Q2 2025 Sonos Inc Earnings Call
Speaker Change: Hello, and welcome to the Sonos 2nd quarter fiscal 2025 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star one on your telephone keypad.
Speaker Change: Another is just days away and more are planned for spring and summer.
Speaker Change: Our core product metrics now reflect performance and reliability levels that exceed those of our previous generation software.
But we're doing more than just making progress on performance and reliability.
Speaker Change: We fully operationalized the reorganization I described on our Q1 call in the process, we've sharpened our priorities restructured how our teams organize and execute and uncovered new efficiencies.
Speaker Change: At the same time, we're tapping into a deep well of creativity and innovation that had been waiting for clearer lanes of expression and our products. This is an incredibly powerful dimension for Stonehouse, just last week I Tripoli's spectrum ranked Sonus fourth and patent power for consumer electronics trailing only Apple Samsung and LG.
Speaker Change: By streamlining how we work and where we focus we're clearing the way for a bold new chapter of innovation across the <unk> platform.
Speaker Change: Speaking of innovation powered by our category defining sound motion architecture, Sonus continued to gain share in home theater year over year in both the U S and EMEA.
Speaker Change: Our ultrasound bar sets the industry standard for performance and our customers are consistently choosing sonus over the competition.
Speaker Change: This quarter, we also made a decisive move to invigorate, our customer acquisition flywheel through the pricing of one of our most popular gateway products the <unk> hundred <unk>.
Speaker Change: <unk> of our customers with multiple products in their homes started with our original flagship plug in speaker the play one and its successor at the Sonus one.
Speaker Change: These products received great critical claim when they were in market and the <unk> hundred is a step function improvement.
Speaker Change: Why I'm. So excited that we are now offering the arrow 100 for the same price as its predecessors at under $200.
Speaker Change: This combination of performance and value is a powerful unlock for attracting new households, and feeding long term sonar system expansion through repurchase.
Speaker Change: While it's early days, we're pleased with the initial customer response to the pricing change.
Speaker Change: As we look ahead, we're operating in a dynamic global environment shaped by macroeconomic forces in an evolving tariff landscape, but <unk> is not on its heels.
Speaker Change: We are well positioned thanks to the proactive steps we've taken over the past few years.
Speaker Change: We moved the vast majority of our U S bound production out of China and into Malaysia, and Vietnam significantly limiting our exposure to China tariffs.
Speaker Change: Our remaining China exposure is limited to a few accessories like speaker stands and our <unk> co branded products, which are a very small part of our total business.
Speaker Change: These actions afford us flexibility as to what products, we manufacture in each country and provide critical optionality as new tariff structures take shape.
Speaker Change: We are managing this moment to improve our position we're accelerating production to take advantage of the current pause in reciprocal tariffs for Vietnam, and Malaysia, We're scenario planning with our contract manufacturers to ensure we maintain maximum flexibility on country of origin.
Speaker Change: We're collaborating closely with both our partners and retailers to limit downstream impact to consumer.
Speaker Change: And we're evaluating pricing and promotion strategies that keep our products compelling while balancing margin and volume to optimize for gross profit dollars.
Speaker Change: Meanwhile, our investments in global sales expansion are right on time as this moment reinforces the strategic importance of our broader international footprint.
Speaker Change: Against this backdrop, we're controlling what we can we've sharpened our focus on the initiatives that matter most improving our core experience investing in profitable growth and driving cost efficiency, while delivering innovative new experiences.
Speaker Change: With a strong balance sheet and nimble operational posture and an experienced team that's executing with discipline, we're setting ourselves up to win.
Speaker Change: Tremendous opportunity lies ahead the team and I are moving forward to build the future of stone us with a renewed sense of purpose and energy.
Speaker Change: Now, let me turn things over to <unk> to discuss our Q2 results in greater detail.
Speaker Change: Thank you Tom Hi, everyone.
