#155 Q4 and FY20 Financial Results November 18, 2020 NOS#2Forward Looking Statements This presentation contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding our outlook for the fiscal year ending October 2, 2021, our long-term focus, financial, growth and business strategies and opportunities, growth metrics and targets, new products, software, services and partnerships, profitability and gross margins, our tariff expense 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; 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 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 accurately forecast consumer demand for our products and manage our inventory in response to changing demands; and the other risk factors set forth under the caption "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended June 27, 2020 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 letter, and we undertake no obligation, and expressly disclaim any obligation, to update forward-looking statements herein in light of new information or future events. 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.#3FY20 Highlights Record 10.6% fiscal 2020 adjusted EBITDA margin ex-tariffs and on track to deliver 12%-14% next year- ahead of prior targets 15th consecutive year of revenue growth fueled by demand for new products, with revenue +3% excluding 53rd week Record FY gross margin +370 bps ex-tariffs driven by favorable product and channel mix and cost reductions Continued investment in R&D to fuel future product and service roadmap offset by significant S&M and G&A leverage ex restructuring and legal costs Record growth in net new households and a record number of additional purchases by existing households Free cash flow / adj EBITDA conversion nearly 120% Note: Unaudited. See appendix for reconciliation of GAAP to non-GAAP measures.#4New Products Launched FY20 Arc - Launched June 2020 - $799 MSRP. Our premium smart soundbar that delivers our most immersive entertainment experience and sets a new standard for home theater sound. Five - Launched June 2020 - $499 MSRP. Our most powerful speaker, delivering the same studio-quality sound as the beloved Play:5 and bringing increased memory, processing power, and a new wireless radio. Sub-Launched June 2020 - $699 MSRP. Features the same iconic design and bold bass as its predecessor, but with upgrades such as increased memory, processing power, and more. Sub Panama MANOLO VALDES ZAA Arc Five SONOS KATI HORNA#5New Services Sonos Radio - Launched April 2020. Free, ad-supported streaming radio service pre-loaded in the Sonos app. We have experienced early customer success, and Sonos Radio is now the fourth most listened to service on Sonos. Sonos Radio HD - Launched November 2020 $7.99/month subscription. Offers the choice of ad-free, high-definition content, all curated and programmed for listening at home with skips and repeats. 20 SONOS Radio HD Chill Beats Radio HD Distant Kingdom Radio HD SONOS SONOS Living Room +2 Radio K Radio In the Absence Thereof... curated by Thom Yorke More Minimal || ▶ alli SONOS Q Rain Radio HD SONOS Radio HD Dolly Parton Songteller Radio Encyclopedia & Brittany Rock curated by Pantheon Brittany Howard SONOS Radio HD Radio HD 242 SONOS SONOS SONOS SOUND SYSTEM Radio HD New Lords of Metal Radio SONOS#6New Software Sonos S2 app - Launched June 2020 Delivers upgraded software platform powering the next generation of Sonos products and experiences. Includes support for higher resolution audio technologies, increased security and improved user interface. New design enables easier search functionality and sound control, plus ability to personalize the experience with new features. S2 12:00 System Bedroom Kitchen Cold Apartment Vagabon Living Room Office TV Audio History Repeats Brittany Howard Bedroom + Kitchen Cold Apartment. Vagabon ill? Pause All ||#7New Partnerships Disney+ Partnership - Fall 2020 Innovative, multifaceted strategic marketing