Sonos sheds 7% of its workforce
In an effort to restructure its fiscal plan amid economic uncertainty, Santa Barbara-based Sonos announced it would be laying off 7% of its workforce, or roughly 130 employees, in a filing with the U.S. Securities and Exchanges unit on June 14.
In an October 2022 filing, Sonos employed 1,844 people globally, the last time the company disclosed its headcount. It is also unknown how many people Sonos employs along the Central Coast.
The company has not filed a WARN act with the state of California as of June 14. If filed, it could give more insight into how many California-based employees were let go.
In the SEC filing, Sonos said it would also continue committing to further reducing its real estate footprint re-evaluating certain program spend.
The company did not mention downsizing its Santa Barbara headquarters as it has not yet mandated employees to come back to the office like other technology companies.
“The foregoing actions were committed to on June 13, 2023 and reflect the Company’s commitment to rightsize its cost base while still investing in its product roadmap to drive future growth,” the filing, signed by CFO and Chief Legal Officer Eddie Lazarus, stated.
Sonos did not respond to a request for comment from the Business Times, but CEO Patrick Spence did issue a statement to CNBC on June 14.
The statement said “In the face of continued headwinds we have had to make some hard choices, including eliminating some positions and reevaluating program spend,” according to CNBC.
According to the SEC filing, Sonos estimates that it will incur approximately $11 to $14 million of restructuring and related charges, of which $9 to $11 million is related to employee severance and benefits costs.
The company expects to incur substantially all of the restructuring and related charges in the third quarter of fiscal year 2023, according to the filing.
The restructuring comes after a rough second quarter for the speaker manufacturer.
For the quarter ended March 31, Sonos generated revenue worth $304.2 million, down 22.4% year-over-year while gross margin decreased 150 basis points year-over-year to 43.3%.
The company also suffered a net loss of $30.7 million compared to a net gain of $8.6 million last year.
Adjusted for one-time losses, Sonos earned net income of $5.7 million, of 4 cents per share, down from $36.8 million, or 26 cents per share, in the same quarter a year ago.
As a result of these numbers, Spence said the company would be slashing its guidance forecast for the full year citing “ softening consumer demand and channel partner inventory tightening.”
“As a result, we are taking swift action to reduce our operating expenses and protect our profitability,” Spence said on May 10.
Shares of Sonos dipped more than 30% in the week after the company announced its earnings.
Shares closed at $21.10 on May 10, the date of its earnings announcement, and fell below $14 a share at one point in the month of May.
Shares closed at $15.70 on June 14, closing at 3% below its open price, but still a bit higher than at its lowest point in May.
In an effort to also gain more revenue streams, Sonos launched into the software industry for the first time in company history.
Brent Thill, an analyst at Jeffries who covers Sonos, told the Business Times it is a good opportunity for the company, but not the biggest one afforded to them.
“I believe this announcement is a nice to have, not a must-have. It will be a modest revenue opportunity and I believe there are bigger opportunities ahead,” he said via email.