Shares of Sonos Inc. fell more than 14 percent in after-hours trading after it reported that its quarterly revenue — its first financial report since going public — was lower than it was at the same time last year.
Annie Gaus of TheStreet.com had the news:
Sonos, which makes home speakers and high-end sound systems, reported year-over-year growth in total unit sales, selling 886,514 products in the third quarter. That represented an increase of 11.4% and $208.4 million in revenue, roughly in line with analyst projections of $208 million.
Despite selling more units compared to Q3 2017, Sonos’ revenue declined by 6.6% in the same period. In the filing, CEO Patrick Spence attributed the lower revenue to “new product launches and/or product mix.”
Sonos sells dozens of speakers and other home audio accessories, including the recently introduced Sonos Beam and Sonos One. It’s best known as a maker of premium wireless speakers, which retail at anywhere from $150 for the lowest-end speaker to thousands for high-end audio systems. Sonos made its public market debut on Aug. 3 at $15 per share.
Jordan Novet of CNBC.com reported that revenue for its wireless speakers did increase:
Sonos’ biggest category, wireless speakers, did see a gain, rising 1 percent to $93.9 million. But the company’s revenue from home theater speakers declined 20 percent to $66.7 million. Revenue from components, including the Connect and Connect:Amp products, was down 4 percent year over year at $42.28 million.
“We are focused on driving sustainable, profitable growth for the long term,” Spence wrote in the letter.
In the letter Spence said the company wants to accelerate growth of sales directly to customers, as opposed to sales through third parties. Selling directly results in a profit margin “tends to be about 10 points better” that indirect sales, Spence said. About 12 percent of Sonos’ sales is direct — through the Sonos website, the company’s app and its customer relationship management system — since the beginning of the year, he said.
The company also provided guidance for its full 2018 fiscal year. It’s expecting to report $1.109 to $1.114 billion in revenue for that period. Analysts had expected guidance of $1.112 billion in revenue for the full year, according to Thomson Reuters.
Tim Bradshaw of The Financial Times reported that the company plans to enter new international markets:
Shares in Sonos had jumped by 13 per cent to $21.24 during normal trading but it gave up most of those gains after-hours. The stock fell by as much as 13 per cent following the release of the results to around $18.60.
Sonos priced its IPO at $15 in August before closing at $19.91 after its first day of trading.
Sonos also said on Monday that feedback from customers, retailers and reviewers for the new Beam soundbar was “in line with our expectations thus far”. Launching more new products such as Beam and an upgraded Amp, which allows traditional hi-fi systems to connect to a Sonos wireless network, is a key pillar of the company’s growth strategy.
Other priorities include launching in more international markets, such as its recent debut in Japan, selling more devices through its own app and website, and brand building.
