Sonos stock tanks 23% after audio equipment maker cuts guidance on 'softening demand'

By Claudia Assis

'Softening demand' leads to 2023 guidance cut

Shares of Sonos Inc. dropped more than 23% in the extended session Wednesday after the maker of audio products beat Wall Street expectations for its fiscal second quarter but cut guidance for the year due to "softening consumer demand."

Sonos (SONO) lost $31 million, or 24 cents a share, in the quarter, swinging from earnings of $8.6 million, or 6 cents a share, in the year-ago quarter. Adjusted for one-time items, Sonos earned 4 cents a share.

Revenue fell 24% to $304.2 million, the company said. FactSet consensus called for a loss of 24 cents a share on sales of $296 million.

"Though our second-quarter results were in-line with our guidance, we are reducing our expectations for the second half of fiscal 2023 due to softening consumer demand and channel-partner inventory tightening," Chief Executive Patrick Spence said in a statement.

Sonos is taking "swift action" to reduce expenses and protect its profitability, Spence said.

"We remain focused on ensuring that Sonos will emerge from the current choppy consumer environment in a position of strength: we are profitable, we are debt-free and we have a huge market opportunity."

Sonos guided for 2023 revenue between $1.625 billion and $1.675 billion, which would be a decline of 7% to 4% from fiscal 2022, compared with a previous outlook range of $1.7 billion to $1.8 billion.

Shares of Sonos ended the regular trading day down 2.9%. In the past 12 months, the stock has gained 1.7%, compared with an advance of about 3.4% for the S&P 500 index . In the year to date, Sonos has gained 25%, compared with 7.8% for the S&P 500.

-Claudia Assis

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05-10-23 2212ET

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