Yahoo Finance Sonos (SONO) Swings to Loss in Q2, Revenues Decline Y/Y
Sonos, Inc. SONO reported second-quarter fiscal 2024 non-GAAP loss per share of 34 cents. It had 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 a challenging macroeconomic environment. However, the top line surpassed the Zacks Consensus Estimate by 2.5%.
Sonos is investing in driving innovation to support 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.
The company’s shares are down 6.2% in pre-market trading on May 8. The stock has lost 19.3% in the past year compared with the sub-industry’s decline of 12.6%.
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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.
Sonos, Inc. Price, Consensus and EPS Surprise
Sonos, Inc. price-consensus-eps-surprise-chart | Sonos, Inc. Quote
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-ago 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%.
Zacks Rank and Stocks to Consider
Sonos currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks worth consideration in the broader technology space are Badger Meter BMI, Salesforce CRM and The Descartes Systems Group Inc DSGX. While BMI sports a Zacks Rank #1 (Strong Buy), CRM and DSGX carry a Zacks Rank of 2 (Buy) each, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Badger Meter’s 2024 EPS is pegged at $3.89, up 9.9% in the past 60 days. The long-term earnings growth rate is 15.6%.
BMI’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 12.7%. Shares of BMI have soared 39.1% in the past year.
The Zacks Consensus Estimate for CRM’s fiscal 2025 EPS is pegged at $9.71. Salesforce’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 5.1%.
The long-term earnings growth rate is 17.4%. Shares of CRM have gained 40.1% in the past year.
The Zacks Consensus Estimate for DSGX’s fiscal 2025 EPS has increased 1.2% in the past 60 days to $1.69. Descartes earnings beat the Zacks Consensus Estimate in two of the last four quarters, while missing in the remaining two quarters, the average surprise being 5.1%. Shares of DSGX have improved 25.8% in the past year.
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