Sonos (SONO) AI Stock Analysis

• Market Cap: $1.09B
• Dividend Yield: N/A
• Average Volume (3M): 2.06M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.62
• Revenue Growth: -5.24%
• EPS Growth: -67.92%
• Country: US
• Employees: 1,708
• Sector: Technology
• Sector Strength: 66
• Industry: Consumer Electronics
• EPS (TTM): -0.58
• Shares Outstanding: 119,082,664
• 10 Day Avg. Volume: 1,698,506
• 30 Day Avg. Volume: 2,055,717
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.47
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 2.34
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $11.67
• Price Target Upside: 11.89% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 4

Sonos faces significant financial challenges, with declining revenue and negative profitability, despite a stable balance sheet. The technical analysis is bearish, and valuation metrics are unattractive due to negative earnings. The recent earnings call offers some optimism with improved EBITDA and cost management, but challenges like rising tariffs and revenue declines persist. The appointment of Hugo Barra to the board adds strategic value, but its immediate impact is limited.

Positive Factors

Gross Margins

Sonos is outperforming gross margins through thoughtful inventory management and mix, achieving impressive gross margin outperformance this quarter.

Market Share

Sonos is gaining market share, most notably within the home theater market, driven by the strength in Arc Ultra.

Strategy Shift

Actions to maximize gross profit, including promotions and pricing strategy, mark a pivot in Sonos' strategy, potentially lowering the friction of onboarding new users.

Negative Factors

Demand Headwinds

The midpoint of F1Q guidance implies revenue and Adj. EBITDA 3% and 24% below pre-earnings forecasts, respectively, as a tough demand backdrop, lingering app redesign headwinds, elevated promotional spending and channel inventory workdown represent more significant Y/Y headwinds.

Guidance Concerns

Sonos' lack of reaffirming December quarter guidance adds to investor uncertainty ahead of earnings.

Leadership Uncertainty

Entering a period of elevated uncertainty as Sonos searches for its next CEO.

Sonos Business Overview & Revenue Model

Company Description

Sonos, Inc., together with its subsidiaries, designs, develops, manufactures, and sells multi-room audio products in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company provides wireless speakers, home theater speakers, components, and accessories. It offers its products through approximately 10,000 third-party retail stores, including custom installers of home audio systems; and e-commerce retailers, as well as through its Website sonos.com. The company was formerly known as Rincon Audio, Inc. and changed its name to Sonos, Inc. in May 2004. Sonos, Inc. was incorporated in 2002 and is headquartered in Santa Barbara, California.

How the Company Makes Money

Sonos generates revenue primarily through the sale of its audio products, which include wireless speakers, home theater systems, and audio components. These products are sold directly to consumers via the company's online store and through third-party retailers worldwide. Licensing agreements with technology partners, such as streaming service providers, also contribute to its revenue streams. Additionally, Sonos benefits from strategic partnerships with other technology companies, enhancing its product offerings and market reach. The company's focus on premium audio quality and user-friendly experiences helps maintain a competitive edge in the growing market for smart home entertainment systems.

Sonos Financial Statement Overview

Summary

Sonos faces financial challenges due to declining revenues and negative profit margins. The balance sheet is stable with low leverage, but negative return on equity is concerning. Cash flow shows some resilience, yet declining free cash flow growth is a worry.

Income Statement

Sonos has experienced a decline in revenue over the past few years, with a recent TTM revenue of $1.46 billion compared to $1.75 billion in 2022. The company is struggling with negative profit margins, as evidenced by a gross profit margin of 44.52% and a net profit margin of -4.73% for the TTM. EBIT and EBITDA margins are also negative, indicating operating challenges.

Balance Sheet

The balance sheet shows moderate financial stability with a debt-to-equity ratio of 0.12, which is relatively low, indicating manageable leverage. However, the return on equity is negative at -14.68%, reflecting the negative net income. The equity ratio stands at 48.68%, suggesting a balanced asset structure between equity and liabilities.

Cash Flow

Sonos's cash flow situation shows some resilience with a positive operating cash flow of $70.68 million for the TTM, although free cash flow growth is declining. The operating cash flow to net income ratio is negative due to the negative net income, but the company maintains a positive free cash flow to net income ratio, indicating some efficiency in cash generation relative to net income.

