SONO

A month has gone by since the last earnings report for Sonos (SONO). Shares have added about 4.6% in that time frame, outperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Sonos due for a pullback? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for Sonos, Inc. before we dive into how investors and analysts have reacted as of late. Sonos Q3 Earnings Beat Sonos reported third-quarter fiscal 2026 non-GAAP earnings of 27 cents per share, which soared 52% year over year and topped the Zacks Consensus Estimate of 24 cents. The 12.5% surprise reflected higher sales and disciplined spending despite rising memory costs. Revenues increased 9% to $375 million, beating the $367 million consensus by 2.3%. Speaker demand and international expansion supported growth. Sonos’ installed base exceeded 53 million connected devices across more than 17 million homes. Segment Details Revenues from Sonos speakers rose 12.5% year over year to $285.3 million and remained the company’s largest product category. The quarter included the first full period of availability for Sonos Play and Era 100 SL, both of which contributed meaningfully to revenue growth. Sonos system products generated $69.3 million, down 5.4%. Partner products and other revenues increased 15.4% to $20.7 million. Amp Multi is scheduled to ship on Aug. 25, extending the company’s offering for professional installers and larger multi-zone projects. Overseas Markets Outpace the Americas Americas revenues advanced 3.8% to $238.4 million. Europe, the Middle East and Africa revenues climbed 17.4% to $114.2 million, while Asia-Pacific sales increased 27.2% to $22.7 million. Foreign exchange added about one percentage point to reported growth. On a constant-currency basis, total revenues rose 7%, accelerating three percentage points from the second quarter. Margin Gains Offset Memory Inflation Non-GAAP gross profit increased 10.8% to $170.8 million. Non-GAAP gross margin expanded 80 basis points (bps) to 45.5%, even as higher memory costs created a $14 million year-over-year burden and reduced the margin by roughly 380 bps. GAAP gross margin was 50.4%, including a $23.2 million benefit from refunds of previously paid tariffs. Excluding that non-recurring benefit, GAAP gross margin was 44.3%, up 90 bps year over year. GAAP operating expenses increased 3.4% to $157.8 million, mainly due to employee compensation, litigation spending and restructuring charges. Non-GAAP operating expenses rose 2.7% to $134.6 million and remained below the levels recorded in the first two quarters of fiscal 2026. Adjusted EBITDA grew 23.5% to $44 million, with the margin improving to 11.7% from 10.3%. Non-GAAP operating income reached $36.2 million, up 57.3%, as gross-profit growth outpaced the increase in adjusted expenses. Cash provided by operating activities increased 23.5% to $46.2 million. Free cash flow rose 23.3% to $40.3 million, while cash and marketable securities totaled $261 million at quarter-end. Sonos repurchased 2 million shares for $30 million, leaving $35 million under its authorization. Inventories were $158 million, up 37% year over year due to higher memory costs, new product launches and capitalized tariffs. Q4 Guidance For the fourth quarter of fiscal 2026, SONO expects revenues of $325 million to $355 million, representing 13% to 23% growth. The 14-week quarter includes an extra week expected to add about $24 million in sales and eight percentage points to growth. Excluding that benefit, growth is projected at 4% to 15%. GAAP gross margin is forecast between 39% and 41%, with non-GAAP gross margin about 120 bps higher. Management expects memory inflation to reduce gross profit by $35 million year over year. Adjusted EBITDA is projected between a loss of $11 million and a profit of $18 million. For fiscal 2026, Sonos expects revenue growth of 6% to 8%, or 4% to 6% excluding the extra week. Adjusted EBITDA is projected at $181 million, up 37%, with an 11.7% margin. Management expects memory-mitigation actions to phase in through fiscal 2027. It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 23.81% due to these changes. Currently, Sonos has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock has a score of B on the value side, putting it in the top 40% for this investment strategy. Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Sonos has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sonos, Inc. (SONO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Wednesday, July 29, 2026 at 4:30 p.m. ET Chief Executive Officer - Tom Conrad Executive Vice President and Chief Financial Officer - Saori Casey Chief Legal Officer - Eddie Lazarus Investor Relations - James Baglanis Operator: Hello, and thank you for standing by. My name is Lacey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sonos Third Quarter Fiscal 2026 Conference Call. [Operator Instructions] I would now like to turn the call over to James Baglanis. You may go ahead. James Baglanis: Good afternoon, and welcome to Sonos Third Quarter Fiscal 2026 Earnings Conference Call. I'm James Baglanis and with me today are Sonos CEO, Tom Conrad; CFO, Saori Casey; and Chief Legal Officer, Eddie Lazarus. Before I hand it over to Tom, I would like to remind everyone that today's discussion will include forward-looking statements regarding future events and our future financial performance. These statements reflect our views as of today only and should not be considered as representing our views of any subsequent date. These statements are also subject to material risks and uncertainties that could cause actual results to differ materially from the expectations reflected in the forward-looking statements. A discussion of these risk factors is fully detailed under the caption Risk Factors in our filings with the SEC. During this call, we will also refer to certain non-GAAP financial measures. For information regarding our non-GAAP financials and a reconciliation of GAAP to non-GAAP measures, please refer to today's press release regarding our third quarter fiscal 2026 results posted to the Investor Relations portion of our website, investors.sonos.com. After the call concludes, we will upload our revised supplemental earnings presentation, including our guidance as well as the conference call transcript to the Investor Relations website. I will now turn the call over to Tom. Thomas Conrad: Hi, everyone. I'm very pleased to report that Sonos had another strong quarter. We continued our positive growth trajectory with revenue coming in at $375 million, up 9% year-over-year and near the high end of our guidance range. We saw strong growth across all of our regions, and our efforts to penetrate new markets are driving excellent results. Non-GAAP gross margin was 45.5% near the high end of our guidance range. Non-GAAP gross profit dollars grew 11% year-over-year, 2 points faster than revenue. Please note that these non-GAAP numbers do not include the benefit of tariff refunds we received in the quarter. Saori will provide those details in a moment. We also continue to control our expenses effectively in Q3. As a result, we generated $44 million of adjusted EBITDA, an improvement of 24% year-over-year and also near the high end of our guidance. These Q3 numbers bear out the inflection in our business that I named on our last earnings call. As anticipated, revenue growth accelerated this quarter to 9%, up from the 2% growth we achieved in the first half of the year. As Saori will detail shortly, we expect strong growth in the fourth quarter as well. Our results through the first 3 quarters of the year demonstrate that we're maintaining strong fiscal discipline and working with greater efficiency and effectiveness. We've held operating expenses steady through the year, which has yielded a 6% year-over-year decline in year-to-date non-GAAP operating expenses, all while still investing in future growth. Putting together these savings with our revenue growth and our strong gross margin, year-to-date, we have achieved a 41% increase in adjusted EBITDA year-over-year. To close on Q3, growth accelerated, gross margin held near the top of our range. Operating expenses came down and adjusted EBITDA grew 24%. We did that while returning $30 million to shareholders in the quarter and continuing to invest in the products and markets that will drive our next chapter. This is what disciplined profitable growth looks like at Sonos, and it sets us up for a strong finish to the year. These are very encouraging numbers, and yet, we are just beginning to reach for our potential. I've talked in recent earnings calls about the 5 dimensions through which will drive profitable growth, product innovation, customer advocacy, more intentional marketing, geo expansion and tapping emerging trends. We're making progress on all of them. We're driving hardware and software road maps that are full of innovative products and experiences that will further reinforce our position as the leader in whole home audio. Let me update you on some of our progress since the last earnings call. First, at Amp Multi. Last week, we announced to our installer partners that Sonos Amp Multi will ship August 25. Built for our installer and integrated partners, Amp Multi combines flexible, best-in-class multi-zone amplification with simpler installation, configuration and tuning. It is a clear expression of our system strategy, products that make our platform more compelling, more differentiated and more deeply integrated into the very fabric of the home. The relationships we built with professional installers over 2 decades are unique Sonos advantage and Amp Multi lets our partners take on larger projects with Sonos at the center. Second, the Sonos app. We spent the last months watching real customers use the app in their everyday life from brand new owners to people who have been with us for years. We've taken those learnings and rebuilt the basics of how you navigate Sonos. Familiar tab navigation, genuinely better core controls like volume and smart mechanisms for how players show up just when you need them. This isn't a new app, but it is a new way of navigating the app our customers already have. Just as important is how we did it. We brought customers into the process through in-home research, beta programs and public previews and their feedback shaped every iteration. These acts of co-creation are core ingredient driving a return to customer advocacy that continues to show up in our own measurements and across social media. There's much more coming this fall and beyond, and we'll be bringing all of it to market with compelling new marketing that is the