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Sonos (SONO) Q1 Earnings Beat Estimates, Revenues Fall Y/Y
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Sonos, Inc. (SONO - Free Report) reported first-quarter fiscal 2024 non-GAAP earnings per share (EPS) of 84 cents compared with 79 cents in the prior-year quarter. On a GAAP basis, the company reported EPS of 64 cents compared with 57 cents in the year-ago quarter. The Zacks Consensus Estimate was pegged at 60 cents.
Quarterly revenues decreased 8.9% (down 10.5% on a constant-currency basis) year over year to $612.9 million due to soft consumer demand. However, the top line surpassed the Zacks Consensus Estimate by 4.1%.
Following the announcement, the company’s shares gained 9% in the pre-market trading on Feb 7, 2024. The stock has lost 7.8% in the past year against the sub-industry’s growth of 6%.
Revenues from Sonos speakers were $503.1 million, down 6.7% from the prior-year quarter’s levels. The consensus estimate for the Sonos speakers segment is pegged at $469 million.
Sonos system products’ revenues were $84.5 million, down 26.1% year over year. The consensus estimate for the Sonos system products segment is pegged at $101 million. Revenues from Partner products and other totaled $25.2 million, up 33.5% year over year.
Region-wise, revenues from the Americas totaled $392.4 million, down 1% year over year. Europe, the Middle East and Africa generated revenues of $191.8 million, down 20%. Revenues from the Asia Pacific were down 20% to $28.6 million.
Other Details
Gross profit was $282.7 million, down 0.9% from the prior-year quarter’s levels. Gross margin expanded 374 bps year over year to 46.1%, mainly due to lower component costs, fewer spot component purchases, lower inventory-related provisions, and foreign currency tailwinds.
Total operating expenses amounted to $179.4 million, up from $172.3 million in the year-ago quarter, reflecting higher research and development expenses.
Operating income was $79.7 million compared with $86.3 million in the year-ago quarter. Adjusted EBITDA totaled $115.2 million compared with $123.9 million in the prior-year quarter. Lower revenues and increased advertising and marketing spend resulted in the downside.
Cash Flow & Liquidity
For the fiscal first quarter, Sonos generated $275.4 million of cash from operations. Free cash flow was $269.3 million.
As of Dec 30, 2023, cash and cash equivalents were $4673 million compared with $220.3 million as of Sep 30, 2023. SONO has no debt.
Sonos repurchased shares worth $23 million. The company has approximately $177 million remaining under its $200 million share repurchase authorization.
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 45% 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%.
The Zacks Consensus Estimate for Itron’s 2023 EPS has remained unchanged in the past 60 days to $2.88. ITRI’s long-term earnings growth rate is 23%.
Itron’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 289.3%. Shares of ITRI have gained 33.1% in the past year.
The Zacks Consensus Estimate for Woodward’s 2024 EPS has inched up 5.7% in the past 60 days to $5.20. WWD’s long-term earnings growth rate is 15.5%.
Woodward’s earnings beat the Zacks Consensus in each of the last four quarters, the average surprise being 27.2%. Shares of WWD have gained 31% in the past year.
The Zacks Consensus Estimate for Watts Water Technologies 2023 EPS has improved 0.1% in the past 60 days to $8.09. WTS’s long-term earnings growth rate is 7.8%.
WTS’ earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 11.8%. Shares of WTS have soared 23.2% in the past year.
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Sonos (SONO) Q1 Earnings Beat Estimates, Revenues Fall Y/Y
Sonos, Inc. (SONO - Free Report) reported first-quarter fiscal 2024 non-GAAP earnings per share (EPS) of 84 cents compared with 79 cents in the prior-year quarter. On a GAAP basis, the company reported EPS of 64 cents compared with 57 cents in the year-ago quarter. The Zacks Consensus Estimate was pegged at 60 cents.
Quarterly revenues decreased 8.9% (down 10.5% on a constant-currency basis) year over year to $612.9 million due to soft consumer demand. However, the top line surpassed the Zacks Consensus Estimate by 4.1%.
Following the announcement, the company’s shares gained 9% in the pre-market trading on Feb 7, 2024. The stock has lost 7.8% in the past year against the sub-industry’s growth of 6%.
Sonos, Inc. Price, Consensus and EPS Surprise
Sonos, Inc. price-consensus-eps-surprise-chart | Sonos, Inc. Quote
Revenues Details
Revenues from Sonos speakers were $503.1 million, down 6.7% from the prior-year quarter’s levels. The consensus estimate for the Sonos speakers segment is pegged at $469 million.
Sonos system products’ revenues were $84.5 million, down 26.1% year over year. The consensus estimate for the Sonos system products segment is pegged at $101 million. Revenues from Partner products and other totaled $25.2 million, up 33.5% year over year.
Region-wise, revenues from the Americas totaled $392.4 million, down 1% year over year. Europe, the Middle East and Africa generated revenues of $191.8 million, down 20%. Revenues from the Asia Pacific were down 20% to $28.6 million.
Other Details
Gross profit was $282.7 million, down 0.9% from the prior-year quarter’s levels. Gross margin expanded 374 bps year over year to 46.1%, mainly due to lower component costs, fewer spot component purchases, lower inventory-related provisions, and foreign currency tailwinds.
Total operating expenses amounted to $179.4 million, up from $172.3 million in the year-ago quarter, reflecting higher research and development expenses.
Operating income was $79.7 million compared with $86.3 million in the year-ago quarter. Adjusted EBITDA totaled $115.2 million compared with $123.9 million in the prior-year quarter. Lower revenues and increased advertising and marketing spend resulted in the downside.
Cash Flow & Liquidity
For the fiscal first quarter, Sonos generated $275.4 million of cash from operations. Free cash flow was $269.3 million.
As of Dec 30, 2023, cash and cash equivalents were $4673 million compared with $220.3 million as of Sep 30, 2023. SONO has no debt.
Sonos repurchased shares worth $23 million. The company has approximately $177 million remaining under its $200 million share repurchase authorization.
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 45% 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%.
Zacks Rank and Stocks to Consider
Sonos currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks worth considering in the broader technology space are Itron (ITRI - Free Report) , Woodward (WWD - Free Report) and Watts Water Technologies (WTS - Free Report) . Woodward and Itron sport a Zacks Rank #1 (Strong Buy), while Watts Water Technologies 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 Itron’s 2023 EPS has remained unchanged in the past 60 days to $2.88. ITRI’s long-term earnings growth rate is 23%.
Itron’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 289.3%. Shares of ITRI have gained 33.1% in the past year.
The Zacks Consensus Estimate for Woodward’s 2024 EPS has inched up 5.7% in the past 60 days to $5.20. WWD’s long-term earnings growth rate is 15.5%.
Woodward’s earnings beat the Zacks Consensus in each of the last four quarters, the average surprise being 27.2%. Shares of WWD have gained 31% in the past year.
The Zacks Consensus Estimate for Watts Water Technologies 2023 EPS has improved 0.1% in the past 60 days to $8.09. WTS’s long-term earnings growth rate is 7.8%.
WTS’ earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 11.8%. Shares of WTS have soared 23.2% in the past year.