Speaker Change: We're pleased to deliver Q2 financial results towards the high end of our guidance or better.
Speaker Change: And you're at $260 million grew 3% year over year versus our guidance of down 5% to up 5%.
Speaker Change: The increase was driven by home theater strength due to our culture and.
Speaker Change: And over the ear headphones Ace, which we launched in June last year.
Speaker Change: We saw great response to a targeted promotion to our installed base, which was very encouraging signs from our customers. We believe this is a testament of the progress we have made improving our core experience and restoring our customers' trust.
Speaker Change: Our Q2 results also benefited from our continued investments in geographic expansion, while our growth markets represent a small share of revenue today. They grew double digits in Q2, and the first half of the year and contributed nicely to the total revenue growth in the quarter.
Speaker Change: Expanding our presence in these markets will be a key driver of our growth in the years to come.
Speaker Change: GAAP gross margin was 43, 7% towards the high end of our guidance range driven by lower inventory reserves non-GAAP gross margin was 47, 1% Q2, GAAP operating expenses were $175 million down 4%. Please note that this included $20 million of restructuring charges.
Speaker Change: To the reduction in force, we announced last quarter.
Speaker Change: non-GAAP operating expenses of $135 million were down 14% year over year came in about $5 million below the low end of our guidance. We saw a partial quarter benefit of savings from the reduction in force announced last quarter as well as many other cost optimization efforts that we had set out last summer.
Speaker Change: As for the year over year trends in each non-GAAP operating expense category.
Speaker Change: G&A expenses decreased by 32% driven by head count and various cost optimization efforts initiated last year.
Speaker Change: Research and development expenses decreased by 18% with a partial quarter benefit of the February reduction in force and product roadmap rationalization sales.
Speaker Change: Sales and marketing expenses increased by 1% with many puts and takes adjusted EBITDA was negative $1 million, which was above the high end of our guidance range by $5 million, primarily due to lower operating expenses.
Speaker Change: This is a $33 million improvement from last year's Q2.
Speaker Change: For the first half of the fiscal year revenue declined by six 3% driven by a 10% decline in Q1 and 3% growth in Q2.
Speaker Change: GAAP gross margin came in at 43, 8% and non-GAAP at 45, 4%.
GAAP and non-GAAP operating expenses declined by 5% and 10% respectively.
Speaker Change: Adjusted EBITDA grew 11% year over year, driving a 170 basis points of margin improvement.
Speaker Change: Our balance sheet remains very strong as we ended the quarter with $224 million of net cash which includes $50 million of marketable securities as we hold some excess cash and short duration treasury bills.
Speaker Change: We also have a $100 million of Undrawn revolving credit facility at our disposal.
Speaker Change: Q2 free cash flow was negative $65 million up from negative $121 million last year due to accounts receivable timing inventory management and lower operating expenses as well as lower capex.
Speaker Change: Capex was $6 million.
Speaker Change: Down from $13 million last quarter and $10 million last year as we rationalize our spend in the near term. Please note that our free cash flow in Q2 was reduced by $24 million of nonrecurring items, including $12 million of cash restructuring payments and $11 million of tax payments for intercompany.
Speaker Change: Transfer of IP Exco.
Speaker Change: Excluding these items Q2 free cash flow would have been negative $41 million, an improvement of $80 million versus Q2 last year.
Speaker Change: Our period end inventory balance decreased by 23% year over year to $138 million.
Speaker Change: Primarily due to lower component balances sequentially. This was a decline of 2%.
Speaker Change: Our inventory consists of $113 million of finished goods and $26 million of components.
Speaker Change: Under our previous share repurchase authorization, we returned $33 million to shareholders in Q2.
Speaker Change: Reducing our share count by $2 3 million shares.
Speaker Change: In late February the board of directors approved a $150 million share repurchase authorization all of which remains available as of Q2 period end, while returning capital to shareholders remain a key pillar of our capital allocation framework, our near term priority is navigating this dynamic and uncertain environment.
