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Sonos' Q2 Loss Matches Estimates, Revenues Increase Y/Y
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Sonos, Inc. (SONO - Free Report) reported second-quarter fiscal 2025 non-GAAP loss per share of 18 cents, meeting the Zacks Consensus Estimate. It incurred a loss of 18 cents in the prior-year quarter as well. On a GAAP basis, the company reported a loss of 58 cents compared with a loss of 56 cents in the year-ago quarter.
Quarterly revenues rose 3% year over year to $259.8 million. The figure came towards the high end of the company’s guidance of $240 million to $265 million. The uptick is driven by strong performance in Home Theater, led by the Arc Ultra, and its over-ear headphones, Ace, launched in June last year, partly offset by softer demand amid tough market conditions and forex pressure. The Zacks Consensus Estimate for the top line was pegged at $255.9 million.
The company’s performance was also boosted by ongoing investment in expanding its global footprint. Although growth markets currently make up a small portion of total revenues, they delivered double-digit growth in the quarter and the first half of the year, positively impacting overall revenues. Strengthening its presence in these regions is expected to be a major growth driver going forward.
Region-wise, revenues from the Americas of $176.8 million increased 3.9% year over year. Europe, the Middle East and Africa generated revenues of $68.8 million, almost flat year over year. Revenues from the Asia Pacific rose 8% to $14.2 million.
Sonos’ Margin Performance
Non-GAAP gross profit was $122.3 million, up 7.6% on a year-over-year basis. Non-GAAP gross margin expanded 210 basis points to 47.1%, driven by reduced inventory reserves and improved cost efficiency.
Adjusted operating expenses amounted to $135 million, down 14% year over year and $5 million below guidance. This reflects savings from last quarter’s workforce reduction and other cost cuts. G&A expenses fell 32% due to lower headcount and cost cuts. R&D dropped 18% due to workforce reduction and roadmap changes. Sales & Marketing rose 1%, led by mixed factors.
Adjusted EBITDA loss totaled $1 million, beating the high end of guidance by $5 million, mainly due to reduced operating expenses, marking a $33 million improvement from the prior-year quarter.
Cash Flow & Liquidity
For the fiscal second quarter, Sonos used $59.7 million of cash from operations. Free cash outflow was $65 million, an improvement from outflow of $121 million last year, driven by better timing of receivables, better inventory management, reduced operating expenses and lower capital spending.
As of March 29, cash and cash equivalents were $173.2 million compared with $280 million as of Dec. 28, 2024. SONO has no debt.
The company returned $33 million to its shareholders through stock repurchases in the fiscal second quarter. In February 2025, the Board authorized a new $150 million share repurchase program, with the full amount still available at the end of the fiscal second quarter.
Sonos’ Fiscal Q3 Guidance
The outlook is based on current demand trends and assumes no major shifts in consumer spending despite the uncertain global trade environment. Management expects revenues of $310–$340 million, up 19–31% quarter over quarter due to seasonality, but down 14–22% year over year, mainly due to last year's Ace headphone launch timing.
GAAP gross margin is anticipated to be in the band of 43% to 45%. Non-GAAP gross margin is predicted to be in the range of 45.2% to 47%.
GAAP operating expenses are projected in the band of $157-$162 million, while non-GAAP operating expenses are predicted in the range of $135-$140 million.
Adjusted EBITDA is likely to be in the range of $12 million to $37 million.
Badger Meter, Inc. (BMI - Free Report) reported EPS of $1.30 for first-quarter 2025, which beat the Zacks Consensus Estimate by 20.4%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of 99 cents.
In the past year, shares of BMI have gained 17%.
Cadence Design Systems (CDNS - Free Report) reported first-quarter 2025 non-GAAP EPS of $1.57, which beat the Zacks Consensus Estimate by 5.4%. The bottom line increased 34.2% year over year, exceeding management’s guided range of $1.46-$1.52.
Shares of Cadence have gained 7.7% in the past year.
Woodward, Inc. (WWD - Free Report) reported second-quarter fiscal 2025 adjusted net earnings per share (EPS) of $1.69, which increased 4.3% year over year. The figure beat the Zacks Consensus Estimate by 17.4%.
In the past six months, shares of WWD have gained 9.9%.
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Sonos' Q2 Loss Matches Estimates, Revenues Increase Y/Y
Sonos, Inc. (SONO - Free Report) reported second-quarter fiscal 2025 non-GAAP loss per share of 18 cents, meeting the Zacks Consensus Estimate. It incurred a loss of 18 cents in the prior-year quarter as well. On a GAAP basis, the company reported a loss of 58 cents compared with a loss of 56 cents in the year-ago quarter.
