Thank you guys very much for joining me today. My name is Erik Woodring. I lead the hardware coverage here at Morgan Stanley. I'm delighted to be joined by both Patrick Spence, CEO of Sonos, and Saori Casey, the new CFO of Sonos. Patrick is a well-known, well-known guy here, was here last year, been CEO since 2017. Saori is relatively new to the role, joined late last year, actually during CES, January of this year. Yeah, six weeks. Yep. So we'll ask you all the questions then. But obviously, was in Apple's finance department before becoming CFO at Sonos. Thank you guys for joining us today. Thanks, Erik. Thank you. Patrick, let's start with you. Yep. You know, I think it's always helpful to kind of look backwards to understand where companies stand today. And for Sonos, that's important because, you know, the value proposition, the flywheel, I'd, I'd say, is still very, very much alive and well, but the end market has been challenged at a macro level. And so maybe just unpack for us kind of what's happened over the last two to three years, both from a market perspective, and then specifically from a Sonos perspective. Yeah, for sure. So as Erik mentioned, our flywheel is a very important part of the story, and so, you know, we've been at this for 20 years, and kind of the key notion has been that customers will come in every year and add another product to their Sonos. And so 40% of our sales every year go to existing customers adding another product to their Sonos system. During the pandemic, along with most companies that sell products for people's homes, our sales shot up, and then we've seen spend shift to other categories over the last year and a half. So we've seen in-home theater and streaming have been very challenged markets. The good news is, we've held or gained share in most of the cases, without having to compromise our gross margins the way many of our competitors have. And so, that gives me, you know, resolve around the brand strength in terms of where we are and the innovations that we've brought to market. And the other good news is that the cohorts that joined during that period are behaving very similarly to the ones that joined pre-pandemic. So, the flywheel, you know, remains intact, and in fact, we've seen some interesting things where in our fiscal Q1, the holiday quarter, we saw more customers, new customers, start with more products than we ever have. and so we've had a concerted effort to both grow our DTC and grow our bundling strategy, because the real value of Sonos, I suspect most people have it, is having more than one product in your home. And so, getting people started that way, we know will drive higher NPS, more engagement, and then repurchase. And then, just the one other thing I would add is that as part of that flywheel, our new customers, the number one way new customers come into the system is existing customers telling their friends and family, "Hey, you need to get Sonos." And so that's been consistent remarkably over the last 20 years and continues to spin as well. So we feel good about where we're positioned. Obviously, some, you know, challenging macro periods, but we're very focused on, on what we can control, so... Perfect. So, and maybe let's just add some numbers to that before we turn to you, Saori, which is, you know, historically, pre-pandemic, you guys kind of pitched yourselves as a 10% top-line grower, 20% EBITDA grower annually. From 2019 to today, you've trended slightly below that. Again, the market has been very weak. Maybe my question is, like, has the Sonos growth algorithm changed? Should we think about the level of growth coming from this business as being relatively similar to pre-pandemic, or how should we unpackage that? Yeah, so we're, you know, we're 2% of the global audio market today. We're in 9% of the homes that we believe are the total addressable market for us. So there's lots of opportunity ahead. I think what we're looking at right now is some cyclical and macroeconomic challenges. And I feel very confident that, you know, we have a path to continued growth for many years ahead. Mm-hmm. And so part of that is our own strategies around channels and countries, and new product introductions as well, that I know we'll get into in terms of thinking about new categories. But there's a lot of opportunity ahead, and I think, you know, we're very focused on what we can do to make sure we continue to drive that. Perfect. So, Saori, you're in the hot seat now. Mm-hmm. So, lucky, lucky to have you here. I'd love, I'd love maybe if you could just start to walk everybody through your background, and then- Yeah ... Now that you've been in the seat for a long six weeks, you know, what your priorities are as you take this role and try to push this company forward? Yeah. Well, thank you for that. No, very excited to be here. Like you said, six weeks on the job, trying to learn the Sonos business. But prior to that, I spent almost 13 years at Apple, and, believe it or not, you know, while the size is much larger, the business model is very similar, and how the company is run is very similar in a single P&L way. And so there's a lot of similarities, you know, from the standpoint of both consumer technology, a well-recognized brand, and playing premium, in the space. And so there's a lot of similar metrics that we can apply, and in terms of the