Speaker Change: With ample liquidity to preserve operational flexibility.
Speaker Change: Turning to our guidance the Q3 outlook, we're providing today reflects the demand trends, we have observed quarter to date and does not assume any material change in consumer purchasing behavior. As a result of this highly dynamic global trade environment. We.
Speaker Change: We expect Q3 revenue to be in the range of $310 million to $340 million up 19% to 31% sequentially from Q2.
Which is consistent with past seasonality and down 22% to down 14% year over year. As a reminder, last quarter. We said, we expect to have a very difficult year over year comparison in Q3 due to the launch and associated channel fill of Ace headphones towards the end of the quarter.
Speaker Change: We're not guiding Q4 at this time, but I would note that we expect the revenue to grow modestly year over year, if current conditions hold.
Speaker Change: We expect our Q3 GAAP gross margin to be in the range of 43% to 45% with non-GAAP gross margin in the range of 45, 2% to 47% our gross margin guidance embeds, our expectations that tariff expenses will be less than $3 million in Q3 due to inventory on <unk>.
Speaker Change: And.
Speaker Change: We expect our tariff expense to rise to $5 million to $10 million in Q4.
Speaker Change: These figures do not contemplate any changes to pricing or promotional strategy, which as Tom mentioned, we're in the process of evaluating please note that the timing of cash payments for tariffs will differ from when we see the P&L expense as the cash outlay happens at the time of receipt of inventory, whereas the P&L expense.
Speaker Change: <unk> incurred when we sell the inventory.
Speaker Change: On a cash basis, we expect to pay $5 million to $10 million of tariffs in Q3, which may rise to as much as $20 million $30 million in Q4, as we build inventory ahead of our holiday quarter.
Speaker Change: The cash outlay, and P&L expense, resulting from tariffs will ultimately be determined by both tariff rates and how much inventory purchases we accelerate.
Speaker Change: We expect Q3, GAAP operating expenses to be in the range of $157 million to $162 million down 9% to 12% from $179 million in Q3 last year.
Speaker Change: We expect non-GAAP operating expenses to be in the range of $135 million to $140 million.
Speaker Change: Down 10% to 13% from $155 million in Q3 last year.
Speaker Change: This is lower than the 14% decline we saw in Q2, primarily due to lower variable compensation expense in Q3 last year.
Speaker Change: On a normalized basis, our guidance implies non-GAAP operating expenses declined by 19% to 22% from Q3 of last year, bringing it altogether, we expect Q3 adjusted EBITDA to be in the range of $12 million to $37 million.
Speaker Change: Entering a margin of approximately 4% to 11%.
Speaker Change: Lastly, I want to provide an update on the transformation journey, we embarked on last year. Following the update we provided in Q1, we have continued to make great progress driving efficiencies in our business and improving our cost structure.
Speaker Change: Accordingly, we are raising our annualized run rate savings for both GAAP and non-GAAP operating expenses.
Speaker Change: Our GAAP operating expenses, we now estimate that our run rate base is $640 million to $670 million down $100 million to $130 million from a normalized fiscal 2024, GAAP operating expenses of $770 million.
Speaker Change: A reduction of 13% to 17%.
Speaker Change: This represents incremental savings of $40 million to $60 million versus the targets, we outlined last quarter for.
Speaker Change: For non-GAAP operating expenses, we now estimate that our run rate expense base is $580 million to 600 million.
Speaker Change: Down $80 million to $100 million from our normalized fiscal 2024, non-GAAP operating expenses of $680 million, a reduction of 12% to 15%.
Speaker Change: This represents incremental savings of $20 million $30 million versus the target we outlined last quarter.
Speaker Change: The new run rate expense range for GAAP operating expenses is wider than the range for non-GAAP operating expenses due to the potential variability in our expectations for non-GAAP adjustments, primarily stock based compensation.
