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Sonos Inc (NASDAQ:SONO)
Q4 2021 Earnings Call
Nov 17, 2021, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good afternoon. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sonos fourth quarter and fiscal 2021 earnings conference call. All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session. [Operator instructions] Thank you. Cammeron McLaughlin, you may begin your conference.

Cammeron McLaughlin -- Vice President of Investor Relations

Thank you. Good afternoon, and welcome to Sonos fourth quarter and fiscal 2021 earnings conference call. I am Cammeron McLaughlin, and with me today are Sonos' CEO, Patrick Spence; Brittany Bagley, CFO; and Eddie Lazarus, chief legal officer. For those who joined the call early, today's hold music is from Sonos Radio's collaboration station from Impulse! Records and basketball legend, activist, and Jazz historian, Kareem Abdul-Jabbar.

Before I hand it over to Patrick, I'd like to remind everyone that today's discussion will include forward-looking statements regarding future events and our future financial performance. These statements reflect our views as of today only and should not be considered as representing our views of any subsequent date. These statements are also subject to material risks and uncertainties that could cause actual results to differ materially from expectations reflected in the forward-looking statements. A discussion of these risk factors is fully detailed under the caption Risk Factors in our filings with the SEC.

During this call, we will also refer to certain non-GAAP financial measures. For information regarding our non-GAAP financials and a reconciliation of GAAP to non-GAAP measures, please refer to today's press release regarding our fourth quarter and fiscal 2021 results posted to the Investor Relations portion of our website. As a reminder, the press release, supplemental earnings presentation, and conference call transcript will be available on our Investor Relations website at investors.sonos.com. I will now turn the call over to Patrick.

Patrick Spence -- Chief Executive Officer

Thanks, Cammeron, and hello, everyone. Our incredible fiscal 2021 financial results underscore the power of our model and our ability to execute despite the uncertainty and challenges throughout the year. I am so proud of what our team delivered, and I'm very confident in our progress toward becoming the world's leading sound experience brand. We have a tremendous opportunity ahead and are well-positioned to seize it.

To start, we are thrilled to report a fourth quarter that caps off a record fiscal year 2021. We achieved total revenue of $1.717 billion, an increase of 29% from the prior year or 32% when you adjust for the extra week last year. This marks our 16th consecutive year of revenue growth. Our leadership position in premium home audio continued throughout fiscal 2021 as our products continue to rank as the leading products in the wireless speaker and home theater categories in our core geographies.

Demand remained very strong through the fourth quarter, driven by the continued strength of our industry-leading products and we delivered a record $360 million in revenue despite increased supply chain constraints that we, like some many others in our industry, have been facing. Our fiscal 2021 results are an illustration of just how powerful and profitable our model is as we scale. We achieved record adjusted EBITDA of $279 million, an increase of 157%, representing an adjusted EBITDA margin of 16.2%, up 800 basis points. Our fiscal 2021 results put us significantly ahead of schedule toward achieving the fiscal 2024 targets outlined at our investor event this past March.

Our brand is strong. We have an exciting and robust product road map ahead, and we are confident in our ability to continue to drive sustainable, profitable growth over the long term. Brittany will go into more detail on our fiscal 2024 targets shortly. Despite the supply challenges that continue to exist as we enter fiscal 2022, we are confident in our ability to continue to deliver strong growth and expect to deliver up to 16% revenue growth and 17% adjusted EBITDA growth at the high end of our range.

Our demand is incredibly robust, and we are confident we can sell every unit we can make this year. Brittany will also go into more detail on our fiscal 2022 outlook. We attribute our continued success to the fact Sonos is a system for your whole home, not just a single product solution. And to our consistent approach to delivering innovative new products and services, the real power of Sonos is that you can start with one product and expand to more over time.

The core of our model is that we continue to add new homes and that our existing homes keep coming back and adding additional products each and every year. On that note, we ended fiscal 2021 in 12.6 million homes, an increase of 15% from the prior year. As we look toward our opportunity ahead, we believe that Sonos is just getting started and has barely scratched the surface of our large and growing addressable market, and have a tremendous runway to add tens of millions more homes to the Sonos ecosystem long term. When it comes to existing customers adding additional products in fiscal 2021, we saw 46% of our product registrations coming from our existing households.