efficiencies and the way we can grow the company in a sustainable and profitable way, through capital allocations and using margin to the strength, you know, to the strength of the business to grow top line. And a lot of the investments that's been made on the product side, you know, obviously ahead of the revenue coming in the future, as well as infrastructure. There's a great infrastructure that's put in place. I feel really lucky to be coming in where the Sonos is right now, at a sort of a pivotal point with the product roadmap that's ahead, with the tremendous opportunities to grow. And if we can put... Continue to evolve and scale with a discipline around that, whether it's channel inventory metrics or on-hand inventory metrics, demand planning, forecasting and planning, with a degree of accuracy and discipline to be able to deliver what we say we're gonna do. I feel like I can add some value there from that perspective and be able to scale. Like I said, you know, there's a lot of great investments that's put in place, so really, the name of the game is how do we scale from here? Okay, perfect. So, so let's maybe first talk about the near term, and then we can think bigger picture and longer term... So, So, the December quarter that just ended, you reported revenue slightly above the high end of your expectations, up a little over 100% sequentially. You kept the full-year 2024 guide unchanged. And so, can you maybe talk about some of the drivers of outperformance in the quarter, you know, promos, channel fill, share shifts? And then, kind of where we stand from a demand perspective, both the broader market and you guys, and maybe, you know, is it conservative that gets you to hold some of those numbers back for the full year, given the outperformance? Or how to think about that juxtaposition, maybe. Yeah. So, you know, really, I would say Q1 was a great, you know, test of the strength of our brand- Mm-hmm In terms of where we are. So all of last year, we fought against all of our competition, deeply discounting their products and trying to drive growth in that way. We use promos pretty in a pretty limited way. We did a little bit more promotion in fiscal Q1 as we saw that buyers were waiting longer to make their purchases this year. So usually we would keep it limited to Black Friday, Cyber Monday. We decided to extend that based on what we were seeing in the marketplace, and that paid off in a big way. We also had some positive developments on component costs, drove down inventory, just a lot of great execution, I would say in the quarter. You know, as we came out of it, part of it was trying to be prudent around what kind of pull-in we saw to Q1 because of the promo and running it in a different way. And part of it is just the environment we're in right now and making sure that we're being thoughtful about what the rest of the year holds. I think we would be, you know, foolish to call, you know, a change in the market at this particular point in time. We'll wanna see, you know, some kind of consistent results around that. And so we're trying to be prudent in terms of how we think about the year, the year ahead, in terms of what we said with guidance. Okay, perfect. You know, and you repeated what I'm about to ask you, Mm-hmm ... Because it stood out to me on your December quarter earnings call, but you said you saw the largest number of products per new customer in a holiday season in years. Yep. Which is very kind of indicative or representative of the success you've had in bundling products together. Can you maybe just elaborate on the strategy and a bit, and kind of clarify why this is a good thing? Meaning, you know, I think, bears would say you're pulling forward demand. Obviously, there's very much an ecosystem story to the Sonos brand and the Sonos product. So maybe just double-click on this whole strategy of bundling. Yeah, and it's very important to understand that even when we look back at the cohorts that started in the first year we started selling products, back in 2004 at this point, they continue to come back and add new products to their system, right? So we do not see, like, there ever being an end to people adding products, particularly as we think about new products, new categories. And so the notion that we're just pulling ahead or something like that, I think, is misplaced from everything we can see from our cohort data at this particular moment in time. And so, but what we know is that if somebody... the more products that they have, the more highly engaged they are, the higher their NPS is, and the more likely they are to come back and buy. And so last holiday, the one previous to this one, we tried some bundles on Sonos.com, and we learned a few things, and we had some progress with that. And then we decided that we would go harder at that at Sonos.com for this holiday, but as well, some of our retail partners, like we set up with some of our retail partners, as well, getting started with more than one product that worked very well. And so we learned last holiday, and this is what I love about our company and the way we approach these things, is we learned, we kind of tested that, and then we expanded it for this year, and it really paid off. That is, you know, just from a overall, like, what we try to do every day, like the better experience is having multiple Sonos products in