Sonos (SONO) AI Stock Analysis

• Market Cap: $1.29B
• Dividend Yield: N/A
• Average Volume (3M): 1.56M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.59
• Revenue Growth: -5.24%
• EPS Growth: -67.92%
• Country: US
• Employees: 1,708
• Sector: Technology
• Sector Strength: 89
• Industry: Consumer Electronics
• EPS (TTM): -0.58
• Shares Outstanding: 120,087,494
• 10 Day Avg. Volume: 1,520,990
• 30 Day Avg. Volume: 1,560,045
• PEG Ratio: 3.64
• Price to Book (P/B): 4.99
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 14.39
• Enterprise Value/Market Cap: 0.85
• Enterprise Value/Revenue: 0.18
• Enterprise Value/Gross Profit: 1.69
• Enterprise Value/Ebitda: 19.05
• 1Y Price Target: $10.83
• Price Target Upside: -0.55% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 3

• Rating: 60 Neutral
• Price Target: $11.00 ▲(1.01%Upside)

Sonos faces significant financial challenges with declining revenues and profitability, impacting its overall stock score negatively. However, strategic moves highlighted in the earnings call, such as cost management and tariff mitigation, provide a balanced outlook. Recent board changes add strategic value, but technical and valuation metrics remain weak.

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

Consumer Feedback

Sonos has faced consistent negative consumer feedback from existing Sonos product users that have complained about a multitude of functionality issues with the new app.

Guidance Uncertainty

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, soundbars, and home theater systems. The company markets its products directly to consumers via its online platform and through various retail partners, including electronic stores, department stores, and specialty retailers. Sonos also partners with streaming service providers to integrate their platforms into its devices, enhancing the overall user experience and encouraging product adoption. Additionally, the company leverages its brand reputation for high-quality sound and design to maintain premium pricing on its products, contributing significantly to its earnings. Sonos continually invests in research and development to innovate and expand its product offerings, which helps drive sales and supports its revenue growth.

Sonos Financial Statement Overview

Summary

Sonos faces challenges with declining revenue and profitability, reflected in negative net income and EBIT margins. The balance sheet remains stable with moderate leverage, but negative ROE highlights inefficiencies. Strong operating cash flow and positive free cash flow demonstrate resilience in cash management, crucial for navigating current financial pressures.

Income Statement

Sonos has experienced declining revenue over the past few years with TTM revenue of $1.46 billion, down from $1.75 billion in 2022. The gross profit margin has decreased slightly, indicating some pressure on cost efficiency. The company has been operating at a net loss recently, with TTM net income at -$69.29 million, compared to a profit in 2021. EBIT and EBITDA margins are negative, reflecting operational challenges.

Balance Sheet

Sonos maintains a moderate debt-to-equity ratio with TTM total debt at $63.03 million and stockholders' equity of $382.86 million. The equity ratio is relatively stable at 48.34%, suggesting a solid equity base. However, the return on equity is negative due to net losses, indicating ineffective use of equity capital.

Cash Flow

Despite net losses, Sonos generated positive operating cash flow of $122.26 million TTM. Free cash flow has decreased but remains positive at $64.61 million. The free cash flow to net income ratio is favorable, indicating effective cash management despite profitability issues.

Breakdown	TTM	Sep 2024	Sep 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.66B	1.52B	1.66B	1.75B	1.72B	1.33B
Gross Profit	716.49M	689.37M	716.49M	796.37M	809.99M	571.96M
EBITDA	54.10M	25.67M	54.10M	107.79M	191.40M	17.83M
Net Income	-10.27M	-38.15M	-10.27M	67.38M	158.59M	-20.11M
Balance Sheet
Total Assets	925.62M	916.31M	1.00B	1.19B	1.14B	816.05M
Cash, Cash Equivalents and Short-Term Investments	291.56M	221.16M	220.23M	274.86M	640.10M	407.10M
Total Debt	59.27M	64.14M	56.11M	36.13M	44.68M	86.19M
Total Liabilities	431.61M	487.69M	483.58M	627.88M	569.76M	518.21M
Stockholders Equity	494.00M	428.62M	518.66M	560.51M	569.04M	297.84M
Cash Flow
Free Cash Flow	50.12M	134.66M	50.12M	-74.48M	207.69M	128.95M
Operating Cash Flow	100.41M	189.91M	100.41M	-28.26M	253.23M	161.99M
Investing Cash Flow	-50.29M	-105.24M	-50.29M	-172.63M	-45.53M	-69.32M
Financing Cash Flow	-108.59M	-137.31M	-108.59M	-150.26M	24.97M	-27.09M

Sonos Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 10.89
• 50DMA: Positive
• 100DMA: Positive
• 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 Positive. The current price of 10.89 is above the 20-day moving average (MA) of 10.50, above the 50-day MA of 10.26, and below the 200-day MA of 12.09, indicating a neutral trend. The MACD of 0.22 indicates Negative momentum. The RSI at 56.98 is Neutral, neither overbought nor oversold. The STOCH value of 41.44 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SONO.

Sonos Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HIMX	74 Outperform	$1.61B	18.38	9.79%	4.02%	0.61%	80.97%
COUR	69 Neutral	$1.38B	―	-10.84%	―	7.26%	39.62%
CRSR	67 Neutral	$1.01B	―	-15.20%	―	-6.53%	-1059.95%
NTGR	64 Neutral	$870.42M	36.88	4.78%	―	-6.97%	―
Sector *	63 Neutral	$33.87B	5.80	-11.87%	1.82%	5.31%	-18.50%
ROG	63 Neutral	$1.36B	80.84	1.34%	―	-8.06%	-75.10%
SONO	60 Neutral	$1.29B	―	-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.