Heavy discounting aimed at clearing stock has paid off for Sonos, which is under new management, with the business reporting that revenues rose nearly 3% from a year earlier to around US$260 million in the last quarter.

Interim CEO Tom Conrad who wants the top job at Sonos has moved quickly to restructure the struggling business whose share are still down 42% following a disastrous app launch by previous management.

In Asia Pacific sales lifted fractionally from US$13.1 million to $14.169 million in the last quarter.

Sales for the last six months came in at US$42.8M Vs $41.73 for the same period last year in Asia Pacific.

Sonos has been heading nowhere for some time under the leadership of former CEO Patrick Spence, now both management, investors, and retailers “see light at the end of what has been a very dark tunnel” claims a former senior manager.

When Sonos launched the overhauled version of its app that customers use to control their product, it proved so buggy that many complained that their systems simply crash or were not useable.

Then came a disastrous headphone launch a month later.

It ultimately forced Sonos to call off other product launches and take down its financial forecast for the year.

The good news is that Sonos manufacturers their goods in Vietnam and Malaysia with the US audio Company not feeling the full effects of Trumps 145% China Tariffs.

The company moved most of its manufacturing out of China during the first Trump administration, but it still faces tariff costs related to its manufacturing bases in Malaysia and Vietnam.

According to Conrad Sonos will not have any new hardware in fiscal 2025, which runs through the end of the third US calendar quarter.

After that the Company could launch what Conrad is describing as some of the most “exciting” products coming from Sonos.

Last week we announced that Sonos had killed off their relationship with Ikea and the manufacture of the Symfonisk sound system that was being sold by the Swedish furniture Company.

Conrad told the Verge that “Sonos put that partnership together eight years ago. And honestly, it’s been on sort of a slow trajectory”.

“One of the big things that I’ve done in my first 116 days is to try to catalogue all of the things that the company is doing and to prioritize and to focus us on doing an appropriate number of things exceptionally well. I think every great company has to have that kind of focus. There are a number of things that we’ll be focused on going forward and a handful of things that we won’t. And to be honest, I think the wind down of the Ikea partnership was relatively easy to contemplate because, the scale of that business was quite small”.

Conrad claims that he is currently focussed on Delivering high value, differentiated products. And so, you take something like the Era 100, which is just like, clearly the best in class sort of speaker that you can buy in that price category. And since I arrived, we brought the price of that down which we think is really a magic spot for delivering something that’s completely differentiated in the market”.

When questioned about the Companies disastrous app roll out, he said “I think that there were three or four kind of things that were problematic about the launch of the new version of the platform. The first couple, I would call them the mistakes that we knew we were making. We knew that there were some features that we were going to roll out in incremental — what we intended to be fast-follow releases. Add the alarm clock, add snooze, do better with accessibility”.

He admits the Company “Made a decision to launch and to sort of do that incrementally over time”.

“We should’ve had a mechanism to roll back.”

Second thing is, anytime you make a set of user experience changes, you know that there’s going to be some fraction of your audience that doesn’t like them. And this is like a universal truth of software, and I think the company, because we’d done a bunch of work in the usability setting, we were convinced that — companies often convince themselves that it was for the greater good and we would sort of get through to the other side. I think the third mistake was one that we just didn’t understand. And that was that, obviously, in the real world, the product had material performance and reliability issues”.

“Just to be completely concrete about it, if the company had known, we never would have shipped it. No reasonable team would have shipped it. You can critique us for not knowing, but it’s not like we intentionally launched understanding we would have the in-the-field performance issues we did”.

He admits that it took Sonos management operating under Spence, a while to figure out the depth of the problem, and “by the time that time had passed, we couldn’t”.

“We have spent a year righting the ship. And we made good progress, I think, by the end of last year — and I think we’ve made really dramatic progress in the last 120 days”.

Spence, along with several other management were sacked following the debacle”.

As for the future Conrad said “One of the things is the work that we’ve done to reorganize the team and to put exactly the right people and capacity and focus on, not just the app codebase, but also the whole platform (player software, the cloud) has allowed us to unlock some of the more lingering, esoteric issues that remained. So, the release that’s making its way to our customers right now — new version of the apps, new version of the player software — is beginning to get at some of those lingering issues, which I’d put into two categories” he said.

