Sonos shares have taken a deep dive despite better-than-expected results, during the last five days shares in the US sound Company have fallen 13.04% to close at US$14.14. Back in May they were trading at $21.78.

Asia Pacific, registrations of Sonos products also “softened through the quarter” claims Sonos CEO Patrick Spence and that’s expected to continue through Q4, he said during a briefing last week.

Sonos expect some further channel tightening in Asia Pacific of which Australia is their biggest market.

Quarterly registrations declined 2% year over year, while products sold declined 11%. Year-over-year basis, gross margin declined by 130 basis points

The business expects to report full-year revenues between US$1.64 billion and $1.66 billion, down approximately 6% year over year.

Free cash flow was negative US$7.8 million in the quarter, largely driven by a $31 million increase in accounts receivable and $18 million decrease in accounts payable and accrued expenses and $15 million of share repurchases, partially offset by a $23 million decrease in inventories.


In June Sonos slashed their headcount by 7% with Spence claiming that “This rightsizing in our expense base will enable us to increase future profitability while making targeted investments”.

As for future layoffs Spence said ” Our journey to drive more efficiency in the organization is never over. We will continue to closely scrutinize our cost base and do whatever it takes to lever on the kind of long-term profitability we have targeted”.

Sonos saw revenue rise 0.4% for the quarter they also revised its outlook for its fiscal year.

Spence claims that “While we have not yet seen conditions in our categories return to normal, the company can still emerge in a position of strength from the quarter”.

At the end of fiscal 2022, the average Sonos household had 2.98 products, up from 2.95 in the prior year. What’s not known is whether this includes Sono’s speakers sold at IKEA which represents over 50% of Sonos speaker sales.

This figure has steadily increased over the years underscoring have a lifetime value of our customers continues to grow.

Consumers adviced not to buy Sonos Arc soundbar by editor at Verge.

40% of households are single-product Sonos households.

A multi-Sonos product household has 4.3 products.

Sonos estimate that converting single-product households to multi product with direct sell offers, they are facing a $5 billion revenue opportunity.

As for the future he said, “There is no doubt in my mind that we will emerge from this challenging period as a stronger company and resume making progress toward delivering on our long-term targets of $2.5 billion in revenue, and $375 million to $450 million in adjusted EBITDA”.

The US represents 67% of Sonos revenues that came in at US$347M.

When asked about their case against Google Eddie Lazarus, Chief Legal and Financial Officer at Sonos said “The next Milestone is going to be the post-trial motions, in the case that we so far have prevailed in. In Northern California, the judge is holding hearing actually tomorrow (Friday) and we should get, a decision on that in relatively soon after the hearing.”

“Step two is going to be the oral argument in the Federal Circuit of appeal.”
“We won at the ITC they found that five Google patents to be both valid, and that Google was infringing five of our valid patents.”

“That appeal could benefit us significantly, if we prevail in any respect there on our cross appeal.”
He said that the damages case relating to the five patents will begin in the Central District of California shortly.
“Google has been infringing these patents for a very, very long time and that, said we’ve already withstood the test of litigation. So that’s probably the next big event”.

And then we’ll be getting decision in their remaining case against us at the ITC, initial decision in September final decision in January. And we’re cautiously optimistic that that will come out well for us.