Reducing management layers through our reorganization efforts has helped reduce the impact of stock based compensation on our shareholders.
Speaker Change: Actions that we have taken should serve to strengthen the business and allow us to continue to invest and most impactful growth opportunities, while structurally improving our profitability.
Speaker Change: And most importantly, this should enable us to emerge from this uncertain period in a stronger position. After the call. We will update our earnings slides that reflect the following items, our Q3 guidance, our expected tariff exposures and expense savings that I just walked through with that I'd like to turn the call over for questions.
Speaker Change: Thank you if you would like to ask a question. Please press star one on your telephone keypad. If you would like to withdraw your question simply press Star one again.
Speaker Change: Please ensure you are not on speaker phone and that your phone is not on mute when called upon thank you.
Speaker Change: Your first question comes from Steven Frankel with Rosenblatt Securities. Your line is open.
Speaker Change: Okay.
Steven Frankel: Thanks, Good afternoon, and thanks for the opportunity.
Steven Frankel: Lot to unpack here as you try to deal with the tariffs.
Steven Frankel: What's your sense of the.
Steven Frankel: The channel.
Steven Frankel: Channels willingness to take on.
Steven Frankel: Inventory that might have lower tariffs.
Steven Frankel: Attached to it first as Youre, just going to hold the inventory until we get closer to it.
Steven Frankel: The typical seasonal inventory build.
Steven Frankel: Hi, Steve I can I can try and take that as your question around the channel inventory or our on hand inventory.
Steven Frankel: Channel inventories.
Speaker Change: Youre going to be building inventory ahead of tariffs it sounds like and do you anticipate that flowing through or youre going to build and hold until we get closer to it.
Steven Frankel: Kind of natural.
Steven Frankel: Man curve, that's going to drive that inventory into the channel and into the consumer.
Steven Frankel: Yes.
Steven Frankel: Very much in discussion with our partners and then in the channel.
Steven Frankel: On both where this tariff rates.
Steven Frankel: We will land and how we mitigate.
Steven Frankel: The consumer impact to the demand and between pricing strategies and promotion strategies as well as the channel inventory strategy. So were much very much at work in progress on that.
Steven Frankel: Okay and then another one in here.
Steven Frankel: There has been press reports about the winding down of the Ikea partnership.
Steven Frankel: Should we read anything into that.
Steven Frankel: In terms of your pricing strategies or is this just the notion of trying to simplify what you do and having more control over the <unk>.
Steven Frankel: Tire ecosystem and product vision.
Steven Frankel: I would just say that.
Steven Frankel: In the last eight years, we've had.
Steven Frankel: Pleasure of working closely with Ikea and we're proud of what we achieved together.
Steven Frankel: We have largely wound partnership down in <unk>.
Steven Frankel: Don't be releasing new products together and.
Steven Frankel: You can read this in part.
Steven Frankel: US just sharpening our focus on what matters most in improving our core experience investing in profitable growth driving cost efficiency and delivering innovative new experiences to our customers.
Speaker Change: And then one last quick one for you Tom where do you think you are in repairing their relationship with the installer channel given all the challenges.
Steven Frankel: Last year.
Speaker Change: We've made tremendous progress over the course of the last 120 days on.
Steven Frankel: Quality and reliability.
Speaker Change: Core experience.
Speaker Change: I mentioned in my prepared remarks that we've delivered nine software updates focused on stability speed and usability and we're getting really great.
Speaker Change: Positive customer response.
Speaker Change: On the backs of these improvements we're seeing all of our core metrics improve across.
Speaker Change: Every dimension right levels that are better than the previous generation software we're seeing.
Speaker Change: Positive customer response to targeted installed base promotion, suggesting and trust is returning with our customers are seeing social sentiment improve our inbound support inquiries are down.
Speaker Change: And that positive momentum accrues to.
Speaker Change: In the professional channel as well.
Speaker Change: Great. Thank you.
