DEI
DEI - USD ($) | 12 Months Ended | ||
Sep. 29, 2018 | Nov. 16, 2018 | Mar. 31, 2018 | |
Document Information [Abstract] | |||
Entity Registrant Name | Sonos Inc | ||
Entity Central Index Key | 1,314,727 | ||
Current Fiscal Year End Date | --09-29 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Sep. 29, 2018 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity common stock, shares outstanding | 100,947,974 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 0 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 29, 2018 | Sep. 30, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 220,930 | $ 130,595 |
Restricted cash | 190 | 193 |
Accounts receivable, net | 73,214 | 47,363 |
Inventories | 193,193 | 113,856 |
Prepaid and other current assets | 10,073 | 9,462 |
Total current assets | 497,600 | 301,469 |
Property and equipment, net | 85,371 | 95,130 |
Deferred tax assets | 941 | 1,107 |
Other noncurrent assets | 3,586 | 2,314 |
Total assets | 587,498 | 400,020 |
Current liabilities: | ||
Accounts payable | 195,159 | 114,494 |
Accrued expenses | 38,687 | 57,348 |
Accrued compensation | 33,371 | 32,007 |
Short-term debt | 6,667 | 0 |
Deferred revenue | 11,615 | 10,920 |
Other current liabilities | 10,858 | 8,497 |
Total current liabilities | 296,357 | 223,266 |
Long-term debt | 33,097 | 39,600 |
Deferred revenue | 39,352 | 34,647 |
Other noncurrent liabilities | 10,334 | 12,139 |
Total liabilities | 379,140 | 309,652 |
Commitments and contingencies (Note 11) | ||
Redeemable convertible preferred stock, $0.001 par value; liquidation preference of $90,976 as of September 30, 2017; 0 and 32,675,074 shares authorized; 0 and 32,482,590 shares issued and outstanding as of September 29, 2018 and September 30, 2017, respectively | 0 | 90,341 |
Stockholders’ equity: | ||
Common stock, $0.001 par value; 500,000,000 and 151,458,824 shares authorized 100,868,250 and 59,339,336 shares issued; 100,061,210 and 58,592,874 shares outstanding, as of September 29, 2018 and September 30, 2017, respectively | 101 | 59 |
Treasury stock, 807,040 and 746,462 shares at cost as of September 29, 2018 and September 30, 2017, respectively | (11,072) | (10,161) |
Additional paid-in capital | 424,617 | 200,301 |
Accumulated deficit | (203,611) | (188,007) |
Accumulated other comprehensive loss | (1,677) | (2,165) |
Total stockholders’ equity | 208,358 | 27 |
Total liabilities, redeemable convertible preferred stock and stockholders’ equity | $ 587,498 | $ 400,020 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 29, 2018 | Sep. 30, 2017 |
Statement of Financial Position [Abstract] | ||
Redeemable convertible preferred stock, par value (in dollars per share) | $ 0.001 | |
Redeemable convertible preferred stock, liquidation preference | $ 90,976 | |
Redeemable convertible preferred stock, shares authorized (in shares) | 10,000,000 | 32,675,074 |
Redeemable convertible preferred stock, shares issued (in shares) | 0 | 32,482,590 |
Redeemable convertible preferred stock, shares outstanding (in shares) | 0 | 32,482,590 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 500,000,000 | 151,458,824 |
Common stock, shares issued (in shares) | 100,868,250 | 59,339,336 |
Common stock, shares outstanding (in shares) | 100,061,210 | 58,592,874 |
Treasury stock, shares at cost (in shares) | 807,040 | 746,462 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 | |
Income Statement [Abstract] | |||
Revenue | $ 1,137,008 | $ 992,526 | $ 901,284 |
Cost of revenue | 647,700 | 536,461 | 497,885 |
Gross profit | 489,308 | 456,065 | 403,399 |
Operating expenses | |||
Research and development | 142,109 | 124,394 | 107,729 |
Sales and marketing | 270,869 | 270,162 | 258,012 |
General and administrative | 85,205 | 77,118 | 68,531 |
Total operating expenses | 498,183 | 471,674 | 434,272 |
Operating loss | (8,875) | (15,609) | (30,873) |
Other income (expense), net | |||
Interest expense, net | (4,511) | (4,260) | (2,489) |
Other income (expense), net | (1,162) | 3,361 | (2,208) |
Total other expense, net | (5,673) | (899) | (4,697) |
Loss before provision for (benefit from) income taxes | (14,548) | (16,508) | (35,570) |
Provision for (benefit from) income taxes | 1,056 | (2,291) | 2,644 |
Net loss | $ (15,604) | $ (14,217) | $ (38,214) |
Net loss per share attributable to common stockholders: | |||
Basic and diluted (in USD per share) | $ (0.24) | $ (0.25) | $ (0.71) |
Weighted-average shares used in computing net loss per share attributable to common stockholders: | |||
Weighted-average shares used in computing net loss per share attributable to common stockholders - basic and diluted (in shares) | 65,706,215 | 56,314,546 | 53,873,051 |
Total comprehensive loss | |||
Net loss | $ (15,604) | $ (14,217) | $ (38,214) |
Change in foreign currency translation adjustment, net of tax | 488 | (2,486) | (203) |
Comprehensive loss | $ (15,116) | $ (16,703) | $ (38,417) |
CONSOLIDATED STATEMENTS OF REDE
CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Accumulated Other Comprehensive Loss | Private placement | Private placementCommon Stock | Private placementAdditional Paid-In Capital | IPO | IPOCommon Stock | IPOAdditional Paid-In Capital |
Redeemable Convertible Preferred Stock, beginning balance (in shares) at Oct. 03, 2015 | 32,395,828 | |||||||||||
Redeemable Convertible Preferred Stock, beginning balance at Oct. 03, 2015 | $ 88,637 | |||||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||||||||
Net exercise of Series C preferred stock warrants (in shares) | 86,762 | |||||||||||
Net exercise of Series C preferred stock warrants | $ 1,704 | |||||||||||
Redeemable Convertible Preferred Stock, ending balance (in shares) at Oct. 01, 2016 | 32,482,590 | |||||||||||
Redeemable Convertible Preferred Stock, ending balance at Oct. 01, 2016 | $ 90,341 | |||||||||||
Balances, beginning of period (in shares) at Oct. 03, 2015 | 78,546,014 | (24,982,950) | ||||||||||
Balances, beginning of period at Oct. 03, 2015 | (19,859) | $ 79 | $ 333,459 | $ (218,345) | $ (135,576) | $ 524 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Exercise of stock options (in shares) | 1,278,150 | |||||||||||
Exercise of stock options | 3,670 | $ 1 | 3,669 | |||||||||
Retirement of treasury stock (in shares) | (24,982,950) | |||||||||||
Retirement of treasury stock | 0 | $ (25) | (218,320) | |||||||||
Retirement of treasury stock (in shares) | 24,982,950 | |||||||||||
Retirement of treasury stock | $ 218,345 | |||||||||||
Purchase of treasury stock (in shares) | (7,780) | |||||||||||
Purchase of treasury stock | (145) | $ (145) | ||||||||||
Stock-based compensation expense | 25,963 | 25,963 | ||||||||||
Net loss | (38,214) | (38,214) | ||||||||||
Change in foreign currency translation adjustment | (203) | (203) | ||||||||||
Balances, ending of period (in shares) at Oct. 01, 2016 | 54,841,214 | (7,780) | ||||||||||
Balances, ending of period at Oct. 01, 2016 | $ (28,788) | $ 55 | 144,771 | $ (145) | (173,790) | 321 | ||||||
Redeemable Convertible Preferred Stock, ending balance (in shares) at Sep. 30, 2017 | 32,482,590 | |||||||||||
Redeemable Convertible Preferred Stock, ending balance at Sep. 30, 2017 | $ 90,341 | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Exercise of stock options (in shares) | 3,756,088 | |||||||||||
Exercise of stock options | 8,906 | $ 3 | 8,903 | |||||||||
Purchase of treasury stock (in shares) | (738,682) | (738,682) | ||||||||||
Purchase of treasury stock | (10,016) | $ (10,016) | $ (10,000) | |||||||||
Issuance of common, net of issuance/offering costs (in shares) | 742,034 | 742,034 | ||||||||||
Issuance of common, net of issuance/offering costs | $ 10,078 | $ 1 | $ 10,077 | |||||||||
Stock-based compensation expense | 36,550 | 36,550 | ||||||||||
Net loss | (14,217) | (14,217) | ||||||||||
Change in foreign currency translation adjustment | $ (2,486) | (2,486) | ||||||||||
Balances, ending of period (in shares) at Sep. 30, 2017 | 58,592,874 | 59,339,336 | (746,462) | |||||||||
Balances, ending of period at Sep. 30, 2017 | $ 27 | $ 59 | 200,301 | $ (10,161) | (188,007) | (2,165) | ||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||||||||
Conversion of redeemable convertible preferred stock to common stock upon initial public offering (in shares) | (32,482,590) | |||||||||||
Conversion of redeemable convertible preferred stock to common stock upon initial public offering | $ (90,341) | |||||||||||
Redeemable Convertible Preferred Stock, ending balance (in shares) at Sep. 29, 2018 | 0 | |||||||||||
Redeemable Convertible Preferred Stock, ending balance at Sep. 29, 2018 | $ 0 | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Exercise of stock options (in shares) | 2,657,436 | 2,657,436 | ||||||||||
Exercise of stock options | $ 9,345 | $ 3 | 9,342 | |||||||||
Purchase of treasury stock (in shares) | (60,578) | |||||||||||
Purchase of treasury stock | (911) | $ (911) | ||||||||||
Issuance of common, net of issuance/offering costs (in shares) | 6,388,888 | |||||||||||
Issuance of common, net of issuance/offering costs | $ 86,027 | $ 6 | $ 86,021 | |||||||||
Conversion of redeemable convertible preferred stock to common stock upon initial public offering (in shares) | 32,482,590 | |||||||||||
Conversion of redeemable convertible preferred stock to common stock upon initial public offering | 90,341 | $ 33 | 90,308 | |||||||||
Stock-based compensation expense | 38,645 | 38,645 | ||||||||||
Net loss | (15,604) | (15,604) | ||||||||||
Change in foreign currency translation adjustment | $ 488 | 488 | ||||||||||
Balances, ending of period (in shares) at Sep. 29, 2018 | 100,061,210 | 100,868,250 | (807,040) | |||||||||
Balances, ending of period at Sep. 29, 2018 | $ 208,358 | $ 101 | 424,617 | $ (11,072) | (203,611) | (1,677) | ||||||
Redeemable Convertible Preferred Stock, beginning balance at Jun. 30, 2018 | $ 90,341 | |||||||||||
Redeemable Convertible Preferred Stock, ending balance (in shares) at Sep. 29, 2018 | 0 | |||||||||||
Redeemable Convertible Preferred Stock, ending balance at Sep. 29, 2018 | $ 0 | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Net loss | $ (1,720) | |||||||||||
Balances, ending of period (in shares) at Sep. 29, 2018 | 100,061,210 | 100,868,250 | (807,040) | |||||||||
Balances, ending of period at Sep. 29, 2018 | $ 208,358 | $ 101 | $ 424,617 | $ (11,072) | $ (203,611) | $ (1,677) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 | |
Cash flows from operating activities | |||
Net loss attributable to common stockholders—basic and diluted | $ (15,604) | $ (14,217) | $ (38,214) |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Depreciation | 39,358 | 35,014 | 34,323 |
Stock-based compensation expense | 38,645 | 36,550 | 25,963 |
Other | 1,676 | 713 | 4,098 |
Deferred income taxes | 152 | 1,443 | (857) |
Foreign currency transaction (gain) loss | 941 | (3,568) | 782 |
Changes in operating assets and liabilities: | |||
Accounts receivable, net | (26,505) | (2,727) | (4,590) |
Inventories, net | (80,107) | (60,270) | 5,878 |
Other assets | (2,140) | 36 | 2,908 |
Accounts payable and accrued expenses | 66,473 | 54,895 | (5,715) |
Accrued compensation | 1,625 | 5,123 | 2,094 |
Deferred revenue | 5,566 | 9,411 | 8,556 |
Other liabilities | 490 | 1,557 | 8,068 |
Net cash provided by operating activities | 30,570 | 63,960 | 43,294 |
Cash flows from investing activities | |||
Purchases of property and equipment | (35,747) | (33,553) | (52,520) |
Net cash used in investing activities | (35,747) | (33,553) | (52,520) |
Cash flows from financing activities | |||
Proceeds from initial public offering, net of underwriting discounts and commissions | 90,562 | 0 | 0 |
Payments of offering costs | (3,950) | 0 | 0 |
Proceeds from issuance of common stock, net of issuance costs | 0 | 10,078 | 0 |
Proceeds from exercise of stock options | 9,345 | 8,906 | 3,670 |
Payments for purchase of treasury stock | (911) | (10,016) | (145) |
Proceeds from borrowings, net of borrowing costs | 69,748 | 14,987 | 89,844 |
Repayments of borrowings | (70,000) | 0 | (85,400) |
Payments for debt extinguishment costs | (420) | 0 | 0 |
Net cash provided by financing activities | 94,374 | 23,955 | 7,969 |
Effect of exchange rate changes on cash and cash equivalents | 1,138 | 1,320 | (182) |
Net increase (decrease) in cash and cash equivalents | 90,335 | 55,682 | (1,439) |
Cash and cash equivalents | |||
Beginning of period | 130,595 | 74,913 | 76,352 |
End of period | 220,930 | 130,595 | 74,913 |
Supplemental disclosure | |||
Cash paid for interest | 3,750 | 4,114 | 2,326 |
Cash paid for taxes, net of refunds | 1,430 | 461 | 233 |
Supplemental disclosure of non-cash investing and financing activities | |||
Conversion of redeemable convertible preferred stock to common stock | 90,341 | 0 | 0 |
Purchases of property and equipment, accrued but not paid | $ 4,075 | $ 9,665 | $ 3,939 |
Net exercise of Series C preferred stock warrants | 0 | 0 | 1,704 |
Deferred offering costs in accounts payable and accrued expenses | $ 585 | $ 0 | $ 0 |
Business overview
Business overview | 12 Months Ended |
Sep. 29, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business overview | Business overview Description of business Sonos, Inc. and its wholly owned subsidiaries (collectively, "Sonos" or the "Company") designs, develops, manufactures and sells multi-room audio products . The Sonos sound system provides customers with an immersive listening experience created by the design of its speakers and components, a proprietary software platform and the ability to stream content from a variety of sources throughout the home over the customer’s wireless network. The Company’s products are sold through third-party retail stores, including custom installers of home audio systems. The Company also sells through select e-commerce retailers and its website sonos.com. The Company’s products are distributed in over 50 countries through its wholly owned subsidiaries: Sonos Europe B.V., Beijing Sonos Technology Co., Ltd. and Sonos Australia Pty Ltd., located in the Netherlands, China and Australia, respectively. Initial public offering On August 6, 2018, the Company completed its initial public offering ("IPO") of its common stock, in which it sold 6,388,888 shares of its common stock, including 833,333 shares of its common stock pursuant to the underwriters’ over-allotment option, and selling stockholders sold 9,583,333 shares of the Company's common stock, including 1,250,000 shares pursuant to the underwriters' over-allotment option. The shares were sold at the IPO price of $ 15.00 per share for net proceeds of $ 90.6 million, after deducting underwriting discounts and commissions of $ 5.3 million. Additionally, offering costs incurred by the Company totaled approximately $ 4.6 million. Upon the closing of the IPO, all outstanding shares of the Company's redeemable convertible preferred stock automatically converted into 32,482,590 shares of common stock on a one -for-one basis. |
Summary of significant accounti
Summary of significant accounting policies | 12 Months Ended |
Sep. 29, 2018 | |
Accounting Policies [Abstract] | |
Summary of significant accounting policies | Summary of significant accounting policies Basis of presentation and preparation The consolidated financial statements, which include the accounts of Sonos, Inc. and its wholly owned subsidiaries, have been prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP"). All intercompany accounts and transactions have been eliminated in consolidation. The Company has a 4-4-5 fiscal year ending on the Saturday nearest September 30 each year. The Company’s fiscal year is divided into four quarters of 13 weeks, each beginning on a Sunday and containing two 4-week months followed by a 5-week "month." An additional week is included in the fourth fiscal quarter approximately every five years to realign fiscal quarters with calendar quarters. This occurred last in the fourth quarter of the Company’s fiscal year ended October 3, 2015. References to fiscal 2018 are to the Company’s fiscal year ended September 29, 2018 , references to fiscal 2017 are to the Company’s fiscal year ended September 30, 2017 and references to fiscal 2016 are to the Company’s fiscal year ended October 1, 2016 . Stock split On July 19, 2018, the Company effected a two -for-one stock split of all outstanding shares of the Company’s capital stock, including its common stock and its redeemable convertible preferred stock. All share and per share information presented in the consolidated financial statements have been retroactively adjusted for all periods presented for the effects of the stock split. Use of estimates and judgments The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. For revenue recognition, examples of estimates and judgments include: determining the nature and timing of satisfaction of performance obligations, determining the standalone selling price ("SSP") of performance obligations, estimating variable consideration such as sales incentives, and product returns. Additionally, estimates and judgments are made by management for allowances for doubtful accounts, the market value of and demand for inventory, useful lives associated with property and equipment, valuation allowances with respect to deferred tax assets and uncertain tax positions, impairment of long-lived assets, goodwill impairment, warranty, contingencies and valuation and assumptions underlying stock-based compensation and other equity instruments. On an ongoing basis, the Company evaluates its estimates and judgments compared to historical experience and trends that form the basis for making estimates and judgments about the carrying value of assets and liabilities. Comprehensive income (loss) Comprehensive income (loss) consists of two components: net income (loss) and other comprehensive income (loss), net of tax. Other comprehensive income (loss), net of tax refers to net gains and losses that are recorded as an element of stockholders’ equity (deficit), but are excluded from net income (loss). The Company’s other comprehensive income (loss), net of tax consists of net unrealized gains and losses on foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency. Cash and cash equivalents Cash equivalents consist of short-term, highly liquid financial instruments with insignificant interest rate risk that are readily convertible to cash and have maturities of three months or less from the date of purchase. As of September 29, 2018 and September 30, 2017 , cash equivalents consisted of money market funds, which are recorded at fair value. Restricted cash The Company held $ 0.2 million in restricted cash as of September 29, 2018 and September 30, 2017 , representing security deposits on real estate leases. Accounts receivable Accounts receivable are recorded at the invoiced amount less allowances for doubtful accounts and sales incentives, do not require collateral and do not bear interest. The allowance for doubtful accounts is established through a provision for net bad debt expense which is recorded in general and administrative expense in the consolidated statements of operations and comprehensive loss. The Company determines the adequacy of the allowance for doubtful accounts by evaluating customer accounts receivable balances as well as the customer’s financial condition, credit history and current economic conditions. This estimate is periodically adjusted as a result of the aforementioned process, or when the Company becomes aware of a specific customer’s inability to meet its financial obligations. Accounts receivable allowances The following table summarizes changes in the allowance for doubtful accounts for fiscal 2018, 2017 and 2016: 2018 2017 2016 (In thousands) Beginning balance $ 804 $ 726 $ 679 Increases 635 449 962 Write-offs (567 ) (371 ) (915 ) Ending balance $ 872 $ 804 $ 726 The following table summarizes the changes in the allowance for sales incentives for fiscal 2018, 2017 and 2016: 2018 2017 2016 (In thousands) Beginning balance $ 11,195 $ 8,913 $ 6,235 Charged to revenue 90,246 65,879 34,627 Utilization of sales incentive allowance (89,687 ) (63,597 ) (31,949 ) Ending balance $ 11,754 $ 11,195 $ 8,913 Concentration of credit risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company maintains cash and cash equivalents in several high-quality financial institutions. Cash and cash equivalents held at these banks, including those held in foreign branches of global banks, may exceed the amount of insurance provided