your house. But we also know that will fundamentally drive that higher NPS, which gets those customers to tell their friends and family, "Hey, Sonos is awesome. You should get it." And then that will have them come back and buy more. And, you know, again, we don't see anything in cohort data that makes us believe that there's any end to somebody filling their home with Sonos. Okay, perfect. So you talked about new products, so I'm gonna take this time to try to ask you about new products, and we'll see where it goes from here. So, so clearly, a big year, as you guys have previewed for us, expecting an entrance into a new product category. You call it TAM expander. You've embedded about $100 million of revenue this year from new product launches, including this one. I don't know, I know you don't want to divulge too many secrets, but maybe one, everything on time. Number two, how does this $100 million ramp compare to past products you've launched? And then the number three is, because you view it as a TAM expander, is this a new product for new households? Is this a new product for existing households, kind of that add-on? How do we think about maybe where this category would fall in that spectrum? Yep, and so we had said. So this is very unusual for us. We don't usually provide this kind of color on when we're entering a new category of these things, but because it has such a large impact on our year, and it also changes the way that people think of our seasonal growth, we felt it was, it was prudent to provide color. And so what we said back in November, when we did earnings, was that it would come in the second half of the year. What we said at our last earnings call in February is that it will be in our fiscal Q3. And we have, you know, no update on that. Continues to be fiscal Q3 from where we are. As we think about any product, we're thinking about a couple dimensions. It has to, you know, it has to be building on kind of everything we've invested to date. So when you think about what we've built, we really are the story of software eats audio, and we've built this software stack, which creates a system and makes it so that every Sonos product you get, the system gets better. And so a great example of that would be when we introduced the Roam, which is a portable speaker. For our existing customers, they got a cool feature called Sound Swap, where you could take it by an existing Sonos speaker that's playing, and you pick up the music. Like, it just picks up the music magically, which is pretty cool. We always look for innovation that makes the system better for those new products, and we look for the fact, like, it will win in the marketplace against the other products that are there. So it's gotta sound great, and it's gotta have some unique trait that helps it win in the market, because we only play in red oceans. And we're pretty good at it at this point, by leveraging software, because a lot of people in audio, I think pretty much everybody else, doesn't have the software capabilities that we do. So that's the way, you know, we ultimately think about it. That's the way we feel like we win, as well as having those two sides. So it's appealing to both new and to existing customers, and we, you know, are just blessed by the fact that with every new product launch, whether it's an existing category or a new category, we see an absolute stampede from our existing customers to go buy that product, you know, sight unseen or unheard is probably better in our case. They're willing to trust the brand, and they trust it that much, they go out and they buy the product right away. So, I think this will be a similar case, as we enter a new category. Well, we can't wait to hear what you're coming out with, no pun intended there. That's good. That's That's good. Maybe just one more question on the new product launches, because you launched the in-ceiling speaker with Sonance earlier. We have. You've obviously committed to this. That kind of gets you to the new, your two new products every year. Should we be thinking about more this year, or, or maybe does that do it for us? I had to ask. Well, let me put it this way. So, back in 2017, when I took over, I said, "We're gonna do at least two new products every year." We have done more than two new products every single year, so. Perfect. And one more question on products, because ultimately at the heart of this, this is a product company. Your last earnings, you talked about being in the early stages of a- Mm-hmm ... multi-year product cycle. What exactly does that mean? Maybe how does that differ from the history of Sonos? Yeah. This is really important, and I think we haven't done a maybe a good enough job explaining this. But, you know, kind of coming out of COVID, we were in a very strong position, and I saw a lot... Like, as there was some weakness, I saw a lot of the industry pulling back, and we decided that we were gonna lean in and invest in four new categories, which we had, we had never taken on four new categories at once. We usually did one after another. And so, so we've got four new categories underway. One, we launched last year called Sonos Pro, which is a really, Sonos as a service, offering. So recurring revenue, tailoring more to the commercial market. And so very excited about that one over the longer term, but very different than the way we