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Sonos Inc (SONO)
NASDAQ:SONO
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Sonos
(NASDAQ:SONO)
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Rating:56Neutral
Price Target:
$15.00
▲(1.35% Upside)
Action:ReiteratedDate:02/04/26
Overall score reflects a company with improving operational execution (earnings call: margin/EBITDA progress, cost reductions, cash generation) and a resilient balance sheet/FCF profile, but weighed down by weak recent financial performance (sharp TTM revenue decline and net losses) and bearish technical momentum (below key moving averages with negative MACD). Valuation is constrained by losses (negative P/E) and no dividend yield support in the provided data.
Positive Factors
Low leverage / strong balance sheet
Very low leverage (debt-to-equity ~0.15) gives Sonos durable financial flexibility to fund product development, absorb demand shocks, and support buybacks or opportunistic M&A without relying on stressed financing. This balance-sheet strength underpins multi-month strategic execution.
Robust cash generation and free cash flow
Consistent positive operating and free cash flow provides a sustainable funding source for R&D, go-to-market investments, and working-capital seasonality. Strong FCF cushions the company through revenue volatility and enables capital return or reinvestment without eroding liquidity.
Margin expansion from cost discipline
Meaningful margin expansion and $100M+ run-rate savings reflect structural cost-reduction and operating-leverage gains. Higher gross and EBITDA margins improve durability of profitability as revenue stabilizes, strengthening the path to sustained operating cash generation even with modest top-line growth.
Negative Factors
Sharp recent revenue decline and net losses
A steep TTM revenue decline and ongoing net losses weaken long-term earnings power and return on equity. Even with solid cash flow, persistent top-line contraction erodes pricing power, reduces scale benefits, and makes sustained profit recovery contingent on reversing demand trends.
Top-line recovery dependent on back-half product ramps
Management’s growth thesis hinges on successful H2 product launches and channel adoption. That creates execution risk: delays, weak customer uptake, or installer-channel friction would materially constrain lasting revenue recovery and undermine operating-leverage assumptions embedded in guidance.
Recurring supply/cost headwinds (tariffs, memory inflation)
Structural input-cost and tariff pressures reduce gross-margin durability and complicate pricing strategy. Even with mitigation steps, persistent memory inflation and tariff exposure can compress long-term margins, force higher consumer prices, or require ongoing cost action that limits reinvestment capacity.
Sonos (SONO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.79B
Dividend YieldN/A
Average Volume (3M)1.98M
Price to Earnings (P/E)―
Beta (1Y)1.51
Revenue Growth-4.93%
EPS Growth-59.17%
CountryUS
Employees1,708
SectorTechnology
Sector Strength88
IndustryConsumer Electronics
Share Statistics
EPS (TTM)0.75
Shares Outstanding120,872,660
10 Day Avg. Volume1,948,661
30 Day Avg. Volume1,980,481
Financial Highlights & Ratios
PEG Ratio-0.47
Price to Book (P/B)5.20
Price to Sales (P/S)1.28
P/FCF Ratio17.08
Enterprise Value/Market Cap0.86
Enterprise Value/Revenue1.07
Enterprise Value/Gross Profit2.39
Enterprise Value/Ebitda22.08
Forecast
1Y Price Target
$19.50Price Target Upside31.76% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)0.11
Revenue Forecast (FY)$1.47B
Sonos Business Overview & Revenue Model
Company DescriptionSonos, 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 MoneySonos generates revenue through the sale of its audio hardware products, which include smart speakers, soundbars, and accessories. A significant portion of its earnings comes from direct-to-consumer sales via its website and retail partners. Additionally, Sonos offers subscription-based services that enhance its product functionality, though hardware sales remain the primary revenue driver. The company has also formed strategic partnerships with various streaming services, which not only broaden its ecosystem but also promote its devices as preferred options for users of those services. These partnerships help to increase brand visibility and consumer adoption, contributing positively to its overall revenue growth.