clearest expression in a decade of what makes Sonos singular in the world. I can't wait for you to see what Colleen and her team have been cooking. Here's what comes next. In September, we'll be hosting a product launch event. This will be the first opportunity for me to publicly introduce some of the work we've been doing on the product side over the last year. I'll save the news for the event, but let me say this today, conversational computing and predictive intelligence are moving into the home, and Sonos brings to this moment 20 years of solving the hard problems the home uniquely creates sound, form, systemness and intelligence. That combination of where we already excel and where computing is going next meaningfully expands the opportunity in front of us. Much of the industry conversation about AI in the home is about who has the best model. We think that's the wrong question. Access to exceptional models is going to be everywhere, and the differences between them will narrow. The lasting value is going to be in what surrounds the model in a real home, the hardware that can converse with quality across every room, the system that already knows the shape of a home and the way a family lives in it, the connectivity to reach the speakers, services and devices that turn a request into coordinated action. That's the operating environment for AI in the home, and Sonos has spent 20 years building it. Alongside the Sonos operating environment sets a physical product portfolio unlike anything else in home audio, speaker-sized for a kitchen counter and speakers built to fill a living room. Sound bars optimized for home theater and subwoofers to make your heart go thump. Amplifiers that run dozens of zones in a custom home. Small speakers, you can throw in a teenagers backpack. Portables at home in the den and also on the patio. Headphones for personal listening and movie theater theatrics without waking the baby. Every form sound takes in a home made by 1 company designed to belong together and built to work in unison. No one else in this category covers that range. Our installed base is more than 53 million connected devices across more than 17 million homes. It's a competitive advantage and as more intelligence moves into the home, the trust and experience we spent 2 decades earning is exactly what these new experiences will require. All of this makes me extremely optimistic about what lies ahead for Sonos even as we navigate transitory macro challenges. It will come as no surprise that a significant headwind we face today is the dramatic escalation in computer memory and associated component costs. And despite the strong results, I just walked through, the impact of the memory cost environment is already here in our numbers. Memory costs impacted Q3 adjusted EBITDA by approximately $14 million year-over-year. Absent that headwind, our profit growth this quarter would have been 64% year-over-year rather than 24%. That's the way our team absorbed while still delivering results near the top of our guidance range. The industry dynamics driving these prices are not yet easing, and we do not expect meaningful near-term relief. So let me speak to how we're approaching the memory situation as a business. We're tackling the challenge across 4 work streams: first, supply. Ensuring that we have the chip supply we need to build our products and meet the demand we see in the market; second, cost. Securing that supply at the best possible terms; third, efficiency. Optimizing memory use in our products to reduce our per device memory footprint; and finally, pricing balance. Weighing, weather and when to adjust pricing, balancing near-term profitability against our focus on attracting new customers to Sonos and driving household lifetime value. Let me say a bit more on the last 2. On efficiency, this dramatic rise in memory cost has served as a catalyst to apply our hardware and software engineering expertise to improve the memory efficiency of our products. By optimizing the memory requirements of our operating system without compromising the performance of our products, the customer experience or future optionality, we can alleviate some of the cost pressure. We're deep in this work and its impact will continue to grow in fiscal 2027. On pricing, this remains 1 of the important levers available to us, and we'll be thoughtful and disciplined about how we use it. Some prominent consumer electronics brands have recently announced price increases on existing products. But notably, no company competing directly in audio categories have moved materially on price for existing products and neither have we. Our focus as we head into the holidays is on welcoming as many new Sonos households as we can. Our thinking is informed by the full picture of our success. Households growing lifetime value expanding and our competitive leadership compounding. We're driving against all of these dimensions in concert with an eye on healthy gross profit dollars, too. As these higher memory prices fully take hold, we will face margin headwinds in Q4 and 2027. I want to underscore that we're entering this moment from a position of underlying strength. Setting aside these transitory conditions, this business operates at a healthy mid-40s gross margin. That's the base we're managing from, and it's what gives us room to prioritize customer growth through this cycle. How we get back to these gross margin levels in 2028 and beyond will depend on where memory prices go. Beyond 2027, our expectation is that the ease from today's unnaturally high levels, though the timing and the pace are hard to predict. If instead, if they stay elevated, we'd expect the industry to move to higher pricing over time and we would adapt along with it. We prefer the first path since delivering the greatest possible value to our customers is always our goal. Either way, the destination is the same. After working through these pressures in 2027, we expect our profitability to improve in 2028 and beyond. The structural improvements we've made over the last 2 years underpin our conviction that Sonos can operate at meaningfully higher adjusted EBITDA margins over time, which when combined with consistent revenue growth creates a strong long-term financial outlook. Before turning the call over to Saori, I'm delighted to share 1 last update. Chris Shackelton, Co-Founder and Managing Partner of Coliseum Capital Management, Sonos' largest investor is joining our Board. Over the last 18 months, I've gotten to know Chris well, and we bonded over a shared enthusiasm for what Sonos can become and the value we can build for shareholders. This is the latest step in the evolution of our Board, adding skills and expertise aligned with Sonos' future. In my time as CEO, we've added Hugo, Joe, Carmen and Mandy, who bring product and AI, hardware and supply chain, consumer and media experience as well as public company CEO and CFO governance alongside operational and financial rigor. Today, we're adding Chris' deep investment, capital allocation and director experience. This is a board built for the opportunity ahead. With those thoughts, Saori, I'll turn it over to you. Saori Casey: Thank you, Tom. Hi, everyone. Q3 was another strong quarter for Sonos as revenue of $375 million was at the high end of our guidance range, growing 9% year-over-year. This marks our eighth consecutive quarter of disciplined execution against our commitments and structurally improving our business. We saw continued strength in APAC and EMEA, up 27% and 17%, respectively, while the Americas grew 4% year-over-year. Our growth markets delivered another quarter of strong double-digit growth, further validating our view that this will be a key driver of our growth in years to come. Foreign exchange was about 1-point tailwind to our year-over-year growth. On a constant currency basis, APAC grew 21%, EMEA grew 14% and the Americas grew 3.5%. Total constant currency revenue growth of 7% year-over-year represents a 3-point acceleration from Q2, consistent with what we had outlined last quarter. On a product basis, Q3 marked the first full quarter of Sonos Play and Era 100 SL available in the market and both contributed meaningfully to our results. As we noted last quarter, we filed our refunds for prior duties paid under IEEPA. Of the $41 million in claim we filed, we received $24 million in Q3. Of that amount, $23 million was principal recovery and recorded as a benefit to GAAP gross profit and the remaining $1 million was recorded as interest income. We expect to collect the remaining $18 million in claims we filed, though the timing of cash receipt is uncertain, thus, we have not recognized any of the remaining claims as a receivable on our balance sheet. As a reminder, the Q3 guidance we provided last quarter did not include any tariff refund benefit. So as I walk through the rest of our results, I'll give 3 figures for each applicable profitability metric. The reported GAAP number, which includes the tariff refund benefit, then the GAAP number, excluding the tariff refund benefit for the comparability to guidance, and finally, the non-GAAP number, which, as you may have seen in our press release, also excludes the tariff refund benefit. GAAP gross profit dollars grew 26% year-over-year to $189 million, representing a GAAP gross margin of 50.4%. Without the benefit of tariff refunds, GAAP gross profit would have been $166 million, up 11% year-over-year, representing a margin of 44.3%. The both dollars and margin landed at the high end of our guidance range. Non-GAAP gross profit of $171 million also grew 11% year-over-year and landed at the high end of our guidance range, representing a margin of 45.5%. This strong growth was driven by higher revenue, partially offset by the impact of higher memory costs. Higher memory costs were about $14 million or a 380 basis point impact to gross margin year-over-year, close to what we had expected. Despite this impact, GAAP gross margin without tariff refunds increased 90 basis points year-over-year due to last year's tariff mitigation actions and leverage from sales growth. Q3 GAAP operating expenses of $158 million increased 3% year-over-year, primarily due to employee compensation costs and litigation spend and $4 million of restructuring charges. Non-GAAP operating expenses of $135 million also grew 3% year-over-year, and we're a bit below the level of Q1 and Q2 of this year. Stock-based compensation was $17 million, down 20% year-over-year. Q3 adjusted EBITDA grew 24% year-over-year and came in near the high end of our guidance range at positive $44 million, which, as previously