approached it in the past, which I think is gonna be interesting. And then with the other categories, we've had teams that we've spun up to do that. So we've never, we've never run our R&D ahead at this scale to try and get ahead of this. And so the reason that we've talked about this is that the revenue will be coming from those products as we go through it. You know, all things being equal, unless we see some opportunities that we think we really need to, like, jump on, which I always reserve the right to, you know, we will be, like, back to more of the way that we're typically investing in R&D, which is thinking, "Okay, you know, another category each time that we're going into it." And so this has been a unique moment in time because we saw unique opportunities. Okay. And maybe elaborating on that again, I think when we could ask anybody here in the audience, most people probably own a Sonos, but they can probably all agree that you own the home, right? You have a number of products that can satisfy your needs within a home. Yep. How do we think about the opportunity for Sonos outside of the home? You, you started that clearly, not just with Sonos Pro, with Roam, with Move. Yep. How do we think about your aspirations to own the sound category outside of the home? Yeah. I mean, endless ambition around it because we believe software plays just as relevant a role in the experience outside of the home, and the home is $20 billion of the $100 billion, you know, TAM that's out there. So we're only playing in that small market today. But as we go into these bigger markets, we think there's ways to connect it to the system that are unique and help power that flywheel, and that customers are just gonna love. And I mean, our brand just has, has so much, you know, trust with customers, we're going to leverage that in other areas. And so, I think there's no end to the ideas that we have on new products and on innovation to go into these areas. It's all for us about kind of staggering that investment and making sure we're doing this in a responsible way, because obviously in our business, with hardware revenue, generally, it's the discipline, you know, that Saori talked about in forecasting and inventory and some of those things too, to make sure that we're doing this in a sustainably profitable way. But we just see so much opportunity, both with our existing products, but as we think about the other $80 billion of the audio TAM, we believe we have a role to play in all of that. And so that's why we think we have a huge opportunity ahead. Okay. Last product question, then we'll get more into the flywheel, which is: a year ago, this time, you guys launched the Era 100 and 300. Mm-hmm. A bit of a different form factor for you guys than the traditional Sonos products. And as I think about the path forward, you know, there's probably more to do when it comes to form factor. You've made some very interesting acquisitions. Mm-hmm. Mayht, T2, Snips, obviously, which isn't necessarily about form factor, but how do these acquisitions kind of play into how you think about the cadence—not necessarily the cadence of product launches, but where this business is ultimately going longer term? Yeah. So everything that we've acquired has been around accelerating our roadmap and taking more of that $100 billion TAM that's there. And so Mayht's a great example. The transducer, the real heart of a speaker, everybody in the industry, all the experts, you know, thought that we'd innovated it as far as it could go, even a lot of the amazing, smart engineers at Sonos. Two young guys in the Netherlands came up with a completely different concept that allows for- Mm-hmm ... Lower power, less weight, better for the environment, and a lot more bass. And so, you know, that creates opportunities for new form factors and kind of new products that I think are very interesting for the future. But we'd already been thinking about other products, and so this fits in very nicely to be able to go, ultimately and power that. And so we're always looking for teams and technology that might help us accelerate our roadmap, but it's all with that vision of, you know, how do we go and expand into the total addressable markets that's, that's there. Okay. So let's maybe dig into the Flywheel, uh, a little bit more in the ecosystem. I guess it's a maybe a two-part question, which is, I first wanna focus on kind of new households, which becomes that early-stage engine. In 2023, it grew about 9% on average. You're adding between, I think it's like kind of one to two billion new households every single year. Million. Million. Million, excuse me. Billion would be fantastic. It would be fantastic. Let's make sure that's correct. You know, maybe the question is: Is it harder to add new households in an environment like this, where the market is weaker, again, the broad category is weaker? And then ultimately, kind of what recatalyzes market growth, new household growth? Is it simply the market? Is it products? Is it everything? Help us think through those two things. Yeah. So, obviously, getting new homes, and we're in over 15 million homes today, with just over an average of three products per home. You know, I think we can do a better job of leveraging our marketing dollars. We've really focused on performance. There's some things, we have a new leader of our