Logan Katzman: The next question comes from Logan Katzman with Raymond James Your line is open.
Speaker Change: Hi, guys. This is this is logan on for Adam Thanks for taking our question.
Logan Katzman: I appreciate you guys sizing the tariff impact.
Logan Katzman: Just a quick question for you guys here.
Logan Katzman: Have you guys seen any demand.
Logan Katzman: Impacted by these tariffs yet.
Logan Katzman: Like pulling ahead of potential tariffs from from the from your customers.
Logan Katzman: Hi, Morgan I can take that question now we're five weeks into the quarter now and.
Logan Katzman: Somewhere around since the tariffs and we're really not seeing any material change to our demand at this point since the announcement. However, we're monitoring that closely and what we've comprehended in our guidance for Q3 is based on what we are seeing so far today.
Logan Katzman: And that nothing material, we've seen thus far.
Logan Katzman: Alright appreciate it.
Logan Katzman: So or salary.
Logan Katzman: Maybe just more of a high level philosophical question around the tariffs as well.
Logan Katzman: Think about layering in.
Logan Katzman: If they stay status quo into July.
How do you guys think about the potential impact on the holiday season.
Logan Katzman: Do you think this could have a material impact on consumer spending there.
Logan Katzman: I know, it's a it's a little early but I just wanted to get your high level thoughts.
Logan Katzman: I can get started and maybe Tom can.
Logan Katzman: Chime in so we provided the Q3 tariff impact, which we said below $3 million since we have more fleet our inventory on hand pre tariffs.
Logan Katzman: In Q4, we've given also an estimate of $5 million to $10 million based on best way now today again.
Logan Katzman: The timing in which we are expecting as Tom said on the call. We're doing a number of actually taking a number of actions to try and mitigate including accelerating some of the productions that were in talks with our partners.
Logan Katzman: And so we're actively working on that but and still working very much work in progress and it's really hard to speculate where the tariff rates will land.
Logan Katzman: And the consumer demand and how much we're able to accelerate.
Logan Katzman: And also migration within our footprint of manufacturing between the countries don't mean manufacturing outside of China.
Logan Katzman: I'll just underscore that we're we're just.
Logan Katzman: Actively engaged in all of these topics everyday here.
Logan Katzman: We are evaluating pricing and promotional strategies trying to find.
Logan Katzman: Alan's between margin and volume for gross profit optimization.
Logan Katzman: We're working closely with our cm partners and retailers.
Logan Katzman: Of course, they want to see at <unk>.
Logan Katzman: <unk> home as well and we're all working to limit the impact downstream to our customers.
Logan Katzman: <unk> continues.
Logan Katzman: <unk> continues to be a very live an evolving topic and one that our deepened and everyday here.
Logan Katzman: Thank you I appreciate the color.
Logan Katzman: Again, if you have a question it is star one telephone keypad.
Speaker Change: Your next question comes from Erik Woodring with Morgan Stanley. Your line is open.
Erik Woodring: Hey, guys. Good afternoon, and thank you. Thank you for taking my questions.
Erik Woodring: One quick clarification to start off and I may have missed this at the top of the call but Thomas.
Erik Woodring: Commentary can you just clarify for us what I know you sized the tariff impact by quarter, but can you just clarify what percent of your revenue base or what percentage of your Cogs days.
Erik Woodring: Currently exempt stated versus versus non exempted and then obviously faces a small reciprocal tariffs outside of China.
Erik Woodring: So the.
Erik Woodring: What we shared on the prepared remarks is that.
Erik Woodring: We have moved all of our U S bound production out of China and into Vietnam, and Malaysia with the exception of a few accessories like speaker stands and the.
Erik Woodring: Speakers that we make in partnership with <unk>.
Erik Woodring: Collectively those represent a tiny tiny fraction of our.
Erik Woodring: Our U S business.
Erik Woodring: And so I think the right way to think about it today is that.