Breakdown
Sep 2024	Sep 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
1.52B	1.66B	1.75B	1.72B	1.33B
	Gross Profit
689.37M	716.49M	796.37M	809.99M	571.96M
	EBIT
-48.05M	-20.55M	69.28M	154.96M	-18.60M
	EBITDA
25.67M	54.10M	107.79M	191.40M	17.83M
	Net Income Common Stockholders
-38.15M	-10.27M	67.38M	158.59M	-20.11M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
221.16M	220.23M	274.86M	640.10M	407.10M
	Total Assets
916.31M	1.00B	1.19B	1.14B	816.05M
	Total Debt
64.14M	56.11M	36.13M	44.68M	86.19M
	Net Debt
-105.59M	-164.12M	-238.73M	-595.42M	-320.91M
	Total Liabilities
487.69M	483.58M	627.88M	569.76M	518.21M
	Stockholders Equity
428.62M	518.66M	560.51M	569.04M	297.84M
Cash Flow		Free Cash Flow
134.66M	50.12M	-74.48M	207.69M	128.95M
	Operating Cash Flow
189.91M	100.41M	-28.26M	253.23M	161.99M
	Investing Cash Flow
-105.24M	-50.29M	-172.63M	-45.53M	-69.32M
	Financing Cash Flow
-137.31M	-108.59M	-150.26M	24.97M	-27.09M

Sonos Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 10.43
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SONO, the sentiment is Neutral. The current price of 10.43 is above the 20-day moving average (MA) of 8.77, above the 50-day MA of 10.31, and below the 200-day MA of 12.43, indicating a neutral trend. The MACD of -0.17 indicates Negative momentum. The RSI at 55.78 is Neutral, neither overbought nor oversold. The STOCH value of 57.21 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SONO.

Sonos Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
COUR	73 Outperform	$1.40B	―	-10.84%	―	7.26%	39.62%
HIMX	70 Neutral	$1.29B	16.47	9.11%	3.75%	-4.43%	57.01%
ROG	64 Neutral	$1.17B	69.28	1.34%	―	-8.06%	-75.10%
NTGR	61 Neutral	$790.97M	33.80	4.78%	―	-6.97%	―
Sector *	60 Neutral	$10.83B	10.47	-6.71%	2.99%	7.73%	-12.97%
CRSR	52 Neutral	$766.13M	―	-15.20%	―	-6.53%	-1059.95%
SONO	50 Neutral	$1.09B	―	-15.80%	―	-5.24%	-67.92%

Sonos Corporate Events

Sonos Appoints Hugo Barra to Board of Directors

On April 7, 2025, Sonos appointed Hugo Barra to its Board of Directors, effective immediately, as a Class III director with a term expiring in 2027. Hugo Barra, a seasoned technologist with extensive experience in consumer tech and AI, is expected to bring valuable insights to Sonos. Concurrently, Mike Volpi, the longest-serving director, resigned from the board after 15 years of service, with no disagreements cited. Volpi’s departure marks the end of a significant era for Sonos, while Barra’s appointment is anticipated to strengthen the company’s strategic direction and innovation capabilities.

Spark’s Take on SONO Stock

According to Spark, TipRanks’ AI Analyst, SONO is a Neutral.

Sonos’s overall stock score is driven by significant financial challenges, including declining revenue and negative profitability, despite a stable balance sheet with low leverage. The technical outlook is bearish, with the stock trading below key moving averages. Valuation remains unattractive with a negative P/E ratio. Recent earnings call highlighted ongoing restructuring efforts, which may provide future benefits but emphasize current operational difficulties.

To see Spark’s full report on SONO stock, click here.

Sonos Announces New $150 Million Stock Repurchase Program

On February 24, 2025, Sonos, Inc. announced a new common stock repurchase program authorized by its Board of Directors, allowing for the repurchase of up to $150 million in common stock. This new program replaces the previous $200 million program, which had $11 million remaining. The repurchase program, which has no expiration date, will be funded through Sonos’ existing cash and cash equivalents or future cash flow, and its execution will depend on various factors such as stock price and market conditions. This move reflects Sonos’ strategic financial management and could impact its stock value and shareholder returns.

Sonos Announces Resignation of Chief Commercial Officer

On February 19, 2025, Sonos, Inc. announced the resignation of its Chief Commercial Officer, Deirdre Findlay, effective March 3, 2025, due to personal reasons without any disagreements with the company. A Transition Agreement was established on February 20, 2025, allowing Ms. Findlay to continue providing consulting services until May 18, 2025, ensuring continuity in marketing strategy and maintaining her stock awards and benefits during this period.