#1Investor Event March 9, 2021 SONOS#2Forward Looking Statements This presentation contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding our outlook, including short-term and long-term expected revenue, gross margin and adjusted EBITDA growth, our long-term focus, financial, growth and business strategies and opportunities, growth metrics and targets, our business model, profitability and gross margins, new products, services and partnerships, our intellectual property, our direct-to-consumer efforts, our market share and marketing efforts, our geographic expansion, expectations about our potential and existing markets and customers, and other factors affecting variability in our financial results. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors, including, but not limited to, the duration and impact of the COVID-19 pandemic and related mitigation efforts on our industry and supply chain; changes in general economic or market conditions that could affect consumer income and overall consumer spending; our ability to successfully introduce new products and services and maintain or expand the success of our existing products; the success of our efforts to expand our direct-to-consumer channel; the success of our financial, growth and business strategies; our ability to meet and accurately forecast product demand and manage any product availability delays; our ability to protect our intellectual property; and the other risk factors set forth under the caption "Risk Factors" in our Annual Report on Form 10-Q for the quarter ended January 2, 2021 and our other filings filed with the Securities and Exchange Commission (the "SEC"), copies of which are available free of charge at the SEC's website at www.sec.gov or upon request from our investor relations department. All forward-looking statements herein reflect our opinions only as of the date of this presentation, and we undertake no obligation, and expressly disclaim any obligation, to update forward-looking statements herein in light of new information or future events, except to the extent required by law. Trademarks This presentation may include trademarks, service marks, trade names and copyrights of other companies, which are the property of their respective owners. Solely for convenience, some of the trademarks, service marks, trade names and copyrights referred to in this presentation may be listed without the TM, SM, (C) or (R) symbols, but Sonos, Inc. will assert to the fullest extent under applicable law, the right of the applicable owners, if any, to these trademarks, service marks, trade names and copyrights. Non-GAAP Measures Additional information relating to certain of our financial measures contained herein, including non-GAAP financial measures, is available in the appendix to this presentation.#3Patrick Spence Chief Executive Officer SONOS#4Our Purpose Inspire the world to listen better#5Our Ambition Be the world's leading sound experience company#6Our Ambition Build an adaptable, admired, and enduring company where people can do their best work and everyone feels welcome and included#7"Software Eats Audio" 32M Products Registered Note: Products registered and homes as of the end of FY2020, listening hours in Q1FY21 11M Homes 3B Listening Hours#8Trends Fueling Our Growth #1 The Golden Age of Audio Spotify pandora ini deezer amazon music YouTube Music TIDAL Yandex Music *Music audible Pocket Casts Calm Clubhouse #2 Homes Becoming Movie Theaters 17 #3 The Great Reshuffling NAJBY#9Our Opportunity: Homes PLUS Geographic Expansion 349M Households in Core Markets¹ 116M Affluent ($75k+²) Households ~9% Current Penetration of Target $75K+ Households in Core Markets² 11M Sonos FY20 Households Source: Euromonitor 1. Core Markets include the United States, Canada, Australia, United Kingdom, Germany, Netherlands, Sweden, Denmark, France, Switzerland, Norway, Belgium, Italy, Austria, Spain, Ireland, Finland and Poland 2. Represents disposable income as defined by the OECD#10Our Opportunity: Revenue PLUS Audio content, services & business $89B Global