Sonos Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down revenue across different regions, revealing where Sonos is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Breaks down revenue across different regions, revealing where Sonos is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Data provided by:
The Fly
The FlySonos Earnings Call Summary
Earnings Call Date:Feb 03, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:May 13, 2026
Earnings Call Sentiment Positive
The earnings call conveyed solid operational and financial progress: meaningful margin expansion, strong adjusted EBITDA growth, cash generation, inventory reduction, and concrete product and go-to-market initiatives (Arrow 100 traction and AMP Multi). However, top-line recovery remains modest (Q1 revenue down 1%), international markets lag, and industry headwinds (tariffs, memory inflation) plus near-term operating seasonality introduce execution risk. Management communicated confidence and a clear multi-dimensional growth strategy, but the company’s return to durable top-line growth is still contingent on successful product ramps and mitigation of supply/cost pressures.Q1-2026 Updates
Positive Updates
Q1 Revenue Above Guidance Midpoint
Q1 revenue of $546 million came in above the midpoint of guidance, with overall revenue down only 1% year-over-year but beating expectations for the quarter.
Gross Profit and Margin Improvement
GAAP gross margin was 46.5% and non-GAAP gross margin was 47.5%, modestly above the high end of guidance. Gross profit dollars grew 5% year-over-year driven by lower costs, FX tailwinds and one-time favorability.
Strong Adjusted EBITDA and Margin Expansion
Adjusted EBITDA grew 45% year-over-year to $132 million. Adjusted EBITDA margin expanded substantially to 24.2% (an increase of ~760 basis points year-over-year), and the company generated as much adjusted EBITDA in Q1 as in all of fiscal 2025.
Earnings Per Share and Cash Generation
Non-GAAP EPS grew 37% to $0.93 (from $0.68). Free cash flow was $157 million (up from $143 million year-over-year). Net cash ended the quarter at $363 million (including $51 million of marketable securities).
Cost Savings and Operating Discipline
Management attributes more than $100 million in run-rate savings to prior structural changes. GAAP operating expenses decreased 21% year-over-year to $153 million and non-GAAP operating expenses decreased 19% year-over-year to $137 million in Q1; implied FY-2026 non-GAAP operating expense reduction of ~9% at the midpoint.
Product & Go-To-Market Progress (Arrow 100 & AMP Multi)
Price reduction on Arrow 100 drove accelerated new-customer growth for the third consecutive quarter, with new household starts for Arrow 100 up more than 40% year-over-year. Company announced AMP Multi for installer channel to expand whole-home/system adoption (not included in Q2 guide).
Installed Base Scale and Share Gains
Installed base exceeds 53 million connected devices across more than 17 million homes. Company reported dollar share gains in premium home theater in both the U.S. and EMEA.
Capital Return and Balance Sheet Actions
Returned $25 million to shareholders via share repurchases in Q1 at an average price of $16.79 (reducing share count ~1.2%); $105 million remains on repurchase authorization.
Inventory and CapEx Improvements
Period-end inventory was $125 million, down $16 million (11%) year-over-year and down 27% sequentially. Q1 CapEx was $6 million (down from $13 million prior year).
Positive Near-Term Guidance and Trajectory
Q2 revenue guidance of $250–$280 million (midpoint +2% year-over-year); first half revenue guidance of $796–$826 million (flat at midpoint) with first-half adjusted EBITDA expected at $128 million (up 42% year-over-year), indicating improvement in year-over-year trends and a line of sight to second-half acceleration.
Negative Updates
Overall Revenue Still Slightly Down
Despite beating guidance midpoint, total Q1 revenue declined 1% year-over-year, indicating top-line recovery is still nascent and dependent on future product ramps.
Geographic Weakness in EMEA and APAC
EMEA revenue declined 4% year-over-year and APAC declined 5% year-over-year, while Americas grew 1%—highlighting uneven performance across regions and reliance on U.S. strength.
Tariffs and Margin Headwinds
Tariff expense represented approximately a 300 basis point headwind to gross margin; management mitigated most of the impact via pricing and other actions, but tariffs remain a recurring risk embedded in guidance.
