SONO

What does Sonos do?

Whether you see it as a buy or a sell, here's a company that sounds pretty good.

Sonos, Inc. is a designer, developer and manufacturer of audio products across the Americas, Europe, Africa, the Middle East, and the Asia Pacific. The company was the first to debut a multi-room audio product in 2005 and has been a leading innovator in wireless home audio ever since.

Sonos’ audio innovations help “the world listen better by giving people access to the content they love and allowing them to control it however they choose.”

As of 2nd October 2021, Sonos had close to 37.1 million products registered in approximately 12.6 million households globally. This includes the addition of almost 1.7 million new households during FY2021.

How does Sonos make money?

Although Sonos reports all of its revenue in one segment, most of it comes via three main income streams: speaker products, system products and partner products.

Speaker products

Some of the company’s recent speaker products include Roam, a portable waterproof smart speaker, Arc, a premium soundbar, Five, a high fidelity speaker for streaming music, and Sub (Gen 3), a wireless subwoofer.

System products

Sonos’ system products include Port, a versatile streaming component for stereos or receivers, Amp, an amplifier for listening across multiple rooms, and Boost, a device that strengthens connections between other Sonos products.

Partner products

Sonos has also worked with other companies such as Ikea and Sonance to earn partner revenue via licences. Sonos’ hardware and software is embedded inside Ikea Symfonisk products. Collaborations with Sonance have resulted in "architectural" speakers; speakers designed for installation in walls or ceilings.

Is Sonos a profitable company?

Yes, Sonos became a profitable company in FY2021. During the year, the company’s net income leapt from negative $US20.08m up to positive $US158.59m. A huge jump of over 888% from the previous year's earnings.

For the first quarter of FY2022, Sonos’ net income reached US$123.48m, around US$35m shy of FY2021’s total earnings.

Sonos currently has zero debt and a free cash flow of US$173.6m.

Should I buy SONO stock?

Sonos’ revenue growth has been strong since going public in 2018. The company’s average annual revenue growth rate has also surpassed 12.5% since 2015. With Sonos becoming profitable in FY2021, some investors are now bullish and getting ready for a strong jump in the stock.

However, other investors do not feel as positive. For much of FY2021, SONO stock was dismissed by many as a “pandemic stock,” only successful because people were trapped at home and looking for entertainment. In turn, the SONO stock price took a beating, dropping from over US$44 in April 2021 down to a low of US$21.46 in January 2022.

Bearish investors are citing supply-chain problems, microchip shortages, inflationary fears and geopolitical tensions as reasons to not enter the stock. 

Who owns SONO stock?

As of April 2022, Sonos’ top five shareholders are BlackRock (9.88%), Vanguard Group (9.15%), Morgan Stanley Investment Banking and Brokerage Investments (3.23%), Thrivent Investment Management (3.1%), and J.P. Morgan Asset Management (2.62%).

Sonos’ CEO, President and Director Patrick Spence holds approximately 0.05% of the company.

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