on such deposits. These deposits may be redeemed upon demand and management believes that the financial institutions that hold the Company’s cash and cash equivalents are financially sound and, accordingly, minimal credit risk exists with respect to cash. The Company has not experienced any losses in such accounts. As of September 29, 2018 and September 30, 2017 , the Company’s customers that accounted for 10% or more of total accounts receivable, net, were as follows: Accounts receivable, net 2018 2017 Customer A 31 % 26 % Customer B 13 % 16 % Customer C 11 % * * Accounts receivable was less than 10%. The Company’s customers that accounted for 10% or more of total revenue were as follows: Revenue Year Ended 2018 2017 2016 Customer A 17 % 16 % 17 % Customer C 10 % 12 % 11 % Inventories Inventories primarily consist of finished goods and to a lesser extent component parts, which are purchased from contract manufacturers and component suppliers. Inventories are stated at lower of cost and net realizable value on a first-in, first-out basis. The Company assesses the valuation of inventory balances including an assessment to determine potential excess and/or obsolete inventory. The Company may be required to write down the value of inventory if estimates of future demand and market conditions indicate estimated excess and/ or obsolete inventory. For the periods presented, the Company has not experienced significant write-downs. Property and equipment, net Property and equipment are stated at historical cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets as follows: Computer hardware and software 2-3 years Furniture and fixtures 3-5 years Tooling and production line test equipment 2-4 years Leasehold improvements 2-10 years Product displays 1-3 years Costs incurred to improve leased office space are capitalized. Leasehold improvements are amortized on a straight-line basis over the shorter of the term of the lease or the estimated useful life of the improvement. Expenditures for major renewals and improvements that extend the useful lives of property and equipment are capitalized. Maintenance, repair costs and gains or losses associated with disposals are charged to expense as incurred. Product displays are deployed at retail locations. Because the product displays facilitate marketing of the Company’s products within the retail stores, depreciation for product displays is recorded in sales and marketing expenses in the consolidated statements of operations and comprehensive loss. Impairment of long-lived assets The Company evaluates the recoverability of its long-lived assets, primarily comprised of property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The Company performs impairment testing at the level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability is measured by comparing the carrying amounts to the expected future undiscounted cash flows attributable to the assets. If it is determined that an asset may not be recoverable, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded. Fair value is determined based upon estimated discounted future cash flows. There were no impairment charges identified on the Company’s long-lived assets for each period presented. Product warranties The Company’s products are covered by warranty to be free from defects in material and workmanship for a period of one year , except for products sold in the European Union where the Company provides a two -year warranty. At the time of sale, an estimate of future warranty costs is recorded as a component of cost of revenue and a warranty liability is recorded for estimated costs to satisfy the warranty obligation. The Company’s estimate of costs to fulfill its warranty obligations is based on historical experience and expectations of future costs to repair or replace. Legal contingencies If a potential loss from any claim or legal proceeding is considered probable, and the amount can be reasonably estimated, the Company accrues a liability for an estimated loss. Legal fees are expensed as incurred and included in general and administrative expenses in the consolidated statements of operations and comprehensive loss. See Note 11 for additional information regarding legal contingencies. Treasury stock The Company accounts for treasury stock acquisitions using the cost method. The Company accounts for the retirement of treasury stock by deducting its par value from common stock and reflecting any excess of cost over par value as a deduction from additional paid-in capital on the consolidated balance sheets. Fair value accounting Assets and liabilities recorded at fair value on the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level Input Input Definition Level 1 Quoted prices for identical assets or liabilities in active markets at the measurement date. Level 2 Inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities, in active markets or other inputs that are observable or can be corroborated with market data at the measurement date. Level 3 Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. Foreign currency Certain of the Company’s wholly owned subsidiaries have non-U.S. dollar functional currencies. The Company translates assets and liabilities of non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period and stockholders’ equity (deficit) at historical rates. Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from translation are recognized in foreign currency translation included in accumulated other comprehensive income (loss). The Company remeasures monetary assets or liabilities denominated in currencies other than the functional currency using exchange rates prevailing on the balance sheet date, and non-monetary assets and liabilities at historical rates. Foreign currency remeasurement and transaction gains and losses are included in other income (expense), net. Foreign currency remeasurement and transaction gains (losses) are recorded in other income (expense), net and were $(1.2) million , $3.2 million and $(2.2) million for fiscal 2018, 2017 and 2016, respectively. Revenue recognition Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company generally enters into contracts that include a combination of products and services. Revenue is allocated to distinct performance obligations and is recognized net of allowances for returns, discounts, sales incentives and any taxes collected from customers, which are subsequently remitted to governmental authorities. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of revenue. As of September 29, 2018 and September 30, 2017 , the Company did not have any material assets related to incremental costs to obtain or fulfill customer contracts. Nature of products and services Product revenue includes sales of wireless speakers, home theater speakers and audio components, which include software that enables the Company’s products to operate over a customer’s wireless network, as well as connect to various third-party services, including music and voice. Software primarily consists of firmware embedded in the products and the Sonos app, which is software that can be downloaded to consumer devices at no charge, with or without the purchase of one of the Company’s products. Products and related software are accounted for as a single performance obligation and all intended functionality is available to the customer upon purchase. The revenue allocated to the products and related software is the substantial portion of the total sale price. Product revenue is recognized at the point in time when control is transferred, which is either upon shipment or upon delivery to the customer, depending on delivery terms. Service revenue includes revenue allocated to (i) unspecified software upgrades and (ii) cloud-based services that enable products to access third-party music and voice assistant platforms, which are each distinct performance obligations and are provided to customers at no additional charge. Unspecified software upgrades are provided on a when-and-if-available basis and have historically included updates and enhancements such as bug fixes, feature enhancements and updates to the ability to connect to third-party music or voice assistant platforms. Service revenue is recognized ratably over the estimated service period. Significant judgments The Company’s contracts with customers generally contain promises to transfer products and services as described above. Determining whether products and services are considered distinct performance obligations that should be accounted for separately requires significant judgment. Judgment is required to determine the SSP for each distinct performance obligation. The Company estimates SSP for items that are not sold separately, which include the products and related software, unspecified software upgrades and cloud-based services, using information that may include competitive pricing information, where available, as well as analyses of the cost of providing the products or services plus a reasonable margin. In developing SSP estimates, the Company also considers the nature of the products and services and the expected level of future services. Determining the revenue recognition period for unspecified software upgrades and cloud-based services also requires judgment. The Company recognizes revenue attributable to these performance obligations ratably over the best estimate of the period that the customer is expected to receive the services. In developing the estimated period of providing future services, the Company considers past history, plans to continue to provide services, including plans to continue to support updates and enhancements to prior versions of the Company’s products, expected technological developments, obsolescence, competition and other factors. The estimated service period may change in the future in response to competition, technology developments and the Company’s business strategy. The Company offers sales incentives through various programs consisting primarily of discounts, cooperative advertising and market development fund programs. The Company records cooperative advertising and market development fund programs with customers as a reduction to revenue unless it receives a distinct benefit in exchange for credits claimed by the customer and can reasonably estimate the fair value of the benefit received, in which case the Company records it as an expense. The Company recognizes a liability or a reduction to accounts receivable, and reduces revenue based on the estimated amount of sales incentives that will be claimed by customers. Estimates for sales incentives are developed using the most likely amount and are included in the transaction price to the extent that a significant reversal of revenue would not result once the uncertainty is resolved. In developing its estimate, the Company also considers the susceptibility of the incentive to outside influences, the length of time until the uncertainty is resolved and the Company’s experience with similar contracts. Reductions in revenue related to discounts are allocated to products and services on a relative basis based on their respective SSP. Judgment is required to determine the timing and amount of recognition of marketing funds which the Company estimates based on past practice of providing similar funds. The Company accepts returns from direct customers and from certain resellers. To establish an estimate for returns, the Company uses the expected value method by considering a portfolio of contracts with similar characteristics to calculate the historical returns rate. When determining the expected value of returns, the Company considers future business initiatives and relevant anticipated future events. Supplier concentration The Company relies on third parties for the supply and manufacture of its products, as well as third-party logistics providers. In instances where these parties fail to perform their obligations, the Company may be unable to find alternative suppliers or satisfactorily deliver its products to customers on time, if at all. During fiscal 2018 , 2017 and 2016, approximately 98% , 99% and 99% , respectively, of the Company’s finished goods purchased during each year were from one vendor. Deferred revenue and payment terms The Company invoices each order upon hardware shipment or delivery and recognizes revenue for each distinct performance obligation when transfer of control has occurred, which in the case of services, may extend over several reporting periods. Amounts invoiced in advance of revenue recognition are recorded as deferred revenue on the consolidated balance sheets. Deferred revenue primarily relates to revenue allocated to unspecified software upgrades and platform services. The Company classifies deferred revenue as noncurrent if amounts are expected to be recognized as revenue after more than one year from the balance sheet date. The following table summarizes the changes in the deferred revenue balances: 2018 2017 2016 (In thousands) Deferred revenue, beginning of period $ 45,567 $ 36,160 $ 27,373 Recognition of revenue included in beginning of period deferred revenue (10,627 ) (6,878 ) (4,553 ) Revenue deferred, net of revenue recognized on contracts in the respective period 16,027 16,285 13,340 Deferred revenue, end of period $ 50,967 $ 45,567 $ 36,160 The Company expected the following recognition of deferred revenue as of September 29, 2018 : For the fiscal years ending (In thousands) 2019 2020 2021 2022 2023 and Beyond Total Revenue expected to be recognized $ 11,615 $ 10,905 $ 9,602 $ 7,756 $ 11,089 $ 50,967 See Note 4 for further information with respect to revenue, including revenue by product category and geography. Payment terms Payment terms and conditions vary among the Company’s distribution channels although terms generally include a requirement of payment within 30 days of product shipment. Sales directly to customers from the Company’s website are paid in advance of product shipment. Prior to providing payment terms to customers, an evaluation of the customer’s credit risk is performed. Contractual allowances are an offset to accounts receivable, net. Research and development Research and development expenses consist primarily of personnel-related expenses, consulting and outside professional service costs, tooling and prototype materials and overhead costs. Substantially all of the Company’s research and development expenses are related to developing new products and services and improving existing products and services. To date, software development costs have been expensed as incurred because the period between achieving technological feasibility and the release of the software has been short and development costs qualifying for capitalization have been insignificant. Advertising costs Advertising costs are expensed as incurred and included in sales and marketing expenses. Advertising expenses were $50.2 million , $72.2 million and $50.6 million for fiscal 2018, 2017 and 2016, respectively. Stock-based compensation The Company measures stock-based compensation cost at fair value on the date of grant. The Company estimates the fair value of stock option awards using the Black-Scholes option-pricing model. The fair value of restricted stock units ("RSUs") is the fair value of the Company’s common stock on the grant date. Compensation costs for RSUs and for stock options with graded vesting are recognized, on a straight-line basis, as expense over the period of vesting as the employee performs the related services, net of estimated forfeitures. The Company estimates forfeitures based on expected future terminations and will revise rates, as necessary, in subsequent periods if actual forfeitures differ from initial estimates. 401(k) Plan The Company has a defined contribution 401(k) plan (the "401(k) Plan") for the Company’s U.S-based employees. The 401(k) Plan is for all full-time employees who meet certain eligibility requirements. Eligible employees may contribute up to 100% of their annual compensation, but are limited to the maximum annual dollar amount allowable under the Internal Revenue Code of 1986, as amended (the "Code"). Although the 401(k) Plan provides for discretionary employer matching contribution, the Company has not made any such contributions on behalf of participating employees as of September 29, 2018. Income taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company records a valuation allowance to the extent that its deferred tax assets are not more likely than not to be realized. In making such a determination, all available positive and negative evidence is considered, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies and results of recent operations. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions in accordance with a two-step process whereby (i) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more likely than not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes in the consolidated statements of operations and comprehensive loss. The Company has not incurred any interest or penalties related to unrecognized tax benefits in any of the periods presented. The Company’s provision for (benefit from) income taxes, deferred tax assets and liabilities and liabilities for unrecognized tax benefits involves the use of estimates, assumptions and judgments. Although the Company believes its estimates, assumptions and judgments to be reasonable, any changes in tax law or its interpretation of tax laws and the resolutions of potential tax audits could significantly impact the amounts provided for income taxes in the Company’s consolidated financial statements. Actual future operating results and the underlying amount and type of income could differ materially from the Company’s estimates, assumptions and judgments thereby impacting the Company’s financial position and results of operations. Segment information The Company operates as one operating segment as it only reports aggregate financial information on a consolidated basis, accompanied by disaggregated information about revenue by geographic region and product category to its Chief Executive Officer, who is the Company’s chief operating decision maker. Leases The substantial majority of the Company’s leases are for its office spaces and facilities, which are accounted for as operating leases. For leases that contain rent escalation or rent concession provisions, the Company recognizes rent on a straight-line basis over the term of the lease. The Company does not assume renewals in its determination of the lease term unless the renewals are deemed to be reasonably assured at inception. Tenant improvement allowances received from landlords are recorded as a credit to deferred rent, reported as a liability on the consolidated balance sheets and amortized on a straight-line basis over the lease term as a reduction to rent expense in the consolidated statements of operations and comprehensive loss. Recently adopted accounting pronouncements Revenue from contracts with customers In May 2014, the Financial Accounting Standards Board (the "FASB") issued a new standard related to revenue recognition, Accounting Standards Codification ("ASC") No. 606, Revenue from Contracts with Customers ("ASC 606"). Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASC 606 is required to be adopted for annual reporting periods beginning after December 15, 2017, including interim periods therein, and may be earlier adopted, though no earlier than for annual reporting periods beginning after December 15, 2016. The Company elected to early adopt ASC 606 effective October 1, 2017, using the full retrospective transition method, which required the Company to adjust each prior reporting period presented. The most significant impact of the adoption of this standard related to the Company’s accounting for arrangements with certain distributors and retail partners with implicit or explicit return rights that were recognized based on a sell-through method under ASC 605, Revenue Recognition. Under ASC 606, revenue with these parties is recognized upon transfer of control to the customer which occurs when the product is either shipped to or delivered to the customer depending on the contractual terms of the arrangement. This change resulted in an acceleration of revenue and related costs of revenue and most significantly, a reduction in deferred costs of revenue and deferred revenue at each balance sheet date. This acceleration of revenue can have a net increase or decrease in the adjusted revenue for the respective fiscal year depending on the year over year impact of the amounts accelerated across reporting periods. The impact of the adjusted balances on previously reported results presented below were also affected by changes in both product mix as well as by the timing of transactions within fiscal years. Impact to previously reported results The adoption of ASC 606 impacted the Company’s previously reported amounts on the consolidated balance sheets as of October 1, 2016 as follows: 2016 (In thousands) As previously reported Impact of adoption As adjusted Accounts receivable, net $ 48,569 $ (3,262 ) $ 45,307 Inventories, net 53,553 9 53,562 Deferred costs of revenue 27,478 (27,478 ) — Other current assets 8,850 587 9,437 Deferred tax assets 6,207 (3,663 ) 2,544 Deferred revenue 96,696 (60,536 ) 36,160 Other current liabilities 4,599 1,936 6,535 Stockholders’ equity (deficit) (53,581 ) 24,793 (28,788 ) The adoption of ASC 606 impacted the Company’s previously reported amounts on the consolidated statements of operations and comprehensive loss for the years ended October 3, 2015 and October 1, 2016 as follows: 2016 2015 (In thousands) As previously Impact of As adjusted As previously Impact of As adjusted Net revenue $ 904,049 $ (2,765 ) $ 901,284 $ 860,652 $ (17,128 ) $ 843,524 Cost of revenue 494,673 3,212 497,885 468,229 (6,842 ) 461,387 Provision for income taxes 2,930 (286 ) 2,644 2,734 508 3,242 Net loss (32,523 ) (5,691 ) (38,214 ) (57,983 ) (10,794 ) (68,777 ) The Company has not previously reported its financial statements for fiscal 2017 under ASC 605. The adoption of ASC 606 had no impact to cash flows provided by or used in operating, financing or investing activities on the Company’s consolidated statements of cash flows. The cumulative impact of adoption resulted in a reduction to the Company’s accumulated deficit by $43.4 million from the previously reported accumulated deficit of $110.2 million , as of September 28, 2014, the beginning of the Company’s fiscal 2015. Recent accounting pronouncements pending adoption In February 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) ("ASU 2016-02"), which amends a number of aspects of lease accounting, including requiring lessees to recognize operating leases with a term greater than one year on their balance sheet as a right-of-use asset and corresponding liability, measured at the present value of the lease payments. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. In January 2018, the FASB issued ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842 (“ASU 2018-01”), which establishes an optional transition practical expedient when applying the guidance in ASU 2016-02. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases (“ASU 2018-10”), and ASU No. 2018-11, Targeted Improvements (“ASU 2018-11”). ASU 2018-10 affects narrow aspects of the guidance issued in ASU 2016-02. ASU 2018-11 provides an additional transition method. The Company is currently evaluating the impact of adopting ASU 2016-02, ASU 2018-01, ASU 2018-10 and ASU 2018-11 on its consolidate |
Fair value measurements
Fair value measurements | 12 Months Ended |
Sep. 29, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements | Fair value measurements The carrying values of the Company’s financial instruments, including accounts receivable and accounts payable, approximate their fair values due to the short period of time to maturity or repayment. The carrying values of the Company’s long-term debt approximate their fair values as of September 29, 2018 and September 30, 2017 as the debt carries a variable rate or market rates that approximate those currently available to the Company. The following table summarizes fair value measurements by level for the assets measured at fair value on a recurring basis as of September 29, 2018 and September 30, 2017 : 2018 (In thousands) Level 1 Level 2 Level 3 Total Assets: Money market funds (cash equivalents) $ 140,588 $ — $ — $ 140,588 2017 (In thousands) Level 1 Level 2 Level 3 Total Assets: Money market funds (cash equivalents) $ 40,072 $ — $ — $ 40,072 |
Revenue and geographic informat
Revenue and geographic information | 12 Months Ended |
Sep. 29, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue and geographic information | Revenue and geographic information Disaggregation of revenue Revenue by geographical region, based on ship-to address, is as follows: 2018 2017 2016 (In thousands) Americas $ 603,450 $ 496,668 $ 443,314 Europe, Middle East and Africa 478,518 442,081 415,689 Asia Pacific 55,040 53,777 42,281 Total revenue $ 1,137,008 $ 992,526 $ 901,284 Revenue from external customers is attributed to individual countries based on ship-to address. Revenue by significant countries is as follows: 2018 2017 2016 (In thousands) United States $ 554,896 $ 449,261 $ 399,531 Germany 121,546 111,065 93,824 United Kingdom 114,790 110,695 120,732 Other countries 345,776 321,505 287,197 Total revenue $ 1,137,008 $ 992,526 $ 901,284 Revenue by major product category is as follows: 2018 2017 2016 (In thousands) Wireless speakers $ 546,649 $ 480,977 $ 462,967 Home theater speakers 418,416 348,899 274,268 Components 150,436 151,965 151,658 Other 21,507 10,685 12,391 Total revenue $ 1,137,008 $ 992,526 $ 901,284 Revenue by product categories includes the applicable service revenue attributable to each product category. Property and equipment, net by country as of September 29, 2018 and September 30, 2017 were as follows: 2018 2017 (In thousands) United States $ 48,441 $ 59,738 China 18,729 22,672 Other countries 18,201 12,720 Property and equipment, net $ 85,371 $ 95,130 |
Balance sheet components
Balance sheet components | 12 Months Ended |
Sep. 29, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Balance sheet components | Balance sheet components The following tables show the Company’s balance sheet component details as of September 29, 2018 and September 30, 2017 . Inventories Inventories, net, consist of the following: 2018 2017 (In thousands) Finished goods $ 176,181 $ 104,014 Components 17,012 9,842 Inventories $ 193,193 $ 113,856 Property and equipment, net Property and equipment, net consist of the following: 2018 2017 (In thousands) Computer hardware and software $ 46,385 $ 42,928 Furniture and fixtures 9,696 9,840 Tooling and production line test equipment 47,297 42,368 Leasehold improvements 53,962 53,479 Product displays 40,265 55,855 Total property and equipment 197,605 204,470 Accumulated depreciation and amortization (112,234 ) (109,340 ) Property and equipment, net $ 85,371 $ 95,130 Depreciation expense was $39.4 million , $35.0 million and $34.3 million for fiscal 2018 , 2017 and 2016 , respectively. During fiscal 2018 , 2017 and 2016 , the Company disposed of gross fixed assets of $ 35.8 million, $ 11.5 million and $ 6.2 million, with accumulated depreciation of $35.6 million , $11.2 million and $3.4 million , respectively. Disposals of fixed assets were recorded in operating expenses in the consolidated statements of operations and comprehensive loss and resulted in losses of $ 0.2 million, $ 0.2 million and $ 3.1 million for fiscal 2018 , 2017 and 2016 , respectively. Accrued expenses Accrued expenses consisted of the following: 2018 2017 (In thousands) Accrued advertising and marketing $ 11,613 $ 10,880 Accrued taxes 4,175 4,800 Accrued inventory 4,179 22,563 Accrued manufacturing, logistics and product development 8,290 4,921 Other accrued payables 10,430 14,184 Total accrued expenses $ 38,687 $ 57,348 |
Debt
Debt | 12 Months Ended |
Sep. 29, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Debt Our short and long term debt as of September 29, 2018 and September 30, 2017 is as follows: 2018 2017 Rate Balance Rate Balance (In thousands) J.P. Morgan Chase Bank, N.A Secured Term Loan (the "New Term Loan") (1) 4.8 % $ 40,000 — % $ — J.P. Morgan Chase Bank, N.A Secured Credit Facility (the "Credit Facility") (2) — % — — % — Gordon Brothers Finance Company Secured Term Loan (the "Prior Term Loan") (3) — % — 10.7 % 40,000 Unamortized debt issuance costs (4) (236 ) (400 ) Total indebtedness 39,764 39,600 Less short term portion (6,667 ) — Long term debt $ 33,097 $ 39,600 (1) Bears interest at a variable rate equal to an adjusted LIBOR plus 2.25% and is payable quarterly. Due in October 2021, with quarterly principal payments beginning in July 2019. (2) Allows the Company to borrow up to $80.0 million restricted to the value of the borrowing base which is based on the value of inventory and accounts receivable and is subject to monthly redetermination. Also includes up to $10.0 million for the issuance of letters of credit and up to $8.0 million for swing line loans. The Credit Facility matures in October 2021 and may be drawn as Commercial Bank Floating Rate Loans (at the higher of prime rate or adjusted LIBOR plus 2.50% ) or Eurocurrency Loans (at LIBOR plus an applicable margin). The unused portion is subject to an annual commitment fee of 0.2% . (3) In July 2018, all outstanding principal, accrued interest and fees were paid in full and the Prior Term Loan was terminated. While outstanding, it bore interest at LIBOR plus 9.5% . (4) Debt issuance costs are recorded as debt discount and recorded as interest expense over the term of the agreement. The Credit Facility and the New Term Loan require the Company to maintain a consolidated fixed charge ratio of at least 1.0 , restrict distribution of dividends unless certain conditions are met, such as having a fixed charge ratio of at least 1.15, and require financial statement reporting and delivery of borrowing base certificates. As of September 29, 2018 and September 30, 2017 , the Company was in compliance with all financial covenants. Obligations under the New Term Loan and the Credit Facility are collateralized by eligible inventory and accounts receivable of the Company as well as the Company's intellectual property including patents and trademarks. As of September 29, 2018 and September 30, 2017 , the Company did not have any outstanding borrowings and $4.5 million and $4.4 million, respectively, in undrawn letters of credit that reduce the availability under the Credit Facility. As of September 29, 2018 , the Company had $39.8 million outstanding on the New Term Loan. |
Stockholders' equity
Stockholders' equity | 12 Months Ended |
Sep. 29, 2018 | |
Equity [Abstract] | |
Stockholders' equity | Stockholders' equity Redeemable convertible preferred stock Upon the closing of the IPO, all outstanding shares of the Company's redeemable convertible preferred stock automatically converted into 32,482,590 shares of common stock on a one -for-one basis. Additionally, upon completion of the IPO, the Company's authorized capital stock consisted of 500,000,000 shares of common stock, $0.001 par value per share and 10,000,000 shares of "blank check" preferred stock, $0.001 par value per share. The following table summarizes the redeemable convertible preferred stock information (together, the "Preferred Stock") as of September 30, 2017: (In thousands, except share amounts) Authorized Shares Issued and Outstanding Shares Carrying Value Liquidation Preference Series A preferred stock 10,035,000 10,005,000 $ 15,060 $ 15,008 Series B preferred stock 3,881,250 3,730,000 5,926 5,968 Series C preferred stock 11,700,000 11,688,766 26,556 25,000 Series D preferred stock 7,058,824 7,058,824 42,799 45,000 Total 32,675,074 32,482,590 $ 90,341 $ 90,976 Common and treasury stock During fiscal 2017 , in an effort to facilitate the sale of common stock to new investors and provide liquidity for existing stockholders, the Company purchased 738,682 shares of common stock at the fair value of common stock at the date of exchange for an aggregate purchase price of $ 10.0 million and concurrent therewith, the Company issued 742,034 shares of common stock to two outside investors. The sale price to the outside investors was $ 13.56 per share, the fair value of common stock at the date of exchange, for total gross proceeds to the Company of $ 10.1 million. |
Stock-based compensation
Stock-based compensation | 12 Months Ended |
Sep. 29, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based compensation | Stock-based compensation During 2003, the Board established the 2003 Stock Plan, as amended (the "2003 Plan"). The 2003 Plan includes incentive stock options that are subject to the rules and regulations of the Code and nonqualified stock options. The option price, number of shares and grant date of stock options granted under the 2003 Plan were determined at the discretion of the Board. Under the 2003 Plan, as long as the optionholder performs services for the Company, the options generally vest over 48 months, with cliff vesting after one year and monthly vesting thereafter and are exercisable for a period not to exceed ten years from the date of grant. In July 2018, the Board adopted the 2018 Equity Incentive Plan (the "2018 Plan") and ceased granting awards under the 2003 Plan. The 2018 Plan became effective in connection with the IPO. The Company reserved 21,200,000 shares of its common stock for issuance under the 2018 Plan. Any remaining shares available for issuance under the 2003 Plan on the effective date of the 2018 Plan were added to the shares of common stock reserved for issuance under the 2018 Plan. The number of shares reserved for issuance under the 2018 Plan will also be increased by (i) the number of shares that are subject to outstanding awards under the 2003 Plan which cease to be subject to such awards and (ii) the number of shares issued under the 2003 Plan which are forfeited or repurchased at their original issue price; however, shares subject to awards under the 2003 Plan that are used to pay the exercise price of an option or withheld to satisfy the tax withholding obligations related to any award will not become available for future grant or sale under the 2018 Plan. Further, the number of shares reserved for issuance under the 2018 Plan will increase automatically on January 1 of each year beginning in 2019 and continuing through 2028 by a number of shares of common stock equal to the lesser of (x) 5% of the total outstanding shares of the Company’s common stock and common stock equivalents as of the immediately preceding December 31 (rounded to the nearest whole share) and (y) a number of shares determined by the Board. As of September 29, 2018, there were 21,939,408 shares reserved for future issuance, including 21,200,000 shares authorized under the 2018 Plan, plus shares under the 2003 Plan that were available for issuance, or forfeited, that were added to shares reserved for issuance under the 2018 Plan. As of September 29, 2018, the Company had not granted any RSUs. Stock option activity was as follows: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Weighted Average Intrinsic Value (in years) (in thousands) Outstanding at September 30, 2017 45,817,252 $ 9.20 6.9 $ 199,663 Granted 9,316,926 15.12 Exercised (2,657,436 ) 3.52 Forfeited (3,971,280 ) 13.14 Expired (1,280 ) 15.11 Outstanding at September 29, 2018 48,504,182 $ 10.33 6.6 $ 276,959 At September 29, 2018 Options exercisable 31,194,219 $ 8.13 5.4 $ 246,847 Options vested and expected to vest 45,662,090 $ 10.07 6.5 $ 272,699 During fiscal 2018 , 2017 and 2016 , the Company granted options with a fair value of $ 50.2 million, $ 39.4 million and $ 83.5 million, respectively, with a weighted-average grant date fair value of $ 5.39 , $ 4.84 and $ 5.32 per share, respectively. The total intrinsic value of stock options exercised was $ 31.3 million, $ 42.0 million and $ 17.4 million for fiscal 2018 , 2017 and 2016 , respectively. As of September 29, 2018 and September 30, 2017 , the Company had $ 71.5 million and $ 74.9 million, respectively, of unrecognized stock-based compensation cost, which is expected to be recognized over a weighted-average period of 2.6 years and 2.8 years , respectively. The Company’s policy for issuing stock upon stock option exercise is to issue new common stock. Stock-based compensation cost is measured at the grant date based on the fair value of the award and is expensed, net of estimated forfeitures, over the remaining requisite service period. The Company uses the Black- Scholes option pricing model to estimate the fair value of stock options. This model requires the input of highly subjective assumptions including the expected term of the option, expected stock price volatility and expected dividends. If any of the assumptions used in the Black-Scholes model changes significantly, stock-based compensation expense may differ materially in the future from that recorded in the current period. The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model with the following weighted-average assumptions: 2018 2017 2016 Expected term (years) 6.25 6.25 6.25 Risk-free interest rate 2.73 % 1.95 % 1.29 % Expected volatility 30.19 % 32.40 % 36.64 % Expected dividend yield — % — % — % Expected term The expected term represents the period over which the Company anticipates stock-based awards to be outstanding. The Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. As a result, the Company elected the simplified method, which is the average of the options’ vesting and contractual terms. Risk-free interest rate The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the option. Expected share price volatility The Company’s computation of expected volatility is based on the historical volatility of selected comparable publicly traded companies over a period equal to the expected term of the option. Expected dividend yield The Company used a zero-dividend yield, as the Company has never paid dividends and does not plan to pay dividends in the near future. Fair value of common stock Prior to the IPO, in accordance with the American Institute of Certified Public Accountants Accounting and Valuation Guide, Valuation of Privately-Held Company Equity Securities Issued as Compensation , the Board exercised reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of fair value of the Company’s common stock, including but not limited to the prices at which the Company sold shares of its common stock to outside investors in arm’s-length transactions; independent third-party valuations of the Company’s common stock; the rights, preferences and privileges of redeemable convertible preferred stock relative to those of common stock; the Company’s operating results, financial position and capital resources; and additional relevant economic information. Subsequent to the Company's IPO, the Company began using the market closing price for its common stock as reported on The Nasdaq Global Select Market. Total stock-based compensation expense by function category was as follows: 2018 2017 2016 (In thousands) Cost of revenue $ 198 $ 240 $ 211 Research and development 13,960 13,605 8,260 Sales and marketing 15,885 15,086 11,742 General and administrative 8,602 7,619 5,750 Total stock-based compensation expense $ 38,645 $ 36,550 $ 25,963 |
Income taxes
Income taxes | 12 Months Ended |