go-to-market team, Deirdre, you know, that really sees opportunity in terms of how we tell our story and reach into new homes that are out there. And so I think there's some things we could do on the marketing front. We mentioned last quarter that we're also doing some new channels, so we believe there are some channels that reach into customers that we haven't reached to this point, so there's also a channel aspect to this. And then there is a geography aspect to this as well, because we've largely been Western Europe and North America to this point. There's a lot outside of that that are an opportunity. And then as we—you know, every time we enter a new product category, it does bring in people that hadn't thought of Sonos before, and that helps then sell that system to more and more people and get into new customers. So I think it's a combination of those things, and those are the things that we can control, and then I think there will be a tailwind from overall the audio market. Mm-hmm ... You know, bouncing back from where it is as well, you know, we don't count on that. We just go and execute on the opportunity we can. Okay. So now, you know, you sold a product, you've acquired a new user, a new household. Let's talk about kind of the underlying kind of drivers of that flywheel. Has anything changed after the point of purchase? Meaning, if we think about recent cohort behavior, does the LTV of these new cohorts, whether they're pre, during, or post-COVID, do they differ at all? Has the kind of ASP of the first product, you know, a customer is buying, changed at all? How should we be thinking about any of the underlying drivers of this flywheel changing, again, pre, during or post-pandemic? Yeah, it looks, you know... Everything so far looks very similar to the pre-pandemic, and so it feels like for the pandemic cohort, it's terrible we call them that, but it is the pandemic cohort, and then the post, like, we're watching those that are quote-unquote post-pandemic. And so the behaviors of the cohort seem very similar from what we can tell at this particular point in time. Even in so much as there's always about 40% of our install base that has one product, and then for people that have more than one, the average is 4.4 products, and so that's been steady as we've- Mm ...... Gone through this, and this is often how people start, with one product, and we've been trying to change that with the bundles. We'll see this year, as we go through that and focus even more on bundles, does that change on a, on an overall basis. But yeah, so everything we can see is that it's continuing to perform as before, and so just gives us more confidence that the flywheel is exactly as we'd expected it. And, you know, I think the LTV, ultimately, we've said in the past that we think, you know, most customers could get to somewhere between four and six, but that was before we started to invest in these four new categories. And so as we do those things, there should be more upside, and there should be more products per home as we go into that. And so I really think the LTV is just, like, only limited by our imagination and our ability to put new products out because, again, every time, we bring something new out, our customers add it to their systems. Okay. And I wanna kind of touch on that point you made. So 40% of your households only own one product. Yep. 60% obviously own more than four. That's right, 4.4. Yep. How do you get that one to four? I mean, what are the tools that you can use out in the market today to say, "Hey, you know, James only has one speaker." I hope he has one more than one, but "James only has one speaker. We're gonna get him to four." How do you convert that, and is there a certain time that it typically takes that user, or that household, to go there? Everybody's on a bit of a different time frame in terms of going through that. One of the things that Saori mentioned in terms of, like, some of the infrastructure investments is a customer data platform that allows us to better target each individual customer with an offer and say, if they have a particular product, "Hey, this is the next one you should add, or you can complement your system," in going through that. And so we're getting better at being able to target our customers with particular offers that allow them to add a new product, and I do think that's the key. Our direct to consumer has grown significantly since 2019, and we've just gotten much better at how to do that and how to go after those customers. And so that is the key, you know, to unlocking that, in my mind, with the combination of trying to actually get more people started with more than one product. Like, if we can do both of those things, I think we'll be in excellent shape. And a lot of the people that start, do start with a soundbar. We're very, you know, we're in a very strong position in home theater, and that just plays itself to either adding a sub or adding two rear speakers as well. And so, you know, I think those, and making sure we're providing the right information to our customers at the right time, is really important. So the one other thing we've done is a very proactive, what we call a first-30-day program, which makes sure that people are off and running and highly engaged and having a good experience in the first 30 days. Because we know if they do, they'll come