Sonos’ IPO has given us a rare glimpse into the company that sells multiroom and TV audio speakers. Since 2005, Sonos has sold 19 million products but the company is also contemplating cutting backwards compatibility. It has lost money for the past three years.
Sonos in 6.9 million households
As of March 2018, Sonos had sold around 19 million products that are installed in 6.9 million households worldwide. This is approximately 2.75 Sonos products per household.
- ”As of March 31, 2018, our customers had registered over 19 million products in approximately 6.9 million households globally. Based on customer data, we estimate that, on average, our customers listen to approximately 70 hours of content per month and to approximately 80% more music after purchasing their first Sonos product. We also estimate that our customers listened to five billion hours of audio content using our products in fiscal 2017, which represents 33% growth from fiscal 2016,” the company wrote in its prospectus.
Sonos has a portfolio of four TV audio products (Sonos Beam, Playbar, Playbase and Sub), four music speakers (Sonos One, Play:1, Play:3 and Play:5) and two accessories (Connect and Connect:Amp).
The future of Sonos
The speakers can connect through the company’s own, proprietary multiroom protocol. According to the prospectus, it is focused on adding more services and voice assistant such as Amazon Alexa, Google Assistant, and Siri (via Airplay 2).
In addition, the company has partnered with Apple and will soon incorporate Apple’s multiroom protocol Airplay 2 in its most recent products (Beam, One, Playbase and Play:5). The other Sonos products cannot be updated to Airplay 2, according to the company.
Sonos warns in its prospectus that it may decide to “discontinue service for older products” in the “near to intermediate term” as support is no longer “practical” or “cost-effective”. That may impact customer relationships.
- ”We expect that in the near to intermediate term, this backward compatibility will no longer be practical or cost-effective, and we may decrease or discontinue service for our older products. Therefore, if we no longer provide extensive backward capability for our products, we may damage our relationship with our customers, and the value proposition of our products with existing and prospective customers may decline,” the company wrote
No decision has been made but perhaps Airplay 2 is a sign of Sonos’ plans – and what products it decides to move forward with.
Sonos is losing money
The prospectus also gives us some financial figures. It reveals that Sonos’ revenue is increasing each year and that it was close to hitting 1 billion dollars in revenue in fiscal 2017 (ended September 30, 2017).
Sonos has been losing money (net loss) for the past three years. In the first half of fiscal 2018 (October 2017 through March 2018), Sonos had a net profit so it may be heading in the right direction. However, the company also presented net profit for the first half of fiscal 2017 but ended the year in the red.
The company’s stock will trade on Nasdaq under the symbol ‘SONO’.