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Sonos beat analysts’ revenue estimates in the fiscal first quarter.
Courtesy of Sonos
A supply chain crunch slowed growth at smart speaker maker Sonos, but the company managed to beat analysts’ revenue expectations anyway. The stock rose 9% after-hours on the news.
Sonos (SONO) reported revenue of $664 million and a profit of 87 cents a share in the fiscal first quarter, better than analysts’ expectations for $642 million and in line with their earnings expectations.
Demand for Sonos’ products remained strong during the pandemic as people stayed home and upgraded their sound systems. But in recent months, the company’s growth has been constrained on the supply side, making it harder to fulfill orders. Its first quarter sales were up 3%, versus 15% a year ago.
Normally, the company introduces a major promotional offer during the quarter, which includes the holiday season, but it didn’t do that this year because executives were worried about getting products to customers. “We didn’t really have the supply to run a promo,” said CFO Brittany Bagley in an interview. “We can’t even fill the demand that we have at full price so it didn’t make sense to run a promo.”
Somewhat ironically, those difficulties helped the company on one closely watched metric—gross margins—because it was able to sell a higher percentage of items at full price.
The global chip shortage has been difficult for Sonos, and forced the company to try some workarounds during the quarter—even reconfiguring the boards in some of its products to get around component shortages while still keeping quality high.
Port congestion, container shortages and other supply-chain issues hurt too.
“I’ve been in this smart hardware world for 25 years, and I’ve never seen it as challenging as it was,” said CEO Patrick Spence.
Spence and Bagley said that the supply problems are likely to persist, though they should ease over the course of the year.
The company also boosted its longer-term guidance, saying that revenue in 2024 should be $2.5 billion, up from prior estimates of $2.25 billion.
Write to Avi Salzman at [email protected]
