Sonos Q4 Loss Narrower Than Expected, Revenues Fall Y/Y, Stock Jumps

Sonos, Inc. SONO reported fourth-quarter fiscal 2024 non-GAAP loss per share of 18 cents. It had registered a loss per share of 7 cents in the prior-year quarter. On a GAAP basis, the company reported a loss of 44 cents compared with a loss of 25 cents in the year-ago quarter. The Zacks Consensus Estimate was pegged at a loss of 22 cents per share.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar

Quarterly revenues fell 16.3% year over year to $255.4 million. The figure was well within the company’s guided range of $240-$260 million. Management noted that the fourth quarter sales were affected due to lower sales across the portfolio owing to app issues and the decision to delay two major product launches (planned for the fiscal fourth quarter) until the app would meet expected quality standards. The top line surpassed the Zacks Consensus Estimate by 2.2%.

The company released two new products, Arc Ultra and Sub 4, in October 2024. Sonos expects the demand for these products to gain from the upcoming holiday season.

Sonos, Inc. Price, Consensus and EPS Surprise

Sonos, Inc. price-consensus-eps-surprise-chart | Sonos, Inc. Quote

Fiscal 2024 revenues of $1.52 billion fell 8% year over year due to weaker demand amid challenging market conditions and the issues surrounding the recent app rollout. The introduction of Ace in June 2024 and favorable foreign exchange rates offered some cushioning to the top-line expansion. It also gained a considerable dollar market share in the U.S. home theater category as well as market share gains in the U.S. streaming audio.

Sonos reported non-GAAP earnings of 56 cents per share compared with 92 cents reported in fiscal 2023.

Following the announcement, shares are 7.7% in the premarket trading on Nov. 14. In the past year, shares have gained 24.1% compared with subindustry’s growth of 4.2%.

Sonos’ Revenue Details

Revenues from Sonos speakers were $178.2 million, down 20.2% year over year. The consensus estimate was pegged at $172 million.

Sonos’ system products’ revenues of $58.7 million fell 5.8% year over year. The consensus estimate was pegged at $61 million.

Revenues from Partner products and other totaled $18.4 million, fell 5.6% year over year. The consensus estimate was pegged at $19.86 million.

Region-wise, revenues from the Americas of $177.5 million declined 13% year over year. Europe, the Middle East and Africa generated revenues of $58.4 million, down 30%. Revenues from the Asia Pacific rose 7% year over year to $19.5 million.

Sonos’ Margin Performance

Non-GAAP gross profit was $104.6 million, down 19.2% on a year-over-year basis. Non-GAAP gross margin expanded 140 basis points to 41%, due to higher promotional activity, partly offset by lower product and material costs.

Adjusted operating expenses amounted to $143 million, up from $135.6 million in the year-ago quarter, due to higher sales and marketing costs.

Non-GAAP adjusted operating loss was $38.4 million compared with $6.1 million in the year-ago quarter. Adjusted EBITDA loss totaled $22.6 million against adjusted EBITDA income of $6.3 million a year ago.

Cash Flow & Liquidity

For the fiscal year, Sonos used $189.9 million of cash from operations. Free cash outflow was $134.7 million.

As of Sept. 28, cash and cash equivalents were $169.7 million compared with $227.1 million as of June 29, 2024.

The company returned $129 million to its shareholders through stock repurchases in fiscal 2024. It has $71 million worth of shares left for repurchase under the current $200 million buyback authorization.

Sonos’ Q1 Guidance

Management expects fiscal first quarter 2025 revenues to be in the range of $480 million to $560 million. GAAP gross margin is anticipated to be in the band of 41% to 43%. Non-GAAP gross margin is predicted to be in the band of 41.9% to 43.8%.

Adjusted EBITDA is likely to be in the range of $35 million to $79 million.

Zacks Rank of Sonos

Sonos currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Peers

GoPro GPRO reported non-GAAP breakeven earnings per share for the third quarter of 2024, narrower than the Zacks Consensus Estimate of a loss of 4 cents. The company reported earnings per share of 6 cents in the year-ago quarter. GPRO generated revenues of $259 million, down 12% year over year due to lower camera unit sales. The metric was within the company’s guidance of $255 million (+/- $5 million). The top line beat the consensus mark by 1.6%. GoPro shipped 881,000 camera units in the reported quarter, down 5% year over year. Shares of GPRO are down 62.3% in the past year.

Sony Group Corporation SONY reported second-quarter fiscal 2024 net income per share (on a GAAP basis) of ¥55.74 ($1.22), increasing from ¥32.35 in the year-ago quarter. Adjusted net income was ¥338.5 billion compared with ¥200.1 billion in the prior-year quarter. Quarterly total revenues rose 3% year over year to ¥2,905.6 billion ($19.5 billion). This upside resulted from healthy growth across Game & Network Services (“G&NS”) and Imaging & Sensing Solutions (“I&SS”) segments, offset by a contraction in the Financial Services and Pictures segments sales. Shares of SONY are up 6.2% in the past year.

LiveOne Corporation LVO reported a non-GAAP loss of 2 cents per share, wider than the Zacks Consensus Estimate of a loss of 1 cent. The figure compares with a loss of 9 cents reported in the year-ago quarter. Revenues of $32.59 million missed the Zacks Consensus Estimate by 3.12%. However, it rose 14.3% on a year-over-year basis. The Audio Division revenues increased 18% to $31.7 million. Shares of LVO are down 23.9% in the past year.

Zacks Investment Research