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Sound system technology company Sonos released better than expected second quarter earnings after the close Wednesday with the momentum of Home Theater smarter speaker Beam leading. After two large EPS misses, $SONOS has now reported three massive EPS beats in a row.

Sonos

Sonos Inc NASDAQ: SONO Reported Earnings After Close Wednesday

$0.31 Beat ($0.22) EPS AND $332.90M Beat $248 million expected in Revenue.

Earnings

Sonos announced its fiscal Q2 2021 earnings report, which ended on March 30, beating analyst expectations. Most impressively the March quarter is a seasonally slower quarter, and a loss was expected.  2020-21 though has been thrown on it's head 

Sonos reported a $0.31 profit vs. a loss of 34 cents a share a year earlier as its revenue jumped 90% yr/yr to $332.9 million smashing the 248 mln consensus and $175.1 million in the same period a year earlier. The company reported GAAP earnings of 12 cents a share, vs. a loss of 48 cents a share a year earlier. Sonos had been expected to report a GAAP loss of 22 cents a share, on sales of $248.5 million, based on a FactSet survey of 6 analysts.

Sonos Inc NASDAQ: SONO

Market Reaction > After Hours 33.83 ▲ 2.34 (+7.43%)

Highlights

Demand continues to exceed even Sonos' heightened expectations. Margins shows just how far Sonos' operating leverage has come. Adjusted EBITDA margin surged to 14.6% from (16.2)% last year and 8.2% for all of FY20.

A key strategy for the company is to create a flywheel-type model through which SONO attracts new customers and then customers return to add additional Sonos products and services over time. A perfect fir for sales points like Costco and Best Buy. A great example of this is SONO experiencing tremendous demand for its newest product, Roam, a wireless and waterproof portable outdoor speaker. Sales reached over 150% of the company's pre-order forecast in its online channel. One could say optimally timed as the world heads outdoors after the global pandemic.

Sonos has also been expanding its subscription services business with Sonos Radio HD and increasingly partnering with other companies, including its first step into automotive with an Audi deal and a partnership with IKEA.

Outlook

Sonos raised up its FY21 guidance to 13.8-14.9% from 12.8-14.3%, a range of $1.625 billion to $1.675 billion. It had previously guided for revenue in a range of $1.525 billion to $1.575 billion. Sonos' business model is showing just what can be achieved as sales increase.

 Looking ahead, Sonos sees three macro trends working in its favor.

  1. Sonos calls present times the Golden Age of Audio given the sheer volume of music, audiobooks, and podcasts.
  2. More movies are going direct-to-home, and consumers want to experience theater-like audio in the home.
  3. There is a great housing reshuffling, which Sonos sees as a multi-year cultural trend that benefits the company significantly.

Sonos has shown incredible recovery in it's business, profitability and stock price since the initial disappointment following its IPO debut back in August 2018.  It came into a world where inexpensive smart speakers available from Amazon (AMZN), Apple (AAPL) and Google (GOOG), were among other competitors, Sonos made the wise decision to focus on the high end premium market and grow through word of mouth which has had the desired affect so far.  In 2021 with supply chain shortages galore the company's main risk is component shortages, and that supply situation is expected to get more challenging in 2H21.  With loyalty comes patience, for Sonos products that brand loyalty is in place for now..

From The TradersCommunity Research Desk

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