A month has gone by since the last earnings report for Sonos (SONO Quick QuoteSONO - Free Report) . Shares have added about 30.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Sonos due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Sonos Q4 Earnings Miss Estimates

Sonos reported fourth-quarter fiscal 2023 non-GAAP loss per share of 7 cents compared with 30 cents in the prior-year quarter. On a GAAP basis, the company reported a loss of 25 cents against the earnings per share (EPS) of 50 cents in the year-ago quarter. The Zacks Consensus Estimate was pegged at (5) cents.

Quarterly revenues decreased 3.5% (down 5.1% on a constant-currency basis) year over year to $305.1 million due to reduced consumer demand. Also, the top line missed the Zacks Consensus Estimate by 0.2%.

Revenues Details

Revenues from Sonos speakers were $223.3 million, down 5.1% from the prior-year quarter’s levels.

Sonos system products’ revenues were $62.3 million, down 0.8% year over year. Revenues from Partner products and other totaled $19.5 million, up 5.9% year over year.

Region-wise, revenues from the Americas totaled $203.5 million, up 1.9% year over year. Europe, the Middle East and Africa generated revenues of $83.4 million, down 8.8%. Revenues from the Asia Pacific were down 27.5% to $18.2 million.

Other Details

Gross profit was $128.1 million, up 3.2% from the prior-year quarter’s levels. Gross margin expanded 270 bps year over year to 42%, mainly due to lower component costs and fewer spot component purchases.

Total operating expenses amounted to $156.4 million, down from $184.2 million in the year-ago quarter, reflecting lower research and development and general and administrative expenses.

Operating loss was $28.3 million compared with $60.1 million in the year-ago quarter. Adjusted EBITDA totaled $6.2 million compared with $(25.5) million in the prior-year quarter. Higher gross margins and reduced bonus accrual and marketing and legal program spending resulted in the upside.

Cash Flow & Liquidity

For the fiscal fourth quarter, Sonos generated $22.1 million of cash from operations. Free cash flow was $11.9 million.

As of Sep 30, 2023, cash and cash equivalents were $220.3 million compared with $294.9 million as of Jul 1, 2023. SONO has no debt.

Sonos repurchased shares worth $55 million. The company has authorized a new share repurchase program of up to $200 million.

2024 Guidance

For fiscal 2024, Sonos now expects revenues to be down 3% to up 3% year over year and in the range of $1.6-$1.7 billion. On a constant-currency basis, revenues are anticipated to be down 3% to up 3%.

The gross margin is projected to be between 44% and 46%. Adjusted EBITDA is estimated to be between $150 million and $180 million, with the margin in the range of 9.4-10.6%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -37.58% due to these changes.

VGM Scores

At this time, Sonos has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Sonos has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Sonos belongs to the Zacks Audio Video Production industry. Another stock from the same industry, Sony (SONY Quick QuoteSONY - Free Report) , has gained 5.5% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.

Sony reported revenues of $18.87 billion in the last reported quarter, representing a year-over-year change of -5.3%. EPS of $1.12 for the same period compares with $1.54 a year ago.

For the current quarter, Sony is expected to post earnings of $1.66 per share, indicating a change of -11.2% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Sony. Also, the stock has a VGM Score of D.