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Why Is Sonos (SONO) Down 11.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for Sonos (SONO - Free Report) . Shares have lost about 11.2% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Sonos Beats Q1 Earnings Estimates
Sonos reported first-quarter 2022 non-GAAP earnings of $1.02 per share, which beat the Zacks Consensus Estimate by 15.9%. However, the figure declined 12.8% on a year-over-year basis.
Quarterly revenues rose 3% year over year to $664.5 million, driven by robust demand for its products despite continued supply constraints stemming from the pandemic. The top line surpassed the consensus estimate by 3.8%.
Driven by strong quarterly results, Sonos raised the outlook for fiscal 2022. Sonos expects revenues to grow 14-16% year over year in the band of $1.95-$2 billion. Previously, management projected revenues to grow 12-16% year over year and reach $1.925-$2 billion.
Revenue Details
By product category, revenues for Sonos speakers were $501.9 million, down 4.9% from the prior-year quarter’s levels. Sonos system products revenues were $134.7 million, up 37.8%. Partner products and other revenues totaled $27.9 million, up 37.1% year over year.
Region-wise, revenues from the Americas came in at $373.8 million, up 1.8% year over year. Revenues from Europe, the Middle East and Africa were $245.5 million, up 2.3%. Revenues from the Asia Pacific rose 17.9% to $45.2 million.
Other Details
Gross profit was $317.4 million compared with $299.4 million in the prior-year quarter, with the respective margins of 47.8% and 46.4%. Favorable product mix and reduced promotional activity cushioned margin growth amid higher shipping and logistics costs.
Total operating expenses were $184.8 million, up from $162 million, reflecting higher research and development as well as sales and marketing expenses. Operating income was $132.6 million compared with $137.4 million in the year-ago quarter. Adjusted EBITDA totaled $163.1 million compared with $166.3 million a year ago, with respective margins of 24.6% and 25.8%. The downside in adjusted EBITDA was caused by higher operating investments.
Cash Flow & Liquidity
For the fiscal first quarter, Sonos generated $179.9 million of cash from operations compared with $214.5 million in the year-ago quarter. Free cash flow for the same period fell 14.6% to $173.6 million.
As of Jan 1, 2022, the company had $754.4 million in cash and cash equivalents compared with $640.1 million as of Oct 2, 2021. The company has no debt.
Fiscal 2022 Outlook
Adjusted EBITDA is now estimated to be between $290 million and $325 million, with the margin ranging from 14.9-16.2%. Earlier, the company projected adjusted EBITDA to be between $280 million and $325 million, with the margin ranging from 14.5-16.2%. The gross margin is projected to be between 46% and 47%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 30.77% due to these changes.
VGM Scores
At this time, Sonos has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Sonos has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Sonos (SONO) Down 11.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Sonos (SONO - Free Report) . Shares have lost about 11.2% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Sonos Beats Q1 Earnings Estimates
Sonos reported first-quarter 2022 non-GAAP earnings of $1.02 per share, which beat the Zacks Consensus Estimate by 15.9%. However, the figure declined 12.8% on a year-over-year basis.
Quarterly revenues rose 3% year over year to $664.5 million, driven by robust demand for its products despite continued supply constraints stemming from the pandemic. The top line surpassed the consensus estimate by 3.8%.
Driven by strong quarterly results, Sonos raised the outlook for fiscal 2022. Sonos expects revenues to grow 14-16% year over year in the band of $1.95-$2 billion. Previously, management projected revenues to grow 12-16% year over year and reach $1.925-$2 billion.
Revenue Details
By product category, revenues for Sonos speakers were $501.9 million, down 4.9% from the prior-year quarter’s levels. Sonos system products revenues were $134.7 million, up 37.8%. Partner products and other revenues totaled $27.9 million, up 37.1% year over year.
Region-wise, revenues from the Americas came in at $373.8 million, up 1.8% year over year. Revenues from Europe, the Middle East and Africa were $245.5 million, up 2.3%. Revenues from the Asia Pacific rose 17.9% to $45.2 million.
Other Details
Gross profit was $317.4 million compared with $299.4 million in the prior-year quarter, with the respective margins of 47.8% and 46.4%. Favorable product mix and reduced promotional activity cushioned margin growth amid higher shipping and logistics costs.
Total operating expenses were $184.8 million, up from $162 million, reflecting higher research and development as well as sales and marketing expenses.
Operating income was $132.6 million compared with $137.4 million in the year-ago quarter. Adjusted EBITDA totaled $163.1 million compared with $166.3 million a year ago, with respective margins of 24.6% and 25.8%. The downside in adjusted EBITDA was caused by higher operating investments.
Cash Flow & Liquidity
For the fiscal first quarter, Sonos generated $179.9 million of cash from operations compared with $214.5 million in the year-ago quarter. Free cash flow for the same period fell 14.6% to $173.6 million.
As of Jan 1, 2022, the company had $754.4 million in cash and cash equivalents compared with $640.1 million as of Oct 2, 2021. The company has no debt.
Fiscal 2022 Outlook
Adjusted EBITDA is now estimated to be between $290 million and $325 million, with the margin ranging from 14.9-16.2%. Earlier, the company projected adjusted EBITDA to be between $280 million and $325 million, with the margin ranging from 14.5-16.2%. The gross margin is projected to be between 46% and 47%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 30.77% due to these changes.
VGM Scores
At this time, Sonos has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Sonos has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.