 2026 and increased 6.0% compared to the six months ended March 29, 2025, due to higher sales to our installed solutions channel. Partner products and other revenue represented 4.9% of total revenue for the six months ended March 28, 2026 and increased 6.1% compared to the six months ended March 29, 2025.
Current wording
Sonos speakers revenue represented 79.4% of total revenue for the nine months ended June 27, 2026 and increased 4.3% compared to the nine months ended June 28, 2025, primarily driven by Era 100 SL, Arc Ultra, and Play, partially offset by the phase-out of Arc sales. Sonos system products represented 15.5% of total revenue for the nine months ended June 27, 2026 and increased 1.5% compared to the nine months ended June 28, 2025. Partner products and other revenue represented 5.1% of total revenue for the nine months ended June 27, 2026, and increased 9.1% compared to the nine months ended June 28, 2025.
Previous wording
The following table presents the change in revenue for the three and six months ended March 28, 2026 compared with the three and six months ended March 29, 2025:
Current wording
The following table presents the change in revenue for the three and nine months ended June 27, 2026 compared with the three and nine months ended June 28, 2025:
Previous wording
Our gross margin fluctuates 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 savings, fluctuations in our product and material and logistics markets, product pricing strategies and 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 fluctuates 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 costs, fluctuations in our logistics markets, product pricing strategies and promotional activity, the foreign currency in which our products are sold, and tariffs and duty costs implemented by governmental authorities.
Previous wording
Gross margin increased 190 basis points for the six months ended March 28, 2026 compared to the six months ended March 29, 2025, primarily due to a decrease in product and material costs, foreign exchange rate favorability, a decrease in inventory-related write-downs, and the net impact of pricing changes, partially offset by tariff expenses, higher memory costs, and unfavorable product mix.
Current wording
Gross margin increased 700 basis points for the three months ended June 27, 2026 compared to the three months ended June 28, 2025, primarily due to tariff refunds. Excluding the impact of tariff refunds, the increase in gross margin was driven by the impact of price changes, and a decrease in inventory-related write-downs, partially offset by higher memory costs, and unfavorable product mix shift.
Previous wording
Cost of revenue increased $10.7 million, or 7.3 %, for the three months ended March 28, 2026 compared to the three months ended March 29, 2025, primarily due to tariff expenses and higher memory costs, partially offset by a decrease in product and material costs.
Current wording
Cost of revenue decreased $15.6 million, or 2.4%, for the nine months ended June 27, 2026 compared to the nine months ended June 28, 2025, primarily due to tariff refunds. Excluding the impact of tariff refunds, cost of revenue increased slightly primarily due to increased tariff expenses and higher memory costs, partially offset by product and material cost savings and by a decrease in inventory-related write-downs.
Previous wording
Gross margin increased 60 basis points for the three months ended March 28, 2026 compared to the three months ended March 29, 2025, primarily due to foreign exchange rate favorability, the net impact of pricing changes, and a decrease in product and material costs, partially offset by tariff expenses and higher memory costs.
Current wording
Gross margin increased 350 basis points for the nine months ended June 27, 2026 compared to the nine months ended June 28, 2025, which was partially related to the benefit of tariff refunds. Excluding the impact of tariff refunds, the increase in gross margin was driven by product and material cost savings, and the impact of pricing changes, partially offset by increased tariff expenses, and higher memory costs.
Previous wording
(1)Restructuring and other charges for the three and six months ended March 28, 2026, include costs associated with non-recurring organizational changes driven by new leadership, charges related to the partial abandonment of office space in support of operational efficiencies, and costs associated with exiting a partnership with one of our contract manufacturers to consolidate and improve supply chain efficiency.
Current wording
(1)Restructuring and other charges for the three and nine months ended June 27, 2026, include employee-related costs resulting from a reorganization of certain corporate functions and organizational changes driven by new leadership. Additionally, the charges include costs related to exiting a contract manufacturing partnership to consolidate and improve supply chain efficiency and exit costs associated with the partial abandonment of office space.
Previous wording
(2)Restructuring and other charges for the three and six months ended March 29, 2025 primarily reflect costs associated with our cost transformation initiative including the 2025 restructuring plan and rationalization of our product roadmap, as well as non-recurring CEO transition costs related to modifications to equity awards.