This is our flywheel in motion. We had lots of new homes, and they buy more and more from us over time. To that end, in fiscal 2021, we saw the number of products per home increased to 3.0 from 2.9 last year, underscoring that the lifetime value of our households continues to increase and is yet to be fully realized. In fact, we see a runway toward four to six products per household long term, driving significant increases in lifetime value over time.

Then as we layer services on top of this, the lifetime value will increase even further. Our model is a proven one and is a powerful one. In fiscal 2021, we made great progress on our three key strategic initiatives: the expansion of our brand, the expansion of our offerings, and driving operational excellence. First, on the expansion of our brand.

This is all about understanding our customers better than anyone and how we're evolving our brand and marketing strategies to reach more of those customers. The first step was updating our brand strategy to tap into the emotional connection derived from experiencing all of your favorite content on Sonos. We leaned into sports and outdoors, inking a partnership with globally renowned Liverpool Football Club as its official sound partner and teaming up with ESPN as the official sponsor of College Football. We celebrated the launch of Roam by partnering with the North Face to create a multifaceted program that invited fans to sonically explore the outdoors, which was supported online by many North Face athletes sharing how Roam accompanied them on their outdoor adventures.

Finally, we were named one of Fast Company's brands that matter. This list captures brands who are inspiring all of us, whether it be leading in pop culture or responding meaningfully to current events. And this is a testament to the enduring brand that we have built. Second, on the expansion of our offerings, our focus on innovation and the integration of our software, hardware, and services together provides a compelling proposition for our customers.

We have an exciting and robust product road map ahead. As you saw, we are off to a great start this fiscal year with the launch of Beam Gen 2 on October 5, the latest version of our industry-leading compact smart soundbar bar, delivering upgraded, more immersive sound experience with greater depth and clarity, as well as support for Dolby Atmos. We continue to deliver on our promise to introduce at least two new products per year. And in fiscal 2021, brought new products and services to the market such as Roam, Sonos Radio HD, and new partner products with Audi and IKEA.

In April, we launched Roam, the ultra-portable smart speaker built to deliver great sound at home and on any adventure. Roam provides the opportunity for millions of new customers to get started with Sonos and is the right product at the right time as we begin to gather again with friends and family. Early in fiscal 2021, we introduced Sonos Radio HD, an ad-free, high-definition streaming tier of Sonos Radio featuring even more exclusive content directly in the Sonos app. We are pleased to report that Sonos Radio listening hours doubled during the past year and is now the third most listen to service on our platform.

We also announced our first-ever automotive audio partnership with Audi, a partner that shares our vision and approach, placing the same value on innovation and premium design at Sonos. And finally, we continue to expand our partnership with IKEA, introducing two new products to the SYMFONISK range. In June, we launched the SYMFONISK picture frame speaker followed by an updated and customizable table lamp. SYMFONISK is now sold in more than 50 markets worldwide, and we will continue to expand our distribution through 2022.

We have tremendous opportunity ahead in the categories we play in today, but we also have ambitious plans to expand into new categories and new customer segments and to layer services on top of everything we do. As we look ahead to fiscal '22 -- 2022 and beyond, our product road map remains robust, and we are excited to unveil what comes next over time. And on to our third key strategic initiative, driving operational excellence to achieve sustainable, profitable growth for the long term. You are seeing us continue to execute ahead of our plan and deliver margin expansion and healthy top-line growth.

Our supply chain, logistics, and operations team has done an outstanding job navigating a difficult supply chain and logistics environment. Our fiscal 2021 results and execution in light of this universal challenge truly underscores our ability to drive operational excellence as an organization. Every year, we strive to improve our efforts as a responsible company, which we share in our Annual Listen Better report. In fiscal 2021, we partnered with a leading third-party to map the carbon footprint of our entire value chain from sourcing materials to packaging to how our products are used throughout their life, identifying where our work has the greatest environmental impact.

