On Wednesday, wireless speaker manufacturer Sonos announced an array of new products, including the Arc sound bar, its first-ever product to feature the acclaimed Dolby Atmos surround sound technology.
The company had less positive news later that day, when it announced its quarterly earnings, for a second-quarter that the company's CEO called "challenging."
Sonos, in a shareholder letter signed by CEO Patrick Spence, said that it posted a "17% year-over-year decline in revenue" over the same quarter the year before. The company lost $52.3 million in the quarter, compared to its loss of $22.8 million in the same period the year before. This was a larger loss than was expected by the Street, per Marketwatch.
"This Q2, we saw one of our large U.S. retail partners and our German distributor doing this rebalancing, but we did not see the replenishments later in the quarter as the COVID-19 pandemic hit and everyone started to close stores and focus on health and safety," Spence said on Wednesday's earnings call, according to a transcript. "This led to a 23% year-over-year decline in revenue in March specifically."
The company also withdrew its fiscal 2020 outlook.
Sonos, perhaps unsurprisingly during stay-at-home orders, posted year-over-year gains in total listening hours of 32 percent and 48 percent in March and April, respectively. They also proclaimed the company's recent At Home With Sonos campaign a success.
The letter did strike a partially positive note, as Sonos revealed their staff has been using its 3D printers to create PPE for frontline workers, while also contributing to music education efforts.
The company also touted a strong balance sheet.
"We ended the second quarter with $283 million in cash and cash equivalents and very minimal long-term debt," the letter said. "We also have in place an $80 million undrawn revolving credit facility providing even further flexibility should we need it. We are confident in our liquidity even in the advent of a prolonged weak economy."
"Any time a crisis hits, it’s critical to step back and take stock," Spence wrote. "We have spent time over the past month doing just this, and we are confident that we will exit this period of uncertainty stronger, and in a position to seize new opportunities that are certain to arise."
Earlier this week, Motley Fool's Rich Duprey suggested that Apple should buy Sonos. The reasoning was that both companies would fit together, as they each emphasize design aesthetic and are focused on the smart home.
The piece also noted that Apple’s HomePod speaker is such an afterthought that it wasn’t mentioned on the company’s own recent earnings call, and if Apple bought Sonos it could then focus its smart home strategy around Sonos' products. The argument was focused not on any weakness on Sonos' part, but rather Apple's potential strategy in acquiring the company.
"Sonos gives Apple what it needs immediately in a space where it requires a strong presence right away, without sacrificing any quality," Duprey wrote. "Having shown a propensity for buying companies that quickly pay dividends, this is one deal Apple could make without regret.”
There is no indication, however, that any such talks have taken place.
As of mid-day Thursday, per Yahoo Finance, Sonos has a market cap of $1.067 billion.
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.