Sonos Inc. has announced record revenue and profit for its first quarter of fiscal 2019.
In his Letter to Shareholders, Sonos CEO Patrick Spence states that the company "made good progress" towards its goal of "sustainable, profitable growth over the long-term." He notes that Q1 2019 was the most profitable quarter in Sonos history.
"Our belief heading into Q1 FY2019 was that many consumers in North America had gotten a taste of voice and music streaming through low cost, commodity devices, but were ultimately underwhelmed with the sound quality and overall experience," says Spence. "We believed some of these consumers would be looking to upgrade to Sonos. Our thesis began to play out in Q1 FY2019 as Sonos One units sold increased 23% period-over-period."
Sonos believes that it benefited from adoption of voice-assistant speakers in the US, with consumers stepping up to its sonically superior models. However, it sees Europe lagging behind, with consumers still opting for lower-cost products, and suggests that a "step-up" trend is yet to come in that market.
Sonos reports success in driving "brand impact," and points out that its special edition Beastie Boys PLAY:5 speaker sold out in six minutes in the US.
The Letter to Shareholders pays particular tribute to Sonos' Installed Solutions (IS) partners. "In many ways, these people helped to establish the first wave of Sonos as they connected our technology solutions with homes all over the world." Sonos notes that this channel has delivered the highest revenue per household within its customer base.
Targeting the IS channel, the Sonos Amp launched in limited quantities in North America last quarter, and will be available globally by the end of February. Also new is Sonos Architectural by Sonance, a new collection of installed, passive speakers. In-Wall and In-Ceiling models (each US$599/pair) are available for pre-order now on sonos.com, with general availability beginning February 26. Sonos Outdoor by Sonance (US$799/pair) will follow in April.
Paired with the Sonos Amp, these speakers enable Sonos' Trueplay feature, allowing speakers to automatically adjust EQ based on placement, room construction and furnishings.
Sonos reported US$496 million in revenue for Q1, up 6% year-over-year. Net income was US$61.7 million, a 12.4% increase, year-over-year.
Additionally, Sonos reported another milestone: installation in over 8 million homes. It adds that, according to NPD, its home theater products earned 2 of the top 3 US market share positions by dollar value; and that, according to GfK, its products held 3 of the top 4 value share positions in the UK, and 4 of the top 8 value share positions in Germany
Sonos notes that its recently launched Sonos Beam was a strong growth driver, driving home theater speaker sales to an 87% increase in sales, and 42% growth in revenue for Q1, year-over-year. Sonos SUB, in market for over six years, grew 32%.
Wireless speaker sales decreased 11%, and 17% in revenue, due to removal of the PLAY:3 from the lineup, and a decline in PLAY:5 sales volume. However, revenue on the newer Sonos One increased by 19% compared to Q1 FY2018, the quarter in which the product was launched.
Sales of components products increased 15%, and revenues grew by 20%, mainly due to the launch of the Sonos AMP.
Sonos reaffirmed the full-year FY19 guidance issued last November. It expects Q2 revenues to be somewhat slowed by relatively high channel inventory levels and a delay in its production schedule with Ikea, to Q3. However, the full-year outlook remains unchanged: 10-12% revenue growth.