Sonos, Inc SONO reported a non-GAAP earnings of 79 cents per share for first-quarter fiscal 2023 compared with $1.03 in the prior-year quarter. On a GAAP basis, the company reported earnings of 57 cents per share compared with 87 cents reported in the prior-year quarter. The Zacks Consensus Estimate was pegged at 33 cents per share.
Quarterly revenues increased 1.2% (up 7% on a constant-currency basis or cc) year over year to $672.6 million, due to increased volume from higher promotional activity and improved product supply. The top line beat the Zacks Consensus Estimate by 11.7%. However, unfavorable foreign exchange movements affected sales by $39 million.
Following the announcement, shares are up 15% in pre-market trading on Feb 9. In the past year, shares of Sonos have declined 32.9% compared with the sub industry’s fall of 17.2%.
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Revenues from Sonos speakers were $539.1 million, up 7.4% from the prior-year quarter’s levels.
Sonos system products’ revenues were $114.4 million, down 15.1%. Revenues from Partner products and other totaled $18.9 million, down 32% year over year.
Region-wise, revenues from the Americas came in at $396.6 million, up 6.1% year over year. Revenues from Europe, the Middle East and Africa were $240.4 million, down 2%. Revenues from the Asia Pacific were down 21.3% to $35.6 million.
Gross profit was $285.1 million, down 10.2% from the prior-year quarter’s levels. Gross margin contracted 540 bps year over year to 42.4%, mainly due to increasing component costs and resumption of normal holiday promotion and forex volatility.
Total operating expenses were $198.7 million, up from $184.8 million, reflecting higher research and development, and general and administrative expenses.
Operating income was $86.3 million compared with $132.6 million in the year-ago quarter. Adjusted EBITDA totaled $123.9 million compared with $163.1 million in the prior-year quarter. Higher operating investments resulted in the downside.
Cash Flow & Liquidity
For the fiscal first quarter, Sonos generated $182.3 million of cash from operations. Free cash flow was $167.6 million.
As of Dec 31, 2022, the company had $431.5 million in cash and cash equivalents compared with $274.9 million as of Oct 1, 2022. The company has no debt.
Sonos, Inc. Price, Consensus and EPS Surprise
Sonos, Inc. price-consensus-eps-surprise-chart | Sonos, Inc. Quote
Guidance for Fiscal 2023
Sonos expects revenues to be down 3% to up 3% year over year and in the range of $1.7-$1.8 billion. On a constant-currency basis, revenues are expected to increase 1-7%. The gross margin is now projected to be between 45% and 46%.
Adjusted EBITDA is estimated to be between $145 million and $180 million, with the margin ranging from 8.5-10%.
Zacks Rank & Other Stocks to Consider
Sonos currently carries a Zacks Rank #2 (Buy).
Investors interested in the broader technology space may also consider stocks like Arista Networks ANET, Jabil JBL and Super Micro Computer SMCI. While Jabil sports a Zacks Rank #1 (Strong Buy), Arista Networks and Super Micro Computer carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Arista Networks’ 2022 earnings is pegged at $4.38 per share, up 1 cent in the past 60 days. The long-term earnings growth rate is anticipated to be 17.5%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 12.7%. Shares of ANET have gained 5.5% in the past year.
The Zacks Consensus Estimate for Jabil’s 2023 earnings is pegged at $8.37 per share, rising 2.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.
Jabil’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 8.8%. Shares of JBL have increased 30.7% in the past year.
The Zacks Consensus Estimate for Super Micro Computer’s fiscal 2023 earnings is pegged at $10.68 per share, up 11.5% in the past 60 days.
Super Micro Computer’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 7.8%. Shares of SMCI have gained 120.5% in the past year
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