Our first holiday winner is Sonos (SONO).

Sonos is a U.S. audio equipment maker and the inventor of multi-room wireless home audio. It sells speakers, headphones, soundbars, subwoofers, and amplifiers online and at three brick-and-mortar stores.

Sonos' premium lineup of wireless home audio systems, soundbars, and portable speakers makes it a top choice for holiday shoppers seeking high-quality audio gifts.

Fiscal 2024 Q4 Earnings --- stock declined 2.3% on November 14th

• Revenue down 16% YoY to $255.4 million (beat)
• Net loss of -$0.18 per share was slightly ahead of consensus
• Q1 revenue guidance implies 88% to 119% QoQ growth

Company Updates

In the aftermath of a botched May 2024 app rollout, SONO announced 7 new quality and customer experience commitments intended to deliver the world’s best wireless audio system and rebuild brand trust — including more stringent pre-launch testing, extended home speaker warranties, and the formation of a Customer Advisory Board.

SONO recently dropped Arc Ultra, a premium ($799-$999) soundbar with breakthrough Sound Motion technology that delivers 2x the bass and an unprecedented spatial audio experience for the home theater.

In January 2025, SONO will launch Era 100 Pro, its first professional installation solution. The offering is expected to make for faster custom audio system setups for installers and customers in the company’s newly entered $2 billion light commercial audio space.

Lowered Bar In 2024, Sonos faced significant challenges following a problematic app update in May, which led to customer dissatisfaction and a decline in revenue.

The app overhaul, intended to enhance user experience, was rushed and insufficiently tested, resulting in missing features and functionality issues that disrupted user access to their music systems.

Addressing these problems required substantial recovery investments, including up to 16 updates to restore 90% of the missing features, and led to delayed product launches, further impacting the company's financial performance.

Hot Holiday Gifts

Consumer interest in Sonos products has surged this holiday season, fueled by the launch of the Arc Ultra soundbar and the Era series speakers.

The Arc Ultra introduces Sound Motion™ technology, which uses a flat transducer design with lightweight motors and opposing diaphragms to deliver enhanced bass and spatial audio in a compact form.

Meanwhile, the Era 100 and Era 300 speakers provide upgraded acoustics and improved connectivity, making them popular choices for home audio enthusiasts.

Old Acquisition Finally Paying Off

In April 2022, Sonos acquired Mayht Holding BV, a Netherlands-based company known for its innovative audio transducer technology, for approximately $100 million.

Mayht's Heartmotion® technology re-engineered speaker drivers to deliver enhanced sound quality in smaller, lighter designs.

This acquisition led to the development of Sonos' Sound Motion™ technology, first showcased in the Arc Ultra soundbar, which combines improved bass performance and spatial audio in a compact form—offering a much-needed spark to reinvigorate consumer demand.

Working to Win Back Consumers

Takeaway

Sonos' new products and updated apps contribute towards improving its position in oversold territory.

With increased consumer focus on home entertainment and gifting during the holiday season, Sonos is well-positioned to capitalize on rising demand for smart and stylish audio solutions.