Audio $25B Global Home Audio $18B Premium Global Home Audio $1.3B Sonos FY20 Revenue Source: Futuresource CY2020, Premium defined as $100+ wireless speakers, $200+ soundbars, $300+ Hi-Fi systems, $250+ in-wall/in-ceiling speakers, $250+ bookshelf speakers (pairs), and all AV receivers, Floor-standing speakers, home theater speakers and home theater in a box products and Hi-Fi separates ~7% Current Penetration of Premium Home Audio Market#11Our Experience Connected Easy Joyful Signature Curated Premium#12Our Model We are continuing to become more efficient in reaching new customers $250 $150 $50 FY16 Household Acquisition Cost FY17 FY18 FY19 FY20 ... while existing customers continue to expand their Sonos system 3.5 2.5 1.5 Year 1 Avg. Products Registered Year 3 Year 2 Years Since First Registration Year 4 Notes: Household acquisition cost is calculated by dividing our sales and marketing expenses by the number of net new households added during the fiscal year. FY20 excludes restructuring costs. Avg. Products Registered represents the weighted avg. new registrations per owner (the best proxy for households) for owners who joined Sonos FY13 and later. Fiscal year cohorts are only included when they have had the full year of data available. Year 5#13Lifetime Value & Household Acquisition Cost Today: 2.9 Products per Household $270 LTV/ HAC: ~2X Potential as customers mature & we deliver on our roadmap: 4-6 Products per Household ~$400 to $600 Implied LTV / HAC: ~3X to 4X#14Our Aspiration 100M+ Customers Using Our Products and Services#15Our Strategic Initiatives Expand our Brand Expand our Offerings Drive Operational Excellence#16Pete Pedersen VP, Marketing SONOS#17Meet the Culture Seeker Content Omnivores They are passionate about music, movies, podcasts, and other forms of entertainment. Value Quality They are willing to pay for better experiences and well-designed products that appeal to their evolved aesthetic tastes. Into Tech But Not Techies They expect a superior experience that is seamless, frictionless, and fun. Influencers & Tastemakers They are trusted gatekeepers who define trends and shape attitudes, frequently sharing their experiences (good and bad) with their social networks.#18Meet the Culture Seeker Mean Age: 38 Discretionary Income: $75K 96% have a college education 71% own a home 70% are married 45% live in urban areas 48% have children SuperDesign chAgape MARC CHAGALL NAV#19Our owners are passionate about Sonos @pauvivas Berkeley, CA er @nmbr4teen The Netherlands @thehousethatjenbuilt Liverpool, UK @thehousethatjenbuilt_ Liverpool, UK#20They buy more Sonos Existing 100% 75% 50% 25% 0% 38% Registrations New Owner Registrations 62% FY17 37% 63% FY18 37% 63% FY 19 41% 59% FY20 SONOS Jennifer FC @jenzfc. Feb 8 I'm a @Sonos junkie. I have so many, and I want more. H EL P! Sonos 1 @Sonos Feb 9 17 captgadget I've had my Arc, Gen 3 sub and 2 SL ones for surround for about 6 weeks. I've had a lot of sound systems in my lifetime but this by far the best I've ever had. Absolutely kicks butt! 4d 3 likes Reply ♡ 1 Jennifer FC @jenzfc Feb 9 Great. My love for @Sonos is now exposed. So vulnerable. 17 27 ↑ adhd benefit The Sonos Move is a great product. I have every Sonos product made. Quality. 1w 4 likes Reply 2 ↑ SAIA @IAMSAIA 2h Replying to @iamctodd and @Sonos Music has gotten me through this year; Sonos speakers have become the fountain of life. chdprtr 20 SONOS and going strong! 3d 1 like Reply ...#21And tell their friends about Sonos WOM as Source of Awareness Trend Total Population Audience 40% 30% 20% 10% 0% January 2015 WOM= Word of Mouth) January January January January 2016 2017 2018 2019 January 2020#22The Sonos Experience N#23Now we're earning our place in culture < 9:12 Sonos Presents > Sonos Radio SONOS SOUND SYSTEM Sound System Presented by Sonos Holiday Music > Love Stinks Radio Love Stinks Heartbreaks and Kiss-offs Trending Now > St Say It Loud Say It Loud Curated by Black@ Sonos Love Rules ♫ allı Radio: Love Rules True Love and Romance Office One Object of Sound - Oh Say Can You Se.. SONOS Q || HYPEBEAST LATEST SECTIONS Introducing Sonos Radio HD VIDEOS BRANDS STORE Sonos Radio HD Offers Exclusive Content Curated by Music Legends Like Dolly Parton Every station is hand-crafted by top DJs, beloved artists and other music experts - no algorithms. NEWS Living Room-2 APPS TECH SONOS Sonos launches a paid, lossless-quality version of its radio service Sonos Padio HDI THE VERGE TECH- REVIEWS SCIENCE CREATORS - ENTERTAINMENT - VIDEO FEATURES MORE Sonos Radio is already the fourth-most-listened-to service on the platform By Chris Welch | @chriswelch | Nov 12, 2020, 9:00am EST = Pitchfork NEWS REVIEWS BEST NEW MUSIC FEATURES THE PITCH VIDEO PODCAST STAFF PICKS By Allison Hussey April 21, 2020 Thom Yorke Curates Station for Sonos Radio Launch Yorke hopes his "ever-rolling compilation" will "stop the walls closing in quite so quick" during isolation FOLLOW CEL#24Innovative brand partnerships to reach new audiences Disney & Sonos: The perfect union of premium sound and premium content Triggering major brand buzz through association with the cult-hit The Mandalorian Enriched by an integrated global brand campaign, including a Sonos Radio station curated by The Mandalorian's Grammy-winning composer Ludwig Göransson Underpinned by Disney+ On Us offer exclusive to sonos.com and tied to the purchase of Arc or Beam in select markets#25The Results 12% uplift in web traffic 27% offer code redemption 735m paid media impressions globally Above benchmark engagement and sentiment across email, blog and owned social platforms (Instagram and Twitter) 118 editorial stories across 11 countries 130M+ earned impressions DISNEY + NATIONAL DISNEY + PIXAR + MARVEL ++ CETAPHI#26And pushing beyond tech into lifestyle We are working with The North Face to create an integrated marketing partnership that reinforces the spirit of exploration and brings authenticity to Sonos' place beyond the home. We are also leveraging our expanded product portfolio to broaden our reach beyond traditional tech outlets and into more specialty retailers popular with Culture Seekers. ONO. HIGH PROTEIN THE NORTH FACE#27Our network of influencers adds depth and authenticity 56 michaeldansk Sunday morning spend listening to podcasts and drinking coffee - only thing missing now is a warm 9 v Itoftegaard Pant 9 v 1 gilla-markering Svara -Visa svar (1) olvh Man that blue mug 9v 1 gilla-markering Svara Visa svar (1) lumikello Loveley Photo! Gillas av ijzerstrą och 581 andra DEN 13 DECEMBER 2020 Ligg till kommentar.. juliesmatblogg Följer Betalt samarbete med sonos Tayen, Oslo, Norway juliesmatblogg Dagsfest for to Vi har ommøblert leiligheten og gjort om det store soverommet til en musikkstue. Kunne ikke vært mer fornøyd! Har fått opp en Pro-Ject x @sonos platespiller i valnøtt som står på valnøtt-benken i hjørnet og skinner. Det var superenkelt å koble den direkte til Sonos Five. På min dagsfest serverer jeg ost og kjeks med honning og klementiner, spekemat, donuts, pikekyss og kombucha Spillelisten består av disse platene: Caribou our love Kindness something like a war Kelly L Lee Owens inner song DEN 28 NOVEMBER 2020 W Publicera Gillas av tuaaa och 374 andra ghenetactually. Following London, United Kingdom Liked by emmajanepalin and 1,265 others ghenetactually (AD - Paid Partnership) I love hearing my favourite tunes out loud; it's the perfect way to set the tone for the day! Whether I'm singing the moment I roll out of bed, cleaning house or relaxing on the beach with a more mellow vibe, my @Sonos Move speaker is helping me keep the music playing! It's portable and has WiFi and Bluetooth capabilities, I can control it from the handy app on my phone, and it even has voice control! Wake up, press play, sing my heart out, repeat! The Move sounds amazing, and fills my whole home with whatever music I choose, whenever I fancy! I love starting my day with a good tune; it always puts me in a great mood and it's at the QV D SEPTEMBER 9, 2020 Add a comment... *** Post 36 ita ( trentcotching F Paid partnership with so trentcotching Mai made better with the Can't wait for