noted, does not include any tariff refund benefit. At a margin of 11.7%, this is the second highest Q3 adjusted EBITDA we have reported in the past 5 years despite higher memory prices reducing it by $14 million year-over-year. Without this impact, adjusted EBITDA would have grown 64% year-over-year to $58 million, representing a margin of 16%. GAAP earnings per share was $0.25 and includes $0.20 of benefit from tariff refunds, a significant improved from a loss of $0.03 last year. Non-GAAP earnings per share of $0.27 grew 52% from $0.18 last year. Please note, GAAP EPS also includes a $2 million gain on sales of excess components which has been recorded in other income line and does not benefit non-GAAP EPS nor adjusted EBITDA. We spent $30 million on share repurchases in Q3 to buy back 2 million shares reducing our share count by 1.7%, which leaves us with $35 million remaining on our current share repurchase authorization. Our balance sheet remains strong as our net cash and marketable securities balance increased to $261 million at quarter end, up modestly from Q3 last year as well as previous quarter. We view our balance sheet strength as a competitive advantage as we build value over the coming years. Our period-end inventory balance of $158 million was up 37% year-over-year, driven by higher memory costs, new product launches and capitalized tariffs. Our inventory consists of $137 million of finished goods and $21 million of components. Q3 free cash flow was $40 million, an improvement of $8 million year-over-year. Two unusual items largely offset each other in the quarter, the $24 million of tariff refunds and interest received and a $20 million cash outlay related to components, which shows up in the other current assets line on our balance sheet. Turning to our guidance. The Q4 outlook we're providing today is our best estimate and reflects the trends we have observed quarter-to-date. Consistent with last quarter, the guidance does not include any tariff refund benefit, so that our outlook reflects the underlying trends in the business rather than the timing of refund receipts. We expect Q4 revenue to be in the range of $325 million to $355 million, representing growth of 13% to 23% year-over-year, up 18% at midpoint. Please note that Q4 is a 14-week fiscal period with 1 extra week of sales as noted in our SEC filings. The extra week represents approximately $24 million of sales, contributing 8 points of year-over-year growth. Excluding this, our Q4 guidance represents year-over-year growth of 4% to 15%, up 10% at the midpoint, an improvement from our 7% Q3 growth on a constant currency basis. FX is expected to have a slightly unfavorable impact to our Q4 revenue growth. We expect Q4 GAAP gross margin to be in the range of 39% to 41%, with non-GAAP gross margin approximately 120 basis points higher than GAAP. As previously mentioned, please note that our Q4 GAAP gross margin guidance does not include benefit of any tariff refunds. Our Q4 guidance embeds the latest announced tariff rates of 10% and 12.5% for goods imported from Malaysia and Vietnam, respectively. Higher memory prices are expected to be a $35 million headwind to Q4 gross profit year-over-year, representing a headwind of approximately 1,000 basis points, which is approximately 600 basis points greater year-over-year impact than Q3. As Tom mentioned, we are actively working to mitigate some of this industry-wide cost pressure. However, the Q4 gross margin guidance I just provided only reflects a small portion of the mitigation benefit as our action will take effect progressively through fiscal 2027. We're focused on managing this challenge thoughtfully without losing sight of larger opportunity to drive top line growth and maximizing long-term value. We expect Q4 GAAP operating expenses to be in the range of $160 million to $170 million. We expect non-GAAP operating expenses to be lower than GAAP by approximately $20 million. Please note that the extra week in Q4 contributes approximately $5 million of additional non-GAAP operating expenses in the quarter. Excluding this, the midpoint of our guidance implies that non-GAAP operating expenses grew by 4% year-over-year, mainly attributable to program expenses related to new product introductions. Bringing it all together, we expect Q4 adjusted EBITDA to be in the range of negative $11 million to positive $18 million or positive $3 million at the midpoint. As previously noted, we expect higher memory prices to reduce our Q4 adjusted EBITDA by $35 million. Excluding higher memory prices, the midpoint of our guidance range implies adjusted EBITDA would have increased from $6 million last year to $38 million or nearly 6x last year. Taking our year-to-date results and the Q4 guidance I just outlined. I'll now walk through what we expect for fiscal 2026 as well as some directional color for fiscal 2027. We expect fiscal 2026 revenue to grow 6% to 8% or 4% to 6% excluding the 53rd week. After 3 years of declining top line, this return to growth represents a pivotal moment for Sonos. We expect the momentum we built in fiscal 2026 to carry into fiscal 2027 and beyond as we continue to execute on the 5 growth dimensions Tom has spoken about. Tariff refunds and higher memory costs distort the gross margin improvement that we achieved in fiscal 2026. For the full year, GAAP gross margin, excluding tariff refunds is expected to be 44.1%, up 40 basis points year-over-year. And we expect to get there while absorbing $58 million or 370 basis point headwind from higher memory costs year-over-year. Looking ahead to fiscal 2027, we expect higher memory prices to further weigh on our gross margin. On an annualized basis, we expect our mitigation actions to drive around 500 basis points of improvement. Though because this work will take effect progressively through the year, we will not see the full benefit in fiscal 2027. As a result, we expect the lower end of our Q4 gross margin guidance range is a reasonable way to think about the year ahead. As a flow-through of higher priced memory is partially offset by our mitigation efforts with first half running lower and some improvements in the second half as our mitigation actions begin to phase in. The combination of growing top line, expanding gross margin and disciplined management of our cost base has a compounding effect on our adjusted EBITDA in fiscal 2026. We expect adjusted EBITDA to be $181 million, up 37% year-over-year, representing an 11.7% margin. Excluding the $58 million of memory cost pressure we expect to face year-over-year, fiscal 2026 adjusted EBITDA would have been up 80% year-over-year to $239 million, a 15.5% margin, up from 9% in fiscal 2025. While this math is illustrative, it reinforces that the earning power of this business has structurally improved. Looking ahead to fiscal 2027, we're comfortable with our level of investments and expect to stay very disciplined on our operating expenses. So to summarize, although the spike in memory costs weighed on our profitability in the near term, the significant improvements we made in our top line and profitability in fiscal 2026 along with the meaningful mitigation actions that are currently underway position this company to emerge from this cycle stronger. This is an important lens through which to view the company's potential over the next few years. We've built real momentum and return this business to growth. Our cash position is strong, and we're generating healthy cash flow, and we remain committed to returning capital to shareholders over time, balancing buybacks against ongoing investment needs of the business. After the call, we'll update our earnings slides to reflect our Q4 guidance as well as the fiscal 2026 math I just walked through. Before I close, I would like to take this opportunity to share that I have decided to retire after a rewarding 35-year career in finance. I will remain in my role as CFO at Sonos until a successor is identified, and I am very committed to ensuring a seamless transition over the coming quarters. Having helped lead the transformation and stabilization of Sonos these past 3 years, I am incredibly proud of the work, confident in the company's future and excited about the momentum we have built. The company is in very capable hands with Tom and our executive leadership team. I'm going to hand things back to Tom, who has a few more remarks before we go to questions. Thomas Conrad: Thank you, Saori. To pause a moment on Saori personal news, this is a bittersweet moment for Sonos. I'm so pleased that this is not yet a goodbye and that Saori will be staying through our CFO search and transition. But it's not too soon to say what a vital contribution she's made to Sonos and to my own thinking about what excellence looks like. Saori has baked into the bones of Sonos true financial rigor through both her leadership and through the processes she's established. We will miss her tremendously when her tenure ends, but the discipline she's modeled and built here will certainly endure. Okay. Before we open the line, I want to close with 1 final thought. The memory situation Saori walked through is real, and we have the operating structure and talent to manage through it, but it is a transitory condition and a much larger story about this company. More than 17 million homes and 53 million devices already operate inside the Sonos system. Our product portfolio spans every shape sound takes in a home. And behind all of it is 20 years of engineering the parts of the home that are actually hard, sound, form, systemness and soon intelligence. Those are precisely the capabilities, the next era of the home will require. And no other company has the IP, expertise and track record we have in the category that we invented. The next few months will begin to make more of this visible. AMP Multi ships in August, our fall launch event follows in September, and there is much more beyond that, which I look forward to sharing in the quarters ahead. I've never been more convinced of the opportunity in front of Sonos or of this company's ability to reach for it. With that, operator, please open the line for questions. Steven Frankel: So let's revisit the RAM situation again for a moment. You spoke to making engineering changes to perhaps reduce the load per product. Is that something that takes a product refresh to accomplish? Or is this something as next year rolls out where you might be doing this midstream? Thomas Conrad: Steven, thanks for taking time to be with us today. As it relates to the efficiency work that our hardware and software teams are doing to optimize our operating system to