March 20, 2023
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Sonos’ revenue revelation generates buzz among IPO speculators


Henry Dubroff

Henry Dubroff

It takes a ton of revenue — or some very foolishly spent capital — to support a multimillion-dollar ad campaign, including a coveted spot in the Super Bowl commercials.

Just how much revenue it takes has been a topic for discussion in the Business Times newsroom. That’s because we’ve tried to figure out if we could reverse-engineer the big ad spend by Santa Barbara-based audio gear maker Sonos into a revenue number. Sonos was a walk-on star of the NFL season, at least in terms of advertising, and the normally tight-lipped company has not — until now — talked about revenue.

My own guess was about $300 million to $400 million. That would easily support an advertising buy of $15 million to $20 million, or something like 5 percent of revenue. However, it turns out my number was way low.

On March 11, Sonos stunned the audiophile community by releasing an official revenue of $535 million for 2013. At the same time, it revealed that the revenue number had doubled during the past year — making my guess more or less accurate as of mid-2012.

The company, co-founded by John MacFarlane, also said it would forward guide on patent releases, which much of the blogosphere interpreted as a preemptive strike against copycats.  And there has been wide speculation that the release of revenue by Sonos, one of the premier players in the wireless audio space for homes, might be getting ready for a public offering.

In a widely publicized move several years ago, early stage investors got an opportunity to cash out when a group of private equity firms led by KKR bought a majority stake in the company. Since then, Sonos’ fortunes have only improved. It is now the largest corporate tenant within the city of Santa Barbara, occupying some 100,000 square feet in four buildings. And the NFL ads were a clear indicator that it saw an opportunity to capture a much bigger slice of the audio market.

Sonos has come a long way from the days when the late Apple CEO Steve Jobs called out the company in a public forum. It does not yet have Apple’s global reach or its multibillion-dollar hoard of cash. But in a world where media and entertainment opportunities are increasingly being fragmented into smaller niches, Sonos is clearly a winner.

And there’s no greater proof than its $535 million in annual revenue and the rapid pace of that growth.

The season for statistics

How fast is the regional economy actually growing?

In a series of blog posts, Brian Thomas of the UC Santa Barbara Economic Forecast Project suggests that a recent spike in Santa Barbara County’s unemployment rate is easily explained as a “January effect” that’s seasonal and consistent over the years.

After making an adjustment for seasonality, it looks like Santa Barbara County’s unemployment rate will be headed to a pre-recession low of about 6.5 percent later this year.

Meanwhile, Bill Watkins, head of California Lutheran University’s CERF project, is unconvinced that California employment on a statewide basis will return to its pre-recession levels. The Golden State economy is about 460,000 jobs short of its 2007 peak. “We’ve worked out most of the pre-2007 real estate market distortions in the U.S., but the fundamentals necessary for a sustained recovery are not in place,” he writes in his latest quarterly update.

Fielding turns 40

In March 1974, Frederic Hudson, Hallock Hoffman and Renata Tesch launched a new university designed to serve mid-career professionals in education and psychology. Their vision resulted in Fielding Graduate University, which celebrates its 40th anniversary this month as an innovator in the delivery of graduate studies to a national and global audience.

The Fielding organization has been largely self-sustaining since inception and its programs in Santa Barbara in organizational development have reshaped the leadership of a number of business and nonprofits in our region.

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