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Why Is Sonos (SONO) Up 4.6% Since Last Earnings Report?
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A month has gone by since the last earnings report for Sonos (SONO - Free Report) . Shares have added about 4.6% 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? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for Sonos, Inc. before we dive into how investors and analysts have reacted as of late.
Sonos Q3 Earnings Beat
Sonos reported third-quarter fiscal 2026 non-GAAP earnings of 27 cents per share, which soared 52% year over year and topped the Zacks Consensus Estimate of 24 cents. The 12.5% surprise reflected higher sales and disciplined spending despite rising memory costs.
Revenues increased 9% to $375 million, beating the $367 million consensus by 2.3%. Speaker demand and international expansion supported growth. Sonos’ installed base exceeded 53 million connected devices across more than 17 million homes.
Segment Details
Revenues from Sonos speakers rose 12.5% year over year to $285.3 million and remained the company’s largest product category. The quarter included the first full period of availability for Sonos Play and Era 100 SL, both of which contributed meaningfully to revenue growth.
Sonos system products generated $69.3 million, down 5.4%. Partner products and other revenues increased 15.4% to $20.7 million. Amp Multi is scheduled to ship on Aug. 25, extending the company’s offering for professional installers and larger multi-zone projects.
Overseas Markets Outpace the Americas
Americas revenues advanced 3.8% to $238.4 million. Europe, the Middle East and Africa revenues climbed 17.4% to $114.2 million, while Asia-Pacific sales increased 27.2% to $22.7 million.
Foreign exchange added about one percentage point to reported growth. On a constant-currency basis, total revenues rose 7%, accelerating three percentage points from the second quarter.
Margin Gains Offset Memory Inflation
Non-GAAP gross profit increased 10.8% to $170.8 million. Non-GAAP gross margin expanded 80 basis points (bps) to 45.5%, even as higher memory costs created a $14 million year-over-year burden and reduced the margin by roughly 380 bps.
GAAP gross margin was 50.4%, including a $23.2 million benefit from refunds of previously paid tariffs. Excluding that non-recurring benefit, GAAP gross margin was 44.3%, up 90 bps year over year.
GAAP operating expenses increased 3.4% to $157.8 million, mainly due to employee compensation, litigation spending and restructuring charges. Non-GAAP operating expenses rose 2.7% to $134.6 million and remained below the levels recorded in the first two quarters of fiscal 2026.
Adjusted EBITDA grew 23.5% to $44 million, with the margin improving to 11.7% from 10.3%. Non-GAAP operating income reached $36.2 million, up 57.3%, as gross-profit growth outpaced the increase in adjusted expenses.
Cash provided by operating activities increased 23.5% to $46.2 million. Free cash flow rose 23.3% to $40.3 million, while cash and marketable securities totaled $261 million at quarter-end.
Sonos repurchased 2 million shares for $30 million, leaving $35 million under its authorization. Inventories were $158 million, up 37% year over year due to higher memory costs, new product launches and capitalized tariffs.
Q4 Guidance
For the fourth quarter of fiscal 2026, SONO expects revenues of $325 million to $355 million, representing 13% to 23% growth. The 14-week quarter includes an extra week expected to add about $24 million in sales and eight percentage points to growth. Excluding that benefit, growth is projected at 4% to 15%.
GAAP gross margin is forecast between 39% and 41%, with non-GAAP gross margin about 120 bps higher. Management expects memory inflation to reduce gross profit by $35 million year over year. Adjusted EBITDA is projected between a loss of $11 million and a profit of $18 million.
For fiscal 2026, Sonos expects revenue growth of 6% to 8%, or 4% to 6% excluding the extra week. Adjusted EBITDA is projected at $181 million, up 37%, with an 11.7% margin. Management expects memory-mitigation actions to phase in through fiscal 2027.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 23.81% due to these changes.