more efficiently use memory, those are changes that we can introduce as running changes to the product lines over time without any impact to the capability of the products or their future optionality or customer experience. So you can expect to see us make those changes through the year as more and more of those technology investments land through the supply chain. Steven Frankel: Great. And I appreciate the timing update on Amp Multi. How should we think of the margin profile of that product? Thomas Conrad: Well, as with all of our professional products, the margins are excellent on Amp Multi, and we're really excited about the early response we're seeing from installers and can't wait to get it into customers' hands. Steven Frankel: Okay. Great. And would you shed any more light on this fall launch event? Kind of where, when, is it you and a host of partners? Is it Sonos alone? Thomas Conrad: Yes. Well, we'll have to send you an invite to give you all the details, but it will be early in September. And let me say a bit more while saving the big news for the day. As I said in our prepared remarks, this moment will be the first opportunity for me to publicly introduce some of the work that we've been doing on the product side over the course of the last year. And it's really about conversational computing and predictive intelligence moving into the home. And in this moment, Sonos brings 20 years of solving the hard problems that are uniquely created in the home across 4 dimensions. The first dimension is what I would call excellence in form. Sonos is every dimension of sound, big speakers, little speakers, with microphones, without microphones, optimized for music, optimized for home theater, on the go, in your ears, installed in the very architecture of your home, and no one else in the category covers this range. It's also about excellence in systemness which means every product seamlessly integrated and better together where really the whole is much more than the sum of the parts. But it also means that all of the products are deeply integrated with all of the outside ecosystems that customers expect, Airplay, Bluetooth, Spotify Connect, even line in. The third dimension is excellence and sound. And we have state-of-the-art audio from the best digital and analog sound engineers in the world, and they tune all of our products to the unique requirements of each individual home through technology like Trueplay. And then finally, the fourth dimension is about excellence and intelligence, which is where conversational computing and predictive intelligence that are built on a deep understanding of the context of the home and how the family lives and it finally come to life. And on intelligence, I really think that the lasting value is going to be in what surrounds AI models in the home, hardware that can converse with quality across every room, the system that understands the shape of your home and how you live in it, the connectivity to reach the speakers and to combine them together in powerful ways, the services and devices that turn a request into a coordinated action across a broad ecosystem, that's the operating environment for AI in the home, and we've spent 20 years building it. And so it's that combination of where we already excel and where computing is going next that I think really meaningfully expands the opportunity in front of it. So you mix that together with 53 million connected devices, 17 million homes, we have this incredible competitive advantage as intelligence moves into the home, building on the trust and experience that we spent all of these years earning, I think that's exactly what these new experiences are going to require, and I can't wait to tell you more about it in September. Steven Frankel: Great. And Saori, congratulations. It's been a great run. Saori Casey: Thank you, Steve. Erik Woodring: Congrats on the nice results and guide here. Tom, in the prepared remarks or in the press release, you attribute some of Sonos' recent success to the system strategy that you have implemented. Just at the surface, it's kind of hard to necessarily see that kind of like on the headline number. So can you maybe just help us understand, for example, how devices per household as of June 30 differ from the end of your last fiscal year? Or for example, how much incremental revenue growth in 3Q versus the first half of the year came from some of those existing households adding products versus new household acquisition? Just any color that you can share to help us better understand how that system strategy is working? Thomas Conrad: Yes. I don't think I'm going to get into the specifics of those intra-year results on the dimensions that you're highlighting. But I can say that we're really building the business around the full picture of our success. Households growing, lifetime value expanding, seeing our competitive leadership compound. And we're working all of these dimensions in concert while we keep an eye, of course, on healthy gross profit dollars, too. And you've heard me talk about the growth levers that we're activating against product innovation. Earlier this year, we launched Sonos Play and Era 100 SL, both which contributed nicely to not only our results in the quarter, but our intention to grow the footprint of Sonos in new households around the world. We're launching Amp Multi on August 25, a completely unique product that is a core demonstration of how the system is incredibly powerful in this moment. We've launched improved software that we're really proud of, that our customers love that's driving a return to advocacy and across every mechanism that we measure. And of course, we have this launch event coming in September that we just couldn't be more excited about. On customer advocacy, you heard us talk about the way that we've like been working directly with our customers on Reddit and our customers in our beta program and all of our constituencies to understand how they're using our products and improve them based on their real-world feedback. You heard me talk about the -- what Colleen is building around phenomenal new storytelling about the Sonos system and what the brand can be in the world. You'll start to see that land in the fall as well. You heard us talk about double-digit growth around the world in our geo expansion countries. And of course, we're seeing more and more about how we're integrating with emerging trends like conversational computing and predictive intelligence. And I'm really, really proud of how the company is executing across all of these base levers to drive the results that we saw in the quarter, which I just couldn't be more proud of. Erik Woodring: Okay. I appreciate that added color. And then Saori, I'm not going to say goodbye yet. I mean you're still on board. So just an early congrats. But maybe just to clarify your comments on fiscal '27. I realize these are all directionally, but 2 clarifications. Just first is when you see the momentum from 2026 will flow into 2027, are you implicitly telling us to expect growth to accelerate from the fiscal '26 run rate? I just want to make sure we understand that comment correctly. And then beyond that, I think what you're kind of implying to us is non-GAAP gross margin for fiscal '27 will be around 40% kind of that low end of the 4Q range with like flattish OpEx as you remain disciplined. Just -- is that how I should interpret your comments? Again, I realize it's not a guide, but I just want to make sure I'm understanding your comments properly. Saori Casey: Thank you, Erik. Great questions. Yes. So when we say momentum, we talk about how we return to growth and the type of growth that we shared in our Q3 fiscal quarter that we just reported and Q4 normalized for the extra week, and we have the Amp Multi that we're launching happily at the end of August. So we certainly getting loose from that. But we're talking not necessarily continued ongoing accelerated growth, but momentum of growth in general, so just a bit of a color as opposed to an explicit number. And I think you're in the ballpark there as far as the non-GAAP gross margin based on what we're saying, that's what we're looking at based on what we can see today during -- in the current memory price dynamics. And then your read on OpEx being flattish is basically what we're saying as far as the investments that we feel comfortable with from today. Erik Woodring: Okay. Super helpful. And then maybe just last 1 for me. Tom, going back to you. I'm sure you're anticipating getting this question, but just obviously some of the, let's call them, AI labs or maybe looking to get into part of your world, right, maybe not the focus on sound, but a focus maybe on using similar form factors to what you guys produce to, again, try to do something like conversational AI. Just would love your high-level thoughts. Obviously, I don't want you to spill the beans on anything you'll tell us in September, unless you want to, but just a little thoughts there, please. Thomas Conrad: Yes. I guess I'll just start by reminding everyone on the call that we've been competing with the biggest of big tech for customers in the home for nearly a decade and customers continue to choose Sonos again and again. And why do they choose Sonos? Well when they ask their installer or they ask a retail associate or they ask a friend, they hear that Sonos is the best solution for whole home audio. It's comprehensive. It's -- has exceptional sound and increasingly, we'll be delivering these intelligence experiences that I think will be really unique to the Sonos platform. So I always tell the team in every company I've ever been in, frankly, if you're doing something interesting, the biggest players in tech will see the same opportunity. And so our job is to win on the field, and I'm really confident in the products and services and system that we're building for this next chapter in computing. Erik Woodring: Awesome. I'd love to hear it. Congrats again, guys. Good luck. Saori Casey: Thank you. Operator: There are no more questions at this time. Thank you, ladies and gentlemen. This concludes today's conference call. You may disconnect. Before you buy stock in Sonos, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Sonos wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $397,405!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,344,091!