Erik Woodring: The majority of our U S bound production comes from Vietnam, and Malaysia, which is subject timber.
Erik Woodring: Paused rate of 10%.
Erik Woodring: Got it.
Erik Woodring: Clarifying that.
Erik Woodring: April 11th exemptions for the 'twenty HTS U S categories. The majority of your products fall into the exempted category I just want to make sure that's correct.
Erik Woodring: Hi.
Speaker Change: Not into the exempted category, but into the ads are paused.
Erik Woodring: Category.
Erik Woodring: A reciprocal tariffs.
Erik Woodring: Outside of China.
Erik Woodring: Okay.
Erik Woodring: And then 10%.
Erik Woodring: Okay.
Right right. Okay. Okay got it. Thank you and then I realize that in the June quarter, you face tough year over year compares from the over ear headphone launch last year.
Erik Woodring: Is there any way that you could help us understand that if we normalize for that launch.
Speaker Change: Would that imply for growth year over year growth or declines for this June quarter, just trying to do a bit of like an apples to apples comparison.
Eric: Thank you Eric.
Eric: There there is a lot of different moving parts here that we're contending with we know.
Eric: For sure the East channel fill but Theres also initial channel.
Eric: Channel fill but also initial pent up demand.
Eric: Of the Ace launch as well since that was.
Eric: Very much a rumored out there for many many quarters and so there's elements of that that we also need to we need to normalize for that because that's the demand. However that it was that was something that we know hindsight now that there was an initial pent up demand that took place in Q3 last year.
Eric: Certainly other.
Eric: Macro environment in terms of you know where our category is while.
Eric: While we have been we're pleased to see how we're gaining in home theater the strength in our home theater from a dollar a share perspective, both in U S and Europe this past quarter.
Eric: Or we have other offsets in other categories like portables, where it's very price competitive and so.
Eric: So theres a lot of puts and takes in that and even just S alone, it's very hard to perfectly normalize that.
Eric: But we wanted to just put out some of those factors on which that distorts our year over year comparability.
Speaker Change: Okay. Okay understood and then maybe last question for you Tom and this is kind of big picture is.
Speaker Change: When we hear you guys on these earnings calls, there's clearly a focus on.
Speaker Change: Cost rationalization and efficiency kind of going back to the core of Sone US. There is also a clear focus on repairing the brand image and kind of doing right.
Speaker Change: Across several channels, what's the latest message just high level on product launches I'm not asking for the number of product launches per year.
Speaker Change: Asking more on the philosophy.
Speaker Change: When does the focus for Sonus.
Speaker Change: I'm, sorry, I apologize, maybe maybe start to take priority over some of these other factors that you are talking in the near term again, not saying you are not prioritizing new product, but just from the narrative when should we start thinking that product launches.
Speaker Change: New either in the home or out the home become more important to the story as opposed to repairing past issues or or credit costs and thats. It for me. Thank you so much.
Speaker Change: Sure. Thank you Eric.
Speaker Change: I guess I'll begin.
Speaker Change: Begin by saying I do think to new hardware launches a year is a really great cadence horizontals.
Speaker Change: Already this year, we've launched arc ultra from for an Arrow 100 pro.
Speaker Change: For the balance of the year, we are focused on using software to drive differentiation and experience improvements and we do this not just <unk>.
Speaker Change: Our repair.
Speaker Change: Our relationship with our customers after the missteps of last year.
Speaker Change: And also because our flywheel is powered by software and with every enhancement, we make we're delivering additional value to our customers and driving delight and incentivizing future repurchase and we just really believe in that investment.
Speaker Change: I'll also offer that.
Speaker Change: I think we have the strongest roadmap in the Companys history.
Speaker Change: While we're not here to talk about that today I am really excited about the day, when we will be able to tell you more about that.
Speaker Change: Okay. Thanks, David can I, if I could just sneak in one more I apologize would you say Laurie.
Speaker Change: The healthy cash balance relative to your market cap.