VGM Scores
Currently, Sonos has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock has a score of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Sonos has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
View the Zacks #1 Rank List
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Why Is Sonos (SONO) Up 4.6% Since Last Earnings Report?
A month has gone by since the last earnings report for Sonos (SONO - Free Report) . Shares have added about 4.6% 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? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for Sonos, Inc. before we dive into how investors and analysts have reacted as of late.
Sonos Q3 Earnings Beat
Sonos reported third-quarter fiscal 2026 non-GAAP earnings of 27 cents per share, which soared 52% year over year and topped the Zacks Consensus Estimate of 24 cents. The 12.5% surprise reflected higher sales and disciplined spending despite rising memory costs.
Revenues increased 9% to $375 million, beating the $367 million consensus by 2.3%. Speaker demand and international expansion supported growth. Sonos’ installed base exceeded 53 million connected devices across more than 17 million homes.
Segment Details
Revenues from Sonos speakers rose 12.5% year over year to $285.3 million and remained the company’s largest product category. The quarter included the first full period of availability for Sonos Play and Era 100 SL, both of which contributed meaningfully to revenue growth.
Sonos system products generated $69.3 million, down 5.4%. Partner products and other revenues increased 15.4% to $20.7 million. Amp Multi is scheduled to ship on Aug. 25, extending the company’s offering for professional installers and larger multi-zone projects.
Overseas Markets Outpace the Americas
Americas revenues advanced 3.8% to $238.4 million. Europe, the Middle East and Africa revenues climbed 17.4% to $114.2 million, while Asia-Pacific sales increased 27.2% to $22.7 million.
Foreign exchange added about one percentage point to reported growth. On a constant-currency basis, total revenues rose 7%, accelerating three percentage points from the second quarter.
Margin Gains Offset Memory Inflation
Non-GAAP gross profit increased 10.8% to $170.8 million. Non-GAAP gross margin expanded 80 basis points (bps) to 45.5%, even as higher memory costs created a $14 million year-over-year burden and reduced the margin by roughly 380 bps.
GAAP gross margin was 50.4%, including a $23.2 million benefit from refunds of previously paid tariffs. Excluding that non-recurring benefit, GAAP gross margin was 44.3%, up 90 bps year over year.
GAAP operating expenses increased 3.4% to $157.8 million, mainly due to employee compensation, litigation spending and restructuring charges. Non-GAAP operating expenses rose 2.7% to $134.6 million and remained below the levels recorded in the first two quarters of fiscal 2026.
Adjusted EBITDA grew 23.5% to $44 million, with the margin improving to 11.7% from 10.3%. Non-GAAP operating income reached $36.2 million, up 57.3%, as gross-profit growth outpaced the increase in adjusted expenses.
Cash provided by operating activities increased 23.5% to $46.2 million. Free cash flow rose 23.3% to $40.3 million, while cash and marketable securities totaled $261 million at quarter-end.
Sonos repurchased 2 million shares for $30 million, leaving $35 million under its authorization. Inventories were $158 million, up 37% year over year due to higher memory costs, new product launches and capitalized tariffs.
Q4 Guidance
For the fourth quarter of fiscal 2026, SONO expects revenues of $325 million to $355 million, representing 13% to 23% growth. The 14-week quarter includes an extra week expected to add about $24 million in sales and eight percentage points to growth. Excluding that benefit, growth is projected at 4% to 15%.
GAAP gross margin is forecast between 39% and 41%, with non-GAAP gross margin about 120 bps higher. Management expects memory inflation to reduce gross profit by $35 million year over year. Adjusted EBITDA is projected between a loss of $11 million and a profit of $18 million.
For fiscal 2026, Sonos expects revenue growth of 6% to 8%, or 4% to 6% excluding the extra week. Adjusted EBITDA is projected at $181 million, up 37%, with an 11.7% margin. Management expects memory-mitigation actions to phase in through fiscal 2027.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 23.81% due to these changes.
VGM Scores
Currently, Sonos has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock has a score of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Sonos has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.