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 7, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Sonos. The Motley Fool has a disclosure policy. Sonos (SONO) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St's investing ideas for FREE. Sonos (SONO) stock is in focus after the company released quarterly results that topped expectations, highlighted ongoing memory cost headwinds, and announced the planned retirement of long serving Chief Financial Officer Saori Casey. See our latest analysis for Sonos. The initial share price reaction to the results and CFO retirement was sharp, with a 1 day share price return that declined 17.64% to close at US$14.43. However, the 1 month share price return is up 7.69% and the 1 year total shareholder return is 39.29%, despite a weaker year to date share price performance. If Sonos has you reassessing where growth and risk are shifting in consumer tech, it can be useful to broaden the search using the Simply Wall St screener for 56 AI infrastructure stocks After that sharp pullback, yet still strong 1 year return, Sonos now sits at a very different entry point than just a few days ago. Do the current earnings, buybacks and leadership changes still tilt the balance toward buyers? On the most followed narrative, Sonos is priced below an estimated fair value of $19.38, compared with the latest close at $14.43. This raises clear questions about what assumptions sit under that gap. Read the complete narrative. Want to understand why this narrative supports a higher fair value for Sonos? The crux is a specific mix of revenue growth, margin shift, and future earnings multiples that are anything but conservative. Result: Fair Value of $19.38 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, the Sonos narrative leans heavily on margin improvement and product momentum, so tariff pressures and a lull in new hardware launches could quickly test that thesis. Find out about the key risks to this Sonos narrative. Analysts see Sonos as trading at a P/E of 30x, which is much higher than the US Consumer Durables industry at 13.8x and also above the peer average of 17.8x. The fair ratio is 30.9x, which is very close. Is this a premium that still feels comfortable to you? See what the numbers say about this price — find out in our valuation breakdown. If this mix of optimism and concern around Sonos leaves you on the fence, check the data now and weigh both sides for yourself with the 4 key rewards and 1 important warning sign. Do not stop with Sonos. Comparing ideas side by side can help you make more informed choices, so consider more options before making your next decision. Expand your opportunity set by checking companies that screens highlight as potentially mispriced with solid fundamentals using the 56 high quality undervalued stocks. Prioritise resilience by reviewing companies that feature in the Simply Wall St 89 resilient stocks with low risk scores. Hunt for quality beyond the usual watchlists by scanning the screener containing 20 high quality undiscovered gems. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include SONO. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

This article first appeared on GuruFocus. Revenue: $375 million, up 9% year over year, near the high end of guidance. Non-GAAP Gross Margin: 45.5%, near the high end of guidance. Non-GAAP Gross Profit: $171 million, up 11% year over year. Adjusted EBITDA: $44 million, up 24% year over year, near the high end of guidance. GAAP Gross Margin (excluding tariff refunds): 44.3%. GAAP Operating Expenses: $158 million, up 3% year over year. Non-GAAP Operating Expenses: $135 million, up 3% year over year. GAAP Earnings Per Share (EPS): $0.25, including $0.20 benefit from tariff refunds. Non-GAAP Earnings Per Share (EPS): $0.27, up 52% year over year. Free Cash Flow: $40 million, an improvement of $8 million year over year. Share Repurchases: $30 million spent in Q3 to buy back 2 million shares. Net Cash and Marketable Securities: $261 million at quarter end. Inventory: $158 million, up 37% year over year. Revenue by Region (constant currency): APAC grew 21%, EMEA grew 14%, Americas grew 3.5%. Memory Cost Headwind: Impacted Q3 adjusted EBITDA by approximately $14 million year over year. Warning! GuruFocus has detected 2 Warning Signs with SONO. Is SONO fairly valued? Test your thesis with our free DCF calculator. Release Date: July 29, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Sonos Inc (NASDAQ:SONO) reported strong Q3 fiscal 2026 revenue of $375 million, up 9% year-over-year, near the high end of guidance. Non-GAAP gross margin was 45.5%, near the high end of guidance, with gross profit dollars growing 11% year-over-year. Adjusted EBITDA grew 24% year-over-year to $44 million, demonstrating disciplined cost control and profitable growth. The company saw strong double-digit revenue growth in APAC (27%) and EMEA (17%), validating its geo-expansion strategy. Sonos Inc (NASDAQ:SONO) is investing in innovative products like Amp Multi and a fall launch event focused on conversational computing and AI in the home. Higher memory costs impacted Q3 adjusted EBITDA by approximately $14 million year-over-year, with a $35 million headwind expected in Q4. Q4 GAAP gross margin guidance is low at 39%-41%, reflecting significant pressure from elevated memory prices. The company expects memory cost headwinds to persist into fiscal 2027, with gross margins potentially remaining near the low end of Q4 guidance. CFO Saori Casey announced her retirement, creating leadership transition uncertainty despite a commitment to a smooth handover. Inventory increased 37% year-over-year to $158 million, driven by higher memory costs and new product launches, posing potential working capital risks. Q: Let's revisit the RAM situation, again, for a moment. You spoke to making engineering changes to, perhaps, reduce the load per product. Is that something that takes a product refresh to accomplish? Or is this something, as next year rolls out, where you might be doing this midstream?A: Tom Conrad (CEO): As it relates to the efficiency work that our hardware and software teams are doing to optimize our operating system to more efficiently use memory, those are changes that we can introduce as running changes to the product lines, over time, without any impact to the capability of the products; or their future optionality or customer experience. You can expect to see us make those changes through the year, as more and more of those technology investments land through the supply chain. Q: Would you shed any more light on this fall launch event? Where? When? Is it you and a host of partners? Is it Sonos alone?A: Tom Conrad (CEO): It will be early in September. This moment will be the first opportunity for me to publicly introduce some of the work that we've been doing on the product side over the course of the last year. It's really about conversational computing and predictive intelligence moving into the home. In this moment, Sonos brings 20 years of solving the hard problems that are uniquely created in the home across four dimensions: excellence in form, systemness, sound, and intelligence. The lasting value is going to be in what surrounds AI models in the home: hardware that can converse with quality across every room; the system that understands the shape of your home and how you live in it; the connectivity to reach the speakers and to combine them together in powerful ways. That's the operating environment for AI in the home. We've spent 20 years building it. Q: Just to clarify your comments on fiscal 2027 -- when you say, the momentum from 2026 will flow into 2027, are you implicitly telling us you expect growth to accelerate from the fiscal 2026 run rate? And then, beyond that, I think what you're implying to us is, non-GAAP gross margins for fiscal 2027 will be around 40%, that low end of the 4Q range, with flattish OpEx, as you remain disciplined. Just -- is that how I should interpret your comments?A: Saori Casey (CFO): When we say momentum, we talk about how we return to growth and the type of growth that we shared in our Q3 fiscal quarter that we just reported and Q4, normalized, for the extra week. We are talking not necessarily continued ongoing accelerated growth but momentum of growth, in general. I think you're in the ballpark there, as far as the non-GAAP gross margin, based on what we're saying. That's what we're looking at, based on what we can see today in the current memory-price dynamics. And then, your read on the OpEx being flattish is basically what we're saying, as far as the investments that we feel comfortable with from today. Q: Obviously, some of the -- let's call them the -- AI labs are maybe looking to get into part of your world, right? Maybe not the focus on sound but a focus, maybe, on using similar form factors to what you guys produce to, again, try to do something like conversational AI. Just, would love your high-level thoughts there, please.A: Tom Conrad (CEO): I'll just start by reminding everyone on the call that we've been competing with the biggest of big tech for customers in the home for nearly a decade. Customers continue to choose Sonos, again and again. Why do they choose Sonos? When they ask their installer; or they ask a retail associate; or they ask a friend, they hear that Sonos is the best solution for whole-home audio. It's comprehensive. It has exceptional sound. Increasingly, we'll be delivering these intelligence experiences that I think will be really unique to the Sonos platform. I always tell the team, in every company I've ever been in, frankly, if you're doing something interesting, the biggest players in tech will see the same opportunity. And so our job is to win on the field. I'm really confident in the products; and services; and system that we're building for this next chapter in computing. Q: I appreciate the timing update on Amp Multi. How should we think of the margin profile of that product?A: Tom Conrad (CEO): As with all of our professional products, the margins are excellent on Amp Multi. We're really excited about the early response we're seeing from installers and can't wait to get it into customers' hands. Q: You attribute some of Sonos' recent success to the system strategy that you have implemented. Can you maybe just help us understand, for example, how devices per household, as of June 30, differ from the end of your last fiscal year? Or, for example, how much incremental revenue growth in 3Q versus the first half of the year came from some of those existing households adding products versus new household acquisition?A: Tom Conrad (CEO): I don't think I'm going to get into the specifics of those intra-year results on the dimensions that you're highlighting. But I can say that we're really building the business around the full picture of our success: households growing, lifetime value expanding, seeing