U.S. Markets closed
  • S&P Futures

    -93.25 (-2.08%)
  • Dow Futures

    -261.00 (-0.76%)
  • Nasdaq Futures

    -193.00 (-1.33%)
  • Russell 2000 Futures

    -23.30 (-1.15%)
  • Crude Oil

    0 (0)
  • Gold

    -0.60 (-0.03%)
  • Silver

    -0.37 (-1.50%)

    +0.0031 (+0.2724%)
  • 10-Yr Bond

    -0.0120 (-0.69%)
  • Vix

    +3.26 (+12.74%)

    -0.0045 (-0.3321%)

    -0.4500 (-0.3944%)

    +1,028.17 (+2.91%)
  • CMC Crypto 200

    +13.18 (+1.63%)
  • FTSE 100

    -90.88 (-1.20%)
  • Nikkei 225

    -250.64 (-0.90%)
  • Oops!
    Something went wrong.
    Please try again later.

Sonos CEO: 'We want to be the world's leading sound experience company'

In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • SONO

Sonos CEO Patrick Spence joins Yahoo Finance Live to break down the audio manufacturer's products and its anticipation of supply chain dysfunction, as shares dip despite a strong quarter.

Video Transcript


AKIKO FUJITA: We are seeing shares of audio equipment maker Sonos moving to the downside. In the session right now down about half a percent, even after the company posted record one point $1.7 billion in revenue in the fiscal year. Revenue grew by 29% year-on-year despite some headwinds the company faced in Q4. Revenue in the quarter increased 6% with supply chain constraints leading to a shortage of supplies and some logistical challenges. Let's bring in Patrick Spence, who is the CEO of Sonos. We've also got Yahoo Finance's Brian Sozzi joining in on the conversation. Patrick, it's always good to have you on. You offered a pretty upbeat outlook here given all of the challenges you're facing. And I wonder if that sort of signals that you're starting to see kind of the light at the end of the tunnel when it comes to the supply chain backlog that you, as well as so many companies, have been facing.

PATRICK SPENCE: That's exactly it, Akiko. It's really, you know, as we look out over the longer term, we see strong consumer demand. You know, we saw an incredible year in terms of both sides of our flywheel where in this past year we added over 1.6 million new homes. But we also saw existing customers coming back in force to actually add additional products. And that was 46% of our sales, a record on that front. And we now have the average home with three products, right? So that's moved up as well.

So we're seeing a lot of strong consumer behavior. Obviously we're dealing with those industry wide supply challenges that everybody's kind of been navigating. But I'm so proud of the way the team has really dealt with them over the last year. They'll get particularly acute, you know, in the quarter we're in right now. And then we'll work through them as 2022 progresses. So we definitely see that light at the end of the tunnel. And, obviously, we see strong growth opportunities for the long term.

BRIAN SOZZI: Patrick, I've been watching these Rivian videos just crawl across my screen for the past week and a half. And I didn't realize, but in the back seat of these trucks, you could pop out a speaker and go do a campfire. I mean, why isn't Sonos in Rivian trucks? Have you talked to these guys yet?

PATRICK SPENCE: You know, we-- Brian, we made our first step into auto this year in our partnership with Audi. So we're in the e-tron, the Q4. And you'll see us in a few more of their automobiles as well. We think that's a huge market for the long term. And you can bet we're going to be continuing to think about where else we should show up, right, fundamentally.

But I also don't want to I don't want to underestimate the focus and energy that needs to go into really tapping into our core market, right? Because we're still in less than 10% of the total addressable homes we think we can reach, just in the country as we operate today. So that's a massive opportunity. But, of course, we also see a lot of opportunity in new categories we're not in today. And auto is one that we've taken our kind of first step in.

BRIAN SOZZI: OK, fair enough. Do you see yourself showing up at some point in the metaverse? And how would a Sonos play in that? I mean, does that make the case for Sonos having more subscription and software-type products?

