Sonos Q4 Earnings Call Highlights

Key Points

• Sonos returned to growth in fiscal 2026: Revenue rose 7% to $1.55 billion, adjusted EBITDA increased 39% to $184 million, and free cash flow grew 14% to $123 million.
• Memory and component costs are pressuring margins: Higher memory prices cut full-year adjusted EBITDA by an estimated $56 million. For fiscal Q1 2027, Sonos forecast revenue of $570 million to $630 million but expects a roughly 1,200-basis-point gross-margin headwind from memory and component costs.
• New products helped drive results and Sonos expects further growth: The company said several 2026 launches contributed meaningfully to Q4 and expects revenue growth in fiscal 2027, while targeting about 500 basis points of annualized gross-margin improvement from memory-cost mitigation by year-end.

Sonos NASDAQ: SONO reported a return to annual revenue growth in fiscal 2026 and a 39% increase in adjusted EBITDA, as new products helped offset a sharp rise in memory costs. The company also forecast first-quarter revenue growth heading into the holiday season, while warning that component prices will weigh heavily on gross margin.

Fourth-quarter revenue rose 20% year over year to $344 million, or 11% excluding an extra week in the reporting period, Chief Financial Officer Saori Casey said. For the full fiscal year, revenue increased 7% to $1.55 billion, or 5% excluding the 53rd week.

“We returned Sonos to growth, including double-digit growth in the fourth quarter. We held our discipline on cost, and we drove a very significant step-up in profitability,” Chief Executive Officer Tom Conrad said on the earnings call.

Profitability improved despite memory costs

Full-year adjusted EBITDA rose to $184 million from the prior year, with the adjusted EBITDA margin expanding to 11.9%. Casey said higher memory prices reduced the measure by $56 million year over year. Without that headwind, Sonos estimated adjusted EBITDA would have been $240 million.

Sonos posted positive adjusted EBITDA in all four quarters of fiscal 2026, which Casey said the company had not achieved since fiscal 2021. Non-GAAP earnings per share roughly doubled to $1.23, while free cash flow increased 14% to $123 million.

For the fourth quarter, adjusted EBITDA was $6 million, roughly flat from a year earlier. Casey said the company absorbed $33 million in higher memory costs during the quarter. GAAP loss per share narrowed to $0.04 from $0.31 a year earlier, including a $0.16-per-share benefit from tariff refunds. Non-GAAP earnings were $0.04 per share, compared with a loss of $0.06 a year earlier.

Quarterly GAAP gross margin was 46.1%, aided by $18 million in tariff refunds. Without the refunds, the margin would have been 40.9%, Casey said. Non-GAAP gross margin was 42.1%, as higher memory costs reduced the figure by nearly 1,000 basis points year over year.

Sonos ended the quarter with $227 million in net cash and marketable securities. Inventory rose 60% year over year to $273 million, reflecting higher memory costs and the timing of new product launches, Casey said.

Holiday outlook and margin pressure

For the first quarter of fiscal 2027, Sonos forecast revenue of $570 million to $630 million, representing growth of 4% to 15% year over year. The company projected adjusted EBITDA of $73 million to $111 million.

Sonos expects first-quarter GAAP gross margin of 36% to 37%, with non-GAAP gross margin approximately 90 basis points higher. Casey said memory and component costs were expected to create a roughly 1,200-basis-point year-over-year headwind, while a stronger dollar would reduce gross margin by nearly another 100 basis points.

The company also expects revenue to grow for the full fiscal year. Its memory cost mitigation efforts are on track to deliver approximately 500 basis points of annualized gross margin improvement at the fiscal 2027 exit rate, Casey said. Conrad said more than half of that improvement was already contemplated in results seen so far, with further benefits expected as the company works on memory efficiency and pricing.

Conrad said Sonos has historically delivered gross margins in the mid-40s, but the pace of a return to that level will depend partly on when and how much memory prices ease. The company is also looking to grow its installer channel and improve its direct-to-consumer business.

New products and software platform

Sonos introduced five products during fiscal 2026: Sonos Play, Era 100 SL, Amp Multi, Beam Ultra and Ace Ultra. Casey said the latter three made meaningful contributions to fourth-quarter results, while the first two continued to generate demand in their second full quarter of availability.

The company ended the year with an installed base of 17.7 million households, up from 17.1 million a year earlier. Conrad said 62% of Sonos households own more than one product, and 44% of the year’s registrations came from homes that already owned Sonos products.

Conrad also highlighted Sonos 27, the audio software platform introduced in September. He said the company plans annual platform releases each fall. An in-house voice assistant, 27voice, is set to launch in early access this month, while 27mcp, an interface designed to let outside AI agents discover and control Sonos systems, is already in early access.

On capital returns, Casey said Sonos completed $130 million in share repurchases during fiscal 2026, finishing its existing $150 million authorization. The board approved a new $150 million authorization in early November, all of which remained available at the time of the call.

About Sonos (NASDAQ:SONO)

Sonos, Inc. designs and sells wireless audio products and software for home entertainment. Its lineup includes wireless speakers, soundbars, subwoofers, amplifiers and related components that can be used individually or connected through the Sonos platform to play audio in multiple rooms. The company's products support music and other audio from a range of streaming services, as well as television and home theater setups. Sonos also offers software and services, including Sonos Radio, and sells products through its website and retail partners in markets around the world.

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