Sep. 29, 2018 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes The Company’s income (loss) before provision for (benefit from) income taxes for fiscal 2018, 2017 and 2016 were as follows: 2018 2017 2016 (In thousands) Domestic $ 2,803 $ (25,005 ) $ (47,285 ) Foreign (17,351 ) 8,497 11,715 Income (loss) before provision for (benefit from) income taxes $ (14,548 ) $ (16,508 ) $ (35,570 ) Components of the provision for (benefit from) income taxes consisted of the following: 2018 2017 2016 (In thousands) Current: U.S. Federal $ — $ — $ 129 U.S. State 177 62 59 Foreign 816 (3,791 ) 3,344 Total current 993 (3,729 ) 3,532 Deferred: U.S. Federal (168 ) — — U.S. State — — — Foreign 231 1,438 (888 ) Total deferred 63 1,438 (888 ) Provision for (benefit from) income taxes $ 1,056 $ (2,291 ) $ 2,644 Components of the Company’s net deferred income tax assets (liabilities) are as follows: 2018 2017 (In thousands) Deferred tax assets Accrued expenses and reserves $ 5,639 $ 8,828 Deferred revenue 10,317 218 Inventory deferral — 3,259 U.S. net operating loss carryforwards 18,385 53,589 Foreign net operating loss carryforwards 5,625 1,147 Tax credit carryforwards 22,969 17,553 Stock-based compensation 7,237 7,976 Amortization 3,237 3,859 Other 427 324 Total deferred tax assets 73,836 96,753 Valuation allowance (72,380 ) (94,956 ) Deferred tax assets, net of valuation allowance 1,456 1,797 Deferred tax liabilities Depreciation (515 ) (690 ) Total deferred tax liabilities (515 ) (690 ) Net deferred tax assets $ 941 $ 1,107 After considering all available positive and negative evidence, the Company has determined it is more likely than not that deferred tax assets will not be realized and that a full valuation allowance is required in the United States and the Netherlands. Both jurisdictions have generated cumulative losses in recent years. The Company has deferred tax assets in other foreign jurisdictions which it determined are more likely than not to be fully realized. As of September 29, 2018, the Company had gross federal and post-apportionment state net operating loss carryforwards of $74.7 million and $45.9 million , respectively, available to reduce future taxable income. The earliest federal and state net operating loss carryforwards expire in varying amounts beginning in 2033 and 2020, respectively. As of September 29, 2018, the Company had gross foreign net operating loss carryforwards of $21.9 million , of which $2.7 million have an indefinite life and $ 19.2 million that will expire in 2027 . The Company also has gross federal and state research and development tax credits carryforwards of $25.4 million and $19.1 million , respectively. The federal research credits will begin to expire in the year 2025, and the state research credits will begin to expire in the year 2024. Because of the change of ownership provisions of Sections 382 and 383 of the Code, use of a portion of the Company’s domestic net operating losses and tax credit carryforwards may be limited in future periods depending upon future changes in ownership. Specifically, the Company’s net operating losses generated through July 18, 2012 may be subject to limitation under Section 382 of the Code. The amount of pre-change loss carryforward which may be subject to this limitation is $46.8 million . Further, a portion of the carryforwards may expire before being applied to reduce future income tax liabilities if sufficient taxable income is not generated in future periods. The following table summarizes changes in the valuation allowance for fiscal 2018, 2017 and 2016: (In thousands) 2018 2017 2016 Beginning balance $ 94,956 $ 95,882 $ 33,264 Increase (decrease) during the period (22,576 ) (926 ) 19,535 Increase due to adoption of ASU 2016-09 — — 43,083 Ending balance $ 72,380 $ 94,956 $ 95,882 During the year ended October 1, 2016 , the Company elected early adoption of ASU 2016-09. Gross excess windfall tax benefits resulting from stock option exercises in the amount of $ 113.8 million and $ 59.8 million for federal and post-apportionment state net operating loss carryforwards, respectively, were not reported as components of gross deferred tax assets with an offsetting valuation allowance as of October 3, 2015. The Company applied a modified retrospective transition method to report the tax effected amount of $ 39.8 million and $ 3.2 million of U.S. federal and state net operating loss carryforwards, respectively, for the year ended October 1, 2016 . The Company determined that these deferred tax assets are not more likely than not to be realized and recorded a corresponding increase to its valuation allowances. As a result, no tax benefit or effect on accumulated deficit was recognized in association with the adoption of ASU 2016-09. Reconciliation of U.S. statutory federal income taxes to the Company’s provision for (benefit from) income taxes is as follows: (In thousands) 2018 2017 2016 U.S. federal income taxes at statutory rate $ (3,570 ) $ (5,778 ) $ (12,450 ) U.S. state and local income taxes (1,441 ) (2,454 ) (1,813 ) Foreign income tax rate differential (53 ) (1,101 ) (4,680 ) Dutch tax settlement — 7,361 — Stock-based compensation 4,025 1,503 6,521 Research tax credits (2,343 ) (1,787 ) (4,036 ) Change in tax rate 25,725 — (624 ) Other 259 1,197 191 Change in valuation allowance (21,546 ) (1,232 ) 19,535 Provision for (benefit from) income taxes $ 1,056 $ (2,291 ) $ 2,644 In December 2013, the Company entered into a written Settlement Agreement with the Dutch Tax Administration related to taxable profits of Sonos Europe B.V. The Settlement Agreement, which expired on October 1, 2016 , provided for a 3% profit based on the statutory revenue of Sonos Europe B.V. which is then allowed to be reduced to 1% for taxable income purposes by utilizing prior year’s net operating losses. As of October 3, 2015, these net operating losses had been fully utilized. In December 2016, the Company reached an agreement with the Dutch Tax Administration to amend the terms of the aforementioned Settlement Agreement (the "Amendment"). Based on a review of the functions, risks and assets of the Company, it was agreed that Sonos Europe B.V.’s arm’s length remuneration should be adjusted for fiscal years 2015 and 2016. The Company’s application of the terms of this Amendment generated a pre-tax loss in fiscal 2015 and 2016 in Sonos Europe B.V., a portion of which is treated as non-deductible for tax purposes and also resulted in an adjustment to the allocation of income and loss to Sonos, Inc., which led to the reduction of pre-existing net operating losses for U.S. tax purposes. As of September 30, 2017 , the Company has utilized all of its Dutch tax loss carryforwards. Additionally, as a result of concluding the terms of the Amendment, the Company was released from previously accrued for Dutch income tax liabilities related to fiscal 2015 and fiscal 2016, resulting in a one-time tax benefit of $ 4.9 million for the year ended September 30, 2017 . In January 2017, the Company entered into a unilateral Advance Pricing Agreement (the "APA") with the Dutch Tax Administration. The APA establishes an intercompany licensing arrangement whereby the operating profit or loss, as determined under U.S. GAAP, of Sonos Europe B.V. and Sonos, Inc. will be allocated between the two companies based on relative contribution to the development of marketing and technology intangibles. The APA has a five-year term that commenced on October 2, 2016 and ends on September 30, 2021. Change in unrecognized tax benefits as a result of uncertain tax positions are as follows: 2018 2017 (In thousands) Beginning balance $ 13,780 $ 11,496 Increase (decrease) - tax positions in prior periods 636 (23 ) Increase (decrease) - tax positions in current periods 3,378 2,307 Ending balance $ 17,794 $ 13,780 The unrecognized tax benefits, if recognized, would increase a deferred tax asset which is expected to require a full valuation allowance based on the current circumstances and would not affect the Company’s effective tax rate for each period presented. The Company does not anticipate changes to unrecognized benefits within the next 12 months that would result in a material change to the Company’s financial position. The Company conducts business in a number of tax jurisdictions and, as such, is required to file income tax returns in multiple jurisdictions globally. U.S. federal income tax returns for the 2014 tax year and earlier are no longer subject to examination by the U.S. Internal Revenue Service (the "IRS"). All net operating losses and tax credits generated to date are subject to adjustment for U.S. federal and state purposes. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. There was no accrued interest or penalties as of September 29, 2018 and September 30, 2017. As of September 29, 2018 , no tax provision has been made for $5.7 million of undistributed earnings of certain of the Company’s subsidiaries as these earnings are considered indefinitely reinvested. If, in the future, the Company decides to repatriate the undistributed earnings from these subsidiaries in the form of dividends or otherwise, the Company could be subject to withholding taxes payable at that time. The amount of withholding tax liability is dependent on circumstances existing if and when a remittance occurs, but could be reasonably estimated to be $0.3 million . Tax Act On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act (the "Tax Act") into law, implementing a wide variety of changes to the U.S. tax system. Among other changes at the corporate level, the Tax Act includes (i) a reduction in the U.S. federal corporate income tax rate from 35% to 21%, (ii) further limitations on the deductibility of interest expense and certain executive compensation, (iii) the repeal of the corporate alternative minimum tax, (iv) the imposition of a territorial tax system with a one-time repatriation tax on deemed repatriated earnings of foreign subsidiaries and (v) subjecting certain foreign earnings to U.S. taxation through a base erosion anti-abuse tax ("BEAT") and a new tax related to global intangible low taxed income ("GILTI"). Additionally, certain foreign derived intangible income ("FDII") may prospectively be subject to a reduced rate of income tax from the statutorily enacted rate of 21%. Some of these changes, including the BEAT, FDII and GILTI provisions, will not come into effect until the Company’s 2019 fiscal year, but because the decrease in the corporate income tax rate was effective January 1, 2018, the Company has reduced the future tax benefits of the Company’s existing U.S. deferred tax assets. However, since the Company maintains a full valuation allowance against these assets, it did not have a material impact on the Company’s results of operations or financial condition. The Company has not recorded a provision related to the one-time transition tax under Section 965 as the Company has estimated that its foreign subsidiaries have a consolidated deficit in accumulated and current earnings and profits. The Company’s accounting for the elements of the Tax Act is incomplete. The Company has made reasonable estimates of the effects to the consolidated statements of operations and comprehensive income (loss) and consolidated balance sheets and have preliminarily determined that a provision is not required. The ultimate impact of the Tax Act may differ from the above estimates due to potential future legislative action to address questions that have arisen because of the Tax Act, issuance of additional guidance by the IRS to provide clarity on certain provisions of the Tax Act and any changes in accounting standards for income taxes or related interpretations in response to the Tax Act. The SEC has issued rules that allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. The Company currently anticipates finalizing and recording any resulting adjustments during its fiscal quarter ending December 29, 2018. |
Net loss per share
Net loss per share | 12 Months Ended |
Sep. 29, 2018 | |
Earnings Per Share [Abstract] | |
Net loss per share | Net loss per share Basic and diluted net loss per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities. Upon the closing of the IPO, all outstanding shares of the Company's redeemable convertible preferred stock automatically converted into 32,482,590 shares of common stock on a one-for-one basis. Basic net loss attributable to common stockholders per share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding less shares subject to repurchase. The following table sets forth the computation of the Company’s basic and diluted net loss per share: 2018 2017 2016 (In thousands, except share and per share data) Numerator: Net loss attributable to common stockholders—basic and diluted $ (15,604 ) $ (14,217 ) $ (38,214 ) Denominator: Weighted-average shares of common stock—basic and diluted 65,706,215 56,314,546 53,873,051 Net loss per share attributable to common stockholders: Net loss per share attributable to common stockholders—basic and diluted $ (0.24 ) $ (0.25 ) $ (0.71 ) The following potentially dilutive shares as of the end of each period presented were excluded from the computation of diluted net loss per share for the periods presented because including them would have been antidilutive: 2018 2017 2016 Stock options to purchase common stock 48,504,182 45,817,252 45,940,594 Convertible preferred stock — 32,482,590 32,482,590 Shares subject to repurchase — 53,892 53,892 Total 48,504,182 78,353,734 78,477,076 |
Commitments and contingencies
Commitments and contingencies | 12 Months Ended |
Sep. 29, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Commitments and contingencies The following table presents noncancelable payments due by the Company as of September 29, 2018, and excludes amounts already recorded on the consolidated balance sheet: Fiscal years ended (In thousands) Total 2019 2020 2021 2022 2023 Beyond Operating leases $ 85,546 $ 16,830 $ 14,120 $ 12,391 $ 11,654 $ 11,870 $ 18,681 Inventory 70,900 70,900 — — — — — Other noncancelable agreements 8,696 3,279 3,574 1,843 — — — Total contractual obligations $ 165,142 $ 91,009 $ 17,694 $ 14,234 $ 11,654 $ 11,870 $ 18,681 Operating leases The Company entered into various non-cancelable operating lease agreements substantially for offices and facilities as well for auto leases. Company’s main offices are leased in California, Massachusetts and the Netherlands with additional sales and operations offices around the world. These facilities operate under leases with initial terms ranging from one to ten years and expire at various dates through 2025. Rent expense during the years ended September 29, 2018 , September 30, 2017 and October 1, 2016 was $ 14.5 million, and $13.5 million and $ 14.5 million, respectively. Inventory The Company enters into various inventory-related purchase agreements with suppliers. Under these agreements, 100% of orders are cancelable by giving sufficient notice prior to the expected shipment date. Legal proceedings From time to time, the Company is involved in legal proceedings in the ordinary course of business, including claims relating to employee relations, business practices and patent infringement. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict and the Company’s view of these matters may change in the future as the litigation and events related thereto unfold. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. An unfavorable outcome to any legal matter, if material, could have an adverse effect on the Company’s operations or its financial position, liquidity or results of operations. On October 21, 2014, the Company commenced a patent infringement action in the United States District Court, District of Delaware against D&M Holdings Inc. d/b/a The D+M Group, D&M Holdings U.S. Inc. and Denon Electronics (USA), LLC (collectively, "Denon"). On May 18, 2018, the Company entered into a patent covenant agreement with Denon, effective May 17, 2018, with a term lasting through May 22, 2022. Under the agreement, Denon will make royalty payments covering both historical sales and sales throughout the term, at an effective royalty rate materially consistent with the December 14, 2017 jury verdict. Pursuant to the agreement, all claims asserted in the Company’s patent infringement claim against Denon and in Denon’s countersuit against the Company were dismissed with prejudice and the parties released claims of any past infringement of the patents asserted in the litigation between the Company and Denon and any patents related thereto. On March 10, 2017, Implicit, LLC ("Implicit") filed a patent infringement action in the United States District Court, District of Delaware against the Company. Implicit is asserting that the Company infringed on two patents in this case. The Company denies the allegations. There is no assurance of a favorable outcome and the Company’s business could be adversely affected as a result of a finding that the Company patents-in-suit are invalid and/or unenforceable. A range of loss, if any, associated with this matter is not probable or reasonably estimable as of September 29, 2018 and September 30, 2017. The Company is involved in certain other litigation matters not listed above but does not consider the matters to be material either individually or in the aggregate at this time. The Company’s view of the matters not listed may change in the future as the litigation and events related thereto unfold. Product warranties As of September 29, 2018 , the Company recorded $ 2.4 million of warranty liability in other current liabilities on the consolidated balance sheets. Changes in the Company’s warranty liability were as follows: (In thousands) 2018 2017 2016 Warranty liability at beginning of year $ 2,437 $ 2,491 $ 2,722 Provision for warranties issued during the year 10,678 5,867 5,412 Settlements of warranty claims during the year (10,665 ) (5,921 ) (5,643 ) Warranty liability at end of year $ 2,450 $ 2,437 $ 2,491 Guarantees and indemnifications In the normal course of business, the Company enters into agreements that contain a variety of representations and warranties and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but have not yet been made. It is not possible to make a reasonable estimate of the maximum potential amount of future payments under these or similar agreements due to the conditional nature of the Company’s obligations and the unique facts and circumstances involved in each particular agreement. To date, the Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by the Delaware General Corporation Law. The Company also currently has directors’ and officers’ insurance. No amount has been accrued in the financial statements with respect to these indemnification guarantees. |
Quarterly financial data (unaud
Quarterly financial data (unaudited) | 12 Months Ended |
Sep. 29, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly financial data (unaudited) | Quarterly financial data (unaudited) The following table shows a summary of the Company’s unaudited quarterly financial information for each of the four quarters of 2018 and 2017 (the sum of quarterly periods may not equal full-year amounts due to rounding): Three Months Ended September 29, June 30, March 31, December 30, (In thousands, except per share amounts) Revenue $ 272,940 $ 208,398 $ 186,720 $ 468,950 Gross profit 116,277 95,489 81,341 196,201 Net income (loss) (1,720 ) (26,988 ) (32,592 ) 45,697 Net income (loss) per share - basic $ (0.02 ) $ (0.45 ) $ (0.55 ) $ 0.42 Net income (loss) per share - diluted $ (0.02 ) $ (0.45 ) $ (0.55 ) $ 0.36 Three Months Ended September 30, July 1, April 1, December 31, (In thousands, except per share amounts) Revenue $ 214,095 $ 223,078 $ 182,546 $ 372,807 Gross profit 102,891 107,288 86,105 159,782 Net income (loss) (14,906 ) (14,539 ) (19,790 ) 35,017 Net income (loss) per share - basic $ (0.26 ) $ (0.26 ) $ (0.35 ) $ 0.32 Net income (loss) per share - diluted $ (0.26 ) $ (0.26 ) $ (0.35 ) $ 0.26 |
Summary of significant accoun_2
Summary of significant accounting policies (Policies) | 12 Months Ended |
Sep. 29, 2018 | |
Accounting Policies [Abstract] | |
Basis of presentation and preparation | Basis of presentation and preparation The consolidated financial statements, which include the accounts of Sonos, Inc. and its wholly owned subsidiaries, have been prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP"). All intercompany accounts and transactions have been eliminated in consolidation. The Company has a 4-4-5 fiscal year ending on the Saturday nearest September 30 each year. The Company’s fiscal year is divided into four quarters of 13 weeks, each beginning on a Sunday and containing two 4-week months followed by a 5-week "month." An additional week is included in the fourth fiscal quarter approximately every five years to realign fiscal quarters with calendar quarters. This occurred last in the fourth quarter of the Company’s fiscal year ended October 3, 2015. References to fiscal 2018 are to the Company’s fiscal year ended September 29, 2018 , references to fiscal 2017 are to the Company’s fiscal year ended September 30, 2017 and references to fiscal 2016 are to the Company’s fiscal year ended October 1, 2016 . |
