Sonos, Inc. SONO has made seven new commitments based on an internal review of its May app release, ensuring it continues to deliver the best wireless audio systems and that customers enjoy the quality for which the brand is known. Many of these efforts are already in progress, with additional measures set to be rolled out over the rest of the year.

The company introduced an extensive redesign for its Sonos app to improve streaming in May 2024. However, the launch didn't go as planned, as some bugs were not identified in advance, causing problems for users as well as partner companies.

Following the launch of the new app, Sonos has focused on delivering software updates every two weeks, quickly reintroducing features and improvements. The company highlighted that more than 80% of the missing features have been restored, with a nearly full revamp expected soon, enhancing the app's reliability and speed.

Highlighting the importance of these commitments, no member of the Executive Leadership Team will receive an annual bonus for the October 2024-September 2025 fiscal year unless the company successfully enhances app quality and regains customer confidence.

Sonos, Inc. Price and Consensus

Sonos, Inc. price-consensus-chart | Sonos, Inc. Quote

Commitments to Enhance Customer Experience and Trust

To address the underlying issues that caused the fiasco, Sonos is now committed to improving customer experience by setting “ambitious quality benchmarks” before product launches. The company will also enhance tools for measuring customer satisfaction and expand its beta testing program to include a wider variety of customers and setups for quicker issue resolution over a longer testing period.

It plans to implement changes gradually, allowing customer feedback before major updates become the default. Smaller features will be offered as opt-in testing options. Also, a new Quality Ombudsperson will be appointed to provide a clear channel for raising quality concerns, ensuring transparency through biannual reports to management and regular updates to the board of directors.

To win back customer confidence, Sonos is extending the manufacturer’s warranty for all home theater and plug-in speaker products by an additional year, underscoring SONO’s confidence in its product quality. The company will enhance the app experience with regular software updates, rolling out new mobile versions every two to four weeks to optimize performance even after current issues are resolved. A Customer Advisory Board will also be established to ensure that customer feedback plays a significant role in shaping software and product development.

SONO’s Top Line to Be Affected

In the last reported quarter, Sonos noted that it expects fourth-quarter fiscal 2024 revenues to be affected by challenges with its new app rollout. Revenues will be negatively impacted in two ways — lower sales across the portfolio owing to app issues and the decision to delay two major product launches until the app meets expected quality standards.

Management expects fiscal fourth quarter revenues to be in the range of $240 million to $260 million. Further, Sonos anticipates incurring charges of approximately $20 million to $30 million to address app issues, support customers and restore their trust.  It did not provide any update regarding the outlook.

Headquartered in Santa Barbara, CA, Sonos operates as a consumer electronics company that is primarily involved in the manufacturing of speakers with immersive sound experiences.

SONO’s Zacks Rank & Stock Price Performance

At present, SONO has a Zacks Rank #3 (Hold). Shares have lost 7.3% against the sub-industry’s growth of 16.3% in the past year.

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Stocks to Consider

Some better-ranked stocks from the broader technology space are Seagate Technology Holdings plc STX, OptimizeRx Corporation OPRX and American Software, Inc. AMSWA.  Both STX & OPRX presently sport a Zacks Rank #1 (Strong Buy), whereas AMSWA carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Seagate Technology delivered an earnings surprise of 80.9%, on average, in three of the trailing four quarters. In the last reported quarter, STX pulled off an earnings surprise of 40%. The Zacks Consensus Estimate for STX’s earnings has increased 18% to $7.41 in the past 60 days.

OptimizeRx delivered an earnings surprise of 159.5%, on average, in three of the trailing four quarters. In the last reported quarter, OPRX pulled off an earnings surprise of 128.6%. The Zacks Consensus Estimate for OPRX’s earnings has increased 38.5% to 36 cents in the past 60 days.

American Software delivered an earnings surprise of 84.5%, on average, in the trailing four quarters. In the last reported quarter, AMSWA pulled off an earnings surprise of 71.4%. The Zacks Consensus Estimate for AMSWA’s earnings has increased 8.6% to 38 cents in the past 60 days.

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