Friday #sonossounds #sonosmove #footyfinals #afl 19w Liked by trav.jacob.run.r 4,572 others OCTOBER 7, 2020 20 giannilee F Paid partnership w Los Angeles, Calif giannilee It's art of motion. O While some can really prefer to b painting always sketches and st of @Sonos I dec mobile studios i Joshua Tree. Th simple, get som studies on canv paintings and le inspire me #Son GIANNI LEE FOR directed and ph @exquisite_eye Art Direction + dp/ editor @kos 6,685 likes DECEMBER 22, 2020 Add a comment... grapewitches Foll Paid partnership with s Movers Move Me grapewitches We a could have imagine dream wine shop, H when we started th and teaching peopl 4 years ago. From t was to share the wi work in wine - small grapes and dynami change your mind a As fate would have when @Sonos asker We have been lovin inside and outside you've noticed we s why. Great music - brings celebrations life whether you're i local park or late Se Cama chark miina a Liked by kellynslone and o 4 DAYS AGO Add a comment...#28Complementing our digital advertising strategy Os SONOS SONOS SONOS Roam SONOS Roam Roam The portable smart speaker for all your listening adventures Shop Now SONOS SONOS The portable smart speaker for all your listening adventures (Shop Now SONOS Feels like#29Roam Creative#30#31Ultimately landing customers on sonos.com DTC Growth (FY20) 29% increase in qualified traffic 84% increase in revenue 48% increase in conversion rate =Q SONOS SONOS Supreme Versatility The portable smart speaker for all your listening adventures. Take incredible sound everywhere with Roam. Enjoy#32And at third-party retail partners Costco in North America ● 699 warehouses in US, CA and MX #2 TV retailer in US Yodobashi Camera in Japan ● Third largest CE retailer in Japan by revenue ($7B), but revenue by store is 12x the next competitor • Launched in top 6 stores toward the end of 2020 • Sonos Experiential stores in Akihabara, Yokohama and Umeda (end of April). SONOS MARI 音楽をスピーカーで聴く 楽しさを感じられるサウンド。 -GIZMODO SONO#33Where customers become owners, and the advocacy cycle starts again SONOS#34Ted Dworkin SVP, Product Management & Customer Experience SONOS#35Expanding Our Offerings#36Engaged, Loyal Customers Daily usage 0 33% growth in audio content hours in FY20 More than 1B app sessions in last quarter Note: Data as of FY20, except app sessions as of 1Q21 Long-term engagement Existing households represent 41% new product registrations 92% of products registered since 2005 still active Loyalty N Average home has 2.9 products 36#37The Sonos System ART HOUSE QUE LIGHT OF TH OTTOMAN CHIC SOMOS#38A Strong Foundation Wireless DOHOS One $199 Home Theater Beam $399 Amp $649 Move $399 Components and Architectural Port $449 Roam $169 I Sub $699 Sonance $599 Sonance $599 Five $499 Arc $799 Sonance $799 Ikea Symphonisk $99 Ikea Symphonisk $169#39Category Leadership $200+ Home Theater Category (by dollars - US, UK, DE) Sonos Beam Sonos Sub Sonos Playbar FY 2020 Consistently Ranked Top 3 Models Source: Based on data from NPD for US, GfK UK and DE $100+ Wireless Speaker Category (by dollars - US, UK, DE) Sonos One Sonos Move Sonos One SL#40Top Choice Among Installers Top 100 Custom Installers Preferred Audio Brand Survey 12% Source: CE Pro 13% HEOS By DENON 16% BOSE 20% Control 88% SONOS#41Open Platform Enables Choices 130+ Content Partners Spotify pandora ...deezer amazon music YouTube Music TIDAL Yandex Music *Music audible Pocket Casts Calm Clubhouse Home Automation & Home Control Partners CRESTRON Control LUTRON SAVANT Llegrand JOSH IPORT IKEA SONANCE brilliant SEXIC hansgrohe Voice Assistants Google Assistant amazon alexa#42Our Experience Connected Easy Joyful Signature Curated Premium#43The Opportunity: Revenue PLUS Audio content, services & business $89B Global Audio $25B Global Home Audio $18B Premium Global Home Audio $1.3B Sonos FY20 Revenue Source: Futuresource CY2020, Premium defined as $100+ wireless speakers, $200+ soundbars, $300+ Hi-Fi systems, $250+ in-wall/in-ceiling speakers, $250+ bookshelf speakers (pairs), and all AV receivers, Floor-standing speakers, home