Sonos’ departing CFO and concerns about consumer trends undercut an otherwise successful quarter at the company.
Sonos has posted the financial results of its first quarter of 2019, which ended December 29th, 2018.
Generating the most profitable quarter to date, the hardware maker brought in $61.7 million of net income. Sonos also posted an earnings per share (EPS) of $0.55. Both numbers beat out analyst expectations.
The company’s revenue grew 6% year-over-year to $496 million. Adjusted EBITDA rose 34% to $87 million, with adjusted EBITDA margin at 17.6%.
Underscoring a successful 2018 holiday season, Sonos now has smart speakers in over 8 million households.
The Sonos Beam drove overall revenue growth this quarter, as sales of the product rose 42%. Citing the NPD Group, the hardware maker earned two of the three market share positions by dollar value in the US. Sonos also had three of the top four value share positions in the UK. In Germany, the company had four of the top eight value share positions.
Sonos One units sales also increased 23%.
Speaking about the successful quarter, Patrick Spence, the company’s CEO, said,
“We made good progress this quarter towards our goal of driving sustainable, profitable growth over the long-term.”
Despite the good news, however, shares sunk more than 15% in after-hours trading.
Confirming a slowdown in sales, Sonos experienced a ‘reduced sell-through velocity’ at the end of Q1 2019.
Sales of its traditional smart speakers also fell 11%. The company attributed the drop to its decision to stop selling the aging Play:3 speaker. Sales of its newer Play:5, however, still declined. This may be due to a lack of voice-enabled technology in the device.
In addition, as with their American counterparts, European consumers appear to only want lower-priced smart speakers.
“We saw voice adoption begin to accelerate in Europe this holiday season, particularly as Google brought the Google Assistant to several European countries.
“However, similar to last year’s trends in the United States where the overwhelming majority of products were priced below $100, product volumes in Europe were skewed heavily to low-priced speakers.”
The company hopes to offer lower-priced speakers with its partnership with IKEA this summer.
However, further spooking investors, the hardware maker confirmed Mike Gianetto, its longtime Chief Financial Officer, will soon leave.
“Mike has been instrumental in getting us to a place of financial stability and operational excellence. He’s built a strong team that will serve Sonos for many years to come.”
Currently, the company’s stock has traded 1.6% below its opening price this morning. Two days ago, Sonos shares traded at $13.81. That number currently sits at $10.77.