our competitive leadership compound. We're working all of these dimensions, in concert, while we keep an eye, of course, on healthy gross profit dollars, too. You've heard me talk about the growth levers that we're activating against product innovation. Earlier this year, we launched Sonos Play and Era 100 SL, both which contributed nicely to not only our results in the quarter but our intention to grow the footprint of Sonos in new households around the world. We're launching Amp Multi on August 25, a completely unique product that is a core demonstration of how the system is incredibly powerful in this moment. Q: You spoke to making engineering changes to, perhaps, reduce the load per product. Is that something that takes a product refresh to accomplish? Or is this something, as next year rolls out, where you might be doing this midstream?A: Tom Conrad (CEO): As it relates to the efficiency work that our hardware and software teams are doing to optimize our operating system to more efficiently use memory, those are changes that we can introduce as running changes to the product lines, over time, without any impact to the capability of the products; or their future optionality or customer experience. You can expect to see us make those changes through the year, as more and more of those technology investments land through the supply For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in Sonos, Inc.? Here are five stocks we like better. Third-quarter results accelerated: Revenue rose 9% year over year to $375 million, while adjusted EBITDA increased 24% to $44 million. Growth was led by APAC and EMEA, with revenue up 27% and 17%, respectively. Memory costs are pressuring profitability: Higher component costs reduced third-quarter adjusted EBITDA by about $14 million, and management expects a $35 million gross-profit headwind in the fourth quarter. Sonos is pursuing supply, engineering, cost-cutting and potential pricing measures to mitigate the impact. Sonos maintained its growth outlook while advancing product and leadership plans: Fiscal 2026 revenue is expected to grow 6%–8%, with adjusted EBITDA of $181 million. The company plans to launch Sonos Amp Multi and showcase conversational-computing initiatives, while CFO Saori Casey prepares to retire and investor Chris Shackleton joins the board. 3 Small Caps Hitting 52-Week Highs: Take Profits or Let Ride? Sonos (NASDAQ:SONO) reported third-quarter fiscal 2026 revenue of $375 million, up 9% from a year earlier and near the high end of its guidance range, as growth in Asia-Pacific and Europe, the Middle East and Africa offset more modest gains in the Americas. CEO Tom Conrad said the quarter reflected an acceleration in the company’s growth trajectory after revenue rose 2% in the first half of the fiscal year. Non-GAAP gross margin was 45.5%, while adjusted EBITDA reached $44 million, up 24% year over year. The company also repurchased $30 million of stock during the quarter. → This Tiny AI Supplier Could Be More Important Than the Chipmakers MarketBeat: Week in Review 5/30 – 6/3 CFO Saori Casey said APAC revenue increased 27% year over year, EMEA revenue rose 17%, and Americas revenue grew 4%. On a constant-currency basis, APAC grew 21%, EMEA increased 14%, and the Americas rose 3.5%. Foreign exchange contributed about one percentage point to reported growth. Casey said Sonos Play and Era 100 SL, which were available for the full quarter, contributed meaningfully to results. The company’s non-GAAP gross profit rose 11% to $171 million. However, higher memory costs reduced gross profit by about $14 million year over year, representing a 380-basis-point impact on gross margin. → Refiner Stocks Are Near Record Highs—Can Iran-Driven Margins Keep Them There? Sonos Stock Sounds Cheap Down Here Sonos received $24 million during the quarter related to refunds for duties paid under IEEPA. Of that amount, $23 million was recorded as a benefit to GAAP gross profit and $1 million was recorded as interest income. The company has filed claims totaling $41 million and expects to collect the remaining $18 million, though it has not recognized those amounts as a receivable because the timing of payment is uncertain. Including tariff refunds, GAAP gross profit was $189 million and GAAP gross margin was 50.4%. Excluding refunds, GAAP gross margin was 44.3%. GAAP earnings per share were $0.25, including a $0.20 benefit from tariff refunds, compared with a loss of $0.03 per share a year earlier. Non-GAAP EPS rose 52% to $0.27. → Innovative ETF Strategies That Are Paying Off This Summer Non-GAAP operating expenses increased 3% year over year to $135 million. The company ended the quarter with $261 million of net cash and marketable securities. Free cash flow was $40 million, up $8 million from the prior-year period. Management said escalating computer-memory and related component costs are expected to remain a near-term challenge. Conrad said higher memory costs reduced third-quarter adjusted EBITDA by approximately $14 million. Without that impact, adjusted EBITDA would have been $58 million, up 64% year over year. For the fourth quarter, Sonos expects higher memory prices to create a $35 million year-over-year headwind to gross profit, or roughly 1,000 basis points of gross-margin pressure. The company expects mitigation efforts to phase in progressively through fiscal 2027. Conrad said Sonos is addressing the issue through supply management, cost negotiations, engineering changes intended to reduce each product’s memory requirements, and potential pricing actions. He said the efficiency work can be implemented as running changes to product lines without reducing product capabilities, future optionality or customer experience. The company has not made material price increases on existing audio products. Conrad said Sonos remains focused on attracting new households during the holiday period, while considering pricing as one of several available levers. Management expects profitability to improve in fiscal 2028 and beyond, depending in part on the path of memory prices. Sonos forecast fourth-quarter revenue of $325 million to $355 million, representing reported growth of 13% to 23%, or 18% at the midpoint. The fiscal fourth quarter includes an extra week, which the company said should contribute approximately $24 million in sales and eight percentage points of year-over-year growth. Excluding the additional week, the outlook implies revenue growth of 4% to 15%, or 10% at the midpoint. Management expects foreign exchange to have a slightly unfavorable effect on fourth-quarter revenue growth. Fourth-quarter GAAP gross margin is expected to be 39% to 41%, excluding any tariff-refund benefit. Non-GAAP gross margin is expected to be approximately 120 basis points above GAAP gross margin. Adjusted EBITDA is projected between a loss of $11 million and positive $18 million, with a midpoint of $3 million. Fiscal 2026 revenue is expected to grow 6% to 8%, or 4% to 6% excluding the 53rd week. Fiscal 2026 adjusted EBITDA is expected to reach $181 million, up 37% year over year. For fiscal 2027, Casey said the low end of the company’s fourth-quarter gross-margin range is a reasonable framework for the year, with lower margins in the first half and some improvement in the second half as mitigation efforts take effect. She also said Sonos expects to remain disciplined on operating expenses. Conrad said Sonos Amp Multi, a multi-zone amplifier aimed at installer and integrator partners, is scheduled to ship Aug. 25. He also said the company plans a product launch event in early September, where it intends to discuss work involving conversational computing and predictive intelligence in the home. The CEO said Sonos’ installed base includes more than 53 million connected devices across more than 17 million homes. He argued that the company’s portfolio, audio expertise, home-system integrations and customer relationships position it to benefit as more intelligence is incorporated into home products. Separately, Sonos said Chris Shackleton, co-founder and managing partner of Coliseum Capital Management, the company’s largest investor, will join its board. Casey also announced plans to retire following a 35-year finance career. She will remain CFO until the company identifies a successor and completes a transition. Conrad said she helped establish financial rigor and operating discipline at Sonos during her tenure. Sonos, Inc is a consumer electronics company specializing in wireless home audio systems. The company's core business revolves around designing, developing and manufacturing smart speakers and soundbars that deliver high-fidelity audio and seamless multi-room listening experiences. Sonos products connect via Wi-Fi or Bluetooth and integrate with popular streaming services, enabling users to control music and other audio content through a dedicated mobile app, voice assistants or traditional controls. Sonos offers a diversified product lineup that includes compact speakers such as Sonos One and Sonos Roam, premium models like Sonos Five and Sonos Move, home theater solutions including Sonos Beam and Sonos Arc, as well as accessories such as the Sonos Sub and Sonos Amp. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Sonos Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