Armed with this knowledge, we have developed our first climate action plan, which we will share alongside our annual Listen Better Report in December. Last, I am proud to report that Sonos was included on Inc. Magazine's first-ever list of the 250 Best-Led Companies, coming in at No. 13.

This list highlights America's thriving midsize companies and leaders that are the unsung heroes of the U.S. economy. I am even more excited about the future ahead. There are three macro trends that we believe have and will continue to fuel our growth.

First, the Golden Age of Audio. The volume of music, audiobooks, and podcasts we have access to now is enormous. And as more and more people become creators and find interesting new audio formats, even more time will be spent with audio. As the leading premium home audio brand, Sonos is very well positioned to continue to capitalize on this.

Second, Hollywood at Home. With more and more video content going direct-to-home, there has been a decade of change in the past year and companies bringing the newest movies right into our living room. Consumers are demanding a theater-like experience at home, evidenced by the fact that consumers are buying larger and larger TVs and driving significant growth in smart TV and streaming video time. Sonos as the No.

1 brand in premium home theater is well-positioned to be the go-to source for consumers looking to bring theater-like sound to their home theater setup. And the third trend, fueling our growth is The Great Reshuffling. This is the untethering of people from their commutes and offices, which has really enabled them to reevaluate how and where they want to live. We believe this will be a multiyear cultural trend driving consumers to continue to invest in their homes.

As our target consumers buy new primary and vacation residences, they often turn to custom audio/video installers for their multiroom home audio setups and home theaters. Custom installers have a lot of influence over purchase decisions given their expertise and customers that work with installers tend to have larger systems and higher Net Promoter Scores. Sonos continued partnership with professional installers has resulted in a record number of amps, ports, and Sonos by Sonance products being integrated into homes all over the world. One of our great strengths is the ongoing collaboration between ourselves and the many small businesses who specialize in using Sonos to create amazing audio experiences for their customers.

In fact, according to a CE Pro report, we have earned 92% share in the wireless audio category, which significantly outpaces our competitors and really underscores the strength of our brand, the quality of our products, and our strong competitive position in the categories we play. We are looking forward to our continued growth in this space as we broaden to serving builders, remodelers, and architects. In conclusion, despite the uncertainty and challenges presented this year, the Sonos team rose to the occasion and delivered a record year. I am proud of what we've accomplished, and I'm excited for the tremendous opportunity that lies ahead.

We have a robust product road map, and our addressable markets are large and growing. The long-term opportunity is enormous, and we are just scratching the surface. Now, I'll turn the call over to Eddie to provide a brief update on our IP litigation.

Eddie Lazarus -- Chief Legal Officer

Thank you, Patrick. Since our last earnings call, the Administrative Law Judge at the International Trade Commission issued his initial decision in our case against Google. We were very gratified that the judge upheld the validity of all five of our patents at issue and further ruled that Google infringes all five patents. As I said over the last call, validity and infringement were our benchmarks for success because they measure the strength of our portfolio and of our theories of infringement and, thus, our eventual prospects for success.

In this regard, we achieved an absolutely outstanding result. At the same time, aspects of the ALJ's ruling leave uncertain the scope of the remedy we will eventually obtain at the ITC. Later this week, the commission is expected to announce whether and to what extent it will review the ALJ's rule, and we look forward to continuing to advance our arguments before the ITC, as well as in the federal court cases we have pending. At bottom, we remain confident in the strength of our cases against Google and that in the end, we will obtain a strong return on the investments we are making and holding them accountable for their widespread infringement.

Now, let me turn the call over to Brittany to provide more details on our results and our outlook.

Brittany Bagley -- Chief Financial Officer

Thank you, Eddie. There certainly has been a lot going on in fiscal 2021. And as I reflect, I'm truly impressed by what an outstanding year we had as a company. Eddie and the team made great progress in further establishing our IP.

We experienced incredible demand for our products. We executed in what was a dynamic and challenging supply environment, and we beat every expectation we had going into the year. We added almost $400 million of revenue to grow 29% year over year, expanded our gross margins despite the global headwinds in the supply chain, and almost doubled our adjusted EBITDA margins from 8.2% to 16.2% while generating over $200 million of free cash flow. I am very proud of what the whole company was able to deliver in fiscal year '21.