Memory Cost Inflation and Supply Risk
Rising memory costs are a sector-wide headwind and are embedded in Q2 guidance; management reported securing additional suppliers and mitigation actions but acknowledged memory inflation as a non-negligible headwind and potential gating risk for second-half product ramps.
Product Mix Pressure from Lower-Price Units
Stronger sales of lower-priced gateway units (Arrow 100) created a product mix headwind to margins despite driving new-customer acquisition; holiday comparisons also weighed due to last year’s Arc Ultra channel fill.
Seasonal Operating Expense Variability and Q2 Uncertainty
Q1 operating expenses were unusually low due to timing of launches; management expects a modest sequential increase in operating expenses in Q2 as product-related spend resumes. Q2 adjusted EBITDA guidance ranges from negative $18 million to positive $10 million, reflecting near-term variability and execution risk.
Top-Line Recovery Dependent on Back-Half Launches
Management’s pathway to durable growth relies heavily on new product launches (AMP Multi and additional products slated for H2). Revenue guidance excludes AMP Multi availability for Q2, so upside depends on successful H2 execution and market reception.
Company Guidance
Sonos guided Q2 revenue of $250–$280 million (down 4% to up 8% YoY, up 2% at the midpoint), noting Q2 does not include AMP Multi, and expects combined Q1+Q2 revenue of $796–$826 million (flat YoY at the midpoint). For Q2 it expects GAAP gross margin of 44%–46% with non‑GAAP gross margin roughly 220 bps higher (the midpoint implies a ~130 bps YoY GAAP margin improvement and gross‑profit‑dollar growth), Q2 GAAP operating expenses of $150–$160 million (down ~11% at the midpoint) with non‑GAAP OpEx about $16 million lower, and Q2 adjusted EBITDA of negative $18 million to positive $10 million — implying first‑half adjusted EBITDA of $128 million (up 42% YoY and ~470 bps of margin expansion at the midpoint); on a first‑half basis the midpoint guidance implies roughly $308 million GAAP OpEx (down ~16% YoY) and ~$276 million non‑GAAP OpEx (down ~9% YoY).Sonos Financial Statement Overview
Summary
Mixed fundamentals: income statement is weak with sharp TTM revenue decline (-36%) and net losses, but the balance sheet is a strength (low leverage, debt-to-equity ~0.15) and cash flow is solid with strong TTM operating cash flow (~$144M) and free cash flow (~$122M). Key risk is cash flow durability given losses and potential working-capital timing effects.Income Statement
TTM (Trailing-Twelve-Months) results show a sharp revenue decline (-36%) and continued net losses (net margin about -4%), signaling pressure on demand and/or pricing. Gross margin remains solid and relatively stable in the mid-40% range, but profitability has deteriorated versus prior years (strongly profitable in 2021–2022). EBITDA is positive but thin, indicating the cost structure is not yet aligned with the lower revenue base.32
Negative
Balance Sheet
The balance sheet is a relative strength: leverage is low with debt-to-equity around 0.15 and modest absolute debt, providing flexibility in a downturn. However, negative returns on equity in the last several periods reflect ongoing losses and reduce the quality of equity over time if not reversed.74
Positive
Cash Flow
Cash generation is currently strong: TTM (Trailing-Twelve-Months) operating cash flow (~$144M) and free cash flow (~$122M) are meaningfully positive, with free cash flow growth also positive versus the prior period. The key concern is the disconnect between cash flow and earnings (net losses alongside positive cash flow), which can be volatile depending on working-capital swings and is less durable than profit-driven cash generation.70
Positive