Use of estimates and judgments | Use of estimates and judgments The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. For revenue recognition, examples of estimates and judgments include: determining the nature and timing of satisfaction of performance obligations, determining the standalone selling price ("SSP") of performance obligations, estimating variable consideration such as sales incentives, and product returns. Additionally, estimates and judgments are made by management for allowances for doubtful accounts, the market value of and demand for inventory, useful lives associated with property and equipment, valuation allowances with respect to deferred tax assets and uncertain tax positions, impairment of long-lived assets, goodwill impairment, warranty, contingencies and valuation and assumptions underlying stock-based compensation and other equity instruments. On an ongoing basis, the Company evaluates its estimates and judgments compared to historical experience and trends that form the basis for making estimates and judgments about the carrying value of assets and liabilities. |
Comprehensive Income (Loss) | Comprehensive income (loss) Comprehensive income (loss) consists of two components: net income (loss) and other comprehensive income (loss), net of tax. Other comprehensive income (loss), net of tax refers to net gains and losses that are recorded as an element of stockholders’ equity (deficit), but are excluded from net income (loss). The Company’s other comprehensive income (loss), net of tax consists of net unrealized gains and losses on foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency. |
Cash and cash equivalents and Restricted cash | Cash and cash equivalents Cash equivalents consist of short-term, highly liquid financial instruments with insignificant interest rate risk that are readily convertible to cash and have maturities of three months or less from the date of purchase. As of September 29, 2018 and September 30, 2017 , cash equivalents consisted of money market funds, which are recorded at fair value. Restricted cash The Company held $ 0.2 million in restricted cash as of September 29, 2018 and September 30, 2017 , representing security deposits on real estate leases. |
Accounts receivable | Accounts receivable Accounts receivable are recorded at the invoiced amount less allowances for doubtful accounts and sales incentives, do not require collateral and do not bear interest. The allowance for doubtful accounts is established through a provision for net bad debt expense which is recorded in general and administrative expense in the consolidated statements of operations and comprehensive loss. The Company determines the adequacy of the allowance for doubtful accounts by evaluating customer accounts receivable balances as well as the customer’s financial condition, credit history and current economic conditions. This estimate is periodically adjusted as a result of the aforementioned process, or when the Company becomes aware of a specific customer’s inability to meet its financial obligations. |
Concentration of credit risk | Concentration of credit risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company maintains cash and cash equivalents in several high-quality financial institutions. Cash and cash equivalents held at these banks, including those held in foreign branches of global banks, may exceed the amount of insurance provided on such deposits. These deposits may be redeemed upon demand and management believes that the financial institutions that hold the Company’s cash and cash equivalents are financially sound and, accordingly, minimal credit risk exists with respect to cash. The Company has not experienced any losses in such accounts. |
Inventories | Inventories Inventories primarily consist of finished goods and to a lesser extent component parts, which are purchased from contract manufacturers and component suppliers. Inventories are stated at lower of cost and net realizable value on a first-in, first-out basis. The Company assesses the valuation of inventory balances including an assessment to determine potential excess and/or obsolete inventory. The Company may be required to write down the value of inventory if estimates of future demand and market conditions indicate estimated excess and/ or obsolete inventory. For the periods presented, the Company has not experienced significant write-downs. |
Property and equipment, net | Property and equipment, net Property and equipment are stated at historical cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets as follows: Computer hardware and software 2-3 years Furniture and fixtures 3-5 years Tooling and production line test equipment 2-4 years Leasehold improvements 2-10 years Product displays 1-3 years Costs incurred to improve leased office space are capitalized. Leasehold improvements are amortized on a straight-line basis over the shorter of the term of the lease or the estimated useful life of the improvement. Expenditures for major renewals and improvements that extend the useful lives of property and equipment are capitalized. Maintenance, repair costs and gains or losses associated with disposals are charged to expense as incurred. Product displays are deployed at retail locations. Because the product displays facilitate marketing of the Company’s products within the retail stores, depreciation for product displays is recorded in sales and marketing expenses in the consolidated statements of operations and comprehensive loss. |
Impairment of long-lived assets | Impairment of long-lived assets The Company evaluates the recoverability of its long-lived assets, primarily comprised of property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The Company performs impairment testing at the level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability is measured by comparing the carrying amounts to the expected future undiscounted cash flows attributable to the assets. If it is determined that an asset may not be recoverable, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded. Fair value is determined based upon estimated discounted future cash flows. |
Product warranties | Product warranties The Company’s products are covered by warranty to be free from defects in material and workmanship for a period of one year , except for products sold in the European Union where the Company provides a two -year warranty. At the time of sale, an estimate of future warranty costs is recorded as a component of cost of revenue and a warranty liability is recorded for estimated costs to satisfy the warranty obligation. The Company’s estimate of costs to fulfill its warranty obligations is based on historical experience and expectations of future costs to repair or replace. |
Legal contingencies | Legal contingencies If a potential loss from any claim or legal proceeding is considered probable, and the amount can be reasonably estimated, the Company accrues a liability for an estimated loss. Legal fees are expensed as incurred and included in general and administrative expenses in the consolidated statements of operations and comprehensive loss. |
Fair value accounting | Fair value accounting Assets and liabilities recorded at fair value on the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level Input Input Definition Level 1 Quoted prices for identical assets or liabilities in active markets at the measurement date. Level 2 Inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities, in active markets or other inputs that are observable or can be corroborated with market data at the measurement date. Level 3 Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. |
Foreign currency | Foreign currency Certain of the Company’s wholly owned subsidiaries have non-U.S. dollar functional currencies. The Company translates assets and liabilities of non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period and stockholders’ equity (deficit) at historical rates. Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from translation are recognized in foreign currency translation included in accumulated other comprehensive income (loss). The Company remeasures monetary assets or liabilities denominated in currencies other than the functional currency using exchange rates prevailing on the balance sheet date, and non-monetary assets and liabilities at historical rates. Foreign currency remeasurement and transaction gains and losses are included in other income (expense), net. |
Revenue recognition and Deferred revenue and payment terms | Revenue recognition Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company generally enters into contracts that include a combination of products and services. Revenue is allocated to distinct performance obligations and is recognized net of allowances for returns, discounts, sales incentives and any taxes collected from customers, which are subsequently remitted to governmental authorities. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of revenue. As of September 29, 2018 and September 30, 2017 , the Company did not have any material assets related to incremental costs to obtain or fulfill customer contracts. Nature of products and services Product revenue includes sales of wireless speakers, home theater speakers and audio components, which include software that enables the Company’s products to operate over a customer’s wireless network, as well as connect to various third-party services, including music and voice. Software primarily consists of firmware embedded in the products and the Sonos app, which is software that can be downloaded to consumer devices at no charge, with or without the purchase of one of the Company’s products. Products and related software are accounted for as a single performance obligation and all intended functionality is available to the customer upon purchase. The revenue allocated to the products and related software is the substantial portion of the total sale price. Product revenue is recognized at the point in time when control is transferred, which is either upon shipment or upon delivery to the customer, depending on delivery terms. Service revenue includes revenue allocated to (i) unspecified software upgrades and (ii) cloud-based services that enable products to access third-party music and voice assistant platforms, which are each distinct performance obligations and are provided to customers at no additional charge. Unspecified software upgrades are provided on a when-and-if-available basis and have historically included updates and enhancements such as bug fixes, feature enhancements and updates to the ability to connect to third-party music or voice assistant platforms. Service revenue is recognized ratably over the estimated service period. Significant judgments The Company’s contracts with customers generally contain promises to transfer products and services as described above. Determining whether products and services are considered distinct performance obligations that should be accounted for separately requires significant judgment. Judgment is required to determine the SSP for each distinct performance obligation. The Company estimates SSP for items that are not sold separately, which include the products and related software, unspecified software upgrades and cloud-based services, using information that may include competitive pricing information, where available, as well as analyses of the cost of providing the products or services plus a reasonable margin. In developing SSP estimates, the Company also considers the nature of the products and services and the expected level of future services. Determining the revenue recognition period for unspecified software upgrades and cloud-based services also requires judgment. The Company recognizes revenue attributable to these performance obligations ratably over the best estimate of the period that the customer is expected to receive the services. In developing the estimated period of providing future services, the Company considers past history, plans to continue to provide services, including plans to continue to support updates and enhancements to prior versions of the Company’s products, expected technological developments, obsolescence, competition and other factors. The estimated service period may change in the future in response to competition, technology developments and the Company’s business strategy. The Company offers sales incentives through various programs consisting primarily of discounts, cooperative advertising and market development fund programs. The Company records cooperative advertising and market development fund programs with customers as a reduction to revenue unless it receives a distinct benefit in exchange for credits claimed by the customer and can reasonably estimate the fair value of the benefit received, in which case the Company records it as an expense. The Company recognizes a liability or a reduction to accounts receivable, and reduces revenue based on the estimated amount of sales incentives that will be claimed by customers. Estimates for sales incentives are developed using the most likely amount and are included in the transaction price to the extent that a significant reversal of revenue would not result once the uncertainty is resolved. In developing its estimate, the Company also considers the susceptibility of the incentive to outside influences, the length of time until the uncertainty is resolved and the Company’s experience with similar contracts. Reductions in revenue related to discounts are allocated to products and services on a relative basis based on their respective SSP. Judgment is required to determine the timing and amount of recognition of marketing funds which the Company estimates based on past practice of providing similar funds. |
Sales returns | The Company accepts returns from direct customers and from certain resellers. To establish an estimate for returns, the Company uses the expected value method by considering a portfolio of contracts with similar characteristics to calculate the historical returns rate. When determining the expected value of returns, the Company considers future business initiatives and relevant anticipated future events. |
Deferred revenue | Payment terms Payment terms and conditions vary among the Company’s distribution channels although terms generally include a requirement of payment within 30 days of product shipment. Sales directly to customers from the Company’s website are paid in advance of product shipment. Prior to providing payment terms to customers, an evaluation of the customer’s credit risk is performed. Contractual allowances are an offset to accounts receivable, net. Deferred revenue and payment terms The Company invoices each order upon hardware shipment or delivery and recognizes revenue for each distinct performance obligation when transfer of control has occurred, which in the case of services, may extend over several reporting periods. Amounts invoiced in advance of revenue recognition are recorded as deferred revenue on the consolidated balance sheets. Deferred revenue primarily relates to revenue allocated to unspecified software upgrades and platform services. The Company classifies deferred revenue as noncurrent if amounts are expected to be recognized as revenue after more than one year from the balance sheet date. |
Research and development | Research and development Research and development expenses consist primarily of personnel-related expenses, consulting and outside professional service costs, tooling and prototype materials and overhead costs. Substantially all of the Company’s research and development expenses are related to developing new products and services and improving existing products and services. To date, software development costs have been expensed as incurred because the period between achieving technological feasibility and the release of the software has been short and development costs qualifying for capitalization have been insignificant. |
Advertising costs | Advertising costs Advertising costs are expensed as incurred and included in sales and marketing expenses. |
Share-based compensation and 401(k) Plan | Stock-based compensation The Company measures stock-based compensation cost at fair value on the date of grant. The Company estimates the fair value of stock option awards using the Black-Scholes option-pricing model. The fair value of restricted stock units ("RSUs") is the fair value of the Company’s common stock on the grant date. Compensation costs for RSUs and for stock options with graded vesting are recognized, on a straight-line basis, as expense over the period of vesting as the employee performs the related services, net of estimated forfeitures. The Company estimates forfeitures based on expected future terminations and will revise rates, as necessary, in subsequent periods if actual forfeitures differ from initial estimates. 401(k) Plan The Company has a defined contribution 401(k) plan (the "401(k) Plan") for the Company’s U.S-based employees. The 401(k) Plan is for all full-time employees who meet certain eligibility requirements. Eligible employees may contribute up to 100% of their annual compensation, but are limited to the maximum annual dollar amount allowable under the Internal Revenue Code of 1986, as amended (the "Code"). Although the 401(k) Plan provides for discretionary employer matching contribution, the Company has not made any such contributions on behalf of participating employees as of September 29, 2018. |
Income taxes | Income taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company records a valuation allowance to the extent that its deferred tax assets are not more likely than not to be realized. In making such a determination, all available positive and negative evidence is considered, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies and results of recent operations. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions in accordance with a two-step process whereby (i) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more likely than not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes in the consolidated statements of operations and comprehensive loss. The Company has not incurred any interest or penalties related to unrecognized tax benefits in any of the periods presented. The Company’s provision for (benefit from) income taxes, deferred tax assets and liabilities and liabilities for unrecognized tax benefits involves the use of estimates, assumptions and judgments. Although the Company believes its estimates, assumptions and judgments to be reasonable, any changes in tax law or its interpretation of tax laws and the resolutions of potential tax audits could significantly impact the amounts provided for income taxes in the Company’s consolidated financial statements. Actual future operating results and the underlying amount and type of income could differ materially from the Company’s estimates, assumptions and judgments thereby impacting the Company’s financial position and results of operations. |
Segment information | Segment information The Company operates as one operating segment as it only reports aggregate financial information on a consolidated basis, accompanied by disaggregated information about revenue by geographic region and product category to its Chief Executive Officer, who is the Company’s chief operating decision maker. |
Leases | Leases The substantial majority of the Company’s leases are for its office spaces and facilities, which are accounted for as operating leases. For leases that contain rent escalation or rent concession provisions, the Company recognizes rent on a straight-line basis over the term of the lease. The Company does not assume renewals in its determination of the lease term unless the renewals are deemed to be reasonably assured at inception. Tenant improvement allowances received from landlords are recorded as a credit to deferred rent, reported as a liability on the consolidated balance sheets and amortized on a straight-line basis over the lease term as a reduction to rent expense in the consolidated statements of operations and comprehensive loss. |