theater speakers and home theater in a box products and Hi-Fi separates ~7% Current Penetration of Premium Home Audio Market#44The Hardware Opportunity SONOS#45The Consumer Services Opportunity 500K paid subscribers Living Room +2 main squeeze curated by FKA twigs Radio || € SONOS#46The Business Opportunity Retail Leisure Wellness Healthcare Hospitality Enterprise Shop Learn Support Radio SONOS Discover the perfect music solution for your business. Sign in Sonos for Business Sonos makes it simple to fill your restaurant, shop, salon, or office with great-sounding and legal music your customers will love. We're here to help you find the best solution for your business. Q B#47Eddie Lazarus Chief Legal Officer SONOS#48Initial Disruption Before Sonos B LE 0000000 (2)= Sonos Vision Legend: - Analog Audio Connection ---Wired Ethernet Connection Wired or WiFi Ethernet Connection WiFi Connection Computer/MP3 Store 0000 Zone player Internet Source converter Source converter co Player/Tuner/Phone/Tape Dedk (Any existing audio source) Cable/DSL Modem w Saurch converter Architecture Hub/W F WIFI Handheld Home Network Streaming Anchen from tower Zone player 1. tell and physimps 2. Zone player Petzte XMP3 "lo pote 3. Zone player streems xmp3. to other one players viny same maten Zone player Patented Sonos Platform 100 110c 110m 1100 120c 1106 1011 130g 1101 1016 JIF 110m 1019 PHIL Fig. 1A 1011 110d -101 120g 101d 1016 Tah -110h 110e 1101 110910f 1019 120b 110k -110 130b 106#49Ongoing Disruption#50Protecting Our Inventive Disruption Total Sonos U.S. Patents and Patent Applications (filed over time, cumulative) 1500 1000 500 2 2003 11 2004 15 2005 24 H 2006 30 2007 34 T 2008 • Total U.S. Patent Applications Total U.S. Issued Patents 35 2009 40 2010 68 2011 114 21 2012 186 29 2013 307 2014 455 109 2015 660 215 2016 778 361 2017 1000 563 2018 1234 756 2019 958 2020#51Sonos Innovation Widely Adopted Sonos Founded June 2002 Jan 2002 Sonos Demos at CES 2004 Sonos releases digital music system in February 2005 SONOS Jan 2004 Jan 2006 Jan 2008 Jan 2010 Jan 2012 Bluesound Jan 2014 Google Denon Heos Jan 2016 Apple HomePod Amazon Echo Jan 2018#52Protecting Our Inventions SONOS#53Brittany Bagley Chief Financial Officer SONOS#54Why We Win Hardware Design Quality Sound = Looks & Sounds Great, Lasts + Software Easy to Use Reliable All Works Together = System + Services 130+ 3rd Party Apps 2 Voice Providers 1st Party Services (Sonos Radio & Sonos Voice) Open Platform & Choice#55Powerful Business Model: Large and Growing Household Base Total Households Existing Households 4.6 FY2016 Net New Households 5.9 FY2017 24% CAGR 7.4 FY2018 9.1 FY2019 10.9 FY2020#56Powerful Business Model: Our Customers to Repurchase 100% -% % of Registrations to Existing Households 2016 NP Continue Over Time 2017 38% NP not provided % of registrations by start year represents the new registrations per owner (the best proxy for households) % of Registrations By Start Year 2018 37% 2019 37% 2020 41% FY2015 & Prior FY2016 FY2017 FY2018 FY2019 FY2020#57Powerful Business Model: Our System Expands, Start with One and Buy More 39% Own 1 Product Note: Percentages as of the end of FY2020 2.9 Products across all HH 61% Own 4.1 Products on Average#58Proven Track Record: Adjusted EBITDA Expansion Reaching prior adjusted EBITDA target ahead of expectations Adj EBITDA Excl. Tariffs Midpoint of Prior Long Term Adj EBITDA Margin Target FCF (% of Adj EBITDA)¹ $29 3.3% FY2016 (31%) $56 5.6% FY2017 54% $69 6.1% FY2018 (7%) $90 $89 7.1% FY2019 110% $141 $109 10.6% FY2020 119% $210 1. Includes tariffs. Adjusted EBITDA margin excludes tariffs. Adjusted EBITDA is a non-GAAP measure. See appendix for reconciliation of GAAP to non-GAAP measures. We do not provide a reconciliation of forward-looking non-GAAP measures to their comparable GAAP financial measures. See appendix for reconciliation of GAAP to non-GAAP measures. Percentages and sums have been calculated using actual, non-rounded figures and, therefore, may not recalculate precisely. -14.0% 13.5% FY2021 Guidance - Midpoint#59Proven Track