Current wording
(2)Restructuring and other charges for the three and nine months ended June 28, 2025 reflect costs associated with fiscal 2025 actions including a reduction-in-force announced in February 2025, rationalization of our product roadmap, as well as non-recurring CEO transition costs related to modifications to equity awards.
Previous wording
Research and development expenses, excluding restructuring and other charges, decreased $1.4 million, or 2.1 %, for the three months ended March 28, 2026, compared to the three months ended March 29, 2025. This decrease was primarily driven by lower stock-based compensation related to timing of grants as well as favorable comparison to one time retention grants for key personnel in the prior year.
Current wording
Research and development expenses, excluding restructuring and other charges, increased by $3.3 million, or 5.4%, for the three months ended June 27, 2026, compared to the three months ended June 28, 2025. This increase was driven by higher personnel costs and investments in our product roadmap, partially offset by lower stock-based compensation related to timing of grants as well as favorable comparison to one-time retention grants for key personnel in the prior year.
Previous wording
Research and development expenses, excluding restructuring and other charges, decreased $22.5 million, or 15.5 %, for the six months ended March 28, 2026, compared to the six months ended March 29, 2025. This decrease was primarily driven by lower headcount and our reorganization efforts.
Current wording
Research and development expenses, excluding restructuring and other charges, decreased $19.2 million, or 9.3%, for the nine months ended June 27, 2026, compared to the nine months ended June 28, 2025. This decrease was primarily driven by lower headcount and our prior year reorganization efforts, partially offset by investments in our product roadmap.
Previous wording
Sales and marketing expenses consist primarily of advertising and marketing activity for our products and personnel-related expenses, maintenance and repair expenses for our product displays, as well as depreciation, customer experience expenses, revenue related sales fees from our direct-to-consumer and installer solution sales channels, and related overhead costs.
Current wording
Sales and marketing expenses consist primarily of advertising and marketing activity for our products and personnel-related expenses, expenses for our product displays, as well as depreciation, customer experience expenses, revenue related sales fees from our direct-to-consumer and installer solution sales channels, and related overhead costs.
Previous wording
Sales and marketing expenses, excluding restructuring and other charges, decreased $21.9 million, or 14.8 %, for the six months ended March 28, 2026, compared to the six months ended March 29, 2025. This decrease was primarily driven by ongoing savings as a result of our cost transformation journey, lower marketing costs due to the timing of our launch of Arc Ultra in October 2024, and lower personnel-related costs due to lower headcount.
Current wording
Sales and marketing expenses, excluding restructuring and other charges, decreased $23.8 million, or 11.4 %, for the nine months ended June 27, 2026, compared to the nine months ended June 28, 2025. This decrease was primarily driven by management's reprioritization of marketing spend, timing of product launches - including the launch of Arc Ultra in October 2024, and lower personnel-related costs due to lower headcount.
Previous wording
General and administrative expenses, excluding restructuring and other charges, increased $0.6 million, or 2.2 %, for the three months ended March 28, 2026, compared to the three months ended March 29, 2025. This increase was primarily driven by legal fees mainly related to our IP litigation, offset by lower stock-based compensation mainly due to timing of grants.
Current wording
General and administrative expenses, excluding restructuring and other charges, increased by $2.0 million, or 7.2%, for the three months ended June 27, 2026, compared to the three months ended June 28, 2025. This increase was primarily driven by legal fees mainly related to our IP litigation.
Previous wording
General and administrative expenses, excluding restructuring and other charges, increased $2.8 million, or 5.1%, for the six months ended March 28, 2026, compared to the six months ended March 29, 2025. This increase was primarily driven by an increase in legal fees mainly related to our IP litigation, partially offset by lower personnel-related costs due to lower headcount.
Current wording
General and administrative expenses, excluding restructuring and other charges, increased $4.8 million, or 5.8%, for the nine months ended June 27, 2026, compared to the nine months ended June 28, 2025. This increase was primarily driven by an increase in legal fees mainly related to our IP litigation, partially offset by lower personnel-related costs due to lower headcount.