There’s a category of issues that are particularly tied to the Play:1 and Play:3, which are 13- and 11-year-old architectures at this point. It’s sort of amazing to think that the iPhone in market when the Play:3 launched was the iPhone 4 Its halo feature was it had a selfie cam for the first time”.

“So a lot has changed in tech since we shipped the Play:3, but fully a third of our households still have players from that generation that they love and they want to work, and we’re doing the hard work today of making sure that they have a great experience. This release that’s launching right now dramatically improves on the experience that they’ll have. In fact, quantitatively the experience is better than it was on those devices four years ago. So, far before the app itself. But we’ve got a bead on another set of enhancements that’s going to take us even further over the next few months”.

He added “Part of the promise and magic of Sonos is that our customers shouldn’t have to be network administrators. But some of the problems that we see commonly today come down to issues that we need to help them troubleshoot on their local network. We have a bunch of things in progress today that will put the power back in our customers’ hands to sort of understand what’s going on in their network in a more sophisticated way.

I don’t mean to overstate this. These are problems that maybe 1 percent of our households have. But 1 percent of households is 150,000 people, [laughs] and apparently, they’re all on Reddit”.

Sonos Headphones

As the drama over the Sonos was unfolding Spence chose to go ahead with the launch of the Sonos Ace headphones and despite high hopes sales failed to eventuate as consumers moved to avoid all things, Sonos.

So where is the headphone now?

“I’m really committed to Ace. I think it’s a fantastic product” .

“Out of the gate, for us to deliver battery life, transparency, noise cancelling, and comfort that we did relative to the competition, I’m really proud of what we delivered”.

“I’m excited about continuing to innovate in that space both through hardware and software. I think there’s a lot we can do with software experiences to further differentiate Ace from other things in the market. In time, we’re going to get back on our footing with respect to the software quality”.

At the highest level, it’s not that complicated. I want the same thing consumers want Chris: I just want it to work”.

“You launch the app, it quickly gives you access to your content, you start something playing back, and you’re done! I have no ambition for people to spend their life in the Sonos app fidgeting with esoteric failures. And all of that’s within our grasp — increasingly so. We’re getting back to that, and then we can get back to the business of creating these innovative, differentiated experiences” he said.

As for performance of the Company gross margins were flat in the prior quarter at 44% despite a step-up in production to get ahead of the tariffs President Trump announced just after the quarter ended.

Sonos shares have jumped more than 16% during the past few days.

Conrad, a longtime Sonos board member who stepped in as chief executive in January quickly moved to reduce the Sonos workforce by 12% while overhauling the organisational structure.

That thinned out the layers, combining multiple hardware business units into one and centralizing the company’s software efforts he claims.

“It’s pretty dramatic the progress we have made,” Conrad said.

“My bar is, the app has to be fast, reliable and easy to use,” he said.

He admits that the Sonos brand has certainly taken a hit, “but the damage doesn’t seem permanent, or universal” he claims.

As for the outlook for Sonos he said, “New customers are still coming in—at least at the right price”.

Conrad said the response so far has been strong, especially among customers new to the company’s products.

In a note to clients, Erik Woodring of Morgan Stanley said such moves could “lower the friction of onboarding new users, which could pay dividends if successful, as the average Sonos household had 3.08 products at the end of [fiscal year 2024].”

Analysts claim that Sonos will have to pull off the difficult balancing act of repairing its brand and expanding its customer base while in the midst of a trade war.

The company deftly moved most of its manufacturing out of China during the first Trump administration, but it still faces tariff costs related to its manufacturing bases in Malaysia and Vietnam.

Those costs could raise its expenses by as much as $10 million in its fiscal fourth quarter. That will leave Sonos with the same hard choice faced by other premium hardware makers like Apple: to raise prices or sacrifice profit margins. But building up inventory has bought the company some time. “We have a lot of levers we can pull, and we don’t have to pull them in haste,” Conrad said.

Today’s Sonos knows all too well the value of getting it right the first time.