Recently adopted accounting pronouncements and recent accounting pronouncements pending adoption | Recently adopted accounting pronouncements Revenue from contracts with customers In May 2014, the Financial Accounting Standards Board (the "FASB") issued a new standard related to revenue recognition, Accounting Standards Codification ("ASC") No. 606, Revenue from Contracts with Customers ("ASC 606"). Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASC 606 is required to be adopted for annual reporting periods beginning after December 15, 2017, including interim periods therein, and may be earlier adopted, though no earlier than for annual reporting periods beginning after December 15, 2016. The Company elected to early adopt ASC 606 effective October 1, 2017, using the full retrospective transition method, which required the Company to adjust each prior reporting period presented. The most significant impact of the adoption of this standard related to the Company’s accounting for arrangements with certain distributors and retail partners with implicit or explicit return rights that were recognized based on a sell-through method under ASC 605, Revenue Recognition. Under ASC 606, revenue with these parties is recognized upon transfer of control to the customer which occurs when the product is either shipped to or delivered to the customer depending on the contractual terms of the arrangement. This change resulted in an acceleration of revenue and related costs of revenue and most significantly, a reduction in deferred costs of revenue and deferred revenue at each balance sheet date. This acceleration of revenue can have a net increase or decrease in the adjusted revenue for the respective fiscal year depending on the year over year impact of the amounts accelerated across reporting periods. The impact of the adjusted balances on previously reported results presented below were also affected by changes in both product mix as well as by the timing of transactions within fiscal years. Impact to previously reported results The adoption of ASC 606 impacted the Company’s previously reported amounts on the consolidated balance sheets as of October 1, 2016 as follows: 2016 (In thousands) As previously reported Impact of adoption As adjusted Accounts receivable, net $ 48,569 $ (3,262 ) $ 45,307 Inventories, net 53,553 9 53,562 Deferred costs of revenue 27,478 (27,478 ) — Other current assets 8,850 587 9,437 Deferred tax assets 6,207 (3,663 ) 2,544 Deferred revenue 96,696 (60,536 ) 36,160 Other current liabilities 4,599 1,936 6,535 Stockholders’ equity (deficit) (53,581 ) 24,793 (28,788 ) The adoption of ASC 606 impacted the Company’s previously reported amounts on the consolidated statements of operations and comprehensive loss for the years ended October 3, 2015 and October 1, 2016 as follows: 2016 2015 (In thousands) As previously Impact of As adjusted As previously Impact of As adjusted Net revenue $ 904,049 $ (2,765 ) $ 901,284 $ 860,652 $ (17,128 ) $ 843,524 Cost of revenue 494,673 3,212 497,885 468,229 (6,842 ) 461,387 Provision for income taxes 2,930 (286 ) 2,644 2,734 508 3,242 Net loss (32,523 ) (5,691 ) (38,214 ) (57,983 ) (10,794 ) (68,777 ) The Company has not previously reported its financial statements for fiscal 2017 under ASC 605. The adoption of ASC 606 had no impact to cash flows provided by or used in operating, financing or investing activities on the Company’s consolidated statements of cash flows. The cumulative impact of adoption resulted in a reduction to the Company’s accumulated deficit by $43.4 million from the previously reported accumulated deficit of $110.2 million , as of September 28, 2014, the beginning of the Company’s fiscal 2015. Recent accounting pronouncements pending adoption In February 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) ("ASU 2016-02"), which amends a number of aspects of lease accounting, including requiring lessees to recognize operating leases with a term greater than one year on their balance sheet as a right-of-use asset and corresponding liability, measured at the present value of the lease payments. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. In January 2018, the FASB issued ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842 (“ASU 2018-01”), which establishes an optional transition practical expedient when applying the guidance in ASU 2016-02. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases (“ASU 2018-10”), and ASU No. 2018-11, Targeted Improvements (“ASU 2018-11”). ASU 2018-10 affects narrow aspects of the guidance issued in ASU 2016-02. ASU 2018-11 provides an additional transition method. The Company is currently evaluating the impact of adopting ASU 2016-02, ASU 2018-01, ASU 2018-10 and ASU 2018-11 on its consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 provides for a new impairment model that requires measurement and recognition of expected credit losses for most financial assets and certain other instruments, including but not limited to accounts receivable and available for sale debt securities. ASU 2016-13 is effective for the Company for fiscal years beginning after December 15, 2019, and interim periods within those years, with early adoption permitted. The Company is currently evaluating the impact of ASU 2016-13 on its consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"), which provides guidance intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those years, with early adoption permitted. The Company is currently evaluating the impact of ASU 2016-15 on its consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash ("ASU 2016-18"), which enhances and clarifies the guidance on the classification and presentation of restricted cash in the statement of cash flows. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017, and interim periods within those years, with early adoption permitted. The Company held $0.2 million in restricted cash as of September 29, 2018 and September 30, 2017 and therefore does not expect the adoption of this guidance to have a material impact on its consolidated financial statements. In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16"). ASU 2016-16 removes the prohibition in ASC Topic 740, Income Taxes, against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. ASU 2016-16is intended to reduce the complexity of U.S. GAAP and diversity in practice related to the tax consequences of certain types of intra-entity asset transfers, particularly those involving intellectual property. ASU 2016-16 is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. The Company is currently evaluating the potential impact of ASU 2016-16 on its consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill ("ASU 2017-04"), which simplifies the subsequent measurement of goodwill by eliminating the second step of the goodwill impairment test. The second step measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under ASU 2017-04, a company will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. ASU 2017-04 will be applied prospectively and is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact of ASU 2017-04 on its consolidated financial statements. The Company expects the impact of ASU 2017-04 to be immaterial as goodwill was $1.0 million as of September 29, 2018 . In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). ASU 2018-13 eliminates disclosures such as the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and adds new disclosure requirements for Level 3 measurements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted for any eliminated or modified disclosures. The Company does not expect adoption will have a material impact on the Company's disclosures. In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). The new guidance requires a customer in a cloud computing arrangement that is a service contract to follow the existing internal-use software guidance to determine which implementation costs to capitalize as assets or expense as incurred. The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted, including adoption in any interim period. The Company is currently evaluating the impact of adopting ASU 2018-15. |
Summary of significant accoun_3
Summary of significant accounting policies (Tables) | 12 Months Ended |
Sep. 29, 2018 | |
Accounting Policies [Abstract] | |
Summary of changes in allowance for doubtful accounts | The following table summarizes changes in the allowance for doubtful accounts for fiscal 2018, 2017 and 2016: 2018 2017 2016 (In thousands) Beginning balance $ 804 $ 726 $ 679 Increases 635 449 962 Write-offs (567 ) (371 ) (915 ) Ending balance $ 872 $ 804 $ 726 |
Summary of changes In allowance for sales incentives | The following table summarizes the changes in the allowance for sales incentives for fiscal 2018, 2017 and 2016: 2018 2017 2016 (In thousands) Beginning balance $ 11,195 $ 8,913 $ 6,235 Charged to revenue 90,246 65,879 34,627 Utilization of sales incentive allowance (89,687 ) (63,597 ) (31,949 ) Ending balance $ 11,754 $ 11,195 $ 8,913 |
Schedules of concentration of credit risk | As of September 29, 2018 and September 30, 2017 , the Company’s customers that accounted for 10% or more of total accounts receivable, net, were as follows: Accounts receivable, net 2018 2017 Customer A 31 % 26 % Customer B 13 % 16 % Customer C 11 % * * Accounts receivable was less than 10%. The Company’s customers that accounted for 10% or more of total revenue were as follows: Revenue Year Ended 2018 2017 2016 Customer A 17 % 16 % 17 % Customer C 10 % 12 % 11 % |
Schedule of property and equipment, depreciation | Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets as follows: Computer hardware and software 2-3 years Furniture and fixtures 3-5 years Tooling and production line test equipment 2-4 years Leasehold improvements 2-10 years Product displays 1-3 years Property and equipment, net by country as of September 29, 2018 and September 30, 2017 were as follows: 2018 2017 (In thousands) United States $ 48,441 $ 59,738 China 18,729 22,672 Other countries 18,201 12,720 Property and equipment, net $ 85,371 $ 95,130 Property and equipment, net consist of the following: 2018 2017 (In thousands) Computer hardware and software $ 46,385 $ 42,928 Furniture and fixtures 9,696 9,840 Tooling and production line test equipment 47,297 42,368 Leasehold improvements 53,962 53,479 Product displays 40,265 55,855 Total property and equipment 197,605 204,470 Accumulated depreciation and amortization (112,234 ) (109,340 ) Property and equipment, net $ 85,371 $ 95,130 |
Scheudle of changes in deferred revenue | The following table summarizes the changes in the deferred revenue balances: 2018 2017 2016 (In thousands) Deferred revenue, beginning of period $ 45,567 $ 36,160 $ 27,373 Recognition of revenue included in beginning of period deferred revenue (10,627 ) (6,878 ) (4,553 ) Revenue deferred, net of revenue recognized on contracts in the respective period 16,027 16,285 13,340 Deferred revenue, end of period $ 50,967 $ 45,567 $ 36,160 |
Schedule of expected recognition of deferred revenue | The Company expected the following recognition of deferred revenue as of September 29, 2018 : For the fiscal years ending (In thousands) 2019 2020 2021 2022 2023 and Beyond Total Revenue expected to be recognized $ 11,615 $ 10,905 $ 9,602 $ 7,756 $ 11,089 $ 50,967 |
Adopt of ASC 606- Impact to previously reported results | The adoption of ASC 606 impacted the Company’s previously reported amounts on the consolidated balance sheets as of October 1, 2016 as follows: 2016 (In thousands) As previously reported Impact of adoption As adjusted Accounts receivable, net $ 48,569 $ (3,262 ) $ 45,307 Inventories, net 53,553 9 53,562 Deferred costs of revenue 27,478 (27,478 ) — Other current assets 8,850 587 9,437 Deferred tax assets 6,207 (3,663 ) 2,544 Deferred revenue 96,696 (60,536 ) 36,160 Other current liabilities 4,599 1,936 6,535 Stockholders’ equity (deficit) (53,581 ) 24,793 (28,788 ) The adoption of ASC 606 impacted the Company’s previously reported amounts on the consolidated statements of operations and comprehensive loss for the years ended October 3, 2015 and October 1, 2016 as follows: 2016 2015 (In thousands) As previously Impact of As adjusted As previously Impact of As adjusted Net revenue $ 904,049 $ (2,765 ) $ 901,284 $ 860,652 $ (17,128 ) $ 843,524 Cost of revenue 494,673 3,212 497,885 468,229 (6,842 ) 461,387 Provision for income taxes 2,930 (286 ) 2,644 2,734 508 3,242 Net loss (32,523 ) (5,691 ) (38,214 ) (57,983 ) (10,794 ) (68,777 ) |
Fair value measurements (Tables
Fair value measurements (Tables) | 12 Months Ended |
Sep. 29, 2018 | |
Fair Value Disclosures [Abstract] | |
Summary of fair value measurements by level for the assets measured on a recurring basis | The following table summarizes fair value measurements by level for the assets measured at fair value on a recurring basis as of September 29, 2018 and September 30, 2017 : 2018 (In thousands) Level 1 Level 2 Level 3 Total Assets: Money market funds (cash equivalents) $ 140,588 $ — $ — $ 140,588 2017 (In thousands) Level 1 Level 2 Level 3 Total Assets: Money market funds (cash equivalents) $ 40,072 $ — $ — $ 40,072 |
Revenue and geographic inform_2
Revenue and geographic information (Tables) | 12 Months Ended |
Sep. 29, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of revenue | Disaggregation of revenue Revenue by geographical region, based on ship-to address, is as follows: 2018 2017 2016 (In thousands) Americas $ 603,450 $ 496,668 $ 443,314 Europe, Middle East and Africa 478,518 442,081 415,689 Asia Pacific 55,040 53,777 42,281 Total revenue $ 1,137,008 $ 992,526 $ 901,284 Revenue from external customers is attributed to individual countries based on ship-to address. Revenue by significant countries is as follows: 2018 2017 2016 (In thousands) United States $ 554,896 $ 449,261 $ 399,531 Germany 121,546 111,065 93,824 United Kingdom 114,790 110,695 120,732 Other countries 345,776 321,505 287,197 Total revenue $ 1,137,008 $ 992,526 $ 901,284 Revenue by major product category is as follows: 2018 2017 2016 (In thousands) Wireless speakers $ 546,649 $ 480,977 $ 462,967 Home theater speakers 418,416 348,899 274,268 Components 150,436 151,965 151,658 Other 21,507 10,685 12,391 Total revenue $ 1,137,008 $ 992,526 $ 901,284 |
Schedule of property and equipment, net by country | Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets as follows: Computer hardware and software 2-3 years Furniture and fixtures 3-5 years Tooling and production line test equipment 2-4 years Leasehold improvements 2-10 years Product displays 1-3 years Property and equipment, net by country as of September 29, 2018 and September 30, 2017 were as follows: 2018 2017 (In thousands) United States $ 48,441 $ 59,738 China 18,729 22,672 Other countries 18,201 12,720 Property and equipment, net $ 85,371 $ 95,130 Property and equipment, net consist of the following: 2018 2017 (In thousands) Computer hardware and software $ 46,385 $ 42,928 Furniture and fixtures 9,696 9,840 Tooling and production line test equipment 47,297 42,368 Leasehold improvements 53,962 53,479 Product displays 40,265 55,855 Total property and equipment 197,605 204,470 Accumulated depreciation and amortization (112,234 ) (109,340 ) Property and equipment, net $ 85,371 $ 95,130 |
Balance sheet components (Table
Balance sheet components (Tables) | 12 Months Ended |
Sep. 29, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of inventories, net | Inventories, net, consist of the following: 2018 2017 (In thousands) Finished goods $ 176,181 $ 104,014 Components 17,012 9,842 Inventories $ 193,193 $ 113,856 |
Schedule of property and equipment | Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets as follows: Computer hardware and software 2-3 years Furniture and fixtures 3-5 years Tooling and production line test equipment 2-4 years Leasehold improvements 2-10 years Product displays 1-3 years Property and equipment, net by country as of September 29, 2018 and September 30, 2017 were as follows: 2018 2017 (In thousands) United States $ 48,441 $ 59,738 China 18,729 22,672 Other countries 18,201 12,720 Property and equipment, net $ 85,371 $ 95,130 Property and equipment, net consist of the following: 2018 2017 (In thousands) Computer hardware and software $ 46,385 $ 42,928 Furniture and fixtures 9,696 9,840 Tooling and production line test equipment 47,297 42,368 Leasehold improvements 53,962 53,479 Product displays 40,265 55,855 Total property and equipment 197,605 204,470 Accumulated depreciation and amortization (112,234 ) (109,340 ) Property and equipment, net $ 85,371 $ 95,130 |
Schedule of accrued expenses | Accrued expenses consisted of the following: 2018 2017 (In thousands) Accrued advertising and marketing $ 11,613 $ 10,880 Accrued taxes 4,175 4,800 Accrued inventory 4,179 22,563 Accrued manufacturing, logistics and product development 8,290 4,921 Other accrued payables 10,430 14,184 Total accrued expenses $ 38,687 $ 57,348 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Sep. 29, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of short and long term debt | Our short and long term debt as of September 29, 2018 and September 30, 2017 is as follows: 2018 2017 Rate Balance Rate Balance (In thousands) J.P. Morgan Chase Bank, N.A Secured Term Loan (the "New Term Loan") (1) 4.8 % $ 40,000 — % $ — J.P. Morgan Chase Bank, N.A Secured Credit Facility (the "Credit Facility") (2) — % — — % — Gordon Brothers Finance Company Secured Term Loan (the "Prior Term Loan") (3) — % — 10.7 % 40,000 Unamortized debt issuance costs (4) (236 ) (400 ) Total indebtedness 39,764 39,600 Less short term portion (6,667 ) — Long term debt $ 33,097 $ 39,600 (1) Bears interest at a variable rate equal to an adjusted LIBOR plus 2.25% and is payable quarterly. Due in October 2021, with quarterly principal payments beginning in July 2019. (2) Allows the Company to borrow up to $80.0 million restricted to the value of the borrowing base which is based on the value of inventory and accounts receivable and is subject to monthly redetermination. Also includes up to $10.0 million for the issuance of letters of credit and up to $8.0 million for swing line loans. The Credit Facility matures in October 2021 and may be drawn as Commercial Bank Floating Rate Loans (at the higher of prime rate or adjusted LIBOR plus 2.50% ) or Eurocurrency Loans (at LIBOR plus an applicable margin). The unused portion is subject to an annual commitment fee of 0.2% . (3) In July 2018, all outstanding principal, accrued interest and fees were paid in full and the Prior Term Loan was terminated. While outstanding, it bore interest at LIBOR plus 9.5% . (4) Debt issuance costs are recorded as debt discount and recorded as interest expense over the term of the agreement. |
Stockholders' equity (Tables)
Stockholders' equity (Tables) | 12 Months Ended |
Sep. 29, 2018 | |
Equity [Abstract] | |
Schedule of redeemable convertible preferred stock | The following table summarizes the redeemable convertible preferred stock information (together, the "Preferred Stock") as of September 30, 2017: (In thousands, except share amounts) Authorized Shares Issued and Outstanding Shares Carrying Value Liquidation Preference Series A preferred stock 10,035,000 10,005,000 $ 15,060 $ 15,008 Series B preferred stock 3,881,250 3,730,000 5,926 5,968 Series C preferred stock 11,700,000 11,688,766 26,556 25,000 Series D preferred stock 7,058,824 7,058,824 42,799 45,000 Total 32,675,074 32,482,590 $ 90,341 $ 90,976 |
Stock-based compensation (Table
Stock-based compensation (Tables) | 12 Months Ended |
Sep. 29, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock option activity | Stock option activity was as follows: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Weighted Average Intrinsic Value (in years) (in thousands) Outstanding at September 30, 2017 45,817,252 $ 9.20 6.9 $ 199,663 Granted 9,316,926 15.12 Exercised (2,657,436 ) 3.52 Forfeited (3,971,280 ) 13.14 Expired (1,280 ) 15.11 Outstanding at September 29, 2018 48,504,182 $ 10.33 6.6 $ 276,959 At September 29, 2018 Options exercisable 31,194,219 $ 8.13 5.4 $ 246,847 Options vested and expected to vest 45,662,090 $ 10.07 6.5 $ 272,699 |
Schedule of fair value of options | The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model with the following weighted-average assumptions: 2018 2017 2016 Expected term (years) 6.25 6.25 6.25 Risk-free interest rate 2.73 % 1.95 % 1.29 % Expected volatility 30.19 % 32.40 % 36.64 % Expected dividend yield — % — % — % |
Schedule of stock-based compensation expense | Total stock-based compensation expense by function category was as follows: 2018 2017 2016 (In thousands) Cost of revenue $ 198 $ 240 $ 211 Research and development 13,960 13,605 8,260 Sales and marketing 15,885 15,086 11,742 General and administrative 8,602 7,619 5,750 Total stock-based compensation expense $ 38,645 $ 36,550 $ 25,963 |
Income taxes Income taxes (Tabl
Income taxes Income taxes (Tables) | 12 Months Ended |