Sonos, Inc. SONO reported third-quarter fiscal 2026 non-GAAP earnings of 27 cents per share, which soared 52% year over year and topped the Zacks Consensus Estimate of 24 cents. The 12.5% surprise reflected higher sales and disciplined spending despite rising memory costs. Revenues increased 9% to $375 million, beating the $367 million consensus by 2.3%. Speaker demand and international expansion supported growth. Sonos’ installed base exceeded 53 million connected devices across more than 17 million homes. Revenues from Sonos speakers rose 12.5% year over year to $285.3 million and remained the company’s largest product category. The quarter included the first full period of availability for Sonos Play and Era 100 SL, both of which contributed meaningfully to revenue growth. Sonos system products generated $69.3 million, down 5.4%. Partner products and other revenues increased 15.4% to $20.7 million. Amp Multi is scheduled to ship on Aug. 25, extending the company’s offering for professional installers and larger multi-zone projects. Image Source: Zacks Investment Research Americas revenues advanced 3.8% to $238.4 million. Europe, the Middle East and Africa revenues climbed 17.4% to $114.2 million, while Asia-Pacific sales increased 27.2% to $22.7 million. Foreign exchange added about one percentage point to reported growth. On a constant-currency basis, total revenues rose 7%, accelerating three percentage points from the second quarter. Non-GAAP gross profit increased 10.8% to $170.8 million. Non-GAAP gross margin expanded 80 basis points (bps) to 45.5%, even as higher memory costs created a $14 million year-over-year burden and reduced the margin by roughly 380 bps. GAAP gross margin was 50.4%, including a $23.2 million benefit from refunds of previously paid tariffs. Excluding that non-recurring benefit, GAAP gross margin was 44.3%, up 90 bps year over year. GAAP operating expenses increased 3.4% to $157.8 million, mainly due to employee compensation, litigation spending and restructuring charges. Non-GAAP operating expenses rose 2.7% to $134.6 million and remained below the levels recorded in the first two quarters of fiscal 2026. Adjusted EBITDA grew 23.5% to $44 million, with the margin improving to 11.7% from 10.3%. Non-GAAP operating income reached $36.2 million, up 57.3%, as gross-profit growth outpaced the increase in adjusted expenses. Cash provided by operating activities increased 23.5% to $46.2 million. Free cash flow rose 23.3% to $40.3 million, while cash and marketable securities totaled $261 million at quarter-end. Sonos repurchased 2 million shares for $30 million, leaving $35 million under its authorization. Inventories were $158 million, up 37% year over year due to higher memory costs, new product launches and capitalized tariffs. Sonos, Inc. price-consensus-eps-surprise-chart | Sonos, Inc. Quote For the fourth quarter of fiscal 2026, SONO expects revenues of $325 million to $355 million, representing 13% to 23% growth. The 14-week quarter includes an extra week expected to add about $24 million in sales and eight percentage points to growth. Excluding that benefit, growth is projected at 4% to 15%. GAAP gross margin is forecast between 39% and 41%, with non-GAAP gross margin about 120 bps higher. Management expects memory inflation to reduce gross profit by $35 million year over year. Adjusted EBITDA is projected between a loss of $11 million and a profit of $18 million. For fiscal 2026, Sonos expects revenue growth of 6% to 8%, or 4% to 6% excluding the extra week. Adjusted EBITDA is projected at $181 million, up 37%, with an 11.7% margin. Management expects memory-mitigation actions to phase in through fiscal 2027. Sonos currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. SAP SE SAP reported second-quarter 2026 non-IFRS earnings per share of €1.59 ($1.85), which increased 6% from the year-ago quarter. The Zacks Consensus Estimate was pegged at $2. Despite macroeconomic uncertainty, SAP reported total revenues on a non-IFRS basis of €9.9 billion ($11.5 billion), which increased 9% year over year (up 11% at constant currency or cc). The Zacks Consensus Estimate was pegged at $11.4 billion. America Movil, S.A.B. de C.V. AMX reported net income per ADR of 47 cents for the second quarter of 2026, up from 38 cents in the prior-year quarter. The earnings figure missed the Zacks Consensus Estimate of 52 cents. Total quarterly revenues rose 3.1% to Mex$241,071 million, driven by rapid momentum across the Service and Equipment segments. BlackBerry Limited BB reported first-quarter fiscal 2027 non-GAAP earnings per share of 4 cents. The figure beat the company’s estimate of 2-3 cents. In the year-ago quarter, it reported a non-GAAP EPS of 2 cents. The Zacks Consensus Estimate was pegged at 3 cents per share. BlackBerry generated $152.9 million in fiscal first-quarter revenue, representing 26% year-over-year growth. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report America Movil, S.A.B. de C.V. Unsponsored ADR (AMX) : Free Stock Analysis Report SAP SE (SAP) : Free Stock Analysis Report Sonos, Inc. (SONO) : Free Stock Analysis Report BlackBerry Limited (BB) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Sonos, Inc. recently reported its fiscal third-quarter 2026 results, with sales rising to US$375.26 million and net income improving to US$29.85 million, while also completing a US$115.32 million share repurchase program and announcing CFO Saori Casey’s planned retirement. At the same time, Sonos added long-term investor Chris Shackelton of Coliseum Capital Management to its board, bringing deep experience in capital allocation and corporate governance that could shape how the company balances investment, costs, and future buybacks. We’ll now examine how Sonos’s stronger profitability, ongoing buybacks, and leadership changes may influence the previously outlined investment narrative. The best AI stocks today may lie beyond giants like Nvidia and Microsoft. Find the next big opportunity with these 16 smaller AI-focused companies with strong growth potential through early-stage innovation in machine learning, automation, and data intelligence that could fund your retirement. To own Sonos, you need to believe its premium audio ecosystem, software updates, and expanding partnerships can support resilient demand despite tariffs, category weakness, and intense competition. The latest quarter’s improved profitability and completed buybacks support that thesis, but higher memory costs and a looming CFO transition keep execution risk elevated in the near term, particularly around margins and the timing of the next major hardware cycle. The most relevant recent move here is Sonos completing its US$115.32 million share repurchase, retiring about 6.26% of shares. For investors focused on catalysts, that signals a company still committing capital to shareholders while investing in new products and absorbing cost headwinds, which sits alongside the board addition of long-term investor Chris Shackelton as another development that could shape future capital allocation decisions. Yet beneath the strong quarter, investors should also be aware of how prolonged tariff and cost pressures could... Read the full narrative on Sonos (it's free!) Sonos' narrative projects $1.6 billion revenue and $120.2 million earnings by 2028. This requires 5.0% yearly revenue growth and a $196.6 million earnings increase from -$76.4 million today. Uncover how Sonos' forecasts yield a $19.38 fair value, a 11% upside to its current price. Some of the most optimistic analysts were already assuming revenue of about US$1.8 billion and earnings near US$166 million by 2029, which is far more upbeat than the tariff and competition risks highlighted here and may look different once this latest profitability, cost pressure, and leadership news is fully reflected in their models. Explore 5 other fair value estimates on Sonos - why the stock might be worth less than half the current price! Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts. A great starting point for your Sonos research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision. Our free Sonos research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Sonos' overall financial health at a glance. Our daily scans reveal stocks with breakout potential. Don't miss this chance: Explore 26 top quantum computing companies leading the revolution in next-gen technology and shaping the future with breakthroughs in quantum algorithms, superconducting qubits, and cutting-edge research. The future of work is here. Discover the 34 top robotics and automation stocks leading the charge in AI-driven automation and industrial transformation. Capitalize on the AI infrastructure supercycle with our selection of the 56 best 'picks and shovels' of the AI gold rush converting record-breaking demand into massive cash flow. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include SONO. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Sonos (SONO) came out with quarterly earnings of $0.27 per share, beating the Zacks Consensus Estimate of $0.24 per share. This compares to earnings of $0.19 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +12.50%. A quarter ago, it was expected that this maker of wireless speakers and home sound systems would post a loss of $0.04 per share when it actually produced a loss of $0.02, delivering a surprise of +50%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Sonos, which belongs to the Zacks Audio Video Production industry, posted revenues of $375.26 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 2.32%. This compares to year-ago revenues of $344.76 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Sonos shares have lost about 4.3% since the beginning of the year versus the S&P 500's gain of 8.5%. While Sonos has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Sonos was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is -$0.04 on $310.44 million in revenues for the coming quarter and $1.15 on $1.5 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Audio Video Production is currently in the bottom 30% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, GoPro (GPRO), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 10. This action video camera maker is expected to post quarterly earnings of $0.02 per share in its upcoming report, which represents a year-over-year change of +125%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. GoPro's revenues are expected to be $208.52 million, up 36.6% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sonos, Inc. (SONO) : Free Stock Analysis Report GoPro, Inc. (GPRO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Q3 Revenue, GAAP and Non-GAAP Gross Margin and Adjusted EBITDA near high end of guidance range SANTA BARBARA, Calif., July 29, 2026--(BUSINESS WIRE)--Sonos, Inc. (Nasdaq: SONO) today reported Third Quarter Fiscal 2026 results. "Our third quarter demonstrates the inflection we've been talking about, as revenue growth accelerated and the reinvention of the business continued to take hold," said Tom Conrad, Chief Executive Officer of Sonos. "Over the past 18 months, we've built a leaner, more focused company and a healthier core business centered around our system strategy, and that work is showing up in our results. Revenue grew 9% in Q3, up from 2% in the first half, and we're now growing revenue, expanding gross margin, and growing profit at the same time. We’re carrying this momentum into the fourth quarter as we focus on building durable growth while operating with discipline." "Q3 was another strong quarter, as revenue and Adjusted EBITDA both landed near the high end of our guidance range. We generated healthy free cash flow and built our cash balance sequentially and year over year, while returning $30 million to our shareholders through share repurchases," said Saori Casey, Chief Financial Officer of Sonos. "Q3 marks our eighth consecutive quarter of