PATRICK SPENCE: You know, we want to be the world's leading sound experience company. And so as the world evolves, so will we. So we'll watch and see how all of that, all that develops over time. I'm sure given how innovative our team is, we will find our space in there as it develops. But I also want to keep the company very focused on bringing the joy, right, of Sonos to all of those homes in real life, IRL, these days. Because that's a huge opportunity too.

And I think even as we progress to the metaverse, you know, I have an Oculus. I try all of the new products in this area. I think there still will be time that we want to come together in real life. And we've been doing it since the days of the campfire and we want to enjoy some things together. So we'll be there for however the future evolves here. And we expect to be the sound experience leader, whether that's in real life or in in the metaverse.

JARED BLIKRE: You know, Patrick, we've been talking about the work from home trends and that tailwind. What about the return to work? You were talking about new categories. I'm just wondering if you would do any business-to-business sales, really outfit commercial businesses and offices with your product?

PATRICK SPENCE: Yeah, that's a great one. We've actually dipped our toe in the water there too. We just recently this year announced Sonos Business. We've got that in beta where we're bringing the simplicity and joy of Sonos into actual businesses. And so we think there is a long-term opportunity there for us to play as well.

It's a very complicated market for often like lots of small companies, lots of offices. We know we're already there today. Consumers are bringing us into those locations. And so we have some work to do to make it an even more compelling offer and create a great experience for all the people in business. But we do see that as a great opportunity long term.

BRIAN SOZZI: If I order my 10th Sonos speaker for the holiday season-- for myself, Patrick, it's all about me this holiday season, just got to be honest-- would I get it in time for Christmas?

PATRICK SPENCE: It depends what country you're in, what product you're ordering. You know, and so there are some. And then there are others that are a little more challenged. You may have seen that a quarter of our business now is through direct to consumer. So somebody checking sonos.com can see when they'll receive that product. And so we're working hard. We mentioned that we're doing air shipments. We're doing everything we can to get all of the products to customers that want them for the holiday season. But we're also confident-- because we've watched the trends over the last year-- that customers are willing to wait for their Sonos. We appreciate that.

We think it's because this is a very considered purchase and also we have so many existing homes adding to their systems. So the answer is a little bit nuanced Brian. But the good news is, people can check that out and they can see. And so they're not going to be surprised. They'll know based on when they're placing an order as well.

AKIKO FUJITA: I imagine a lot of people are going to have Sonos on their Christmas list. Patrick, you mentioned the partnership that you've had in place now with Audi, potential other partnerships with car companies. But I've been interested in seeing how your partnership with IKEA has evolved, specifically looking at the form the speaker takes, you know, not necessarily what we see is just a speaker, but you've had sort of the lamp, the frame. Is that something that you want to build on, not just with IKEA but other partnerships with product makers? I mean, how big of a driver do you think that can be for Sonos moving forward?

PATRICK SPENCE: Yeah, this has been a great way for us to explore, like you said, new form factors, new price points, and as well get us into new countries, right? Because, you know, there's a lot of countries we're not in today. And really, it goes towards innovation and trying to think about when we bring software and sound together what we can create, right, and how we can make speakers disappear in some cases.

And so the picture frame with IKEA is a great example of that partnership kind of coming to life and doing something a little bit different. Because, really, sound doesn't need to be constrained to what we've typically thought of as speakers.

And so that's something we're always working on and thinking about and looking at potential partners, but as well in our own roadmap, right? And that's such a key important part of our story is every year, you know, we're committed to at least two new products coming out. We've done that throughout, you know, the last five years. And we expect to do that in the future. And we'll do that with some partners.

And we'll do that as well on our own. So we think it's a combination. And I think it's important to be, you know, open to those ideas and those partnerships. Because that's the way you continue to stay on the front edge. And you figure out your space in places like the metaverse.

JARED BLIKRE: Beyond speakers, the future of sound, really compelling stuff there. Always great to talk to you, Patrick Spence, Sonos CEO.