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Sonos released better than expected fourth quarter earnings after the close Thursday with the momentum of Sonos One and smarter speaker Beam leading. $SONO guided higher and the stock jumped 23%  after the release.

Sonos

Sonos Inc NASDAQ: SONO Reported Earnings After Close Thursday

 ($0.02) Beat ($0.06) EPS On $273.4 million in revenue. 

Earnings 

Sonos reported a net loss in the fourth quarter narrower than expected of  $1.72 million or $0.02 per share from $14.9 million or $0.26 per share in the previous year quarter. Analysts had expected loss of $0.06 per share. Revenue jumped 27% to $273 million. 

“Beam has and continues to exceed our expectations,” Chief Executive Patrick Spence said on the company’s earnings call " In just a few months, the device became the leader measured by dollar share in the U.S. soundbar category, that’s unheard of for a $400 product. “

Sonos Inc NASDAQ: SONO

Market Reaction > After Hours $17.53 USD +$3.37 (+23.80%) 

Highlights

Sonos sold 1.12 million products, representing a 47% year-over-year growth. The largest driver impacting its revenue growth was the launch of Beam, which led to a 119% jump in home theater speakers products sold and a 63% surge in home theater speakers revenue. Wireless speakers products sold increased 35% due to the continued momentum of Sonos One. Despite the strong unit growth, wireless speaker revenue rose 4% as volume mix shifted from high-priced Play:5 and Play:3 to low-priced Sonos One and Play:1. onos expects Google Assistant to join its platform alongside Amazon Alexa, giving customers the freedom of choice when it comes to voice assistants. In the fiscal year 2019, the company plans to push its boundaries by investing resources to make the experience of Sonos outside the home a reality.

Outlook

  • Looking ahead into the first quarter of fiscal 2019, the company expects revenue to grow 3% to 6% to the range of $485 million to $495 million.
  • Adjusted EBITDA is predicted to rise 1% to 6% to the range of $66 million to $69 million.
  • For the full year 2019, Sonos projects revenue to jump 10% to 12% year-over-year to the range of $1.25 billion to $1.275 billion.
  • Adjusted EBITDA is anticipated to climb 20% to 27% to the range of $83 million to $88 million.
  • The company plans to invest about 2.5% of fiscal 2019 revenue in capital expenditures primarily to fund tooling and production line test equipment required for new products.

 

Sonos Q3 Earnings Recap

 ($0.45) Missed ($0.26) EPS And $208.4 million Met $208.0 million forecast in revenue. 

Earnings 

Sonos reported a net loss of $27 million, or 45 cents a share, on sales of $208.4 million,worse than the loss of 26 cents a share on revenue of $223.1 million in the same quarter a year ago but matching expectations for revenue. Adjusted Ebitda was a loss of $1.5 million less than a year ago profit of $2.3 million.

The company said that it expected to end the fiscal year with total adjusted Ebitda of $59 million to $62 million on revenue of about $1.11 billion, roughly in line with analyst estimates. 

Sonos Inc NASDAQ: SONO

Market Reaction $18.91 USD −$4.33 (20.41%) Sep 11, 9:35 AM EDT

Highlights

  • Sonos, reported year-over-year growth in total unit sales, selling 886,514 products in the third quarter, an increase of 11.4% and $208.4 million in revenue.
  • Sonos was also affected by stock-based compensation of US$10.3mln, as well as a number of other related expenss.

Chief Executive Patrick Spence wrote that the timing of new product launches was to blame for the dip in revenue. He focused on potential growth from the company’s recent expansion into the Japanese market,  the second-largest music market in the world and a broader integration with streaming platforms ahead of the upcoming holiday season.

Jeffries Analyst Brent Thill Note on Sonos

Brent Thill, an analyst with Jefferies, said it was fitting that the newly public company more or less evened out by Monday’s end  given its steady growth. Revenues increased 11% through the nine months leading up to June, compared with the same period in 2017. “They don’t have any new gadget that’s causing a stampede effect,” Thill said, “but we think they’re executing well.”

Filings made in July, in preparation for the IPO showed that Sonos’ smart speakers rely heavily on the technology of one of its biggest rivals in the market. Their voice recognition functionality, which allows users to control devices just by speaking, runs on Amazon’s Alexa.

The obvious concern is $AMZN could decide to pull that integration, or start charging Sonos for the privilege, at any time. Sonos speakers occupy a higher tier of the wireless home entertainment market than Amazon Echo or Google Home products. With prices for multi-room Sonos systems running into the thousands of dollars, the products are targeted toward customers who value a full home-theater experience. “My 75-year-old parents are probably fine with the Amazon product for streaming their music,” Thill said. “For certain consumers, that’s not good enough.” The risk remains that a behemoth such as Amazon or Google could decide to compete in higher-end equipment and use its vast cash reserves to undercut the smaller company’s prices and quickly dominate the segment.

For now, though, Amazon seems content to leave Sonos alone. “Our sense is that Amazon sees Sonos as a channel,” Thill said. “Sonos is in 7 million homes, and that gives Amazon a lot of inputs for commerce” since any Alexa-enabled speaker can be used to purchase products from Amazon.

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