To put some more detail behind that, fiscal '21 was our 16th consecutive year of revenue growth. We generated total revenue of $1.717 billion, which was 29% year-over-year growth or 32% excluding the 53rd week last year. The increase was driven by strong overall demand across all our product categories and geographies, somewhat offset by the impact of constrained product availability. Gross margin for the year increased 410 basis points to 47.2%.

We received approximately $18 million in tariff refunds out of our approximately $34 million in expected refunds and recognized approximately $14 million in tariff expense in fiscal '21, resulting in a minimal net impact. If you excluded the effect of tariffs from both fiscal '20 and fiscal '21, gross margin increased 130 basis points to a record 46.9%, driven by a shift in product mix into higher-margin products and lower promotional discounts compared to the prior year. Direct-to-consumer revenue increased 47% and represented 24% of total revenue, compared to 21% last year. sonos.com, our retail channel, and our installed solutions channel are all important parts of our go-forward strategy.

Gross margin was negatively impacted by component material costs and shipping and logistics costs, which are part of the broader industrywide supply chain challenge we're facing. Adjusted EBITDA increased 157% to a record $279 million, and adjusted EBITDA margin increased 800 basis points to a record 16.2%. Given the strong growth in revenue, we experienced strong opex leverage during the year, allowing us to scale profitability faster than expected. R&D increased 10%, excluding restructuring and severance costs last year, driven by higher personnel-related expenses due to increased head count and higher bonus stock-based compensation and related payroll taxes, as well as an increase in product development costs and professional fees.

Our software and consumer experience continues to differentiate our products. Sales and marketing increased 13%, excluding restructuring and severance costs last year. This was primarily due to higher marketing expenses to support new product launches, higher revenue-related sales fees, and higher personnel-related expenses. G&A, excluding restructuring, severance, transaction costs, and IP litigation, increased 18%, driven by higher personnel-related expenses, as well as professional fees related to our investments in information technology.

Our model continues to generate strong free cash flow, and we saw another significant increase this year. We generated cash flows from operating activities of $253 million and free cash flow of $208 million. We have an incredibly strong balance sheet from which we will deploy capital back into the business to drive future growth, including through M&A, as well as returning capital to our shareholders. In fiscal '22, you will see us continuing to allocate additional capital toward our long-term growth.

We will also continue to return capital to shareholders and offset future dilution through our share repurchase programs. As you can see, today, our board has authorized a new $150 million share repurchase program. In the fourth quarter, we completed our most recent $50 million share repurchase program. Since early 2020, we have completed $100 million in share repurchases, representing over 5 million shares at an average price of approximately $19.30.

Now, turning to our fourth quarter results. Revenue increased 6% or 14% excluding the 14th week last year to $359.5 million. Growth was driven by strong overall demand, partially offset by the impact of continued constrained product availability due to industrywide supply chain challenges. This was primarily related to limitations on component supplies due to the global shortage of semiconductors.

We have been so short on some components that we have had manufacturing shutdowns, and these may continue to impact us into fiscal '22. As we've noted, we continue to see strong demand and are thankful that our customers continue to wait for our products. Gross margin decreased 110 basis points to 46.4%. We received approximately $7 million in tariff refunds and recognized approximately $4 million in tariff expense during the quarter.

Excluding the impact of tariffs from both quarters, gross margin decreased 260 basis points to 45.7%. The decrease was primarily due to increased component costs and shipping and logistics costs related to broader industrywide supply chain challenges. Adjusted EBITDA was $17.1 million, and adjusted EBITDA margin declined to approximately 5%. As we stated last quarter, we plan to make additional opex investments to support our long-term growth, which resulted in deleverage across all opex line items in the fourth quarter.

Now, turning to our record fiscal '22 outlook. In fiscal '22, we will remain focused on continuing to meet our strong demand and demonstrating our ability to execute in the face of global supply challenges. We expect to be able to deliver revenue in the range of $1.925 billion to $2 billion, which represents growth of 12% to 16% off a record fiscal '21. While our demand trends remain strong, the global supply situation has only continued to get more challenging.

