Sonos, Inc. ( SONO Quick Quote SONO - Free Report) reported non-GAAP earnings of 26 cents per share in second-quarter fiscal 2022, which declined 16.1% on a year-over-year basis. The Zacks Consensus Estimate stood at 4 cents per share. Quarterly revenues rose 20.1% (up 22.8% on a constant-currency basis or cc) year over year to $399.8 million, driven by robust demand for its products despite continued supply constraints stemming from the pandemic. The top line surpassed the consensus estimate by 10.6%. Following the announcement, shares are up 7.6% in the pre-market trading on May 12. In the past year, shares of Sonos have declined 43.8% compared with the industry’s fall of 16.9%. Revenue Details
By product category, revenues for Sonos speakers were $317.7 million, up 19% from the prior-year quarter’s levels. The upside was driven by a positive full period impact from the launch of Roam.
Sonos system products revenues were $61.2 million, up 18%. Partner products and other revenues totaled $20.8 million, up 56% year over year. sRegion-wise, revenues from the Americas came in at $238.2 million, up 23% year over year. Revenues from Europe, the Middle East and Africa were $128.4 million, up 12%. Revenues from the Asia Pacific rose 34% to $33.2 million. Other Details
Gross profit was $179 million, up 8% from the prior-year quarter’s levels. Gross margin contracted 500 bps year over year to 44.8% mainly due to higher supply chain costs.
Total operating expenses were $168.8 million, up from $153.3 million, reflecting higher research and development and sales and marketing expenses. Operating sincome was $10 million compared with $12.4 million in the year-ago quarter. Adjusted EBITDA totaled $46.9 million compared with $48.5 million in the prior-year quarter, with respective margins of 11.7% and 14.6%. The downside in adjusted EBITDA was caused by higher operating investments and gross margin contraction. Cash Flow & Liquidity
For the fiscal second quarter, Sonos used $97.6 million of cash from operations. Free cash outflow was $106.9 million owing to inventory investments and new product launches.
For six months ended Apr 2, 2022, cash generated from operations was $82.3 million compared with $175.9 million in the comparable period of fiscal 2021. Free cash flow for the same period fell 57.2% to $66.7 million. The company repurchased shares worth $43.1 million in the second quarter, taking the count to $74.5 million year to date. It has shares worth $75.5 million left under its existing $150-million authorization As of Apr 2, 2022, the company had $606.7 million in cash and cash equivalents compared with $754.4 million as of Jan 1, 2022. The company has no debt. Fiscal 2022 Outlook
Sonos expects revenues to increase 14-16% year over year in the range of $1.95-$2 billion. The gross margin is projected to be between 45.5% and 46% compared with the earlier guidance of 46% and 47%.
Adjusted EBITDA is estimated to be between $290 million and $310 million, with the margin ranging from 14.9% to 15.5%. Earlier, the company projected adjusted EBITDA to be between $290 million and $325 million, with 14.9-16.2% margin. Zacks Rank & Stocks to Consider
Sonos currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader technology sector are Flex ( FLEX Quick Quote FLEX - Free Report) , Jabil ( JBL Quick Quote JBL - Free Report) and Broadcom ( AVGO Quick Quote AVGO - Free Report) . All stocks carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here. The Zacks Consensus Estimate for Flex’s fiscal 2023 earnings is pegged at $2.16 per share, up 6.9% in the past 60 days. The long-term earnings growth rate is pegged at 14.9%. Flex’s earnings beat the Zacks Consensus Estimate all last four quarters, with the average being 21.1%. Shares of FLEX have declined 8.1% in the past year. The Zacks Consensus Estimate for Jabil fiscal 2022 earnings is pegged at $7.25 per share, up 10.2% in the past 60 days. The long-term earnings growth rate is 12%. Jabil’s earnings beat the Zacks Consensus Estimate all last four quarters, with the average being 13.5%. Shares of JBL have gained 7% in the past year. The Zacks Consensus Estimate for Broadcom’s fiscal 2022 earnings is pegged at $35.67 per share, up 0.5% in the past 60 days. AVGO’s long-term earnings growth rate is pegged at 15.6%. Broadcom’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, with the average being 1.9%. Shares of AVGO have increased 31.7% in the past year.