Struggling in the speaker market Sonos now wants to have a crack at the headphone market after being forced to slash 7% of their staff after global sales fell another 6% in the quarter, and Asia Pacific revenues fell 32%.
The US speaker Company has spruiked several new product initiatives in the past, including headphones, with most projects, not making it to market, at one stage the Company was developing their own content OS and voice activation.
The move into headphones is seen more as desperation, especially as the market for headphones is cluttered with several audio brands being deranged by retailers this year in Australia as consumers move to advanced buds and in ear technology.
Sonos Revenues in Asia Pacific of which Australia is the largest market fell from $130M in 2022 to just $89M.Chief Product Officer Maxime Bouvat-Merlin announced the move in an email to employees earlier today, following the company’s quarterly earnings report.
He said that affected staff would be notified via email and that conversations with those being terminated would occur today Friday. At this stage it’s not known if any staff will be let go in Australia.
Sonos CEO Patrick Spence keeps using the “challenging” when asked questions about the Companies future.
Questions are now being asked as to whether Sono’s speakers are reaching their end of life with consumers moving on to other brands in the affordable premium network speaker market.
Sonos PR management are spruiking that some sort of significant new product is on the roadmap for later next year. Spence said. “This cycle begins with our entry into a new multi-billion-dollar category in the second half of the year that will complement our current offering, delight customers and drive immediate revenue.”
In his memo reported by Bloomberg, Bouvat-Merlin said that the latest cuts were due to “a shift in product strategy” and didn’t stem from an earlier effort to cut operating expenses.
In the memo, Bouvat-Merlin also disclosed that a Sonos team is dedicated to headphones. The company has been working on headphones for more than four years, without any product making it to market.
Another initiative is “voice control” that has not yet made it to market with the business looking to take on both Google and Amazon Alexa.
As for the new product next year, Spence said “All told, we expect to generate over $100 million from new product introductions this year, (2024 financial year US) with this exciting new product accounting for a large portion of this revenue in the second half.”
Bouvat-Merlin said new offerings — codenamed Lasso, Pinewood and Premier — are in the works for the near future.
While Sonos beat estimates for its fourth quarter, its revenue forecast for fiscal year 2024 came in light. The company predicted sales of $1.6 billion to $1.7 billion — the midpoint of which fell below Wall Street projections.
Here is how Sonos performed in the latest US Q4 in US dollar terms.
Revenue by Product Category- Sono’s speakers: $223.32 million versus $229.42 million estimated by two analysts on average. C
compared to the year-ago quarter, this number represents a -5% change.
Revenue by Product Category- Partner products and other revenue: $19.51 million versus the two-analyst average estimate of $18.91 million.
The reported number represents a year-over-year change of +5.9%.
Revenue by Product Category- Sono’s system products: $62.32 million versus $57.94 million estimated by two analysts on average. Compared to the year-ago quarter, this number represents a -0.7% change.
