A month has gone by since the last earnings report for Sonos (SONO Quick QuoteSONO - Free Report) . Shares have added about 5.4% 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 its most recent earnings report in order to get a better handle on the important drivers.

Sonos Q4 Loss Narrower Than Expected

Sonos reported fourth-quarter fiscal 2024 non-GAAP loss per share of 18 cents. It had registered a loss per share of 7 cents in the prior-year quarter. On a GAAP basis, the company reported a loss of 44 cents compared with a loss of 25 cents in the year-ago quarter. The Zacks Consensus Estimate was pegged at a loss of 22 cents per share.

Quarterly revenues fell 16.3% year over year to $255.4 million. The figure was well within the company’s guided range of $240-$260 million. Management noted that the fourth quarter sales were affected due to lower sales across the portfolio owing to app issues and the decision to delay two major product launches (planned for the fiscal fourth quarter) until the app would meet expected quality standards. The top line surpassed the Zacks Consensus Estimate by 2.2%.

The company released two new products, Arc Ultra and Sub 4, in October 2024. Sonos expects the demand for these products to gain from the upcoming holiday season.

Fiscal 2024 revenues of $1.52 billion fell 8% year over year due to weaker demand amid challenging market conditions and the issues surrounding the recent app rollout. The introduction of Ace in June 2024 and favorable foreign exchange rates offered some cushioning to the top-line expansion. It also gained a considerable dollar market share in the U.S. home theater category as well as market share gains in the U.S. streaming audio.

Sonos reported non-GAAP earnings of 56 cents per share compared with 92 cents reported in fiscal 2023.

Revenue Details

Revenues from Sonos speakers were $178.2 million, down 20.2% year over year. The consensus estimate was pegged at $172 million.

Sonos’ system products’ revenues of $58.7 million fell 5.8% year over year. The consensus estimate was pegged at $61 million.

Revenues from Partner products and others totaled $18.4 million, fell 5.6% year over year. The consensus estimate was pegged at $19.86 million.

Region-wise, revenues from the Americas of $177.5 million declined 13% year over year. Europe, the Middle East and Africa generated revenues of $58.4 million, down 30%. Revenues from the Asia Pacific rose 7% year over year to $19.5 million.

Margin Performance

Non-GAAP gross profit was $104.6 million, down 19.2% on a year-over-year basis. Non-GAAP gross margin expanded 140 basis points to 41%, due to higher promotional activity, partly offset by lower product and material costs.

Adjusted operating expenses amounted to $143 million, up from $135.6 million in the year-ago quarter, due to higher sales and marketing costs.

Non-GAAP adjusted operating loss was $38.4 million compared with $6.1 million in the year-ago quarter. Adjusted EBITDA loss totaled $22.6 million against adjusted EBITDA income of $6.3 million a year ago.

Cash Flow & Liquidity

For the fiscal year, Sonos used $189.9 million of cash from operations. Free cash outflow was $134.7 million.

As of Sept. 28, cash and cash equivalents were $169.7 million compared with $227.1 million as of June 29, 2024.

The company returned $129 million to its shareholders through stock repurchases in fiscal 2024. It has $71 million worth of shares left for repurchase under the current $200 million buyback authorization.

Q1 Guidance

Management expects fiscal first quarter 2025 revenues to be in the range of $480 million to $560 million. GAAP gross margin is anticipated to be in the band of 41% to 43%. Non-GAAP gross margin is predicted to be in the band of 41.9% to 43.8%.

Adjusted EBITDA is likely to be in the range of $35 million to $79 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

VGM Scores

Currently, Sonos has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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

Sonos has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Sonos is part of the Zacks Audio Video Production industry. Over the past month, Sony (SONY Quick QuoteSONY - Free Report) , a stock from the same industry, has gained 21%. The company reported its results for the quarter ended September 2024 more than a month ago.

Sony reported revenues of $19.53 billion in the last reported quarter, representing a year-over-year change of +3.5%. EPS of $0.37 for the same period compares with $0.22 a year ago.

For the current quarter, Sony is expected to post earnings of $0.27 per share, indicating a change of -32.5% 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 #2 (Buy) for Sony. Also, the stock has a VGM Score of B.