Unlike in past pandemic-impacted holiday quarters, Sonos Inc. had enough product in stock that it was able to run promotions, and that helped propel the company to revenue growth.
said Wednesday it posted $672.6 million in revenue for the fiscal first quarter, up from $664.5 million a year prior and ahead of the $594.3 million that analysts tracked by FactSet had been anticipating.
“We hadn’t been in stock in three years and hadn’t been able to promote,” Chief Financial Officer Eddie Lazarus told MarketWatch. “The consumer was hungry for our products. We gained a lot of share, especially in home theater, over the holiday period.”
Sonos logged net income of $75.2 million, or 57 cents a share, compared with $123.5 million, or 87 cents a share, in the year-earlier quarter. The FactSet consensus was for 38 cents a share in GAAP earnings.
Gross margins fell to 42.4% from 47.8% a year before, though Lazarus said that Sonos was also able to “stay on track in terms of gross margins and the things we need to do to see our year through” even while running promotions.
The company also posted adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda) of $123.9 million, down from $163.1 million a year before, while analysts were projecting $84 million.
“While we’re very pleased with how we did” in the first quarter, there’s “no spiking the football,” Lazarus said.
Despite beats across the board, Sonos maintained its fiscal 2023 outlook, which calls for revenue of $1.7 billion to $1.8 billion, along with adjusted Ebitda of $145 million to $180 million.
“What we look to is the balance of the first half versus the second half, and we’re right on plan,” Lazarus said. “We’re sticking to our guidance because it’s so early in the year and there’s so much uncertainty.”
He added that executives at Sonos “don’t know which way consumers are going to go in the U.S. and Europe.”
Lazarus said that Sonos is “prudently investing in the business so we can come out of this time of economic uncertainty on the right foot,” and the company intends to “modestly” grow its headcount and research and development investment this year.
At the same time, Lazarus said Sonos is prepared to “trim back on things” if conditions “fall off track.”