Yahoo Finance Sonos (SONO) Down 4.5% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Sonos (SONO). Shares have lost about 4.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Sonos due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Sonos Reports Loss in Q2
Sonos reported second-quarter fiscal 2024 non-GAAP loss per share of 34 cents. It registered earnings per share of 4 cents in the prior-year quarter. On a GAAP basis, the company reported a loss of 56 cents compared with a loss of 24 cents in the year-ago quarter. The Zacks Consensus Estimate was pegged at a loss of 27 cents.
Quarterly revenues decreased 16.9% (down 17.3% on a constant-currency basis) year over year to $252.7 million due to challenging macroeconomic environment. However, the top line surpassed the Zacks Consensus Estimate by 2.5%.
Sonos is investing to drive innovation for supporting long-term business growth. As part of this strategy, it unveiled an extensively redesigned Sonos app.
The company is on track to launch its new product in the upcoming weeks. Management noted that the new product will provide Sonos’ a foothold in a multi-billion-dollar category. This will also aid in diversifying its business.
Revenue Details
Revenues from Sonos speakers were $187.3 million, down 22.4% year over year. The consensus estimate was pegged at $192 million.
Sonos system products’ revenues of $49.3 million plunged 11.7% year over year. The consensus estimate was pegged at $32.4 million.
Revenues from Partner products and other totaled $16.1 million, down 14.6% year over year. The consensus estimate was pegged at $21.6 million
Region-wise, revenues from the Americas of $170.2 million declined 13% year over year. Europe, the Middle East and Africa generated revenues of $69.4 million, down 22% year over year. Revenues from the Asia Pacific fall 29% year over year to $13.1 million.
Other Details
Gross profit was $112 million, down 14.9% on a year-over-year basis. Gross margin expanded 100 bps year over year to 44.3% mainly due to lower component costs and favorable product mix partly offset by additional promotional activity.
Total operating expenses amounted to $183 million, down from $188.8 million in the year-ago quarter, reflecting lower general and administrative expenses.
Operating loss was $71 million compared with $57.2 million in the year-earlier quarter. Adjusted EBITDA loss totaled $33.6 million compared with $10.6 million in the prior-year quarter.
Cash Flow & Liquidity
For the fiscal second quarter, Sonos used $111.2 million of cash from operations. Free cash outflow was $121.4 million.
As of Mar 30, cash and cash equivalents were $291.6 million compared with $467.3 million as of Dec 30, 2023. SONO has no debt.
It repurchased shares worth $53 million in the quarter under review. The company has approximately $124 million remaining under its $200 million share repurchase authorization.
2024 Guidance Reiterated
Management expects revenues to be down 3% to up 3% from the year-ago levels and in the range of $1.6-$1.7 billion. On a constant-currency basis, revenues are also anticipated to be down 3% to up 3%.
The gross margin is projected to be between 45% and 46%. Adjusted EBITDA is estimated to be between $150 million and $180 million, with the margin in the range of 9.4-10.6%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
The consensus estimate has shifted 500% due to these changes.
VGM Scores
At this time, Sonos has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Sonos has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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