| Breakdown | TTM | Sep 2025 | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.44B | 1.44B | 1.52B | 1.66B | 1.75B | 1.72B |
| Gross Profit | 642.58M | 630.53M | 689.37M | 716.49M | 796.37M | 809.99M |
| EBITDA | 69.56M | 12.29M | 25.67M | 54.10M | 107.79M | 191.40M |
| Net Income | -17.58M | -61.14M | -38.15M | -10.27M | 67.38M | 158.59M |
Balance Sheet | ||||||
| Total Assets | 947.88M | 823.28M | 916.31M | 1.00B | 1.19B | 1.14B |
| Cash, Cash Equivalents and Short-Term Investments | 363.49M | 227.53M | 221.16M | 220.23M | 274.86M | 640.10M |
| Total Debt | 59.22M | 59.62M | 64.14M | 56.11M | 36.13M | 44.68M |
| Total Liabilities | 504.55M | 468.05M | 487.69M | 483.58M | 627.88M | 569.76M |
| Stockholders Equity | 443.33M | 355.23M | 428.62M | 518.66M | 560.51M | 569.04M |
Cash Flow | ||||||
| Free Cash Flow | 122.47M | 108.19M | 134.66M | 50.12M | -74.48M | 207.69M |
| Operating Cash Flow | 144.00M | 136.87M | 189.91M | 100.41M | -28.26M | 253.23M |
| Investing Cash Flow | -24.25M | -29.52M | -105.24M | -50.29M | -172.63M | -45.53M |
| Financing Cash Flow | -91.97M | -102.34M | -137.31M | -108.59M | -150.26M | 24.97M |
Sonos Technical Analysis
Negative
14.80
Price Trends
16.52
Negative
16.88
Negative
14.41
Positive
Market Momentum
-0.28
Positive
37.82
Neutral
11.80
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SONO, the sentiment is Negative. The current price of 14.8 is below the 20-day moving average (MA) of 15.58, below the 50-day MA of 16.52, and above the 200-day MA of 14.41, indicating a neutral trend. The MACD of -0.28 indicates Positive momentum. The RSI at 37.82 is Neutral, neither overbought nor oversold. The STOCH value of 11.80 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SONO.
Sonos Risk Analysis
Sonos disclosed 40 risk factors in its most recent earnings report. Sonos reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Sonos Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
64 Neutral | $228.26M | 13.70 | 17.19% | ― | 6.43% | 196.68% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
56 Neutral | $1.79B | -84.81 | -3.85% | ― | -4.93% | -59.17% | |
50 Neutral | $40.33M | -45.91 | -0.69% | ― | 11.58% | 81.08% | |
48 Neutral | $52.66M | -2.36 | -14.35% | ― | 2.35% | 18.83% | |
48 Neutral | $347.42M | -5.88 | -24.39% | ― | 13.27% | -66.48% | |
47 Neutral | $128.35M | -1.02 | -91.95% | ― | -27.37% | 70.46% |
* Technology Sector Average
SONO
Sonos
14.80
1.24
9.14%
GPRO
GoPro
0.79
0.01
1.28%
KOSS
Koss
4.26
-1.54
-26.55%
TBCH
Turtle Beach
11.82
-5.35
-31.16%
UEIC
Universal Electronics
3.94
-4.09
-50.93%
ZEPP
Zepp Health
24.18
21.43
779.27%
Sonos Corporate Events
Business Operations and StrategyExecutive/Board Changes
Sonos Strengthens Board to Support Platform-Driven Strategy
Positive
Jan 12, 2026
On January 12, 2026, Sonos expanded its board of directors from eight to ten members and appointed Carmine Arabia, Mandy Fields and Joe Kennedy as independent directors, with staggered terms ending at the 2026, 2027 and 2028 annual meetings of stockholders respectively, and standard non-employee director compensation and indemnification agreements. The new appointments bring deep experience in global hardware operations, consumer brand-focused financial leadership, and scaling category-defining consumer technology platforms, bolstering governance as Sonos sharpens a platform-driven strategy centered on the Sonos System, aims to deepen engagement across more than 17 million households and 53 million connected devices, and executes its growth priorities in fiscal 2026 and beyond.
The most recent analyst rating on (SONO) stock is a Buy with a $21.00 price target. To see the full list of analyst forecasts on Sonos stock, see the SONO Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.