1 week Ago By David Richards
Sonos Australia’s business is going backwards at an alarming rate, revenue figures reveal that prior to COVID the APC region of which Australia is the largest contributor had revenues of A$151M, this has fallen to $128M and is still falling according to Sonos’s latest financials up to September 2024. Even without their recent app debacle it appears that consumers are ditching Sono’s sound products, for alternative networked audio speakers from the likes of Denon, Audio Pro, Apple, and a multitude of other providers. Sonos has reported revenue declines in eight of its last 10 quarters.
Last night their shares fell another $2.34% on their latest financial results, with the shares having fallen over 20% during the past six months. Some insiders are claiming that a “Woke” culture at the US business contributed to an ambitious overhaul to its app in early May going pear shaped, with work from home management coupled with designers of their struggling app not communicating with each other because they were also working from home failing to properly beta test the new app.
Bugs were not found and simple functionality issues not only crashed their speakers it’s also crashed their brand and reputation, which was already on the nose due to management attempts to try and force existing consumers to upgrade from an ill-conceived proprietary operating system that would not work in a Bluetooth Wi Fi world without a new app. Rennie Addabbo joined Sonos as Country Director, four years ago when sales were actually growing. Responsible for end-to-end operations of the Australian business, including sales and marketing, customer care, operations and finance the business under his watch has lost share both in mass consumer and via their custom install channel.
Prior to that, he was General Manager for Microsoft’s Interactive Entertainment Business in Greater Asia. PR management at Sonos became so desperate at the Australian operation that they took to threatening journalists unless they wrote favourable stories or they face being black banned, SmartHouse & ChannelNews were two such publications after we revealed the launch of a new product months out from the release date. The severity of the app issue really came to the surface with the release yesterday of the company’s fiscal third-quarter results.
Facing a challenging fiscal 2024 fourth quarter as their app drama failed to get solved, management yesterday revealed significant declines in both quarterly and annual revenues. Sonos’ Q4 revenue dropped to US$255.4 million from U$305.
1 million in the same quarter last year, resulting in a larger-than-expected net loss of $53.1 million, or $0.44 per share.
This quarter also included their new Ace headphones which was a first for the Company and a new Sonos Arc soundbar. The 16% drop year-over-year in revenue and a 17% drop in unit sales is still being played out with consumers. The Ace headphones have already been described as a business flop after Sonos initially projected revenues of between US$480 million to US$560 million for the crucial December quarter, the midpoint of which would represent a 15% decline in sales from the same period last year.
The Wall Street Journal claims that Sonos management actions have “definitely dented its brand”. “Sonos can’t escape its own misfires or the gyrations of the global economy. Its bungled app launch came just as the market for home electronics was contracting following a Covid-induced boom.
Sonos has reported revenue declines in eight of its last 10 quarters. As for their first headphone which ChannelNews tipped was set to struggle in a crowded market, Sonos Chief Executive Officer Patrick Spence said on last night’s earnings call, “We have found that building momentum in headphones is taking longer than we had originally anticipated..
” Spence also admitted that “unprecedented discounting and permanent price drops from the established players” in the headphone market which have been there for at least 12 months was also impacting sales of their headphones. One observer said, “It was if Spence was of the opinion that because it was branded Sonos they were going to have a better run than established headphone brands”. Spence tried to spin investors on the performance of their Ace headphones claiming ” Ace continues to be very well received by customers and reviewers.
It’s an excellent product that can compete with anyone on comfort, sound, ANC, and the other qualities that make for a great headphone. This is why TIME named Sonos Ace a winner for their 2024 Best Inventions list in the category of Entertainment & Gaming last month”. The only problem is that few people are reading Time today especially the right audience for Sono’s headphones.
Currently Time is being hawked around for a sale with Billionaire tech mogul Marc Benioff reportedly in talks to sell Time magazine to a Greek Company. Benioff, who co-founded enterprise software giant Salesforce and who boasts of having a net worth of $10.7 billion bought Time in 2018 for $190 million, now he is looking to flog it for considerably less.
Sonos CEO Patick Spence In September, Time raised eyebrows when it excluded Elon Musk from its list of the 100 most influential people in artificial intelligence. In 2012, Time had a circulation of 3.3 million.
Today, its readership numbers have slumped to the point that the publication is seen as not being commercially viable for a lot of advertisers. Sonos thus has a lot to manage in its new fiscal year with some questioning whether the brand is beyond repair. In the last quarter the business spent money as they desperately tried to repair their damaged reputation.
Sales and marketing costs in the latest quarter represented 29% of revenue, which is the highest in six years. As for investors they are also turning off investing in the broken brand. “We fear the app debacle created more damage than Sonos has let on,” wrote Brent Thill of Jefferies in a note ahead of their latest results.
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