As a result, we are anticipating that our first quarter revenue could be lower than the first quarter last year. We expect to see some improvements in the global supply chain in the back half of fiscal '22 and are also continuing to work to mitigate the biggest impact of the shortages where we can. Gross margin is expected to be in the range of 46% to 47% in fiscal '22. Given the global supply challenges, we are pleased to be able to give guidance at the top of our long-term range of 45% to 47%.

As you are aware, we did take price increases on various products in September, and these helped to offset some of the gross margin impact of the rising component and logistics costs we're seeing. In addition, given these supply constraints, our promotional activity will be moderated, especially as we head into the first quarter, which is the quarter we are typically most promotional. We continue to invest in incremental air freight, particularly in the first quarter to fulfill as much of the strong demand as possible. We also expect to see a smaller benefit from both product and channel mix in fiscal '22 and are assuming a minimal net benefit from tariffs.

Adjusted EBITDA is expected to be in the range of $280 million to $325 million, up 9% from fiscal '21 at the midpoint. This reflects an adjusted EBITDA margin in the range of 14.5% to 16.2%, reflecting the gross margin investments noted previously, as well as continued opex investments to support our long-term growth and road map. We are ahead of schedule toward achieving the fiscal '24 targets we outlined at our investor event last March. Given how much we exceeded our expectations in fiscal '21, we are pleased to say we still expect to deliver an approximately 13% revenue CAGR as we look forward.

This is consistent with the revenue growth CAGR implied at our investor event in March but off a much larger base of revenue in fiscal '21 than previously contemplated. We remain confident in our ability to deliver industry-leading gross margins in the range of 45% to 47% and adjusted EBITDA margins in the range of 15% to 18% through fiscal '24. Overall, we had a tremendous fiscal '21. It underscored the strength of our model and our ability to deliver operational excellence in light of a challenging environment.

Demand remains strong, and our customers have proven they will wait for our products despite supply constraints. We are confident in our outlook for fiscal '22 and beyond. Our P&L and balance sheet are stronger than ever, and this enables us to invest in the business and return capital to shareholders to continue driving long-term value. We are excited about the opportunity ahead and look forward to sharing our continued progress with you.

With that, I would like to turn the call over to questions.

Questions & Answers:


Operator

[Operator instructions] We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Tom Forte with Davidson. Your line is now open.

Tom Forte -- D.A. Davidson -- Analyst

Thanks for taking my question. I have one question and one follow-up question. So, one of the things that's been so impressive about Sonos is that your customer have been willing to wait for your products even before really some of the supply chain crunches we've had. Do you have any internal survey work or things of that nature that shows that their willingness to wait continues to hold steady even as the supply chain worsens?

Patrick Spence -- Chief Executive Officer

Yes. Hey, Tom, it's Patrick here. We watch so carefully, and we have a good handle, obviously, with almost 25% of our business being direct-to-consumer on order cancellation rates. And then as well we watch kind of what's happening in the general marketplace and get channel feedback.

And we've been dealing with some supply chain issues throughout the year. So, we've seen on particular products, how the behavior has been. And we continue to see very low cancellation rates on those orders. I mean, we haven't seen anything in the market that makes us believe that people are moving to some other product that's out there.

And I think it goes back to the fact that we are a considered purchase. You've seen the way that we continue to increase the number of products per home as well, and it is that system. And we have no reason to believe at this point that any of that will change. We're very grateful for it, but we work hard to make sure that it is something that is going to continue to be above and beyond anything else they can buy, but all indications right now are that will continue, and we really face that throughout fiscal 2021 as well.

Tom Forte -- D.A. Davidson -- Analyst

Great. And then for my follow-up question, on the new share buyback program, how should we think about your capital allocation decisions between investing in the business, M&A, and buying back stock?

Brittany Bagley -- Chief Financial Officer

I think we have stated that all three of those are really an important part of our plan. So, we will execute on M&A. We will continue to repurchase shares through our new share repurchase program, and we are talking about really investing in the business for fiscal year '22 as well. So, I don't think it's an either/or, it's really all of the above.