campaign with Disney+ leading up to the widely-anticipated premiere of the second season of The Mandalorian on October 30, 2020. Disney+ partnership with Sonos highlights the quality of our brand and the value that our consumers provide to content partners like Disney. Disney+ SONOS Elevate your listening adventures#8Strong Financial Performance and Outlook $1,137 FY2018 $69 FY2018 Net Revenue $1,261 FY2019 Adjusted EBITDA* $89 FY2019 $1,326 FY2020 $109 FY2020 $1,470 FY2021 Midpoint $188 FY2021 Midpoint 43.0% FY2018 $(5) FY2018 Gross Margin 41.8% FY2019 Free Cash Flow* $97 FY2019 Note: $ in millions, unaudited. See appendix for reconciliation of GAAP to non-GAAP measures. Percentages have been calculated using actual, non-rounded figures and, therefore, may not recalculate precisely. 43.1% FY2020 $129 FY2020 45.6% FY2021 Midpoint#9Q4 Highlights#10Record Profitability and Strong Revenue Growth Q4 Revenue $272.9 4Q18 Q4 Adjusted EBITDA $20.2 4Q18 $294.2 4Q19 $(2.8) 4Q19 $339.8 4Q20 $46.4 4Q20 Revenue +16%; excluding 14th week, revenue +7% due to strong demand, success of recent new product intros, and 67% DTC growth offset by negative effect of COVID-19 on retail store partners and product availability constraints Adjusted EBITDA growth driven by continued strong demand, further gross margin expansion, and significant opex leverage Adjusted EBITDA margin +1460 bps to record 13.7%; ex-tariffs adjusted EBITDA margin of 14.4% Gross margin +530 bps to record 47.5%; ex-tariffs gross margin +560 bps to 48.3% Note: $ in millions, unaudited. See appendix for reconciliation of GAAP to non-GAAP measures. Percentages have been calculated using actual, non-rounded figures and, therefore, may not recalculate precisely.#11Record Gross Margin Gross margin +530 bps Y/Y - key drivers: Mix shifts into higher margin products and channels Product and material cost reductions Cost leverage on higher volume No promotions as compared to 4Q19 42.6% 42.6% 42.2% 42.7% Gross Margin 47.5% 4Q20 4Q18 4Q19 Note: Unaudited. See appendix for reconciliation of GAAP to non-GAAP measures. Percentages have been calculated using actual, non-rounded figures and, therefore, may not recalculate precisely. Gross Margin ex Tariffs 48.3%#12Strong Opex Leverage While Continuing to Invest in R&D Research and Development (GAAP) Restructuring and related charges Adjusted Research and Development (Non-GAAP) % of revenue Sales and Marketing (GAAP) Restructuring and related charges Adjusted Sales and Marketing (Non-GAAP) % of revenue General and Administrative (GAAP) Restructuring and related charges Legal and transaction related costs Adjusted General and Administrative (Non-GAAP) % of revenue Total Operating Expenses (GAAP) Restructuring and related charges Legal and transaction related costs Adjusted Operating Expenses (Non-GAAP) % of revenue 4Q20 $54.8 0.1 $54.7 16.1% $58.3 $58.3 17.2% $33.0 $6.2 $26.8 7.9% $146.1 0.1 6.2 $139.8 41.1% 4Q19 $49.6 $49.6 16.9% $70.9 $70.9 24.1% $28.6 $28.6 9.7% $149.1 $149.1 50.7% Y/Y Change 10.4% NM 10.1% (80 bps) (17.7)% NM (17.7)% (690 bps) 15.5% NM NM (6.1)% (180 bps) (2.0)% NM NM (6.2)% (960 bps) Excluding restructuring and legal costs, drove 960 basis points of opex leverage Leverage in all adjusted opex lines excluding restructuring and legal costs R&D +10% ex restructuring primarily driven by increased headcount, higher bonus achievement, and new product development costs S&M -18% ex restructuring due to lower marketing and advertising expenses G&A -6% ex restructuring and legal costs due primarily to facilities cost reductions Note: $ in millions, unaudited. 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.#13FY20 Highlights I SONOS#1415th Consecutive Year of 20%+ Household Growth Total Households (cumulative - in millions) Net New Online Households (in millions) % Registrations to Existing Households Average Registrations per Total Households Total Listening Hours (in billions) FY20 10.9 1.8 41% 2.9 10.2 FY19 9.1 1.7 37% 2.9 7.7 Y/Y Change 20% 9% 33% Note: Percentages have been calculated using actual, non-rounded figures and, therefore, may not recalculate precisely. 