Sep. 29, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of income (loss) before provision for (benefit from) income taxes | The Company’s income (loss) before provision for (benefit from) income taxes for fiscal 2018, 2017 and 2016 were as follows: 2018 2017 2016 (In thousands) Domestic $ 2,803 $ (25,005 ) $ (47,285 ) Foreign (17,351 ) 8,497 11,715 Income (loss) before provision for (benefit from) income taxes $ (14,548 ) $ (16,508 ) $ (35,570 ) |
Schedule of provision for (benefit from) income taxes | Components of the provision for (benefit from) income taxes consisted of the following: 2018 2017 2016 (In thousands) Current: U.S. Federal $ — $ — $ 129 U.S. State 177 62 59 Foreign 816 (3,791 ) 3,344 Total current 993 (3,729 ) 3,532 Deferred: U.S. Federal (168 ) — — U.S. State — — — Foreign 231 1,438 (888 ) Total deferred 63 1,438 (888 ) Provision for (benefit from) income taxes $ 1,056 $ (2,291 ) $ 2,644 |
Schedule of deferred tax assets and liabilities | Components of the Company’s net deferred income tax assets (liabilities) are as follows: 2018 2017 (In thousands) Deferred tax assets Accrued expenses and reserves $ 5,639 $ 8,828 Deferred revenue 10,317 218 Inventory deferral — 3,259 U.S. net operating loss carryforwards 18,385 53,589 Foreign net operating loss carryforwards 5,625 1,147 Tax credit carryforwards 22,969 17,553 Stock-based compensation 7,237 7,976 Amortization 3,237 3,859 Other 427 324 Total deferred tax assets 73,836 96,753 Valuation allowance (72,380 ) (94,956 ) Deferred tax assets, net of valuation allowance 1,456 1,797 Deferred tax liabilities Depreciation (515 ) (690 ) Total deferred tax liabilities (515 ) (690 ) Net deferred tax assets $ 941 $ 1,107 |
Summary of changes in valuation allowance | The following table summarizes changes in the valuation allowance for fiscal 2018, 2017 and 2016: (In thousands) 2018 2017 2016 Beginning balance $ 94,956 $ 95,882 $ 33,264 Increase (decrease) during the period (22,576 ) (926 ) 19,535 Increase due to adoption of ASU 2016-09 — — 43,083 Ending balance $ 72,380 $ 94,956 $ 95,882 |
Schedule of effective income tax rate reconciliation | Reconciliation of U.S. statutory federal income taxes to the Company’s provision for (benefit from) income taxes is as follows: (In thousands) 2018 2017 2016 U.S. federal income taxes at statutory rate $ (3,570 ) $ (5,778 ) $ (12,450 ) U.S. state and local income taxes (1,441 ) (2,454 ) (1,813 ) Foreign income tax rate differential (53 ) (1,101 ) (4,680 ) Dutch tax settlement — 7,361 — Stock-based compensation 4,025 1,503 6,521 Research tax credits (2,343 ) (1,787 ) (4,036 ) Change in tax rate 25,725 — (624 ) Other 259 1,197 191 Change in valuation allowance (21,546 ) (1,232 ) 19,535 Provision for (benefit from) income taxes $ 1,056 $ (2,291 ) $ 2,644 |
Schedule of changes in unrecognized tax benefits | Change in unrecognized tax benefits as a result of uncertain tax positions are as follows: 2018 2017 (In thousands) Beginning balance $ 13,780 $ 11,496 Increase (decrease) - tax positions in prior periods 636 (23 ) Increase (decrease) - tax positions in current periods 3,378 2,307 Ending balance $ 17,794 $ 13,780 |
Net loss per share (Tables)
Net loss per share (Tables) | 12 Months Ended |
Sep. 29, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of net loss per share, basic | The following table sets forth the computation of the Company’s basic and diluted net loss per share: 2018 2017 2016 (In thousands, except share and per share data) Numerator: Net loss attributable to common stockholders—basic and diluted $ (15,604 ) $ (14,217 ) $ (38,214 ) Denominator: Weighted-average shares of common stock—basic and diluted 65,706,215 56,314,546 53,873,051 Net loss per share attributable to common stockholders: Net loss per share attributable to common stockholders—basic and diluted $ (0.24 ) $ (0.25 ) $ (0.71 ) |
Schedule of net loss per share, diluted | The following table sets forth the computation of the Company’s basic and diluted net loss per share: 2018 2017 2016 (In thousands, except share and per share data) Numerator: Net loss attributable to common stockholders—basic and diluted $ (15,604 ) $ (14,217 ) $ (38,214 ) Denominator: Weighted-average shares of common stock—basic and diluted 65,706,215 56,314,546 53,873,051 Net loss per share attributable to common stockholders: Net loss per share attributable to common stockholders—basic and diluted $ (0.24 ) $ (0.25 ) $ (0.71 ) |
Schedule of potentially dilutive shares excluded from computation of diluted earnings per share | The following potentially dilutive shares as of the end of each period presented were excluded from the computation of diluted net loss per share for the periods presented because including them would have been antidilutive: 2018 2017 2016 Stock options to purchase common stock 48,504,182 45,817,252 45,940,594 Convertible preferred stock — 32,482,590 32,482,590 Shares subject to repurchase — 53,892 53,892 Total 48,504,182 78,353,734 78,477,076 |
Commitments and contingencies (
Commitments and contingencies (Tables) | 12 Months Ended |
Sep. 29, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of noncancelable payments | The following table presents noncancelable payments due by the Company as of September 29, 2018, and excludes amounts already recorded on the consolidated balance sheet: Fiscal years ended (In thousands) Total 2019 2020 2021 2022 2023 Beyond Operating leases $ 85,546 $ 16,830 $ 14,120 $ 12,391 $ 11,654 $ 11,870 $ 18,681 Inventory 70,900 70,900 — — — — — Other noncancelable agreements 8,696 3,279 3,574 1,843 — — — Total contractual obligations $ 165,142 $ 91,009 $ 17,694 $ 14,234 $ 11,654 $ 11,870 $ 18,681 |
Schedule of warranty liability | Changes in the Company’s warranty liability were as follows: (In thousands) 2018 2017 2016 Warranty liability at beginning of year $ 2,437 $ 2,491 $ 2,722 Provision for warranties issued during the year 10,678 5,867 5,412 Settlements of warranty claims during the year (10,665 ) (5,921 ) (5,643 ) Warranty liability at end of year $ 2,450 $ 2,437 $ 2,491 |
Quarterly financial data (una_2
Quarterly financial data (unaudited) (Tables) | 12 Months Ended |
Sep. 29, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of unaudited quarterly financial information | The following table shows a summary of the Company’s unaudited quarterly financial information for each of the four quarters of 2018 and 2017 (the sum of quarterly periods may not equal full-year amounts due to rounding): Three Months Ended September 29, June 30, March 31, December 30, (In thousands, except per share amounts) Revenue $ 272,940 $ 208,398 $ 186,720 $ 468,950 Gross profit 116,277 95,489 81,341 196,201 Net income (loss) (1,720 ) (26,988 ) (32,592 ) 45,697 Net income (loss) per share - basic $ (0.02 ) $ (0.45 ) $ (0.55 ) $ 0.42 Net income (loss) per share - diluted $ (0.02 ) $ (0.45 ) $ (0.55 ) $ 0.36 Three Months Ended September 30, July 1, April 1, December 31, (In thousands, except per share amounts) Revenue $ 214,095 $ 223,078 $ 182,546 $ 372,807 Gross profit 102,891 107,288 86,105 159,782 Net income (loss) (14,906 ) (14,539 ) (19,790 ) 35,017 Net income (loss) per share - basic $ (0.26 ) $ (0.26 ) $ (0.35 ) $ 0.32 Net income (loss) per share - diluted $ (0.26 ) $ (0.26 ) $ (0.35 ) $ 0.26 |
Business overview (Details)
Business overview (Details) $ / shares in Units, $ in Thousands | Aug. 06, 2018USD ($)$ / sharesshares | Sep. 29, 2018USD ($)country | Sep. 30, 2017USD ($)shares | Oct. 01, 2016USD ($) |
Class of Stock [Line Items] | ||||
Number of countries where products are distributed | country | 50 | |||
Underwriting discounts and commissions | $ | $ 3,950 | $ 0 | $ 0 | |
Common shares issued in conversion of outstanding shares of redeemable convertible preferred stock (shares) | 32,482,590 | |||
Number of shares of common stock issued for each share of redeemable convertible preferred stock (shares) | 1 | 32,482,590 | ||
IPO | ||||
Class of Stock [Line Items] | ||||
Shares sold in IPO (shares) | 6,388,888 | |||
Public offering price (in USD per share) | $ / shares | $ 15 | |||
Net proceeds from IPO | $ | $ 90,600 | |||
Underwriting discounts and commissions | $ | 5,300 | |||
Offering costs | $ | $ 4,600 | |||
Over-Allotment Option | ||||
Class of Stock [Line Items] | ||||
Shares sold in IPO (shares) | 833,333 | |||
Initial Public Offering - Shares From Existing Shareholders | ||||
Class of Stock [Line Items] | ||||
Shares sold in IPO (shares) | 9,583,333 | |||
Over-Allotment Option - Shares From Existing Shareholders | ||||
Class of Stock [Line Items] | ||||
Shares sold in IPO (shares) | 1,250,000 |
Summary of significant accoun_4
Summary of significant accounting policies - Textual (Details) | Jul. 19, 2018 | Sep. 29, 2018USD ($)vendoroperating_segment | Sep. 30, 2017USD ($) | Oct. 01, 2016USD ($) | Sep. 28, 2014USD ($) |
Accounting Policies [Abstract] | |||||
Stock split, conversion ratio | 2 | ||||
Restricted cash | $ 200,000 | $ 200,000 | |||
Impairment of long-lived assets | $ 0 | 0 | |||
Product Warranty Liability [Line Items] | |||||
Product warranty term | 1 year | ||||
Foreign currency remeasurement and transaction gain (losses) | $ (941,000) | 3,568,000 | $ (782,000) | ||
401(k) plan maximum annual contribution per employee, percent | 100.00% | ||||
Cumulative effect, new accounting principle | $ 43,400,000 | ||||
Number of operating segments | operating_segment | 1 | ||||
Retained earnings (accumulated deficit) | $ (203,611,000) | $ (188,007,000) | $ (110,200,000) | ||
Goodwill | $ 1,000,000 | ||||
European Union | |||||
Product Warranty Liability [Line Items] | |||||
Product warranty term | 2 years | ||||
Supplier concentration risk | |||||
Product Warranty Liability [Line Items] | |||||
Concentration percentage | 98.00% | 99.00% | 99.00% | ||
Number of vendors | vendor | 1 | ||||
Other income (expense) | |||||
Product Warranty Liability [Line Items] | |||||
Foreign currency remeasurement and transaction gain (losses) | $ (1,200,000) | $ 3,200,000 | $ (2,200,000) | ||
Sales and marketing | |||||
Product Warranty Liability [Line Items] | |||||
Advertising costs | $ 50,200,000 | $ 72,200,000 | $ 50,600,000 |
Summary of significant accoun_5
Summary of significant accounting policies - Summary of changes in allowance for doubtful accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | |||
Beginning balance | $ 804 | $ 726 | $ 679 |
Increases | 635 | 449 | 962 |
Write-offs | (567) | (371) | (915) |
Ending balance | $ 872 | $ 804 | $ 726 |
Summary of significant accoun_6
Summary of significant accounting policies - Summary of changes in allowance for sales incentives (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 | |
Allowance for Sales Incentives [Roll Forward] | |||
Beginning balance | $ 11,195 | $ 8,913 | $ 6,235 |
Charged to revenue | 90,246 | 65,879 | 34,627 |
Utilization of sales incentive allowance | (89,687) | (63,597) | (31,949) |
Ending balance | $ 11,754 | $ 11,195 | $ 8,913 |
Summary of significant accoun_7
Summary of significant accounting policies - Percentage accounts receivable, revenue (Details) | 12 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 | |
Customer A | Accounts receivable | |||
Product Information [Line Items] | |||
Concentration percentage | 31.00% | 26.00% | |
Customer A | Revenue | |||
Product Information [Line Items] | |||
Concentration percentage | 17.00% | 16.00% | 17.00% |
Customer B | Accounts receivable | |||
Product Information [Line Items] | |||
Concentration percentage | 13.00% | 16.00% | |
Customer C | Accounts receivable | |||
Product Information [Line Items] | |||
Concentration percentage | 11.00% | ||
Customer C | Revenue | |||
Product Information [Line Items] | |||
Concentration percentage | 10.00% | 12.00% | 11.00% |
Summary of significant accoun_8
Summary of significant accounting policies - Property and equipment, net (Details) | 12 Months Ended |
Sep. 29, 2018 | |
Computer hardware and software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 2 years |
Computer hardware and software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 3 years |
Furniture and fixtures | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 3 years |
Furniture and fixtures | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 5 years |
Tooling and production line test equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 2 years |
Tooling and production line test equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 4 years |
Leasehold improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 2 years |
Leasehold improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 10 years |
Product displays | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 1 year |
Product displays | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 3 years |
Summary of significant accoun_9
Summary of significant accounting policies - Deferred revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 | |
Accounting Policies [Abstract] | |||
Deferred revenue, beginning of period | $ 45,567 | $ 36,160 | $ 27,373 |
Recognition of revenue included in beginning of period deferred revenue | (10,627) | (6,878) | (4,553) |
Revenue deferred, net of revenue recognized on contracts in the respective period | 16,027 | 16,285 | 13,340 |
Deferred revenue, end of period | $ 50,967 | $ 45,567 | $ 36,160 |
Summary of significant accou_10
Summary of significant accounting policies - Expected recognition of deferred revenue (Details) $ in Thousands | Sep. 29, 2018USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-12-31 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue expected to be recognized | $ 11,615 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-12-31 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue expected to be recognized | 10,905 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-12-31 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue expected to be recognized | 9,602 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-12-31 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue expected to be recognized | 7,756 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-12-31 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue expected to be recognized | 11,089 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue expected to be recognized | $ 50,967 |
Summary of significant accou_11
Summary of significant accounting policies - ASC 606 impact to previously reported results (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Sep. 29, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jul. 01, 2017 | Apr. 01, 2017 | Dec. 31, 2016 | Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 | Oct. 03, 2015 | |
Statement of Financial Position [Abstract] | ||||||||||||
Accounts receivable, net | $ 73,214 | $ 47,363 | $ 73,214 | $ 47,363 | $ 45,307 | |||||||
Inventories, net | 193,193 | 113,856 | 193,193 | 113,856 | 53,562 | |||||||
Deferred costs of revenue | 0 | |||||||||||
Prepaid and other current assets | 10,073 | 9,462 | 10,073 | 9,462 | 9,437 | |||||||
Deferred tax assets | 941 | 1,107 | 941 | 1,107 | 2,544 | |||||||
Deferred revenue | 11,615 | 10,920 | 11,615 | 10,920 | 36,160 | |||||||
Other current liabilities | 10,858 | 8,497 | 10,858 | 8,497 | 6,535 | |||||||
Stockholders’ equity (deficit) | 208,358 | 27 | 208,358 | 27 | (28,788) | $ (19,859) | ||||||
Income Statement [Abstract] | ||||||||||||
Net revenue | 272,940 | $ 208,398 | $ 186,720 | $ 468,950 | 214,095 | $ 223,078 | $ 182,546 | $ 372,807 | 1,137,008 | 992,526 | 901,284 | 843,524 |
Cost of revenue | 647,700 | 536,461 | 497,885 | 461,387 | ||||||||
Provision for income taxes | 1,056 | (2,291) | 2,644 | 3,242 | ||||||||
Net loss | $ (1,720) | $ (26,988) | $ (32,592) | $ 45,697 | $ (14,906) | $ (14,539) | $ (19,790) | $ 35,017 | $ (15,604) | $ (14,217) | (38,214) | (68,777) |
As previously reported | ||||||||||||
Statement of Financial Position [Abstract] | ||||||||||||
Accounts receivable, net | 48,569 | |||||||||||
Inventories, net | 53,553 | |||||||||||
Deferred costs of revenue | 27,478 | |||||||||||
Prepaid and other current assets | 8,850 | |||||||||||
Deferred tax assets | 6,207 | |||||||||||
Deferred revenue | 96,696 | |||||||||||
Other current liabilities | 4,599 | |||||||||||
Stockholders’ equity (deficit) | (53,581) | |||||||||||
Income Statement [Abstract] | ||||||||||||
Net revenue | 904,049 | 860,652 | ||||||||||
Cost of revenue | 494,673 | 468,229 | ||||||||||
Provision for income taxes | 2,930 | 2,734 | ||||||||||
Net loss | (32,523) | (57,983) | ||||||||||
Impact of adoption | Accounting Standards Update 2014-09 | ||||||||||||
Statement of Financial Position [Abstract] | ||||||||||||
Accounts receivable, net | (3,262) | |||||||||||
Inventories, net | 9 | |||||||||||
Deferred costs of revenue | (27,478) | |||||||||||
Prepaid and other current assets | 587 | |||||||||||
Deferred tax assets | (3,663) | |||||||||||
Deferred revenue | (60,536) | |||||||||||
Other current liabilities | 1,936 | |||||||||||
Stockholders’ equity (deficit) | 24,793 | |||||||||||
Income Statement [Abstract] | ||||||||||||
Net revenue | (2,765) | (17,128) | ||||||||||
Cost of revenue | 3,212 | (6,842) | ||||||||||
Provision for income taxes | (286) | 508 | ||||||||||
Net loss | $ (5,691) | $ (10,794) |
Fair value measurements (Detail
Fair value measurements (Details) - Money market funds - Fair value, measurements, recurring - USD ($) $ in Thousands | Sep. 29, 2018 | Sep. 30, 2017 |
Assets: | ||
Money market funds (cash equivalents) | $ 140,588 | $ 40,072 |
Level 1 | ||
Assets: | ||
Money market funds (cash equivalents) | 140,588 | 40,072 |
Level 2 | ||
Assets: | ||
Money market funds (cash equivalents) | 0 | 0 |
Level 3 | ||
Assets: | ||
Money market funds (cash equivalents) | $ 0 | $ 0 |
Revenue and geographic inform_3
Revenue and geographic information - Disaggregation of revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Sep. 29, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jul. 01, 2017 | Apr. 01, 2017 | Dec. 31, 2016 | Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 | Oct. 03, 2015 | |
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenue | $ 272,940 | $ 208,398 | $ 186,720 | $ 468,950 | $ 214,095 | $ 223,078 | $ 182,546 | $ 372,807 | $ 1,137,008 | $ 992,526 | $ 901,284 | $ 843,524 |
Wireless speakers | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenue | 546,649 | 480,977 | 462,967 | |||||||||
Home theater speakers | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenue | 418,416 | 348,899 | 274,268 | |||||||||
Components | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenue | 150,436 | 151,965 | 151,658 | |||||||||
Other | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenue | 21,507 | 10,685 | 12,391 | |||||||||
Americas | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenue | 603,450 | 496,668 | 443,314 | |||||||||
Europe, Middle East and Africa | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenue | 478,518 | 442,081 | 415,689 | |||||||||
Asia Pacific | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenue | 55,040 | 53,777 | 42,281 | |||||||||
United States | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenue | 554,896 | 449,261 | 399,531 | |||||||||
Germany | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenue | 121,546 | 111,065 | 93,824 | |||||||||
United Kingdom | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenue | 114,790 | 110,695 | 120,732 | |||||||||
Other countries | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenue | $ 345,776 | $ 321,505 | $ 287,197 |
Revenue and geographic inform_4
Revenue and geographic information Revenue and geographic information - Disaggregation of property and equipment, net (Details) - USD ($) $ in Thousands | Sep. 29, 2018 | Sep. 30, 2017 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | $ 85,371 | $ 95,130 |
United States | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | 48,441 | 59,738 |
China | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | 18,729 | 22,672 |
Other countries | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | $ 18,201 | $ 12,720 |
Balance sheet components - Inve
Balance sheet components - Inventories (Details) - USD ($) $ in Thousands | Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Finished goods | $ 176,181 | $ 104,014 | |
Components | 17,012 | 9,842 | |
Inventories | $ 193,193 | $ 113,856 | $ 53,562 |
Balance sheet components - Prop
Balance sheet components - Property and equipment, net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 | |
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 197,605 | $ 204,470 | |
Accumulated depreciation and amortization | (112,234) | (109,340) | |
