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Sonos (SONO) Swings to Loss in Q4, Revenues Beat Estimates
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Sonos, Inc (SONO - Free Report) reported a non-GAAP loss of 32 cents per share for fourth-quarter fiscal 2022 against earnings of 8 cents per share in the prior-year quarter. The Zacks Consensus Estimate was pegged at a loss of 43 cents per share.
Quarterly revenues declined 12% (up 6.6% on a constant-currency basis or cc) year over year to $316.3 million, owing to soft demand for its products amid continued supply constraints and unfavorable foreign exchange movements. However, the top line beat the consensus estimate by 4.6%.
The company also announced a new $100 million share repurchase program after completing the existing $150 million share repurchase plan.
Following the announcement, shares rose 4% in pre-market trading on Nov 17. In the past year, shares of Sonos have declined 49.7% compared with the industry’s fall of 34.9%.
Image Source: Zacks Investment Research
Revenue Details
Revenues from Sonos speakers were $235.1 million, up 14.1% from the prior-year quarter’s levels.
Sonos system products’ revenues were $62.8 million, down 7.3%. Revenues from Partner products and other totaled $18.4 million, up 0.8% year over year.
Region-wise, revenues from the Americas came in at $199.7 million, up 2% year over year. Revenues from Europe, the Middle East and Africa were $91.4 million, down 34%. Revenues from the Asia Pacific were down 2% to $25.2 million.
Other Details
Gross profit was $124.1 million, down 25.6% from the prior-year quarter’s levels. Gross margin contracted 720 bps year over year to 39.2%, mainly due to increasing component costs.
Total operating expenses were $184.1 million, up from $178.5 million, reflecting higher research and development, and general and administrative expenses.
Operating loss was $60 million compared with $11.5 million in the year-ago quarter. Adjusted EBITDA loss totaled $25.6 million compared with adjusted EBITDA income of $17.1 million in the prior-year quarter. The downside in adjusted EBITDA was caused by higher operating investments and lower revenue.
Cash Flow & Liquidity
For the fiscal year, Sonos used $28.3 million of cash from operations. Free cash outflow was $74.5 million.
As of Oct 1, 2022, the company had $274.9 million in cash and cash equivalents compared with $640.1 million as of Oct 2, 2021. The company has no debt.
Guidance
Sonos now expects revenues to be down 3% to up 3% year over year and come in the range of $1.7-$1.8 billion. On a constant-currency basis, revenues are expected to increase 1-7%. The gross margin is now projected to be between 45% and 46%.
Adjusted EBITDA is estimated to be between $145 million and $180 million, with the margin ranging from 8.5-10%.
The Zacks Consensus Estimate for Arista Networks’ 2022 earnings is pegged at $4.35 per share, up 7.7% in the past 60 days. The long-term earnings growth rate is anticipated to be 17.5%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 12.7%. Shares of ANET have decreased 1.4% in the past year.
The Zacks Consensus Estimate for Blackbaud’s 2022 earnings is pegged at $2.59 per share, up 1.6% in the past 60 days. The long-term earnings growth rate is anticipated to be 4%.
Blackbaud’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 4.9%. Shares of BLKB have declined 29% in the past year.
The Zacks Consensus Estimate for Jabil’s fiscal 2023 earnings is pegged at $8.18 per share, rising 3.8% in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.
Jabil’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 9.3%. Shares of JBL have increased 4.8% in the past year.
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Sonos (SONO) Swings to Loss in Q4, Revenues Beat Estimates
Sonos, Inc (SONO - Free Report) reported a non-GAAP loss of 32 cents per share for fourth-quarter fiscal 2022 against earnings of 8 cents per share in the prior-year quarter. The Zacks Consensus Estimate was pegged at a loss of 43 cents per share.
Quarterly revenues declined 12% (up 6.6% on a constant-currency basis or cc) year over year to $316.3 million, owing to soft demand for its products amid continued supply constraints and unfavorable foreign exchange movements. However, the top line beat the consensus estimate by 4.6%.
The company also announced a new $100 million share repurchase program after completing the existing $150 million share repurchase plan.
Following the announcement, shares rose 4% in pre-market trading on Nov 17. In the past year, shares of Sonos have declined 49.7% compared with the industry’s fall of 34.9%.
Image Source: Zacks Investment Research
Revenue Details
Revenues from Sonos speakers were $235.1 million, up 14.1% from the prior-year quarter’s levels.
Sonos system products’ revenues were $62.8 million, down 7.3%. Revenues from Partner products and other totaled $18.4 million, up 0.8% year over year.
Region-wise, revenues from the Americas came in at $199.7 million, up 2% year over year. Revenues from Europe, the Middle East and Africa were $91.4 million, down 34%. Revenues from the Asia Pacific were down 2% to $25.2 million.
Other Details
Gross profit was $124.1 million, down 25.6% from the prior-year quarter’s levels. Gross margin contracted 720 bps year over year to 39.2%, mainly due to increasing component costs.
Total operating expenses were $184.1 million, up from $178.5 million, reflecting higher research and development, and general and administrative expenses.
Operating loss was $60 million compared with $11.5 million in the year-ago quarter. Adjusted EBITDA loss totaled $25.6 million compared with adjusted EBITDA income of $17.1 million in the prior-year quarter. The downside in adjusted EBITDA was caused by higher operating investments and lower revenue.
Cash Flow & Liquidity
For the fiscal year, Sonos used $28.3 million of cash from operations. Free cash outflow was $74.5 million.
As of Oct 1, 2022, the company had $274.9 million in cash and cash equivalents compared with $640.1 million as of Oct 2, 2021. The company has no debt.
Guidance
Sonos now expects revenues to be down 3% to up 3% year over year and come in the range of $1.7-$1.8 billion. On a constant-currency basis, revenues are expected to increase 1-7%. The gross margin is now projected to be between 45% and 46%.
Adjusted EBITDA is estimated to be between $145 million and $180 million, with the margin ranging from 8.5-10%.
Zacks Rank & Stocks to Consider
Sonos currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader technology space are Arista Networks (ANET - Free Report) , Blackbaud (BLKB - Free Report) and Jabil (JBL - Free Report) . Arista Networks and Jabil currently sport a Zacks Rank #1 (Strong Buy) while Blackbaud carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Arista Networks’ 2022 earnings is pegged at $4.35 per share, up 7.7% in the past 60 days. The long-term earnings growth rate is anticipated to be 17.5%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 12.7%. Shares of ANET have decreased 1.4% in the past year.
The Zacks Consensus Estimate for Blackbaud’s 2022 earnings is pegged at $2.59 per share, up 1.6% in the past 60 days. The long-term earnings growth rate is anticipated to be 4%.
Blackbaud’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 4.9%. Shares of BLKB have declined 29% in the past year.
The Zacks Consensus Estimate for Jabil’s fiscal 2023 earnings is pegged at $8.18 per share, rising 3.8% in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.
Jabil’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 9.3%. Shares of JBL have increased 4.8% in the past year.