Tom Forte -- D.A. Davidson -- Analyst

Wonderful. Thanks for taking my questions.

Brittany Bagley -- Chief Financial Officer

Thank you.

Operator

Your next question comes from the line of Katy Huberty with Morgan Stanley. Your line is now open.

Katy Huberty -- Morgan Stanley -- Analyst

Thank you. Congratulations on the strong execution and 2022 outlook. I have a couple of questions. First for Brittany.

You mentioned 1Q revenue could be down year on year. If you were to isolate just demand, where would you expect 1Q growth to be before considering the supply issues? And just as a follow-up to that, given cost inflation, should we expect that the gross margin in 1Q is likely to be the low point for the year?

Brittany Bagley -- Chief Financial Officer

Yeah. Thanks, Katy. It's really, really hard to quantify what it would look like without supply constraints, a lot of unknown factors. And so, we're not putting a number on that.

But I would say, when we think about how it might be challenging to grow in Q1, that really is all about supply and our ability to get supply into the quarter. We think that most of that demand rolls over and is part of what gives us comfort and support for the growth outlook that we're looking at for the rest of the year. From a gross margin standpoint, Q1 is typically a challenging -- or a lower gross margin quarter for us because we run our promotions more typically in Q1. Because of the supply constraints, we won't be running typical promotional environments in Q1 either.

And so that's a bit of a balance to the significantly higher component and logistics costs that we're seeing come through in Q1.

Katy Huberty -- Morgan Stanley -- Analyst

OK. Understood. And then, Patrick, you commit to two product launches a year, which helps deliver the double-digit revenue growth. Just at a high level, how should we think about the product portfolio and partnerships expanding to drive that 12% to 16% revenue growth outlook?

Patrick Spence -- Chief Executive Officer

We see a ton of opportunity in new homes, right? So, we're somewhere under 10% penetrated into the homes we believe we can just in the markets we're in today. So, that is a huge opportunity and something that we think we see before we even get to the new products that are coming. And then as you've seen, we strike a balance between products that go into the existing categories that we're in, sometimes a new form factor, sometimes a new price point as well that helps us tap into new customers and reach new homes and then as well new categories. And so, as we think about those, we're balancing all the time how we do each of those.

And we have some exciting stuff we're working on. And as per usual, we will share that as it is ready and comes to market. But we definitely are excited. Like Brittany said, we're investing more in what we're doing on the product side, which I am so pleased with.

And I think that sets us up for the continued kind of growth we're talking about well into the future.

Katy Huberty -- Morgan Stanley -- Analyst

Congratulations again. Thank you.

Patrick Spence -- Chief Executive Officer

Thanks, Katy.

Operator

Your next question comes from the line of Brent Thill with Jefferies. Your line is now open.

Brent Thill -- Jefferies -- Analyst

Thanks. Patrick, how would you characterize the supply chain constraint now versus a few months ago? Kind of what's your sense as you look forward into early next year? I know it's hard to maybe answer, but is there any color you can give us just as it relates to kind of when you think we get back to more normal?

Patrick Spence -- Chief Executive Officer

I think it will get better as we go throughout fiscal 2022. So, I think it will improve as we progress through the year. We have been dealing with it for over a year at this particular point in time. So, there's always some ups and downs in that.

As Brittany has talked about, it's particularly acute in our fiscal Q1. But all indications are, as fabs come up, new fabs come online, people kind of catch up with the demand that's out there. We qualify new parts in our products as well. The government and some of the infrastructure players take care of the port congestion and other issues that are there.

As we get the pandemic under control, there are so many factors that go into it. But fundamentally, we believe it's something that eases as we progress through 2022. And so, we'll be monitoring it very closely. I think it's -- I don't think anybody has the crystal ball to call when it will be completely open again.

So, I want to be a little bit careful about that. But it gets better as we progress through 2022.

Brent Thill -- Jefferies -- Analyst

Great. Thank you.

Patrick Spence -- Chief Executive Officer

Thanks, Brent.

Operator

Your next question comes from the line of Rod Hall with Goldman Sachs. Your line is now open.

