Sonos Finally Reveal Volitile Revenues & More Losses Than Profits Ahead Of IPO
Sonos who moved to open their own shop in Sydney this week, has finally revealed revenues ahead of their IPO listing, of $655M and a profit of $13.1M, what is not know is how much of this profit came from the sacking of close to 100 staff recently.
The $13.1M profit was down on the prior year when the private Company reported a profit of $15.2M. The prior three years the Company that is under pressure in the sound market reported losses.
What Sonos, is now trying to do is raise several hundred million dollars in proceeds from the IPO before other vendors start stripping share from the US sound Company whose latest sound bar offering is no different than several other less expensive soundbars on the market.
Based on the current forecasts the Company has been valued at between $2.5 billion to $3 billion.
The problem for Sonos is that the Company has desperately stripped costs out of their loss making business to deliver two years of profits. This has included the axing of staff who helped build the Company.
Sonos has also failed to offer up any insights into new products however they have issued a warning about the US tarriff war with China.
Sonos whose speakers are made in China, has warned in its initial public offering documents that the US-China trade skirmish poses a ‘material’ risk to its business.
They claim that levies applied by the US on Chinese goods and potential countermeasures could “materially” harm its operations.
“If significant tariffs or other restrictions are placed on Chinese imports or any related counter-measures are taken by China, our revenue and results of operations may be materially harmed,” the group said.
They claim that the Trump administration’s decision to apply tariffs on imports of Chinese steel and aluminium could also hurt the Company.
“We may be required to raise our prices, which may result in the loss of customers and harm our reputation and operating performance” the Company added.
Patrick Spence, Sonos’ chief executive, took aim at Apple’s iPhone and other smartphones in his letter to prospective investors, positioning Sonos as an alternative to screen addiction.
“We’re tired of technology that pulls us deeper into our screens, deeper into distraction and deeper down bottomless feeds,” he wrote. The is the same CEO who last month launched a new TV soundbar that connects to a screen.
“Smart speakers offer a radical alternative . . . Take away the screen, and suddenly you have the freedom to look up and actually be present with the people around you.”
ChannelNews understands that the Company has made more losses than profits since launching in 2005, this is despite having the networked sound market to themselves for several years.
The wireless-speaker company’s public filing with the Securities and Exchange Commission Friday morning showed it is also on pace to generate more than $1 billion in revenue this year. It said its products are in nearly 7 million households.
The company has reported annual losses for the past three fiscal years, and their revenue growth has been historically volatile and should therefore not be considered indicative of future performance the Company has admitted.
The company has built a loyal fan base by letting customers play music in every room of a home through a network of wireless speakers that supported streaming services such as Spotify and Apple Music. In June, Sonos announced its newest product, Sonos Beam, a $399 speaker system that connects with “virtually any streaming content” including multiple voice assistants and Apple AirPlay2, the company has said. In the filing, Sonos said it plans to increase its pace of new product launches.
Sonos also outlined its market opportunity as partly driven by repeat customers and by the increasing ubiquity of streaming music and voice assistants.
The company said follow-on purchases accounted for 38% of its new product sales in fiscal 2017. It said it expects the continuing expansion of streaming services and voice assistants should also drive its own sales since its products work with a wide range of partners.
In his letter to shareholders, Sonos Chief Executive Patrick Spence said the company’s software platform “gives our customers unparalleled freedom.”
Sonos’ s public filing comes as the pace of IPOs has picked up dramatically. The IPO market logged one of the best first halves in recent years and the fourth-highest-volume first half on record, according to Dealogic data that dates back to 1995.
Sonos has raised about $110 million in primary funding from investors, including Index Ventures and KKR & Co.