Sonos shares up after Q1 earnings report
Santa Barbara-based Sonos delivered revenue growth and beat analysts’ expectations when it announced its results for the first quarter of 2022 on Feb. 9.
Sonos, a maker of audio speakers, generated record revenue in the first quarter, with sales worth $664.5 million, a 3% increase year-over-year, driven largely by strong demand in both existing and new households, the company said in a statement.
Zacks Consensus Estimate, which is based on analysts’ predictions, had projected Sonos generating revenue worth $645.4 million in the first quarter.
Net income fell for Sonos in the first quarter, from $132.3 million last year to $123.5 million this year, but that mark still beat analysts’ expectations of $120.2 million, according to First Call estimates, a company covering global market trends.
Non-GAAP earnings per share were $1.02, down from $1.17 in the same quarter a year ago, but higher than the Zacks Consensus Estimate of 88 cents per share.
Sonos shares closed at $26.65 on Feb. 9, before the earnings release. They were up nearly 10% the following morning, trading at over $29 about two hours into the trading day.
Sonos CEO Patrick Spence said the company’s ability to deliver record revenue in the first quarter despite supply chain issues speaks to the demand for its products.
“Our record first quarter results illustrate the continued strong demand for our products,” Spence said during the company’s earnings call. “As we discussed last quarter, we expected heavily constrained product availability to offset our potential growth in the first quarter. We are pleased to have modestly exceeded our own expectations.”
With the high revenue mark in the first quarter, Spence said Sonos is on track to deliver a 17th consecutive year of revenue growth and has raised the low end of its fiscal 2024 revenue guidance range from $2.25 billion to $2.5 billion.
Revenue for fiscal year 2022 is expected to be between $1.95 and $2 billion.
Sonos also said it has significant room for expansion, with current sales accounting for less than 10% of the total spend in the $18 billion premium home audio market, and less than 2% of the broader $89 billion global audio market that the company expects to expand into over the long term.
Spence said Sonos has added approximately 3.5 million new households over the last two years and has more than doubled its total households since fiscal 2017.
“We have a tremendous runway to add tens of millions more households to the Sonos ecosystem over time even before we contemplate adding new categories of products and services and new geographies,” Spence said. “Sonos is not a typical one-and-done purchase. It is a unique system that you build over time. This system-based model is proven and predictable and core to our success.”
In fiscal year 2021, 46% of existing households with Sonos products added even more from the company’s lineup.
“This repurchase behavior has been long lasting and is a unique and critical element of our growth,” Spence said.
Sonos does not release specific sales for each of its individual products.
Speaker sales were down 5% year-over-year, though, generating $501.8 million in the first quarter of 2021.
Brittany Bagley, the company’s chief financial officer, said this was due to speakers being “most impacted by the industry-wide component availability challenges.”
Sonos’ system products sales saw a big boost, however, up 38% to $134.7 million during the quarter ended Dec. 31.
Finally, Sonos’ partner products and other revenue generated $27.8 million, a 37% increase driven by the company’s partnership with Sonance and IKEA.
Bagley said the company is also committed to its goal of releasing two new products a year. One of those products is Beam Gen 2, which Spence called “the newest version of our industry-leading compact smart soundbar for TV, music, gaming and more.”
Last year, Sonos released its newest speaker, Roam, its first bluetooth portable speaker.
“We have products like Roam and Move, which are well positioned as people leave their homes as well. So I’d remind everybody that Sonos is well positioned and more and more becoming a company that delivers the ad experience throughout your life, not just at home,” Spence said.
Sonos ended the quarter with cash and cash equivalents worth $754.4 million compared to $640.1 million at the same period last year.