Property and equipment, net | 85,371 | 95,130 | |
Depreciation | 39,358 | 35,014 | $ 34,323 |
Fixed asset, disposal | 35,800 | 11,500 | 6,200 |
Fixed asset disposal, accumulated depreciation | 35,600 | 11,200 | 3,400 |
Gain (loss) disposal of fixed assets | (200) | (200) | $ (3,100) |
Computer hardware and software | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 46,385 | 42,928 | |
Furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 9,696 | 9,840 | |
Tooling and production line test equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 47,297 | 42,368 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 53,962 | 53,479 | |
Product displays | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 40,265 | $ 55,855 |
Balance sheet components - Accr
Balance sheet components - Accrued expenses (Details) - USD ($) $ in Thousands | Sep. 29, 2018 | Sep. 30, 2017 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accrued advertising and marketing | $ 11,613 | $ 10,880 |
Taxes Payable, Current | 4,175 | 4,800 |
Accrued inventory | 4,179 | 22,563 |
Accrued manufacturing, logistics and product development | 8,290 | 4,921 |
Other accrued payables | 10,430 | 14,184 |
Accrued expenses | $ 38,687 | $ 57,348 |
Debt - Schedule of debt (Detail
Debt - Schedule of debt (Details) - USD ($) | Sep. 29, 2018 | Sep. 30, 2017 |
Debt Instrument [Line Items] | ||
Unamortized debt issuance costs (4) | $ (236,000) | $ (400,000) |
Total indebtedness | 39,764,000 | 39,600,000 |
Less short term portion | (6,667,000) | 0 |
Long-term debt | $ 33,097,000 | $ 39,600,000 |
J.P. Morgan Chase Bank, N.A. | Line of credit | Term Loan under Credit Facility | ||
Debt Instrument [Line Items] | ||
Debt, interest rate, stated percentage | 4.80% | |
Debt | $ 40,000,000 | |
Gordon Brothers Finance Company | Line of credit | Term loan under Amended Term Loan | ||
Debt Instrument [Line Items] | ||
Debt, interest rate, stated percentage | 10.70% | |
Debt | $ 40,000,000 |
Debt - Textual (Details)
Debt - Textual (Details) | 1 Months Ended | 12 Months Ended | ||
Jul. 31, 2018 | Sep. 29, 2018USD ($) | Sep. 30, 2017USD ($) | Oct. 31, 2015USD ($) | |
Debt Instrument [Line Items] | ||||
Long-term Debt | $ 39,764,000 | $ 39,600,000 | ||
J.P. Morgan Chase Bank, N.A. | Line of credit | Term Loan under Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Fixed charge ratio, covenant one | 1 | 1 | ||
Fixed charge ratio, covenant two | 1.15 | 1.15 | ||
J.P. Morgan Chase Bank, N.A. | Line of credit | Term Loan under Credit Facility | London Interbank Offered Rate (LIBOR) | ||||
Debt Instrument [Line Items] | ||||
Debt, basis spread on variable rate | 2.25% | |||
Gordon Brothers Finance Company | Line of credit | Term loan under Amended Term Loan | London Interbank Offered Rate (LIBOR) | ||||
Debt Instrument [Line Items] | ||||
Debt, basis spread on variable rate | 9.50% | |||
Credit facility | J.P. Morgan Chase Bank, N.A. | Line of credit | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 80,000,000 | |||
Unused capacity, commitment fee percentage | 0.20% | |||
Fixed charge ratio, covenant one | 1 | 1 | ||
Fixed charge ratio, covenant two | 1.15 | 1.15 | ||
Credit facility | J.P. Morgan Chase Bank, N.A. | Line of credit | London Interbank Offered Rate (LIBOR) | ||||
Debt Instrument [Line Items] | ||||
Debt, basis spread on variable rate | 2.50% | |||
Letter of credit | J.P. Morgan Chase Bank, N.A. | Line of credit | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | 10,000,000 | |||
Borrowing capacity | $ 4,500,000 | $ 4,400,000 | ||
Swing loan | J.P. Morgan Chase Bank, N.A. | Line of credit | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 8,000,000 |
Stockholders' equity - Textual
Stockholders' equity - Textual information (Details) - USD ($) $ / shares in Units, $ in Thousands | Aug. 06, 2018 | Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 |
Equity [Abstract] | ||||
Common shares issued in conversion of outstanding shares of redeemable convertible preferred stock (shares) | 32,482,590 | |||
Number of shares of common stock issued for each share of redeemable convertible preferred stock (shares) | 1 | 32,482,590 | ||
Common stock, authorized (in shares) | 500,000,000 | 500,000,000 | 151,458,824 | |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | |
Preferred stock, authorized (in shares) | 10,000,000 | |||
Preferred stock, par value (in dollars per share) | $ 0.001 | |||
Class of Stock [Line Items] | ||||
Repurchase of common stock | $ 911 | $ 10,016 | $ 145 | |
Private placement | ||||
Class of Stock [Line Items] | ||||
Repurchase of common stock (in shares) | 738,682 | |||
Repurchase of common stock | $ 10,000 | |||
Issuance of common, net of issuance costs (in shares) | 742,034 | |||
Sale of stock, price per share (in dollars per share) | $ 13.56 | |||
Proceeds from sale of stock | $ 10,100 |
Stockholders' equity - Redeemab
Stockholders' equity - Redeemable convertible preferred stock (Details) - USD ($) $ in Thousands | Sep. 29, 2018 | Aug. 06, 2018 | Jun. 30, 2018 | Sep. 30, 2017 | Oct. 01, 2016 | Oct. 03, 2015 |
Temporary Equity [Line Items] | ||||||
Authorized shares (in shares) | 10,000,000 | 32,675,074 | 32,675,074 | |||
Issued shares (in shares) | 0 | 32,482,590 | 32,482,590 | |||
Outstanding shares (in shares) | 1 | 32,482,590 | ||||
Carrying Value | $ 0 | $ 90,341 | $ 90,341 | $ 90,341 | $ 88,637 | |
Redeemable convertible preferred stock, liquidation preference | $ 90,976 | $ 90,976 | ||||
Series A preferred stock | ||||||
Temporary Equity [Line Items] | ||||||
Authorized shares (in shares) | 10,035,000 | |||||
Issued shares (in shares) | 10,005,000 | |||||
Outstanding shares (in shares) | 10,005,000 | |||||
Carrying Value | $ 15,060 | |||||
Redeemable convertible preferred stock, liquidation preference | $ 15,008 | |||||
Series B preferred stock | ||||||
Temporary Equity [Line Items] | ||||||
Authorized shares (in shares) | 3,881,250 | |||||
Issued shares (in shares) | 3,730,000 | |||||
Outstanding shares (in shares) | 3,730,000 | |||||
Carrying Value | $ 5,926 | |||||
Redeemable convertible preferred stock, liquidation preference | $ 5,968 | |||||
Series C preferred stock | ||||||
Temporary Equity [Line Items] | ||||||
Authorized shares (in shares) | 11,700,000 | |||||
Issued shares (in shares) | 11,688,766 | |||||
Outstanding shares (in shares) | 11,688,766 | |||||
Carrying Value | $ 26,556 | |||||
Redeemable convertible preferred stock, liquidation preference | $ 25,000 | |||||
Series D preferred stock | ||||||
Temporary Equity [Line Items] | ||||||
Authorized shares (in shares) | 7,058,824 | |||||
Issued shares (in shares) | 7,058,824 | |||||
Outstanding shares (in shares) | 7,058,824 | |||||
Carrying Value | $ 42,799 | |||||
Redeemable convertible preferred stock, liquidation preference | $ 45,000 |
Stock-based compensation - Addi
Stock-based compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |||
Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 | Jul. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock options granted, fair value | $ 50.2 | $ 39.4 | $ 83.5 | |
Weighted-average grant date fair value (in dollars per share) | $ 5.39 | $ 4.84 | $ 5.32 | |
Intrinsic value of stock options exercised | $ 31.3 | $ 42 | $ 17.4 | |
Unrecognized stock-based compensation expense | $ 71.5 | $ 74.9 | ||
2003 Stock Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 48 months | |||
Exercisable period | 10 years | |||
2018 Equity Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares authorized | 21,200,000 | |||
Shares reserved for future issuance | 21,939,408 | |||
Stock options to purchase common stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized stock-based compensation expense, period of recognition | 2 years 7 months 6 days | 2 years 9 months 20 days |
Stock-based compensation - Stoc
Stock-based compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Sep. 29, 2018 | Sep. 30, 2017 | |
Number of Options | ||
Beginning balance (in shares) | 45,817,252 | |
Granted (in shares) | 9,316,926 | |
Exercised (in shares) | (2,657,436) | |
Forfeited (in shares) | (3,971,280) | |
Expired (in shares) | (1,280) | |
Ending balance (in shares) | 48,504,182 | 45,817,252 |
Weighted Average Exercise Price | ||
Beginning balance (in USD per share) | $ 9.20 | |
Granted (in USD per share) | 15.12 | |
Exercised (in USD per share) | 3.52 | |
Forfeited (in USD per share) | 13.14 | |
Expired (in USD per share) | 15.11 | |
Ending balance (in USD per share) | $ 10.33 | $ 9.20 |
Additional Information | ||
Weighted Average Remaining Contractual Term | 6 years 7 months 6 days | 6 years 10 months 24 days |
Weighted Average Intrinsic Value | $ 276,959 | $ 199,663 |
Options exercisable | 31,194,219 | |
Option exercisable - Weighted Average Exercise Price (in USD per share) | $ 8.13 | |
Option exercisable - Weighted Average Remaining Contractual Term | 5 years 4 months 24 days | |
Options exercisable - Weighted Average Intrinsic Value | $ 246,847 | |
Options vested and expected to vest | 45,662,090 | |
Options vested and expected to vest - Weighted Average Exercise Price (in USD per share) | $ 10.07 | |
Options vested and expected to vest - Weighted Average Remaining Contractual Term | 6 years 6 months | |
Options vested and expected to vest - Weighted Average Intrinsic Value | $ 272,699 |
Stock-based compensation - Fair
Stock-based compensation - Fair value of Options (Details) | 12 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (years) | 6 years 3 months | 6 years 3 months | 6 years 3 months |
Risk-free interest rate | 2.73% | 1.95% | 1.29% |
Expected volatility | 30.19% | 32.40% | 36.64% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Stock-based compensation - St_2
Stock-based compensation - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense | $ 38,645 | $ 36,550 | $ 25,963 |
Cost of revenue | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense | 198 | 240 | 211 |
Research and development | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense | 13,960 | 13,605 | 8,260 |
Sales and marketing | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense | 15,885 | 15,086 | 11,742 |
General and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense | $ 8,602 | $ 7,619 | $ 5,750 |
Income taxes - Income (loss) be
Income taxes - Income (loss) before income tax provision (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 | |
Income Tax Disclosure [Abstract] | |||
Domestic | $ 2,803 | $ (25,005) | $ (47,285) |
Foreign | (17,351) | 8,497 | 11,715 |
Income (loss) before provision for (benefit from) income taxes | $ (14,548) | $ (16,508) | $ (35,570) |
Income taxes Income taxes - Com
Income taxes Income taxes - Components of provision (benefit) for income taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 | Oct. 03, 2015 | |
Current: | ||||
U.S. Federal | $ 0 | $ 0 | $ 129 | |
U.S. State | 177 | 62 | 59 | |
Foreign | 816 | (3,791) | 3,344 | |
Total current | 993 | (3,729) | 3,532 | |
Deferred: | ||||
U.S. Federal | (168) | 0 | 0 | |
U.S. State | 0 | 0 | 0 | |
Foreign | 231 | 1,438 | (888) | |
Total deferred | 63 | 1,438 | (888) | |
Provision for (benefit from) income taxes | $ 1,056 | $ (2,291) | $ 2,644 | $ 3,242 |
Income taxes - Deferred tax ass
Income taxes - Deferred tax assets and liabilities (Details) - USD ($) $ in Thousands | Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 | Oct. 03, 2015 |
Deferred tax assets | ||||
Accrued expenses and reserves | $ 5,639 | $ 8,828 | ||
Deferred revenue | 10,317 | 218 | ||
Inventory deferral | 0 | 3,259 | ||
U.S. net operating loss carryforwards | 18,385 | 53,589 | ||
Foreign net operating loss carryforwards | 5,625 | 1,147 | ||
Tax credit carryforwards | 22,969 | 17,553 | ||
Stock-based compensation | 7,237 | 7,976 | ||
Amortization | 3,237 | 3,859 | ||
Other | 427 | 324 | ||
Total deferred tax assets | 73,836 | 96,753 | ||
Valuation allowance | (72,380) | (94,956) | $ (95,882) | $ (33,264) |
Deferred tax assets, net of valuation allowance | 1,456 | 1,797 | ||
Deferred tax liabilities | ||||
Depreciation | (515) | (690) | ||
Total deferred tax liabilities | (515) | (690) | ||
Net deferred tax assets | $ 941 | $ 1,107 |
Income taxes - Textual (Details
Income taxes - Textual (Details) $ in Thousands | 12 Months Ended | |||
Sep. 29, 2018USD ($) | Sep. 30, 2017USD ($) | Oct. 01, 2016USD ($) | Oct. 03, 2015USD ($) | |
Operating Loss Carryforwards [Line Items] | ||||
Provision for (benefit from) income taxes | $ 1,056 | $ (2,291) | $ 2,644 | $ 3,242 |
Undistributed earnings | 5,700 | |||
Undistributed earnings, withholding tax liability | 300 | |||
Dutch Tax Administration | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating loss carryforward, profit percent | 0.03 | |||
Operating loss carryforward, profit percent, taxable income | 0.01 | |||
Provision for (benefit from) income taxes | $ (4,900) | |||
Federal | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net operating loss carryforwards | 74,700 | |||
Federal | Generated through tax year 2012 | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net operating loss carryforwards | 46,800 | |||
Federal | Research tax credit carryforward | ||||
Operating Loss Carryforwards [Line Items] | ||||
Tax credit carryforward | 25,400 | |||
State | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net operating loss carryforwards | 45,900 | |||
State | Research tax credit carryforward | ||||
Operating Loss Carryforwards [Line Items] | ||||
Tax credit carryforward | 19,100 | |||
Foreign | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net operating loss carryforwards | 21,900 | |||
Foreign | Tax year expiration, indefinite | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net operating loss carryforwards | 2,700 | |||
Foreign | Tax year expiration, 2027 | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net operating loss carryforwards | 19,200 | |||
Accounting Standards Update 2016-09 | Federal | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net operating loss carryforwards | 113,800 | $ 39,800 | ||
Accounting Standards Update 2016-09 | State | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net operating loss carryforwards | $ 59,800 | $ 3,200 |
Income taxes - Valuation allowa
Income taxes - Valuation allowance (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 | Sep. 28, 2014 | |
Valuation Allowance [Line Items] | ||||
Beginning balance | $ 94,956 | $ 95,882 | $ 33,264 | |
Increase (decrease) during the period | (22,576) | (926) | 19,535 | |
Increase due to adoption of ASU 2016-09 | $ 43,400 | |||
Ending balance | 72,380 | 94,956 | 95,882 | |
Accounting Standards Update 2016-09 | ||||
Valuation Allowance [Line Items] | ||||
Increase due to adoption of ASU 2016-09 | $ 0 | $ 0 | $ 43,083 |
Income taxes - Effective tax re
Income taxes - Effective tax reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 | Oct. 03, 2015 | |
Income Tax Disclosure [Abstract] | ||||
U.S. federal income taxes at statutory rate | $ (3,570) | $ (5,778) | $ (12,450) | |
U.S. state and local income taxes | (1,441) | (2,454) | (1,813) | |
Foreign income tax rate differential | (53) | (1,101) | (4,680) | |
Dutch tax settlement | 0 | 7,361 | 0 | |
Stock-based compensation | 4,025 | 1,503 | 6,521 | |
Research tax credits | (2,343) | (1,787) | (4,036) | |
Change in tax rate | 25,725 | 0 | (624) | |
Other | 259 | 1,197 | 191 | |
Change in valuation allowance | (21,546) | (1,232) | 19,535 | |
Provision for (benefit from) income taxes | $ 1,056 | $ (2,291) | $ 2,644 | $ 3,242 |
Income taxes Income taxes - Cha
Income taxes Income taxes - Changes in unrecognized tax benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 29, 2018 | Sep. 30, 2017 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Beginning balance | $ 13,780 | $ 11,496 |
Increase (decrease) - tax positions in prior periods | 636 | |
Increase (decrease) - tax positions in prior periods | (23) | |
Increase (decrease) - tax positions in current periods | 3,378 | 2,307 |
Ending balance | $ 17,794 | $ 13,780 |
Net loss per share - Computati
Net loss per share - Computation of Basic and Diluted Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | Aug. 06, 2018 | Sep. 29, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jul. 01, 2017 | Apr. 01, 2017 | Dec. 31, 2016 | Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 | Oct. 03, 2015 |
Earnings Per Share [Abstract] | |||||||||||||
Common shares issued in conversion of outstanding shares of redeemable convertible preferred stock (shares) | 32,482,590 | ||||||||||||
Numerator: | |||||||||||||
Net loss attributable to common stockholders—basic and diluted | $ (1,720) | $ (26,988) | $ (32,592) | $ 45,697 | $ (14,906) | $ (14,539) | $ (19,790) | $ 35,017 | $ (15,604) | $ (14,217) | $ (38,214) | $ (68,777) | |
Denominator: | |||||||||||||
Weighted-average shares of common stock—basic and diluted (in shares) | 65,706,215 | 56,314,546 | 53,873,051 | ||||||||||
Net loss per share attributable to common stockholders: | |||||||||||||
Basic and diluted (in USD per share) | $ (0.24) | $ (0.25) | $ (0.71) |
Net loss per share - Antidilut
Net loss per share - Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 12 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 48,504,182 | 78,353,734 | 78,477,076 |
Stock options to purchase common stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 48,504,182 | 45,817,252 | 45,940,594 |
Convertible preferred stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 32,482,590 | 32,482,590 |
Shares subject to repurchase | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 53,892 | 53,892 |
Commitments and contingencies -
Commitments and contingencies - Contractual obligations (Details) $ in Thousands | Sep. 29, 2018USD ($) |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
Total | $ 85,546 |
2,019 | 16,830 |
2,020 | 14,120 |
2,021 | 12,391 |
2,022 | 11,654 |
2,023 | 11,870 |
Beyond | 18,681 |
Other noncancelable agreements | |
Total | 8,696 |
2,019 | 3,279 |
2,020 | 3,574 |
2,021 | 1,843 |
2,022 | 0 |
2,023 | 0 |
Beyond | 0 |
Total contractual obligations | |
Total | 165,142 |
2,019 | 91,009 |
2,020 | 17,694 |
2,021 | 14,234 |
2,022 | 11,654 |
2,023 | 11,870 |
Beyond | 18,681 |
Inventory | |
Total contractual obligations | |
Total | 70,900 |
2,019 | 70,900 |
2,020 | 0 |
2,021 | 0 |
2,022 | 0 |
2,023 | 0 |
Beyond | $ 0 |
Commitments and contingencies_2
Commitments and contingencies - Textual (Details) $ in Thousands | Mar. 10, 2017patent | Sep. 29, 2018USD ($) | Sep. 30, 2017USD ($) | Oct. 01, 2016USD ($) | Oct. 03, 2015USD ($) |
Loss Contingencies [Line Items] | |||||
Operating leases, rent expense | $ 14,500 | $ 13,500 | $ 14,500 | ||
Warranty accrual | $ 2,450 | $ 2,437 | $ 2,491 | $ 2,722 | |
Implicit, LLC | |||||
Loss Contingencies [Line Items] | |||||
Patents infringed upon | patent | 2 | ||||
Minimum | |||||
Loss Contingencies [Line Items] | |||||
Operating lease, term of contract | 1 year | ||||
Maximum | |||||
Loss Contingencies [Line Items] | |||||
Operating lease, term of contract | 10 years |
Commitments and contingencies_3
Commitments and contingencies - Warranty liability (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | |||
Warranty liability at beginning of year | $ 2,437 | $ 2,491 | $ 2,722 |
Provision for warranties issued during the year | 10,678 | 5,867 | 5,412 |
Settlements of warranty claims during the year | (10,665) | (5,921) | (5,643) |
Warranty liability at end of year | $ 2,450 | $ 2,437 | $ 2,491 |
Quarterly financial data (una_3
Quarterly financial data (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Sep. 29, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jul. 01, 2017 | Apr. 01, 2017 | Dec. 31, 2016 | Sep. 29, 2018 | Sep. 30, 2017 | Oct. 01, 2016 | Oct. 03, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||
Revenue | $ 272,940 | $ 208,398 | $ 186,720 | $ 468,950 | $ 214,095 | $ 223,078 | $ 182,546 | $ 372,807 | $ 1,137,008 | $ 992,526 | $ 901,284 | $ 843,524 |
Gross profit | 116,277 | 95,489 | 81,341 | 196,201 | 102,891 | 107,288 | 86,105 | 159,782 | 489,308 | 456,065 | 403,399 | |
Net loss | $ (1,720) | $ (26,988) | $ (32,592) | $ 45,697 | $ (14,906) | $ (14,539) | $ (19,790) | $ 35,017 | $ (15,604) | $ (14,217) | $ (38,214) | $ (68,777) |
Net income (loss) per share - basic (in dollars per share) | $ (0.02) | $ (0.45) | $ (0.55) | $ 0.42 | $ (0.26) | $ (0.26) | $ (0.35) | $ 0.32 | ||||
Net income (loss) per share - diluted (in dollars per share) | $ (0.02) | $ (0.45) | $ (0.55) | $ 0.36 | $ (0.26) | $ (0.26) | $ (0.35) | $ 0.26 |