Speaker Change: Obviously, we can all look at kind of where your stock prices today, but is there an impetus to use that given where valuation is today you just help us understand how you're thinking about.
Speaker Change: The uses of cash thanks, so much.
Speaker Change: Yes, Thank you Eric for that question.
Speaker Change: Certainly returning capital to our shareholders as you've seen in the past.
Speaker Change: One of our key pillars of our capital allocation framework, we did retire $33 million in Q2, and we do still have the full.
Speaker Change: New $150 million of share authorization that the board approved this past quarter.
Speaker Change: So we're very much.
Speaker Change: Cognizant of returning capital to our shareholders. However on the near term our priority is to navigating through this dynamic uncertain environment and with ample liquidity and we want to preserve operational flexibility. During this time, so until we see better clarity around where the tariffs will land and the.
Speaker Change: Tumor behavior, we will be as prudent as possible in navigating through this environment.
Speaker Change: Okay totally understood. Thank you so much guys and good luck.
Speaker Change: Thank you.
Speaker Change: Again, if you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Your next question comes from Brent Thill with Jefferies. Your line is open.
Speaker Change: Hi, This is Mary on the metrology on for Brent Thill. Thanks for the question given the revenue performance. This quarter could you speak to any specific products or regions that contributed to this.
Speaker Change: <unk>.
Speaker Change: I can start that yes.
Speaker Change: Yes, so Q2, we have grown 3% year over year.
Speaker Change: And it came in at the high end of our guidance range and we were pleased with that we had.
Speaker Change: As Tom had referred to we had a better than expected.
Speaker Change: Response by our customers on the owner demand owner and promotion that we had wrong in the quarter and so that helped boost our results to be better than the midpoint of our guidance and the higher end of the guidance.
Speaker Change: From the product perspective arc Ultra certainly had a great impact as we also were able to gain share in the quarter and both U S and Europe, and so that fueled our growth as well as east I have found is incremental to us since we did not launch that until <unk>.
Speaker Change: Q3 last year.
Speaker Change: So and not last but not least as we said on the prepared remarks, our growth of 3% had a meaningful meaningful contribution from our what we're what we're characterizing as our growth markets there.
Speaker Change: It had been smaller markets for us that we're focused on investing in those markets outside of the U S.
Speaker Change: And so that also fueled our growth rate for this quarter.
Speaker Change: Okay, Thanks, and on the search for a permanent CEO what qualities as the board prioritizing in the selection process and that's it for me. Thank you.
Speaker Change: I think the best thing for me to say is that the board has.
Speaker Change: As we described in Q1.
Speaker Change: Hence was working with a leading executive search firm.
Speaker Change: And are conducting a comprehensive search I know that they take this responsibility very seriously and I'm confident that in the coming months now select a world class leader for the company's next chapter.
Speaker Change: So I think I'll, just leave that and then to the process.
Speaker Change: And in Canada.
Speaker Change: Great. Thank you good luck.
Speaker Change: The next question is <unk>.
Speaker Change: Follow up from Steve Frankel with Rosenblatt Securities. Your line is open.
Speaker Change: Yes could you give us any update on your alright.
Speaker Change: Alright litigations.
Speaker Change: Sure happy to.
Speaker Change: Sorry.
Speaker Change: Just wanted to get this right and I have some notes here.
Speaker Change: So we have to affirmative cases against Google that are proceeding or damages case that mirrors, our successful litigation at the ITC is now getting moving in district Court in Los Angeles and on our appeal of our other case, where the trial judge overturned the jury verdict.
Speaker Change: <unk> is now fully briefed and awaiting oral argument before the federal circuit.
Speaker Change: And no new updates on today and those are.
Speaker Change: The same updates we have shared in the past.
Speaker Change: Great. Thank you.
Speaker Change: This concludes the question and answer session and we will conclude today's conference call. Thank you for joining you may now disconnect.
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