Record: Gross Margin Expansion Industry-leading gross margins Gross Margin excl. tariffs Midpoint of Prior Long Term Gross Margin Target 44.8% 45.9% FY2016 43.0% FY2017 41.9% 41.8% FY2018 45.6% FY2019 FY2021 Guidance - Midpoint Gross Margin excluding tariffs is a non-GAAP measure. See appendix for reconciliation of GAAP to non-GAAP measures. We do not provide a reconciliation of forward-looking non-GAAP measures to their comparable GAAP financial measures. See appendix for reconciliation of GAAP to non-GAAP measures. Percentages and sums have been calculated using actual, non-rounded figures and, therefore, may not recalculate precisely. 43.1% 46.3% FY2020 43.0%#60Proven Track Record: Consistent Revenue Growth On track for 16th consecutive year of revenue growth Prior Long Term Revenue CAGR Target 2016-2021 CAGR $901 FY2016 $993 FY2017 $1,137 FY2018 $1,261 FY2019 $1,326 FY2020 $1,550 11.5% -10.0% FY2021 Guidance - Midpoint#61Growth Drivers: Continued Revenue Growth • Accelerated new product introductions . Continued expansion of our offerings • Market penetration . Growing faster than our $25B market • Adding new households and benefitting from existing household repurchases • FY20 and FY21 have large new household cohorts to support future growth . Global expansion#62Growth Drivers: Driving Operational Excellence • Diversified manufacturing • Supply chain efficiencies • Efficient sales and marketing leverage • Ongoing investment in R&D to support new product roadmap • Supporting other investments to scale the business CERE SOHOS#63Growth Drivers: Strong Balance Sheet • $653mm net cash¹ as of Q1 2021 • Invest in the Business • Organically invest to drive profitable growth • Pursue M&A to support our roadmap, innovation and accelerate growth strategy • Return cash to shareholders via share repurchases executed $50M repurchase FY20, additional $50M authorized in November 2020 1. Net cash defined as cash and cash equivalents less outstanding debt SONOS#64Our FY 2024 Financial Targets Revenue $2.25B Gross Margin 45-47% Adjusted EBITDA Margin 15-18%#65Growth Drivers: Expanding Profitability Through Continued Operational Excellence . Continued expansion of our offerings • Maintain industry-leading gross margins, including supporting our ongoing direct-to-consumer channel initiatives • New households, with attractive household acquisition costs, and existing household repurchases Continued investment in research and development • Scale G&A while investing in systems for the future, including a new ERP system and tools to support recurring revenue and other services • Delivering adj. EBITDA CAGR of 20%+ through FY24 SONOS#66Our Strategic Initiatives Expand Our Brand Expand Our Offerings Drive Operational Excellence#67SONOS#68Appendix SONOS#69Non-GAAP Measures We have provided in this presentation financial information that has not been prepared in accordance with GAAP. 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 in 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. Non-GAAP financial measures should not be considered in isolation of, or as an alternative to, measures prepared in accordance with U.S. GAAP. We define adjusted EBITDA as net income adjusted to exclude the impact of depreciation, stock-based compensation expense, interest income, interest expense, other income (expense), income taxes and other items that we do not consider representative of our underlying operating performance. We define adjusted EBITDA margin as adjusted EBITDA divided by revenue. We calculate gross margin excluding the impact of tariff duties and refunds as gross profit dollars removing the impact of tariffs imposed on goods imported to the U.S. from China and any tariffs refunds subject to a tariff refund claim approved by U.S. Customs and Border Protection divided by revenue. We define free cash flow as net cash from operations less purchases of property and equipment. We calculate adjusted EBITDA excluding the impact of tariffs as net income excluding the impact of tariffs imposed on goods manufactured in China and any