back sooner and add another product. And so I think kind of across those three prongs, I would say, you know, gives us some confidence that we'll be able to turn more of those single-product homes into. Now, the other thing that may happen is we may, as new homes accelerate, we may actually get more single-product homes, and so we'll have to see how this all plays out, 'cause it's been very consistent over time. But yeah, we're definitely targeting that group. And that group-... You know, we estimate if we could get those single-player homes to the 4.4 multi average, that's a $6 billion opportunity before you even talk about the revenue from new homes. So it's a massive opportunity for us. Now new categories means that- That's right It's going to be even larger. That's right. That's right. I told you too, that I won't. Yeah. You mentioned something before, which was the distribution footprint. Can you maybe just touch on that in terms of what you're seeing from kind of DTC versus retail versus the installer channel? How we might think about, again, the installer channel, a little bit tied to housing, people- Mm-hmm might say, but how we think of that, and then what the priorities really are from a distribution footprint, again, to either turn one product into 4.4, or turn those 15 million households into something that's larger than that? Yeah. I'll start with DTC. So our direct-to-consumer efforts have really doubled since 2019 to about 24% of our sales today. And, you know, with 40% of our sales coming from existing customers adding another Sonos product every year, like, that is a golden opportunity, you know, for DTC because we're developing that relationship. They're opening their Sonos app every single day. So one could make the argument that it should be higher, and maybe I have, than 24%, given that 40% of our sales come from existing customers, and we should be capturing, you know, a large dose of those. The installer channel that Erik mentioned, that's going around in people's houses, right, and installing Sonos. It is one we've worked on for a long time. It sells some of our highest priced and highest margin products and has huge loyalty. And so we think there's a ton of opportunity there. They've been holding up relatively well in terms of where we are right now. It does seem logical that with housing and with renovations, like, they very much will play in that because that is what they do. That's about 21% of our sales as well. But again, I think there's more products. There's kinda actually some services we've talked about that exist in that category too, that we think we could do. And, it's a really unique one, and one that, you know, over my 10 years at Sonos, has continued to be strong, and we've continued to perform well in it. It was one that a lot of people thought might go by the wayside, over time, but it's remained very strong. That's a good one for us. Finally, on retail, a lot of retailers are actually reducing the number of brands that they wanna offer, post-pandemic, and they're being much more selective about what they're gonna do and what they're gonna feature. We're in an excellent position as retailers do that. We found some retailers that, as we think about new categories, are particularly important. But even for our core business, we believe there are some retailers to add to the mix that will help us reach more of our total addressable market. And so, we expect, you know, as things normalize, we expect each of those teams to drive growth in their areas and in their channels. So there should be opportunity across all of them. So, so you mentioned, retail is reducing the number of brands that they own. So I wanna just quickly touch on the competitive landscape, but do it obviously from the Sonos side. There's no need to give anybody else free press. How do you think about the intensity of the competitive landscape today? Is it more intense than three or five years ago? Is it less intense? And then where are you finding, when you look at the cohorts, or you talk to customers, or you talk to retailers, where the Sonos brand is having success, like differentiation versus your competitors? So, you know, as I said, we've always kinda played in red ocean territories, and so when we first came out, it was like, there's no way you can compete with Bose or Sony or any of these players. After we, you know, bested all of them in the home audio space, then in about 2017, yeah, we had, well, a little bit before that, we had Amazon and Google jump in, you know, and with their smart speaker products, which largely copied our technology, and everybody said: Oh, my gosh, there's no way you can compete with them. We did. We co-opted their services. We brought out products that were better, and continued to grow through that period. And so we've navigated, you know, any competition the world's thrown at us, and I'm confident we can do that as we go through it. We've seen the big tech companies step back, you know, from this as they go now focus their efforts, it seems, would appear more on AI. So hardware, as I'm sure you all know, has been a money-losing business for Google and Amazon, and so they've started to back off those efforts, particularly in the areas we play. So I'd say competitive intensity that way has come down. I would say from the traditional audio players, that are out there, a