Quarterly revenues rose 3% year over year to $259.8 million. The figure came towards the high end of the company’s guidance of $240 million to $265 million. The uptick is driven by strong performance in Home Theater, led by the Arc Ultra, and its over-ear headphones, Ace, launched in June last year, partly offset by softer demand amid tough market conditions and forex pressure. The Zacks Consensus Estimate for the top line was pegged at $255.9 million.
The company’s performance was also boosted by ongoing investment in expanding its global footprint. Although growth markets currently make up a small portion of total revenues, they delivered double-digit growth in the quarter and the first half of the year, positively impacting overall revenues. Strengthening its presence in these regions is expected to be a major growth driver going forward.
In the past six months, shares have declined 37.4% against the Zacks Audio Video Production industry’s growth of 27.7%.
Image Source: Zacks Investment Research
Sonos’ Revenue Details
Revenues from Sonos speakers were $194.5 million, up 3.9% year over year. The consensus estimate was also pegged at $194.5 million.
Sonos’ system products’ revenues of $50.5 million grew 2.6% year over year. The consensus estimate was pegged at $60.3 million.
Revenues from Partner products and other totaled $14.7 million, down 8.9% year over year. The consensus estimate was pegged at $23.4 million.
Sonos, Inc. Price, Consensus and EPS Surprise
Sonos, Inc. price-consensus-eps-surprise-chart | Sonos, Inc. Quote
Region-wise, revenues from the Americas of $176.8 million increased 3.9% year over year. Europe, the Middle East and Africa generated revenues of $68.8 million, almost flat year over year. Revenues from the Asia Pacific rose 8% to $14.2 million.
Sonos’ Margin Performance
Non-GAAP gross profit was $122.3 million, up 7.6% on a year-over-year basis. Non-GAAP gross margin expanded 210 basis points to 47.1%, driven by reduced inventory reserves and improved cost efficiency.
Adjusted operating expenses amounted to $135 million, down 14% year over year and $5 million below guidance. This reflects savings from last quarter’s workforce reduction and other cost cuts. G&A expenses fell 32% due to lower headcount and cost cuts. R&D dropped 18% due to workforce reduction and roadmap changes. Sales & Marketing rose 1%, led by mixed factors.
Adjusted EBITDA loss totaled $1 million, beating the high end of guidance by $5 million, mainly due to reduced operating expenses, marking a $33 million improvement from the prior-year quarter.
Cash Flow & Liquidity
For the fiscal second quarter, Sonos used $59.7 million of cash from operations. Free cash outflow was $65 million, an improvement from outflow of $121 million last year, driven by better timing of receivables, better inventory management, reduced operating expenses and lower capital spending.
As of March 29, cash and cash equivalents were $173.2 million compared with $280 million as of Dec. 28, 2024. SONO has no debt.
The company returned $33 million to its shareholders through stock repurchases in the fiscal second quarter. In February 2025, the Board authorized a new $150 million share repurchase program, with the full amount still available at the end of the fiscal second quarter.
Sonos’ Fiscal Q3 Guidance
The outlook is based on current demand trends and assumes no major shifts in consumer spending despite the uncertain global trade environment. Management expects revenues of $310–$340 million, up 19–31% quarter over quarter due to seasonality, but down 14–22% year over year, mainly due to last year's Ace headphone launch timing.
GAAP gross margin is anticipated to be in the band of 43% to 45%. Non-GAAP gross margin is predicted to be in the range of 45.2% to 47%.
GAAP operating expenses are projected in the band of $157-$162 million, while non-GAAP operating expenses are predicted in the range of $135-$140 million.
Adjusted EBITDA is likely to be in the range of $12 million to $37 million.
Zacks Rank of Sonos
Sonos currently carries a Zacks Rank #4 (Sell).
You can see see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Recent Performance of Other Companies
Badger Meter, Inc. (BMI - Free Report) reported EPS of $1.30 for first-quarter 2025, which beat the Zacks Consensus Estimate by 20.4%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of 99 cents.
In the past year, shares of BMI have gained 17%.
Cadence Design Systems (CDNS - Free Report) reported first-quarter 2025 non-GAAP EPS of $1.57, which beat the Zacks Consensus Estimate by 5.4%. The bottom line increased 34.2% year over year, exceeding management’s guided range of $1.46-$1.52.
Shares of Cadence have gained 7.7% in the past year.
Woodward, Inc. (WWD - Free Report) reported second-quarter fiscal 2025 adjusted net earnings per share (EPS) of $1.69, which increased 4.3% year over year. The figure beat the Zacks Consensus Estimate by 17.4%.
In the past six months, shares of WWD have gained 9.9%.