Previous 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 (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 as well as interest earned on tariff refunds. Interest expense consists primarily of interest expense associated with our debt financing arrangements and amortization of debt issuance costs. 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.
Previous wording
Interest income and interest expense for the three months ended March 28, 2026 compared to the three months ended March 29, 2025, remained relatively consistent. Other income (expense), net for the three months ended March 28, 2026 compared to the three months ended March 29, 2025, increased from other income of $0.2 million for the three months ended March 29, 2025 to other expense of $1.4 million for the three months ended March 28, 2026 due to foreign currency exchange fluctuations.
Current wording
Interest income for the three months ended June 27, 2026 compared to the three months ended June 28, 2025, increased primarily due to interest earned on tariff refunds. Interest expense for the three months ended June 27, 2026 compared to the three months ended June 28, 2025, remained relatively consistent. Other income for the three months ended June 27, 2026 compared to the three months ended June 28, 2025, increased due to a gain on sale of excess components, partially offset by foreign currency exchange fluctuations.
Previous wording
Interest income for the six months ended March 28, 2026 compared to the six months ended March 29, 2025, decreased due to higher international cash balances with lower yields. Interest expense for the six months ended March 28, 2026 compared to the six months ended March 29, 2025, remained relatively consistent. Other income (expense), net for the six months ended March 28, 2026 compared to the six months ended March 29, 2025, decreased due to foreign currency exchange fluctuations.
Current wording
Interest income and interest expense for the nine months ended June 27, 2026 compared to the nine months ended June 28, 2025, remained relatively consistent. Other expense for the nine months ended June 27, 2026 compared to the nine months ended June 28, 2025, decreased due to foreign currency exchange fluctuations partially offset by a gain on sale of excess components.
Previous wording
Our operations are financed primarily through cash flows from operating activities. As of March 28, 2026, our principal sources of liquidity consisted of cash flows from operating activities, cash and cash equivalents of $200.2 million, including $111.2 million held by our foreign subsidiaries, marketable securities of $48.9 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 March 28, 2026, as they are intended to fund needs outside of the United States. In the event funds from foreign operations are repatriated to the United States, we may incur income or withholding taxes associated with such distributions. In addition, certain of our non-U.S. subsidiaries have the ability to repatriate funds to the United States in a tax-free manner.
Current wording
Our operations are financed primarily through cash flows from operating activities. As of June 27, 2026, our principal sources of liquidity consisted of cash flows from operating activities, cash and cash equivalents of $206.9 million, including $102.1 million held by our foreign subsidiaries, marketable securities of $54.1 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 27, 2026, as they are intended to fund needs outside of the United States. In the event funds from foreign operations are repatriated to the United States, we may incur income or withholding taxes associated with such distributions. In addition, certain of our non-U.S. subsidiaries have the ability to repatriate funds to the United States in a tax-free manner.
Previous wording
As of March 28, 2026, our open purchase orders to contract manufacturers for finished goods were approximately $92 million, the majority of which are expected to be paid over the next six months. As of March 28, 2026, our expected commitments to suppliers for components were in the range of $198 million to $222 million, the majority of which is expected to be paid and/or utilized by our contract manufacturers in building finished goods within the next two years. The expected commitments are subject to change as a result of fluctuations in the demand forecast, as well as ongoing negotiations with contract manufacturers and suppliers. These commitments are related to components that can be specific to Sonos products and comprised 1) indirect obligations to third-party manufacturers and suppliers, 2) the inventory owned by contract manufacturers procured to manufacture Sonos products, and 3) purchase commitments made by contract manufacturers to their upstream suppliers.
Current wording
As of June 27, 2026, our open purchase orders to contract manufacturers for finished goods were approximately $148 million, the majority of which are expected to be paid over the next six months. As of June 27, 2026, our expected commitments to suppliers for components were in the range of $264 million to $296 million, the majority of which is expected to be paid and/or utilized by our contract manufacturers in building finished goods within the next two years. The expected commitments are subject to change as a result of fluctuations in the demand forecast, as well as ongoing negotiations with contract manufacturers and suppliers. These commitments are related to components that can be specific to Sonos products and comprised 1) indirect obligations to third-party manufacturers and suppliers, 2) the inventory owned by contract manufacturers procured to manufacture Sonos products, and 3) purchase commitments made by contract manufacturers to their upstream suppliers.