lot of them have been discounting quite heavily, and I think impacting their margins over the last year. But at the end of the day, there's nobody else out there leveraging software the way we do to create the system. You know, the blue shirts at Best Buy are a great example, where, you know, they continue to recommend Sonos to people that come in because they know it's easy, it's gonna work well for people, and they know they're not gonna get, they're gonna get that customer to come back and buy another one, which is good for them, and they're not gonna get an angry customer coming back saying, "Hey, this thing doesn't work as promised." I know it sounds really simple, but that is it at the end of the day. It's something that our installers can stand behind. The blue shirts at Best Buy, you know, the reps at John Lewis in the U.K., they are confident in offering our products because it's simple to use, it's reliable, sounds great, looks great in your home, and they'll usually get somebody to come back and buy another one. And so all of that together, has really set us up into, a competitively differentiated position. And so I'd say the intensity is less. There's some pricing pressure from traditional audio players, but we don't see any, you know, software-enabled players pushing in the category. Right. Okay. So we've spent 33 minutes talking about demand and the revenue side, so we'll save seven minutes for everything else. And maybe if we kinda almost... I think back to kinda going down the income statement on the gross margin side, you know, already as a hardware company, 45%+ gross margin is really strong. Your long-term guide is 45%-47%. You're kind of there, and so can you maybe just talk about the opportunities that you have in front of you to drive gross margins higher? What would be those underlying factors? And we'll go from there afterwards on more on the cost side. ... Yeah, no, I mean, certainly as we were talking about different channels, the installers, installer base, as well as the DTC, they certainly have, just by design, the higher margin profile. And so those areas grow, relative to the channel. Certainly, that will give us a better mix from a channel margin perspective to be able to do that. I think that, you know, it's been great to see such a great hardware product margin as I'm coming in here, and the roadmap that we have continues to be very strong. So that gives us ability to, either expand, continue to expand gross margin percent, or use that as a flexibility to be able to drive also top line at the same time. Mm-hmm. So it gives tremendous leverage for us to be nimble and adaptable as we go through it. And so it gives you the flexibility to play in both margin expansion as well as top line growth at the same time. Okay. And, you know, again, this is a growth company, and... But I’ve sensed, at least in kind of interacting with you guys over the last few quarters, there is this focus on cost. Not just necessarily rationalizing costs, but making sure you’re investing in the right areas that drive growth over the right period of time, but then also being efficient if and when you can be. So can you maybe just talk about some of the more important initiatives you’ve done on the cost side, to get you to where you are today, I guess maybe through the end of this year? And ultimately, is this, you know, should we be thinking about this still as kind of a mid- to high-teens EBITDA margin type of business? What is the goal for you guys, ultimately, as you try to balance kind of growth with profitability? Yeah, we haven't, you know, provided, like, any longer term guides. We've talked about 15%-18% Adjusted EBITDA- Mm-hmm. -over the longer term as we've gone through it. At that point, I still feel that's very reasonable from where we stand today. We're focused on, I would say, yielding on the investments- Mm. -that we've been making. That infrastructure that we've invested in has definitely supports, you know, the $2 billion-$2.5 billion that we're talking about. So I feel good about our infrastructure investments, but we're ahead. We're ahead of where we need to be if we were just doing the kind of level of growth we are today, or, or the level of revenue, which then, you know, sets us up to drive the revenue from here. Our R&D, we've invested ahead. And so right now, we're very focused on how do we yield the return from the investments in the additional categories- Mm. I guess I would say, and the infrastructure investments we've made. And so we've been keeping discipline and you know, aiming to provide, Adjusted EBITDA growth versus last year to show we can drive that sustainable, profitable growth as we start to bring, the products that come with the increased R&D to market. I'd imagine that as the model then returns to growth, the goal is to get that leverage. Absolutely. Okay. Absolutely. Yeah, we're set up. We've got everything set up we need to go and do that exact thing. Yep. Okay. So then let's turn to capital allocation. You have $450 million of gross and net debt. You obviously have done some tuck-ins over time. You obviously buy back a fair amount of stock every single year. If we put aside reinvestment into the company, which you've already made clear that you want to do, how do we think about your capital allocation priorities? And what I mean by that is, is there, one, an