Sonos, Inc. SONO reported first-quarter fiscal 2025 non-GAAP earnings per share of 64 cents. It had registered earnings of 84 cents in the prior-year quarter. On a GAAP basis, the company reported earnings of 40 cents compared with 64 cents in the year-ago quarter. The Zacks Consensus Estimate was pegged at 36 cents per share.

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Quarterly revenues fell 10.1% year over year to $550.9 million. The figure was within the company’s guided range of $480 million to $560 million. The decline was due to weaker demand caused by market conditions and challenges from its 2024 app rollout. The company’s categories remain cyclically pressured and highly promotional, especially in portables. Despite this, strong demand for its Arc Ultra sound bar helped the company achieve a record-high U.S. home theater market share in dollar terms. The top line surpassed the Zacks Consensus Estimate by 4.9%.

Sonos, Inc. Price, Consensus and EPS Surprise

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

Following the announcement, shares were up 3.3% in the pre-market trading session on Feb. 7, 2025. In the past six months, shares have gained 27.3% compared with the Zacks Audio Video Production industry’s growth of 35.2%.

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Sonos’ Revenue Details

Revenues from Sonos speakers were $467.1 million, down 7.1% year over year. The consensus estimate was pegged at $427 million.

Sonos’ system products’ revenues of $60.3 million fell 28.7% year over year. The consensus estimate was pegged at $77 million.

Revenues from Partner products and other totaled $23.4 million, down 7.3% year over year. The consensus estimate was pegged at $22.9 million.

Region-wise, revenues from the Americas of $324.6 million declined 17.3% year over year. Europe, the Middle East and Africa generated revenues of $197.6 million, up 3%. Revenues from the Asia Pacific rose 0.2% year over year to $28.7 million.

Sonos’ Margin Performance

Non-GAAP gross profit was $246.1 million, down 13.4% on a year-over-year basis. Non-GAAP gross margin contracted 170 basis points to 44.7%.

Adjusted operating expenses amounted to $193.3 million, down from $203 million in the year-ago quarter.

Non-GAAP adjusted operating expenses were $169 million compared with $179.4 million in the year-ago quarter. This was due to cost management efforts and spending timing. Adjusted EBITDA totaled $91.2 million compared with $115.2 million a year ago.

Cash Flow & Liquidity

For the fiscal first quarter, Sonos generated $156.2 million of cash from operations. Free cash outflow was $143.1 million compared with $269.3 in the year-ago quarter. This was due to lower revenues and unique factors that boosted last year’s free cash flow. Also, last year’s first quarter saw a one-time cash flow boost from the execution of new payment terms with the company’s suppliers. The company reduced excess inventory in the first quarter of fiscal 2024, starting with $82 million more in finished goods than this year. 

As of Dec. 28, 2024, cash and cash equivalents were $280 million compared with $169.7 million as of Sept. 28, 2024.

The company returned $27 million to its shareholders through stock repurchases in the fiscal first quarter. It has $44 million worth of shares left for repurchase under the current $200 million buyback authorization.

Sonos’ Q2 Guidance

Management expects second-quarter fiscal 2025 revenues to be in the range of $240 million to $265 million. GAAP gross margin is anticipated to be in the band of 42% to 44%. Non-GAAP gross margin is predicted to be in the band of 44% to 45.8%.

Adjusted EBITDA loss is likely to be in the range of $27 million to $6 million.

Zacks Rank of Sonos

Sonos currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Firms in Consumer Discretionary Space

Skechers U.S.A., Inc. SKX reported earnings of 65 cents per share, missing the Zacks Consensus Estimate by 12.2%. The company reported earnings of 56 cents in the prior-year quarter. SKX posted revenues of $2.21 billion, up 12.8% year over year. The figure was in line with the Zacks Consensus Estimate.

In the past year, shares of SKX have gained 30.4%.

Dolby Laboratories, Inc DLB reported first-quarter fiscal 2025 results, with non-GAAP earnings per share (EPS) of $1.14 compared with $1.01 reported in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 6.5%. Strong revenues and higher gross margins were primary growth drivers. Total revenues were $357 million, up from $315.6 million in the year-ago quarter and beat the Zacks Consensus Estimate by 3.1%. This uptick was driven by higher revenues across business segments.

In the past six months, shares of DLB have soared 24.2%.

GoPro, Inc GPRO reported the fourth quarter of 2024 non-GAAP loss per share of 9 cents, narrower than the Zacks Consensus Estimate of a loss of 11 cents. The company reported earnings per share of 3 cents in the year-ago quarter.

In the past six months, shares of GPRO have declined 11.5%.

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