tariffs refunds subject to a tariff refund claim approved by U.S. Customs and Border Protection and adjusted to exclude the impact of depreciation, stock-based compensation expense, interest income, interest expense, other income (expense), income taxes and other items that we do not consider representative of our underlying operating performance. We do not provide a reconciliation of forward-looking non-GAAP financial measures to their comparable GAAP financial measures because we cannot do so without unreasonable effort due to unavailability of information needed to calculate reconciling items and due to the variability, complexity and limited visibility of the adjusting items that would be excluded from the non-GAAP financial measures in future periods. When planning, forecasting and analyzing future periods, we do so primarily on a non-GAAP basis without preparing a GAAP analysis as that would require estimates for certain items such as stock-based compensation, which is inherently difficult to predict with reasonable accuracy. Stock-based compensation expense ifficult to estimate because it depends on our future hiring and retention needs, as well as the future fair market value of our common stock, all of which are difficult to predict and subject to constant change. In addition, for purposes of setting annual guidance, it would be difficult to quantify stock-based compensation expense for the year with reasonable accuracy in the current quarter. As a result, we do not believe that a GAAP reconciliation would provide meaningful supplemental information about our outlook.#70Reconciliation of Net Income (Loss) to Adjusted EBITDA Net loss Add (deduct): Depreciation and amortization Stock-based compensation expense Interest income Interest expense Other (income) expense, net Provision for (benefit from) income taxes Restructuring and related expenses Legal and transaction related costs (1) Adjusted EBITDA Revenue Adjusted EBITDA margin FY20 (20,115) Note: $ in thousands, unaudited. 36,426 57,610 (1,998) 1,487 (6,639) 32 26,285 15,455 $ 108,543 $ 1,326,328 8.2 % (1) Legal and transaction related costs consist of expenses related to our intellectual property ("IP") litigation against Alphabet Inc. and Google LLC as well as legal and transaction costs associated with our acquisition activity, which we do not consider representative of our underlying operating performance.x FY19 (4,766) 36,415 46,575 (4,349) 2,499 8,625 3,690 $ 88,689 $ 1,260,823 7.0% FY18 (15,604) 39,358 38,645 (731) 5,242 1,162 1,056 $ 69,128 $ 1,137,008 6.1 % FY17 (14,217) 35,014 36,550 (120) 4,380 (3,361) (2,291) $ 55,955 $ 992,526 5.6 % FY16 (38,214) 34,323 25,963 (14) 2,503 2,208 2,644 $ 29,413 $901,284 3.3 %#71Reconciliation of Cash Flows Provided by Operating Activities to Free Cash Flow Cash flows provided by operating activities Less: purchases of property and equipment and intangible assets Free cash flow Note: $ in thousands, unaudited. FY20 $ 161,986 (33,035) $ 128,951 FY19 $ 120,636 (23,222) $ 97,414 FY18 $ 30,570 (35,747) $ (5,177) FY17 $ 63,960 (33,553) $ 30,407 FY16 $ 43,294 (52,520) $ (9,226)#72Gross Profit and Margin Excluding the Impact of Tariffs Revenue Reported gross profit Add/deduct: Net tariff impact Adjusted gross profit Gross margin Adjusted gross margin Note: $ in thousands, unaudited. FY20 $1,326,328 571,956 32,342 $ 604,298 43.1% 45.6 % FY19 $1,260,823 527,343 1,371 $528,714 41.8 % 41.9 % FY18 $1,137,008 489,308 $ 489,308 43.0 % 43.0 % FY17 $992,526 456,065 $ 456,065 45.9 % 45.9 % FY16 $901,284 403,399 $ 403,399 44.8% 44.8 %#73Prior Long Term Targets vs. Current Long Term Targets Revenue Target Gross Margin Adj. EBITDA Margin ¹ Long-term targets provided in 2018 in conjunction with Sonos initial public offering. 2 Outlook for Fiscal Year 2024. Prior¹ 10% CAGR 42%-44% 13%-15% Current² $2.25B 45%-47% 15%-18% Note: Adjusted EBITDA Margin is a non-GAAP measure. We do not provide a reconciliation of forward-looking non-GAAP measures to their comparable GAAP measures. See "Non-GAAP Measures" appendix for more information.#74SONOS