opportunity to maybe do something more, maybe drastic, but transformational on the M&A side, if necessary? And then, two, is there an opportunity to do something or any appetite to do something like a dividend? Or is it just too early to say that? I can start here. Yeah, you know, certainly that's one of the things that I'm digging into is my first 60 days here, and hopefully will come out of some kind of framework. But certainly, we don't want to leave potential opportunities for M&A when, you know, small or large. To Patrick's point earlier, so far, most of the M&As have been more smaller in nature, but we certainly don't want to leave out an option- Mm. to be able to do that. So we'll try to look into the pace of buyback, the degree of buyback, as well as opportunities for dividend when the time is right, to make sure that we obviously leave enough money behind for operational flexibility, given, you know, there are seasonalities to the business and the cycles. And to Patrick's point, the category or existing home theater category is in its place right now. So as the economy recovers, then we'll see what kind of free cash flow we can generate on an ongoing basis, and whether that affords us to play in the dividend space, in a sustainable way. Yeah, and there's no debt. So I think just to clarify that- Yeah. Yeah, $400 million cash. That's right. Yeah, yeah, no debt on the balance sheet, so... And we generate cash, so strong position. So if there was something transformationally strategic to get done, we're definitely like, always, we are always shaking the trees on acquisitions that help accelerate the roadmap. If something more transformational, we'd definitely be, you know, open to, if we thought it would help accelerate that growth and take advantage of more of the opportunity that's out there. So I like to think that we kind of never say never to any of those things that come up there. And we got a great team that I think can evaluate these things in a rigorous fashion to make sure that it would fit with what we're capable of and what we've done. But we've successfully integrated all the companies we've acquired. Their founders and key people all remain at Sonos even five, six years later, which I think is a good sign about our culture and our way of integrating people. And so, yeah, we'd be open to that if an opportunity presented itself that we felt would help drive the kind of financial profile we talked about. And then just very quickly, I know Eddie's not here, so, just, you know, as we think about maybe next events on the legal side- Yep. Where should all of our minds be there? Yeah, so two things. One, with the ITC, we went five for five on patents against Google. They appealed that. Watch for the, you know, the outcome of that appeal in the next little bit, because then after that's done, we move to damages. So we'd be going to the damages case that corresponds with that five for five, which is significant. And then in the Northern District of California, the jury had awarded us $30 million, over $31 million for one patent, a separate patent that we had sued Google on. We believe they infringe over 200 patents, so that was on one patent. They awarded us the over $30 million. The judge came in over the top and isn't a patent fan and threw that out. So there's an appeal for that one that we're very confident in, that will also come through this year, I believe. Okay. Yeah. So maybe with the last bit of seconds here, Patrick, I wanna give you the dance floor. You know, last year I asked you the same question, which is, you know, as you think five to 10 years down the line and this vision that you have for Sonos and sound, you know, how do you think Sonos evolves along with the audio landscape and the sound landscape, and how do you evolve to make sure you always stay at the top of this industry as we go through the different stages of evolution? Totally. And hopefully we are evolving it. Like, that's been our thing, right? Bringing software to the audio space, driving that evolution, is I can see a world where audio is in different aspects. Obviously, we're leveraging GenAI and thinking through the experiences of GenAI. I think there could be a, you know, complete upheaval of what we see in the music space today, and thinking text to music and some of these other areas. And so it could be very different. But I think sound is so... Like, you know, just there's so much emotion around sound, and it's something that's going to be very important to people, is I expect form factors will change. I expect maybe business models will change around that. But sound is so critical to creating the great kind of environment and moving people that it's something I expect will be here forever, ultimately, and it's really us evolving form factors. You know, we've done certain things where furniture makes sound. We use software to be able to do that and tune it in certain ways. And so those are the kind of things we're thinking about for the future of like, okay, the world's gonna evolve the way we live. Maybe we've got VR headsets or glasses on and those things, and what role do we play in those worlds? And so making sure we're always staying a step out front and really driving the market is the key. Perfect. We're out of time. Patrick, Saori, thank you so much. Thank you. Thanks, Erik. Thank you, everybody.