disciplined execution against our commitments and structurally improving our business." Third Quarter Fiscal 2026 Financial Highlights (unaudited) Revenue increased 9% year-over-year to $375 million GAAP gross margin2 of 50.4%, Non-GAAP gross margin1 of 45.5% GAAP net income3 increased by $33 million year-over-year to $30 million, GAAP diluted income per share (EPS)3 increased by $0.28 year-over-year to $0.25 Non-GAAP net income1 increased 51% year-over-year to $33 million, Non-GAAP diluted EPS1 increased 52% year-over-year to $0.27 Adjusted EBITDA1 increased 24% year-over-year to $44 million Returned $30 million to shareholders through repurchase of 2.0 million shares Free cash flow3 increased by $8 million year-over-year to $40 million Guidance The company will provide guidance on its Third Quarter Fiscal 2026 earnings call. Supplemental Earnings Presentation The company has posted a supplemental earnings presentation accompanying its Third Quarter Fiscal 2026 results to the Earnings Reports section of its investor relations website at https://investors.sonos.com/reports-and-filings/default.aspx#section=earningsreports. Conference Call, Webcast and Transcript The company will host a webcast of its conference call and Q&A related to its Third Quarter Fiscal 2026 results on July 29, 2026, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). Participants may access the live webcast in listen-only mode on the Sonos investor relations website at https://investors.sonos.com/news-and-events/default.aspx. The conference call may also be accessed by dialing (888) 330-2454 with conference ID 8641747. Participants outside the U.S. can access the call by dialing (240) 789-2714 using the same conference ID. An archived webcast of the conference call and a transcript of the company’s prepared remarks and Q&A session will also be available at https://investors.sonos.com/reports-and-filings/default.aspx#section=earningsreports following the call. Use of Non-GAAP Measures We have provided in this press release financial information that has not been prepared in accordance with generally accepted accounting principles ("U.S. GAAP"), including Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP operating income (loss), non-GAAP pre-tax income (loss), free cash flow, non-GAAP gross margin, non-GAAP net income (loss), non-GAAP cost of revenue, non-GAAP gross profit and non-GAAP diluted earnings (loss) per share. These non-GAAP financial measures are not based on any standardized methodology prescribed by U.S. GAAP and are not necessarily comparable to similarly titled measures presented by other companies. We use these non-GAAP financial measures to evaluate our operating performance and trends and make planning decisions. We believe that these non-GAAP financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses and other items that we exclude in these non-GAAP financial measures. Accordingly, we believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects and allowing for greater transparency with respect to a key financial metric used by our management in its financial and operational decision-making. Non-GAAP financial measures should not be considered in isolation of, or as an alternative to, measures prepared in accordance with U.S. GAAP. Investors are encouraged to review the reconciliation of these financial measures to their nearest U.S. GAAP financial equivalents provided in the financial statement tables above. We define Adjusted EBITDA as net income (loss) adjusted to exclude the impact of depreciation and amortization, stock-based compensation expense, interest income, interest expense, other expense (income), income taxes, restructuring and other charges, legal and transaction related fees and other items that we do not consider representative of our underlying operating performance, including, for the third quarter fiscal 2026, IEEPA tariff refund benefit. We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue. We define non-GAAP operating income (loss) as total operating loss adjusted to exclude stock-based compensation expense, legal and transaction related costs, amortization of intangibles and restructuring and other charges and, for the third quarter fiscal 2026, IEEPA tariff refund benefit. We define non-GAAP pre-tax income (loss) as non-GAAP operating income (loss) adjusted to include interest income and to exclude interest expense and, for the third quarter fiscal 2026, interest attributable to IEEPA tariff refund benefit. We define free cash flow as net cash from operations less purchases of property and equipment. We define non-GAAP gross margin as GAAP gross margin, excluding stock-based compensation, amortization of intangible assets and restructuring and other charges and, for the third quarter fiscal 2026, IEEPA tariff refund benefit. We define non-GAAP cost of revenue as GAAP cost of revenue less stock-based compensation and amortization of intangibles and, for the third quarter fiscal 2026, IEEPA tariff refund benefit. We define non-GAAP gross profit as GAAP gross profit less stock-based compensation, amortization of intangibles, and restructuring and other charges and, for the third quarter fiscal 2026, IEEPA tariff refund benefit. We calculate non-GAAP net income (loss) as GAAP net income (loss) less stock-based compensation, legal and transaction related fees, amortization of intangibles, other expense (income) and restructuring and other charges and, for the third quarter fiscal 2026, IEEPA tariff refund benefit and interest attributable to IEEPA tariff refund benefit. We calculate non-GAAP diluted earnings (loss) per share as non-GAAP net income (loss) divided by non-GAAP weighted average diluted shares outstanding during the period. We do not provide a reconciliation of forward-looking non-GAAP financial measures to their comparable GAAP financial measures because we cannot do so without unreasonable effort due to unavailability of information needed to calculate reconciling items and due to the variability, complexity and limited visibility of the adjusting items that would be excluded from the non-GAAP financial measures in future periods. When planning, forecasting and analyzing future periods, we do so primarily on a non-GAAP basis without preparing a GAAP analysis as that would require estimates for items such as stock-based compensation, which is inherently difficult to predict with reasonable accuracy. Stock-based compensation expense is difficult to estimate because it depends on our future hiring and retention needs, as well as the future fair market value of our common stock, all of which are difficult to predict and subject to constant change. In addition, for purposes of setting annual guidance, it would be difficult to quantify stock-based compensation expense for the year with reasonable accuracy in the current quarter. As a result, we do not believe that a GAAP reconciliation would provide meaningful supplemental information about our outlook. Forward Looking Statements This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding our long-term outlook, financial, growth and business strategies and opportunities, market growth and our market share, our operating model and cost structure, and other factors affecting variability in our financial results. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors, including, but not limited to: difficulties in and effect of implementing improvements to our operating model and cost structure; the risk that restructuring and related charges may be greater than anticipated or not occur in the expected time frame; local law requirements in various jurisdictions regarding elimination of positions; our ability to accurately forecast product demand and effectively forecast and manage owned and channel inventory levels; our ability to successfully introduce software updates; our ability to maintain, enhance and protect our brand image; the impact of global economic, market and political events, including tariffs, global trade tensions, continued inflationary pressures, high interest rates and, in certain markets, foreign currency exchange rate fluctuations; changes in consumer income and overall consumer spending as a result of economic or political uncertainty or conditions, including tariffs; changes in consumer spending patterns; our ability to successfully introduce new products and services and maintain or expand the success of our existing products; the success of our efforts to expand our direct-to-consumer channel; the success of our financial, growth and business strategies; our ability to compete in the market and maintain or expand market share; our ability to maintain relationships with our channel, distribution and technology partners; our ability to meet product demand and manage any product availability delays; supply chain challenges, including shipping and logistics challenges and component supply-related challenges, including memory costs and constraints; our ability to protect our brand and intellectual property; our use of artificial intelligence; and the other risk factors identified in our filings with the Securities and Exchange Commission (the "SEC"), including our most recent Annual Report on Form 10-K and subsequent filings. Copies of our SEC filings are available free of charge at the SEC’s website at www.sec.gov, on our investor relations website at https://investors.sonos.com/reports-and-filings/default.aspx or upon request from our investor relations department. All forward-looking statements herein reflect our opinions only as of the date of this press release, and we undertake no obligation, and expressly disclaim any obligation, to update forward-looking statements herein in light of new information or future events. Sonos and Sonos product names are trademarks or registered trademarks of Sonos, Inc. All other product names and services may be trademarks or service marks of their respective owners. About Sonos Sonos (Nasdaq: SONO) is a leading audio company dedicated to elevating life through sound. Sonos has built a connected system that brings together all the sounds people love, from music and movies to stories and conversations. Its portfolio of home theater speakers, components, plug-in and portable speakers, and headphones grows more powerful with every room and device added. Trusted by more than 17 million households in over 60 countries, Sonos is headquartered in Santa Barbara, California. Learn more at www.sonos.com. View source version on businesswire.com: https://www.businesswire.com/news/home/20260729559143/en/ Contacts Investor Contact James [email protected] Press Contact [email protected]