Sonos Revenues Fall 16 Percent as Most App Issues Get Fixed

Sonos says it has “restored 90 percent of [the] missing features” in its new mobile and web apps after six months of updates, layoffs, product delays, and a series of internal reforms. But its latest earnings report hints at the problems the firm created for itself this year.

For the quarter ending September 28, Sonos reported a net loss of $53 million on revenues of $255 million. Revenues are down 16 percent year-over-year (YOY). This quarter was also the end of the Sonos fiscal year. For the year, the firm reported a net loss of $38 million on revenues of $1.5 billion. So its full-year revenues were down 8.3 percent YOY.

“Thanks to our team going all-in on our app recovery efforts, we made significant progress in bringing the quality of our software to a level that we’re all proud of, which enabled us to launch our highly anticipated new products, Arc Ultra and Sub 4, in time for the holidays,” Sonos CEO Patrick Spence says in what is perhaps an overly positive view of things. “Initial feedback on our new products has been very positive, which, along with the introduction of Ace earlier this year, makes our product lineup the strongest it’s ever been. While the overall audio category continues to face headwinds, we are confident that we are well-positioned to take more of it over time.”

Sonos offers only a semi-transparent view of its finances, and it breaks down its revenues into three broad categories, all of which experienced YOY revenue shortfalls. Sonos speakers delivered $178 million in revenues in the quarter, accounting for about 70 percent of total revenues. Sonos system products provided $58.7 million in revenues. And Partner products and other revenues landed at $18.4 million in revenues. Those represent YOY drop-offs of 20, 5.8, and 5.6 percent, respectively.

In its earnings presentation, Sonos blamed “challenging market conditions” and “challenges resulting from our recent app rollout” for the losses, noting that they were partially offset by the Ace headphone launch in June and favorable exchange rates.

But it put a big focus on the new app as well, noting that it delivered its “most extensive app redesign ever” to “improve our ability to drive innovation, make rapid updates,” and overcome “technical debt.” But it acknowledges that it “changed too much all at once, and we know that since the May launch, many customers have experienced significant problems with the new app.”

Since that botched release, Sonos has issued 16 app updates that it says restored 90 percent of the features that were missing when it originally launched. Its most recent update from yesterday made more improvements to Trueplay and Quick tuning on iOS, added support for content search when setting an alarm in iOS 18, improved stability on Android, and added a battery status icon in room settings for portable speakers on iOS. Sonos claims the new app has finally achieved several quality milestones–“Add Product”/Setup Success rate, “System not found” and “Products not found” errors, Configuring stereo pairs and home theater, App responsiveness, and Crash-free sessions–that it says makes it “as good or better than” the old S2 app.

And with that, the Sonos app biweekly app update schedule comes to a close.

“Moving forward we’ll alternate between major and minor releases,” Sonos says. “This will allow us to maintain our momentum of making improvements while also ensuring adequate beta testing. We are committed to continuing to improve the software experience on an ongoing basis.”

Looking to the current quarter, Sonos expects the blowback to continue, with YOY revenue declining between 9 and 22 percent.