RK Rajagopal -- Goldman Sachs -- Analyst

Hi. This is RK on behalf of Rod. I wanted to ask about your fiscal '22 guidance. Could you talk about how much visibility you have at this stage? And what are the assumptions underpinning that guide in terms of both demand and supply constraints? Thank you.

And I have a follow-up.

Brittany Bagley -- Chief Financial Officer

It's obviously a very difficult time to come out with guidance and there are certainly companies who aren't guiding at all at this point. But our general guidance philosophy is to always try and share to the best of what we know, what we're seeing out there. And so, we are looking at everything that we see in the supply chain environment. And to Patrick's point, we expect that that starts to get better in the second half of the year.

And then we're looking at everything we can see from a demand standpoint and rolling that together to come up with our fiscal year '22 guidance. So, that's what gives us comfort behind the 12% to 16% on revenue, the 46% to 47% on gross margin, and the $280 million to $325 million on adjusted EBITDA.

RK Rajagopal -- Goldman Sachs -- Analyst

Thanks, Brittany. Could you also talk about your recent price increase? When do we see the effects on the financials? And has it had any effect on demand so far? Thank you.

Brittany Bagley -- Chief Financial Officer

Yeah. So, that went into effect in September. And so, you will see the full impact of that as we go through fiscal year '22. And our view on how that impacts demand is fully factored in as we look at that fiscal year '22 guidance.

And obviously, we're in a supply constrained environment right now. So, you have to factor that in as we think about the impact.

RK Rajagopal -- Goldman Sachs -- Analyst

Great. Thank you.

Operator

Your next question comes from the line of John Babcock with Bank of America. Your line is now open.

John Babcock -- Bank of America Merrill Lynch -- Analyst

I guess my first question is actually just on the gross margin front. Can you talk about generally like what panned out better for you in the fourth quarter than you expected? Because it seems like you did a little bit, at least better than I think most anticipated. I'm just kind of curious what went on there. I don't know if it was maybe a little bit of or there were any other factors but any color there would be helpful.

Brittany Bagley -- Chief Financial Officer

Yeah. I mean, look, there's such a mix of factors. We have continued to see benefit from product mix and channel mix, and those have been offset by supply chain component costs, logistics, air freight, all of that. And so, it's really just the balance of how those played out.

John Babcock -- Bank of America Merrill Lynch -- Analyst

OK. Fair enough. And then just like two more quick questions if you don't mind. I guess just quickly just on the supply chain impact and how that impacted, I guess, overall manufacturing.

I mean, do you have a sense of like how much production you lost during the quarter from that?

Brittany Bagley -- Chief Financial Officer

No, not in any way we would quantify. Obviously, we work hard to manage through that. But of course, when you're struggling to get component costs, as I called out in my remarks that it has caused us to have some delays in our total manufacturing capacity. So, that's certainly one of the factors that's limiting our supply outlook right now.

John Babcock -- Bank of America Merrill Lynch -- Analyst

OK. And then I guess just the next question, this is for Eddie or someone else wants to take it. But just on the update that we're going to get on the Friday from the U.S. ITC, could you just provide a little bit more color on what you expect from them? I know you obviously can't like mention in any way like which way it might lean.

But just kind of curious, overall, on any kind of additional points you might be able to provide. And also, if there is any update on the case in California and when we should expect to rule in there, that would be useful.

Eddie Lazarus -- Chief Legal Officer

Sure. So, with respect to the ITC, just to be clear, we don't expect this week to receive any kind of substantive decision. What we're going to get is an indication of whether and to what extent the full commission is going to review the ruling of the Administrative Law Judge. So, there could be indications where you could read the tea leaves on things or there could not be.

And so, we're just going to have to see. There's no specific formula for what they're going to say on this date. And it's also possible they could give themselves another extension of time as they did once before on this particular benchmark. So, like you, we're waiting to see what happens and looking forward to continuing to present our arguments in front of the ITC.

We feel very good about where that case is, and we'll just keep playing that out. As for the case out in California, the case was transferred from Texas. The judge in California has a somewhat unusual procedural style for handling patent cases called the showdown. And so, the parties move forward with a small number of claims on a fast pace, looking toward hearings in the spring of '22 with the remainder of the case being set for trial in May of '23, and that way, the parties can get a sense for the strength of their case early.

