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Sonos Inc (NASDAQ:SONO) Enjoys a Pop on the Beat and Raise

Sonos Inc (NASDAQ:SONO) shares launched higher after beating on the top and bottom line and guiding above consensus across the board. Sonos reported a small fourth quarter net loss with EBITDA up 350% to $20 mln and revenue up 27.5% to $249 mln.

The driver for the results was clearly the Sonos Beam system – a $400 soundbar for enhancing the home entertainment system experience. In Q3, according to NPD, the Beam was the most popular soundbar in terms of dollar sales market share. This is particularly remarkable given that it wasn’t launched until July. In other words, it hit the market with a bang.

Sonos Inc (NASDAQ:SONO) said the Beam is also doing well in the UK and Germany.

Impressively, this year will go down as the 13th year in a row that the company has posted positive revenue growth. And that curve is starting to accelerate again, with this year being the sharpest growth the company has seen in 4 years, with product sales up 29% to 5 mln.

Sonos added 1.5 mln new homes, 21% more than last year. 94% of the 21 mln Sonos products registered since 2005 are still in use today. That’s a very strong signal about likelihood of return customers.

Management stresses focus on annual results, as product launches and seasonality can lead to lumpy and inconsistent quarters. After an uninspiring first quarterly report in September, where revenue fell due to product mix and timing, guidance for fiscal 2019 was key.

Sonos guided for EBITDA +20-27% to $83-88 mln and revenue up 10-12% to $1.25-1.275 bln, both handily beating expectations.


Bird’s Eye View

Sonos Inc (NASDAQ:SONO) trumpets itself as a company that, through its subsidiaries, designs, develops, manufactures, and sells multi-room audio products primarily for use in private residences in the United States and internationally.

It offers wireless speakers, home theater speakers, and components. The company offers its products through third-party retail stores and e-commerce retailers, as well as through its Website.

The company was formerly known as Rincon Audio, Inc. and changed its name to Sonos, Inc. in May 2004. Sonos, Inc. was founded in 2002 and is headquartered in Santa Barbara, California.

According to company materials, “Sonos is one of the world’s leading sound experience brands. As the inventor of multi-room wireless home audio, Sonos innovation helps the world listen better by giving people access to the content they love and allowing them to control it however they choose. Known for delivering an unparalleled sound experience, thoughtful home design aesthetic, simplicity of use and an open platform, Sonos makes the breadth of sonic content available to anyone.”

Aside from the Beam, growth drivers for next year include a Sonos Amp, launching in Japan, a partnership with Ikea and adding Goggle Assistant alongside Alexa for voice control. The company also indicated that it will launch an outside the home product next year.

Sonos has a valuation just over $1.5 bln and trades at ~1.2x sales. The sales multiple is higher than that of Fitbit (FIT) and GoPro (GPRO) but lower than consumer electronics companies that have posted more consistent growth like Logitech (LOGI) and Garmin (GRMN).

The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 8% in that timeframe.

Sonos Inc (NASDAQ:SONO) is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($124.6M against $201M, respectively).

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