Great Sound, Lots of Profit: Sonos Touts Record Earnings

Great Sound, Lots of Profit: Sonos Touts Record Earnings

Sales topped expectations for both Sonos’ speakers and system products segments, and that the quarterly numbers consisted of an “earnings smasher.”

Sonos on Wednesday reported what it called record earnings, posting revenue of $339.8 million for the fiscal fourth quarter, a 16 percent increase year over year, and GAAP net income of $18.4 million, up from a $29.6 million loss the same time in 2019. 

The earnings number was ahead of analyst expectations, Marketwatch said. It also led the company’s stock to rise in after-hours trading. 

In the previous quarter, Sonos posted revenue of $249.3 million, which was a four percent decline from the same quarter the year before. 

Per Seeking Alpha, sales topped expectations for both Sonos’ speakers and system products segments, and that the quarterly numbers consisted of an “earnings smasher.” The performance came even though Apple had pulled third-party audio products, including those of Sonos, from its stores during the quarter. 

“We reached an inflection point in the fourth quarter that demonstrates the power and profitability of our model. As our customers recognize, Sonos products operate seamlessly together, with more products improving the experience,” CEO Patrick Spence said in a press statement about the earnings. 

“That’s why year in and year out, our existing customers add more products to their systems—every new household that we gain starts that cycle anew. Fiscal 2020 was the 15th year in a row we grew total households by at least 20%, while our existing customers once again showed strong repurchase habits, accounting for a record 41% of total product registrations,” the statement said. “We deliver a consistent cadence of new, innovative products and services, and we have only started the process of realizing the lifetime value of our customers, both old and new.”

In late September, which was part of the most recent quarter, Sonos launched a promotion in collaboration with Disney+, in conjunction with the launch of season two of The Mandalorian. Under the terms of the promotion, those purchasing a new Arc or Beam soundbar from Sonos would get a free six months of Disney+. The advertising campaign for the promotion included an effort to convey the sound of Star Wars through the Sonos products. 

The Arc, the first Dolby Atmos-equipped Sonos product, arrived earlier this year. 

The company, in its earnings, added that it says FY2021 revenue of $1.44 billion to $1.50 billion and that it expects its direct-to-consumer for 2021 to be similar to what it was for 2020. 

“As we look ahead, we are focused on delivering innovative new products and services that customers love, strengthening our direct-to-consumer efforts, and supporting our incredible partnerships,” Spence added in his statement. "We believe we are well positioned to deliver strong profit margins, cash flow, revenue growth and increased shareholder value over the long-term.”

Stephen Silver, a technology writer for the National Interest, is a journalist, essayist and film critic, who is also a contributor to Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.

Image: Reuters