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Sonos (SONO) Beats Q4 Earnings Estimates on Top-Line Growth

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  • SONO
  • AMCX
  • EVC

Sonos, Inc. SONO reported impressive fourth-quarter fiscal 2021 results, wherein both the bottom line and the top line beat the Zacks Consensus Estimate.

This Santa Barbara, CA-based sound experience company remains focused on its three strategic initiatives — the expansion of its brand, boosting its offerings, and driving operational excellence.

Bottom Line

On a GAAP basis, quarterly net loss came in at $8.7 million or a loss of 7 cents per share against a net income of $18.4 million or 15 cents per share in the prior-year quarter. The significant year-over-year deterioration primarily resulted from an operating loss and benefit from income taxes in the reported quarter.

Non-GAAP net income was $11.8 million or 8 cents per share compared with $40.7 million or 33 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 19 cents, delivering a surprise of 172.7%.

In fiscal 2021, GAAP net income was $158.6 million or $1.13 per share against a net loss of $20.1 million or a loss of 18 cents per share in fiscal 2020. Non-GAAP net income came in at $248.3 million or $1.77 per share compared with $79.2 million or 67 cents per share in the prior fiscal.

Sonos, Inc. Price, Consensus and EPS Surprise

Sonos, Inc. Price, Consensus and EPS Surprise
Sonos, Inc. Price, Consensus and EPS Surprise

Sonos, Inc. price-consensus-eps-surprise-chart | Sonos, Inc. Quote

Revenues

Quarterly revenues rose 5.8% year over year to $359.5 million, driven by robust demand for its products despite continued supply constraints stemming from the pandemic. The top line surpassed the consensus estimate of $352 million. In fiscal 2021, revenues improved to $1,716.7 million from $1,326.3 million.

By product category, revenues for Sonos speakers were $273.5 million compared with $254.9 million in the prior-year quarter. Sonos system products revenues were $67.7 million, down 0.2%, and the same from partner products and other revenues totaled $18.3 million compared with $17.1 million a year ago.

Region-wise, revenues from the Americas came in at $196 million compared with $199.5 million a year ago. Revenues from Europe, the Middle East and Africa were $137.9 million, up from $117.1 million and the same from the Asia Pacific grew 10.2% to $25.6 million.

Thanks to its stellar performance, Sonos’ direct-to-consumer revenues grew nearly 47% in fiscal 2021 on the back of higher product registrations, accretive customer base, and increasing year-over-year listening hours.

Other Details

Gross profit was $166.9 million compared with $161.5 million in the prior-year quarter with the respective margins of 46.4% and 47.5%. Total operating expenses were $178.5 million, up from $146.1 million, reflecting higher research and development as well as sales and marketing expenses.

Operating loss was $11.5 million against an operating income of $15.4 million in the year-ago quarter. Adjusted EBITDA totaled $17.1 million compared with $46.4 million a year ago, with respective margins of 4.8% and 13.7%.

Cash Flow & Liquidity

In fiscal 2021, Sonos generated $253.2 million of cash from operations compared with $162 million in fiscal 2020. Free cash flow for the same period increased 61.1% to $207.7 million. As of Oct 2, 2021, the company had $640.1 million in cash and cash equivalents with zero long-term debt compared with the respective tallies of $407.1 million and $18.3 million a year ago.

The company’s board of directors has authorized a new stock repurchase program of up to $150 million. As part of its previous repurchase programs, Sonos completed $100 million in stock repurchases, which reflects 5.2 million shares at an average price of $19.30 per share. This allowed the speaker manufacturer to return capital to shareholders and offset dilution from compensation plans.

Fiscal 2022 Outlook

Sonos has issued financial guidance for fiscal 2022. It expects revenues to grow at 12-16% year over year to be in the band of $1.925 billion to $2 billion. Adjusted EBITDA is estimated to be between $280 million and $325 million with the margin ranging from 14.5-16.2%. Gross margin is projected to be between 46% and 47%.

Based on such an impressive outlook, Sonos remains well-positioned to deliver significant free cash flow with increased shareholder value on the back of a solid product roadmap in the long run. This powerful momentum puts the company ahead of schedule for reaching the fiscal 2024 financial targets.

Zacks Rank & Stocks to Consider

Sonos currently carries a Zacks Rank #3 (Hold).

A better-ranked stock in the industry is GoPro, Inc. GPRO, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

GoPro delivered a trailing four-quarter earnings surprise of 90%, on average. It has gained 67.1% in the past year. The Zacks Consensus Estimate for its current-year earnings has been revised 12% upward over the past 30 days.

AMC Networks Inc. AMCX, carrying a Zacks Rank #2, is another solid pick for investors. The stock has appreciated 57.7% in the past year.

AMC Networks pulled off a trailing four-quarter earnings surprise of 185.9%, on average. The Zacks Consensus Estimate for its current-year earnings has been revised 11.8% upward over the past 30 days.

Entravision Communications Corporation EVC also carries a Zacks Rank #2. Its shares have rallied 200% in the past year.

Entravision Communications delivered a trailing four-quarter earnings surprise of 29%, on average. The Zacks Consensus Estimate for its current-year earnings has been revised 14.6% upward over the past 30 days.


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