[ad_1]
The post Q3 Earnings of Sonos Are Music to Investors’ Ears appeared first on Millennial Money.
Shares of Sonos (NASDAQ: SONO) opened higher by 13% on Thursday morning after the company reported fiscal third quarter earnings on Wednesday evening.
Like many technology and consumer products companies, Sonos has been grappling with supply constraints in recent quarters due to the global semiconductor shortage. The good news for Sonos is that its customers remain highly loyal and willing to wait to receive their products.
As of 12 p.m. EDT, Sonos stock was up by 5%.
Sonos customers are being patient
Revenue in the fiscal third quarter jumped 52% to $378.7 million, which handily crushed the consensus estimate of $315.2 million in sales. CEO Patrick Spence has been discussing three secular trends bolstering the business in recent months:
- Golden Age of Audio: Consumers now have access to unprecedented amounts of audio content, including music, audiobooks, and podcasts.
- Hollywood at Home: More video content is heading directly to homes as streaming services embrace direct-to-consumer models, leading people to upgrade their home theater setups.
- The Great Reshuffling: People have become untethered from commutes and are shifting to remote work, moving from urban areas to the suburbs and buying audio equipment for larger living spaces.
In order to capitalize on these trends, Sonos is focusing on strengthening its brand, expanding its product lineup by entering new categories, and delivering sustainable and profitable growth for investors in the long term.
Gross margin expanded by 300 basis points to 47%, thanks to several factors. Sonos pulled back on promotional discounts during the quarter, the company received some tariff refunds, and operating leverage kicked in with higher sales volumes.
The supply chain environment remains challenging, as Sonos is facing bottlenecks around numerous components needed to manufacture its products. But instead of buying audio products from a competing brand, consumers are simply waiting.
“Fortunately, our customers have shown both patience and loyalty,” Spence noted on the conference call with analysts. “Their willingness to wait for our products while we continue to work to build supply, truly underscores the power of our system-based approach and our brand.”
That all resulted in adjusted earnings per share of $0.27, while Wall Street analysts were expecting Sonos to lose $0.06 per share.
Raising guidance—again
For the third consecutive quarter, Sonos has raised its outlook for fiscal 2021. Revenue for the fiscal year is now forecast in the range of $1.695 billion to $1.71 billion, up from the company’s prior outlook of $1.625 billion to $1.675 billion. The consensus estimate currently calls for $1.67 billion.
Adjusted EBITDA for the year is expected to be $270 million to $280 million, and gross margin should expand to a range of 46.5% to 46.9%. The outlook assumes that tariff expenses will be minimal in the fiscal fourth quarter. Sonos is now working through the backlog of orders it has been sitting on, which CFO Brittany Bagley declined to quantify.
“Demand continues to be strong,” Bagley added. “There’s nothing we see that implies any slowing of demand.”
The post Q3 Earnings of Sonos Are Music to Investors’ Ears appeared first on Millennial Money.
[ad_2]
Source link