And then the full-blown trial is, as I said, May of '23. So, we, again, look forward to moving forward aggressively in that case and feel good about our prospects.

John Babcock -- Bank of America Merrill Lynch -- Analyst

OK. Great. That all I have. Thanks.

Operator

Your next question comes from the line of Matt Sheerin with Stifel. Your line is now open.

Matt Sheerin -- Stifel Financial Corp. -- Analyst

Yes. Thank you, and good afternoon. I wanted to ask about your EBITDA growth target ranges for next year, which are much, much wider than your revenue growth. I think you're guiding 1% to 17% versus in mid-teens for revenue growth.

So, could you give us the reasons for that? Is it just because of the unknown variable costs relative to gross margin and input costs or opex? Could you just give us the reasons for that?

Brittany Bagley -- Chief Financial Officer

No, I would say it's really -- it's two pieces. One, it's the variability in gross margin. So, 46% to 47% gives you a point there. And then beyond that, it really is about the investments that we're looking to make and when and timing and how those come in and what that opex forecast looks like for us as we go throughout the year.

So, those are the two pieces we're factoring in when we think about our EBITDA ranges.

Matt Sheerin -- Stifel Financial Corp. -- Analyst

OK. And I'd like to throw in another supply chain question if I can. It sounds like you have some optimism, Patrick, about the supply constraints easing. But if you talk to a lot of other companies, they really have no idea when that supply is going to come online.

So, I'm just trying to figure out, do you have any tangible support in terms of when you're going to get that supply? Some of your contract manufacturing partners, for instance, building inventory, have you talked to suppliers? How should we get a sense of how this plays out?

Patrick Spence -- Chief Executive Officer

Yes. Hey, Matt. I think given the way we've been able -- and our team has done an amazing job this year working with everybody in the value chain too. Really in fiscal 2021, if you look at the challenges that we had that were right throughout all four quarters and the way the teams handled those and dealt with those and understood the situation kind of worked through all of those.

And then with what we know about what happens or what is planned to happen in 2022 at this point, fabs coming online are important and some of the plans that we have around components and having multiple sources and those kind of things put us in a -- in what we feel should be a better situation as we work through it. And to your point, nobody forecasts the pandemic and some of the challenges that arise in those kind of situations. It has been an up and down year of challenges. But we go into the year with confidence in our outlook because of the way our team has really managed fiscal 2021 and all the challenges it brought.

So, it's all obviously been built into the way that we look at the year ahead and what we have planned. So, hopefully, that gives you some more color.

Matt Sheerin -- Stifel Financial Corp. -- Analyst

OK. Fair enough. Thanks so much.

Patrick Spence -- Chief Executive Officer

Thanks, Matt.

Operator

There are no further questions at this time. Patrick Spence, I turn the call back over to you.

Patrick Spence -- Chief Executive Officer

Thanks a lot, Emma, and thanks to everybody for joining. I am so proud of the way the team delivered in fiscal 2021. I'm so appreciative of our customers continuing to stick with us and all of our channel partners, our installed solutions partners. It's been a tremendous year, and we are so excited about fiscal 2022.

We feel very excited about being ahead of our plans for reaching those fiscal 2024 targets and we're getting back to work. So, we'll see you next quarter. Thanks, everybody.

Operator

[Operator signoff]

Duration: 54 minutes

Call participants:

Cammeron McLaughlin -- Vice President of Investor Relations

Patrick Spence -- Chief Executive Officer

Eddie Lazarus -- Chief Legal Officer

Brittany Bagley -- Chief Financial Officer

Tom Forte -- D.A. Davidson -- Analyst

Katy Huberty -- Morgan Stanley -- Analyst

Brent Thill -- Jefferies -- Analyst

RK Rajagopal -- Goldman Sachs -- Analyst

John Babcock -- Bank of America Merrill Lynch -- Analyst

Matt Sheerin -- Stifel Financial Corp. -- Analyst

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