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Sonos stock soars as demand for its speakers pays dividends

Sonos Inc. said it continues to see strong demand for its audio products, although the speakermaker admitted on Wednesday that its sales growth could be limited by the ongoing supply crunch.

The company’s revenue for the second fiscal quarter was $399.8 million, up from $332.9 million a year earlier. The FactSet consensus called for sales of $353 million.

These results reflected “a very healthy performance driven by good underlying demand, which we continue to see,” according to Sonos SONO,
-8.61%
CFO Brittany Bagley told MarketWatch.

Sonos maintained its full-year revenue guidance of $1.95 billion to $2.00 billion, which Bagley says balances the company’s optimistic view of future demand with its reasonable understanding of supply chain realities.

“It would be difficult for us to have any upside potential in the second half of the year because we just don’t have the supply to support that,” she said, although demand has been strong. “Since our last quarter we’ve had war in Ukraine, the dollar strengthening against the euro, ongoing inflation and we’re monitoring all of this very closely, but we continue to have a great client investing in audio products and the like back home.”

Sonos also announced new products on Wednesday, including a lower-priced soundbar, which is expected to further boost demand.

After initially rising nearly 20% in after-hours trading immediately after the report’s release, shares ended the extended session up 8%.

But the company’s push to put coverage in the hands of consumers hasn’t come without a cost, Bagley said, as Sonos is feeling some pressure on its gross margins. Sonos had a 44.8% gross margin in the fiscal second quarter, compared to 47.8% in the fiscal first quarter.

It also revised its full-year gross margin guidance to 45.5% to 46.0%, while its previous guidance called for 45.0% to 47.0%.

Bagley shared that Sonos is working hard to maintain an adequate supply of its products, including new ones, but the company is “paying a little more from a gross margin perspective to be able to do this” and expects it “to continue to cost.” more.”

The company posted net income of $8.6 million, or 6 cents a share, compared to $17.2 million, or 12 cents a share, in the year-ago quarter. Analysts tracked by FactSet were expecting 5 cents a share in GAAP earnings.

On an adjusted basis, Sonos earned 26 cents a share, compared to 31 cents a share a year ago, while analysts had forecast 17 cents a share.

Sonos reported adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of $46.9 million, down from $48.5 million a year earlier but above the $35 million analysts had forecast.

Adjusted EBITDA for the full year is now expected to be at the lower end of the previous range. Sonos is forecasting adjusted Ebitda of $290 million to $310 million, down from its previous guidance of $290 million to $325 million.

https://www.marketwatch.com/story/sonos-sees-strong-demand-fuel-earnings-beat-but-supply-constraints-could-limit-upside-11652300014?rss=1&siteid=rss Sonos stock soars as demand for its speakers pays dividends

Brian Lowry

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