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 the Revolving Credit Agreement, which was amended in October 2025 to provide for aggregate commitments of up to $80.0 million with a maturity date in October 2030. 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.
Current wording
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
Net cash provided by operating activities of $97.9 million for the six months ended March 28, 2026, consisted of net income of $64.9 million, non-cash adjustments of $62.8 million, and an unfavorable impact of net changes in operating assets and liabilities of $29.8 million. Non-cash adjustments primarily consisted of stock-based compensation expense and depreciation and amortization. The net decrease in cash from the change in operating assets and liabilities was primarily due to a decrease in accounts payable and accrued expenses of $33.3 million driven by payments for inventory purchases, and an increase in accounts receivable of $31.7 million driven by the timing of new product launches. The net decrease in cash from the change in operating assets and liabilities was partially offset by an increase in deferred revenue of $17.0 million driven by product general availability deferrals, and a decrease in inventories of $9.8 million due to seasonality.
Current wording
Net cash provided by operating activities of $144.2 million for the nine months ended June 27, 2026, consisted of net income of $94.8 million, which included the benefit of $23.2 million in IEEPA tariff refunds, non-cash adjustments of $93.6 million, and an unfavorable impact of net changes in operating assets and liabilities of $44.2 million. Non-cash adjustments primarily consisted of stock- based compensation expense of $46.4 million. The net decrease in cash from the change in operating assets and liabilities was primarily due to an increase in accounts receivable of $53.6 million due to sales growth, and an increase in other assets of $15.9 million driven by a cash outlay related to components. The net decrease in cash from the change in operating assets and liabilities was partially offset by a decrease in inventories of $11.3 million due to seasonality partially offset by the impact of higher memory costs, an increase in accrued compensation of $10.3 million, and an increase in accounts payable and accrued expenses of $6.0 million.
Previous wording
Cash used in investing activities of $6.8 million for the six months ended March 28, 2026, primarily consisted of the purchases of marketable securities of $25.2 million and purchases of property and equipment of $10.7 million mainly related to manufacturing-related tooling and test equipment to support the launch of new products, partially offset by cash provided by maturities of marketable securities of $29.1 million.
Current wording
Cash used in investing activities of $18.0 million for the nine months ended June 27, 2026, primarily consisted of the purchases of marketable securities of $44.6 million and purchases of property and equipment of $16.7 million mainly related to manufacturing-related tooling and test equipment to support the launch of new products, partially offset by cash provided from the maturity of marketable securities of $43.3 million.
Previous wording
Cash used in financing activities of $66.7 million for the six months ended March 28, 2026, primarily consisted of payments for repurchases of common stock of $65.1 million, and payments for repurchases of common stock related to shares withheld for tax in connection with vesting of stock awards of $15.9 million, partially offset by proceeds from the exercise of stock options of $15.1 million.
Current wording
Cash used in financing activities of $93.4 million for the nine months ended June 27, 2026, primarily consisted of payments for repurchases of common stock of $95.3 million, and payments for repurchases of common stock related to shares withheld for tax in connection with vesting of stock awards of $20.4 million, partially offset by proceeds from the exercise of stock options of $23.1 million.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
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 was amended in October 2025 to provide for aggregate commitments of up to $80.0 million with a maturity date in October 2030. Our obligations under the Revolving Credit Agreement are secured by substantially all of our assets. The Revolving Credit Agreement contains customary representations and warranties, customary affirmative and negative covenants, a financial covenant that is tested quarterly and requires us to maintain a certain consolidated leverage ratio, and customary events of default. As of June 27, 2026, we were in compliance with all financial covenants under the Revolving Credit Agreement. Refer to Note 6. Debt for further information.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Our obligations under the Revolving Credit Agreement are secured by substantially all of our assets. The Revolving Credit Agreement contains customary representations and warranties, customary affirmative and negative covenants, a financial covenant that is tested quarterly and requires us to maintain a certain consolidated leverage ratio, and customary events of default. As of March 28, 2026, we were in compliance with all financial covenants under the Revolving Credit Agreement.