Jason Haas: Hey, good afternoon, and thanks for taking my questions. I’m curious if you could talk about what you think is needed to see a pickup in the industry demand broadly. There’s some expectation that we should inevitably see a pickup in housing with lower rates. So, I’m curious to what extent you think that could potentially help your business and the industry broadly?
Patrick Spence: Yes. I think, Jason, that’s probably one of those factors that know helps. Ultimately, TV sales have been down as well. So as that picks up at some point, I’m sure that will help. And just general consumer sentiment towards buying goods versus services, interest rates, all of those things. But at the same time, I would also just make sure everybody here is loud and clear that we believe we have opportunity despite these challenges. Right. So, we are definitely making every effort we can to take more and more of the addressable market that’s out there, because there is a lot for us. And even in a more challenged environment, we’ve shown the ability to take more. And that’s something that I think with our marketing efforts and kind of the things that we’re renewing there, some of the distribution agreements I referenced and then the work in the new categories, I actually think we have an opportunity to go and take more.
And so we’re very focused on that. And then I think it’s just a nice tailwind as those things come back whenever they do, but we’re staying very focused on the things we can control.
Jason Haas: That’s great. And then as a follow up question, I wanted to ask about the cadence of EBITDA through the year. I know you’ve given some good color on it. I was getting this question even before you reported results. It sounds like the cadence hasn’t really changed too much. But basically the question I’ve been getting is just, it seems like it’s going to be a little bit more back half weighted year from an EBITDA perspective versus if we look at the years pre-pandemic. So, I’m curious what’s driving that. I recognize you’ll have the new product introduction, so I’m sure that’s part of it. But any other tailwinds that we should be aware of for the second half of the year?
Eddie Lazarus: I would say that it reflects the fact that this year, the percentage of revenue that we’ll get in the first half is a little bit lighter than we typically do because of this significant new product introduction. So if usually the first half would be 55% to 60% of revenue this year, we’re projecting 52%. And that’s because we have this new category, multibillion dollar category we’re going into. And so the EBITDA will follow that. We’re going to have a dip in the second quarter, which is typically our weakest, and then it will rebound for the back half of the year.
Jason Haas: Got it. That makes sense. Thank you.
Patrick Spence: Thanks, Jason.
Operator: Your next question comes from Jake Norton with Raymond James. Please go ahead.
Jake Norton: Hey, perfect. Thank you. Of course, there’s a lot of excitement around entering a new product category in the back half of this year. How are you internally thinking about a new product launch into what is potentially a soft consumer and macro environment versus a more typical, traditional, stronger market that you’ve seen in the past?
Patrick Spence: Well, I think, Jake, when we’re thinking about a new category that is new to us, it’s all opportunity. And so we are approaching it with the kind of energy, excitement and prudence around investments that I think we always do. But I think everybody across the company is super excited to get in there. And I think just like we’ve shown in the categories that we’re the leader in today, I believe we’ll have a great opportunity to take others share and at the same time probably bring some buyers into the category that weren’t even contemplating being buyers this year. So, we’re excited right across the company and we’re aggressively getting ready to launch because we think this is a big long term opportunity.
Jake Norton: Okay, perfect. And then last one for me, welcoming Saori as CFO, can you just speak to what this organizational change will enable from an operations and maybe even a long term strategic standpoint? Thank you.
Patrick Spence: So, yes, Saori is two weeks in at this point picking up the finance team and technology team. And really, I think the thing that we’ve talked a lot about is her expertise in helping drive growth and scale in a sustainable, profitable way with companies in the past like Cisco and Apple. And she knows consumer electronics and the right kind of investment and financial profiles. And so she is going to help us make sure we are investing wisely for the future to drive the kind of sustainable, profitable growth that we’ve talked to in the past. So, I could not be more excited to see her impact on the organization, but it’ll take a little bit more than two weeks.
Jake Norton: Thanks for the color. I appreciate that. Congrats on the quarter.
Patrick Spence: Thanks, Jake.
Operator: Your next question comes from Alex Fuhrman with Craig-Hallum Capital Group. Please go ahead.
Alex Fuhrman: Hi guys. Thanks very much for taking my question. Patrick, you mentioned being more promotional during the holidays to meet consumer expectations, given what a lot of your competitors were doing, presumably that’s not going away this upcoming holiday season or the one after that. Does it start to change, how you think about initial prices now that a more promotional holiday environment is starting to become the more new normal?
Patrick Spence: If I’ve learned one thing, Alex, it’s that we can’t project what will know next holiday necessarily, right, given some of the ways that these things work. And so this was a pretty unique holiday, I will say. And we were monitoring closely and I was super proud of the way the team adapted and moved with a sense of urgency to kind of do the right thing to make sure that we were meeting the customers where they were in this quarter. But I’m very confident that we have the right level of product investment, innovation and brands kind of leading products that put us in a position where we will continue to deliver the kind of gross margin we’ve talked about and products that customers love, right, and are willing to pay for.
And so we have a good strategy when it comes to, I think, the value for the price we provide at a premium level, and we’re going to continue to deliver that. So, I think perhaps 2024 we see the kind of discounts we saw in 2023, but I also believe we can continue to execute and win, just as we did throughout that year with our strategy.
Alex Fuhrman: Great. That’s really helpful. Thanks very much, Patrick.
Patrick Spence: Thanks, Alex.
Operator: Your final question comes from Brent Thill with Jefferies. Please go ahead.
Brent Thill: Patrick. I’m just curious; you talked a little bit about these green shoots you’re starting to see, I mean where are you seeing kind of the biggest excitement and the return to growth? What’s been standing out to you? Kind of ex-out the new category you’re going into. But what’s standing out in the existing categories that’s reigniting now?
Patrick Spence: Well, I think our ability to continue to gain share with the products that we have and seeing Era 300 and Era 100 really help drive streaming audio as a category, in the holiday quarter was something that just for me, I think helps us kind of prove out our hypothesis about raising the bar in existing categories. But make no mistake, Brent, we want to be, we believe that given the opportunity in our existing categories, plus the things we’re investing in for the new categories. Our typical growth aspirations are higher for the long term than what we’re seeing right now because of the challenged kind of category growth rates. But we’re going to continue to do everything we can through our product introductions, our distribution, our marketing to continue to compete and win in those existing categories.
We know there’ll be tailwinds when spending comes back in those categories, but we are doing everything we can in the meantime to capture more of that, if you will. And then, to your point, we have exciting new categories that we’re entering one in Q3.
Brent Thill: Okay. And then I know you mentioned the outlook is on change, but when you think about the new category impact on the numbers for this year, can you just remind us what you’ve embedded at that midpoint at 1.65 [ph].
Eddie Lazarus: $100 million in new product introductions this year.
Brent Thill: Terrific. Thank you.
Patrick Spence: Thanks, Brent.
Operator: [Operator Instructions] Seeing no further questions, I will now turn the call back to Sonos CEO Patrick Spence for any closing remarks.
