Sonos, Inc. (NASDAQ:SONO) Q3 2023 Earnings Call Transcript

Unidentified Analyst: Thanks. Hey guys. This is David on for Brent. And I wanted to start on the litigation. Appreciate the color you just gave. I’m curious just on, kind of the go forward path from here. How you guys are thinking about this, maybe one, I guess, what are the next mile markers that we should as investors should be watching for? And two how are you guys thinking about, I know you guys have in the past that that you think Google is infringing on more than just 5 patents you guys have gone with. Kind of reloading that and coming with more patents down the road, just curious to get an update on that.

Eddie Lazarus: Well, the next Milestone is going to be the post-trial motions, in the case that we so far have prevailed in. In Northern California, the judge is holding hearing actually tomorrow and we should get, I would think a decision on that in relatively soon after the hearing. So that’s step one. Step two is going to be the oral argument in the Federal Circuit of the appeal from the case that we won at the ITC finding five Google patents to be both valid, that Google was infringing five of our valid patents. And once that appeal, first of all, that appeal could benefit us significantly, if we prevail in any respect there on our cross appeal. And the second point there is that, once that appeal is decided, the damages case for those five patents will begin in the Central District of California.

And those are foundational patents that Google has been infringing for a very, very long time and that, we’ve already withstand – stood the test of litigation. So that’s probably the next big event. And then we’ll be getting decision in their remaining case against us at the ITC, initial decision in September final decision in January. And we’re cautiously optimistic that that will come out well for us.

Unidentified Analyst: That’s helpful. And then, maybe just on the promotional activity, I know you guys have the past talked about competitors being a little bit more aggressive on promotion activity, obviously, you guys weren’t promoting as much as you – last year as much as you are this year. Just curious have you guys found yourself maybe promoting a little bit more than you would like, just curious around that trend.

Eddie Lazarus: I think we, what I’d say is that, that our promotional strategy overall really hasn’t changed. We’re promoting in very particular moments in time when we think the consumers are really focused on our product context and that’s proven, very, very successful. So, while we have in some sense promoted more this year, because we’ve been so successful with our promotions. It hasn’t been because we’ve been on sale all the time. And I think with that strategy has proven successful and I expect that we’re going to continue much the same way because we are gaining market share as Patrick described very significantly in home theater both here and abroad. And so it just – I think we hit the right notes with a brand that’s really, really strong right now and plays with these occasional moments as opposed to being on sale all the time.

Unidentified Analyst: That’s helpful. Thanks guys. Appreciate it.

Operator: Your next question comes from the line of Jason Haas with Bank of America. Your line is open.

Jason Haas: Hi, good afternoon and thanks for taking my questions. So the commentary on the – what’s going on with the second half that has been really helpful. I’m curious if that changes your thinking at all to hit the holiday period, I know it falls into next fiscal period, but just curious as we’re getting a little bit closer to the holidays, if there’s any change in your thinking there?