15th consecutive year of 20%+ total household growth - ended fiscal 2020 with 10.9M Existing households accounted for 41% of new product registrations up from 37% last year Added record 1.8M net new households Average number of registered products per household at 2.9 Listening hours +33% on top of +29% last year#15Demonstrating Significant Scale and Profitability FY Revenue $1,137.0 FY18 FY Adjusted EBITDA $69.1 FY18 $1,260.8 FY19 $88.7 FY19 $1,326.3 FY20 $108.5 FY20 Revenue +5% to $1.326B; excluding 53rd week, revenue +3% Adjusted EBITDA +22%; ex-tariffs adjusted EBITDA +56% Adjusted EBITDA margin +120 bps to record 8.2%; ex-tariffs adjusted EBITDA +350 bps to record 10.6% Gross margin +130 bps to 43.1%; ex-tariffs gross margin +370 bps to 45.6% Free cash flow $129.0M vs $97.4M LY Note: $ in millions, unaudited. See appendix for reconciliation of GAAP to non-GAAP measures. Percentages have been calculated using actual, non-rounded figures and, therefore, may not recalculate precisely.#16Continued Strong Gross Margin Expansion Gross margin +130 bps; ex tariffs, +370 bps. Key drivers: Mix shifts into higher margin products and channels Product and material cost reductions associated with the consolidation of our supplier base and successful cost negotiations 43.0% FY18 43.0% 41.8% FY19 41.9% Gross Margin 43.1% Note: Unaudited. See appendix for reconciliation of GAAP to non-GAAP measures. Percentages have been calculated using actual, non-rounded figures and, therefore, may not recalculate precisely. Gross Margin ex Tariffs 45.6% FY20#17Continued R&D Investment; S&M and G&A Leverage Research and Development (GAAP) Restructuring and related charges Adjusted Research and Development (Non-GAAP) % of revenue Sales and Marketing (GAAP) Restructuring and related charges Adjusted Sales and Marketing (Non-GAAP) % of revenue General and Administrative (GAAP) Restructuring and related charges Legal and transaction related costs Adjusted General and Administrative (Non-GAAP) % of revenue Total Operating Expenses (GAAP) Restructuring and related charges Legal and transaction related costs Adjusted Operating Expenses (Non-GAAP) % of revenue FY20 $214.7 5.1 $209.6 15.8% $263.5 19.8 $243.8 18.4% $121.0 1.4 15.5 $104.1 7.8% $599.2 26.3 15.5 $557.4 42.0% FY19 $171.2 $171.2 13.6% $247.6 $247.6 19.6% $102.9 $102.9 8.2% $521.6 $521.6 41.4% Y/Y Change 25.4% NM 22.4% 220 bps 6.4% NM (1.6)% (120 bps) 17.6% NM NM 1.2% (40 bps) 14.9% NM NM 6.9% 60 bps Continued investment in R&D coupled with S&M and G&A leverage ex-restructuring and legal costs R&D +22% ex-restructuring primarily driven by increased headcount, higher stock-based compensation, and new product development costs S&M -2% ex-restructuring due to lower marketing and advertising expenses, offset by an higher fees resulting from higher DTC sales and other costs G&A +1% ex-restructuring and legal costs due to higher personnel-related costs Note: $ in millions, unaudited. 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.#18Significant Cash Flow and Strong Balance Sheet Cash flow from operations Capital expenditures % of revenue Free cash flow Free Cash Flow / Adj EBITDA Ending cash & cash equivalents Long-term debt FY20 $162.0 $33.0 2.5% $129.0 119% $407.3 $18.3 FY19 $120.6 $23.2 1.8% $97.4 110% $338.8 $24.8 Y/Y Change 34.3% 42.3% 32.4% 20.2% (26.5)% ● Cash flow from operations of $162.0M vs $120.6M LY Free cash flow of $129.0M, +32% from LY Free cash flow / adjusted EBITDA 119% Capex of $33.0M, 2.5% of revenue, largely driven by investments in manufacturing and new products Cash and cash equivalents of $407.3M Long-term debt of $18.3M Completed $50M stock repurchase program in September 2020; Board authorizes new $50M program in November 2020 Note: $ in millions, unaudited. See appendix for reconciliation of GAAP to non-GAAP measures. Percentages have been calculated using actual, non-rounded figures and, therefore, may not recalculate precisely.#19FY 21 Outlook#20FY21 Priorities Delivering innovative new products that both new and existing customers love Services that enhance and further differentiate the customer experience Strengthening our direct-to-consumer efforts Supporting our incredible partnerships Adjusted EBITDA margin expansion Industry-leading gross margins Double-digit revenue growth#21FY21 Outlook: Profit Margin Expansion Continues; Strong Demand Adjusted EBITDA Adjusted EBITDA Margin Gross Margin Revenue % growth (52 wk vs 52 wk) % growth (as reported) Other Key Assumptions: Tariffs DTC as % of revenue FY20 Actuals $108.5 million 8.2% 43.1% $1.326 billion 3% 5% $32 million 21% Note: Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures. We do not provide a reconciliation of forward-looking non-GAAP measures to their comparable GAAP financial measures. See "Non-GAAP Measures" for more information. FY21 Outlook speaks only as of the date of this presentation. See "Forward-Looking Statements" for more information. FY21 Outlook $170 million $205 million 12% -14% 45.3% - 45.8% 11 $1.44 billion - $1.5 billion 11% - 15% 9% -13% Minimal tariff expense; no tariff refund assumed Similar to Fiscal 2020 %#22Upcoming Investor Event Tuesday, March 9, 2021 Save the Date! Sonos to host virtual investor event where leadership will further highlight its long-term strategy and outlook. Further details to come - stay tuned...#23of HUGO CABRET own and in Appendix SS WHO ANGURACL KML#24Non-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 (loss) 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 tariffs as gross profit dollars removing the impact of tariffs imposed on goods imported to the U.S. from China divided by revenue. We define free cash flow as defined as net cash from operations less purchases of property and equipment. We calculate adjusted EBITDA excluding the impact of tariffs as net income (loss) excluding the impact of tariffs imposed on goods manufactured in China 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 is difficult 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.#25Reconciliation of Net Income (Loss) to Adjusted EBITDA (unaudited, dollars in thousands) Net income (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 charges Legal and transaction related costs (1) Adjusted EBITDA Revenue Adjusted EBITDA margin (1) Three Months Ended October 3, 2020 $ 18,411 $ 8,733 $ 15,971 $ (43) $ 300 $ (3,273) $34 $125 $ 6,170 $ 46,428 $ 339,837 13.7 % September 28, 2019 $ (29,600) $9,012 $ 13,049 $ (1,416) $ 584 $ 4,985 $615 $ (2,771) $ 294,160 (0.9)% Twelve Months Ended October 3, 2020 $ (20,115) $36,426 $ 57,610 $ (1,998) $ 1,487 $ (6,639) $32 $ 26,285 $ 15,455 $ 108,543 $1,326,328 8.2 % 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 recent acquisition activity, which we do not consider representative of our underlying operating performance. September 28, 2019 $ (4,766) $36,415 $46,575 $ (4,349) $ 2,499 $8,625 $ 3,690 $ 88,689 $1,260,823 7.0 %#26Gross Profit and Margin Excluding the Impact of Tariffs (unaudited, dollars in thousands) Revenue Reported gross profit Add: Tariffs Adjusted gross profit Gross margin Adjusted gross margin Three Months Ended October 3, 2020 $339,837 $161,536 2,442 $163,978 47.5 % 48.3 % September 28, 2019 $294,160 $124,271 1,371 $125,642 42.2 % 42.7 % Twelve months ended October 3, 2020 $1,326,328 $571,956 32,342 $604,298 43.1 % 45.6 % September 28, 2019 $1,260,823 $527,343 1,371 $528,714 41.8 % 41.9 %#27Reconciliation of Cash Flows Provided by Operating Activities to Free Cash Flow (unaudited, in thousands) Cash flows provided by operating activities Less: purchases of property and equipment and intangible assets Free cash flow Year Ended October 3, 2020 $ 161,986 $ (33,035) $ 128,951 September 28, 2019 $ 120,636 $ (23,222) $ 97,414#28SONOS