Sonos Reports First Quarter Fiscal 2026 Results

Sonos Reports First Quarter Fiscal 2026 Results Feb 3, 2026 Q1 Revenue above midpoint of guidance range, Adjusted EBITDA near high-end of range Sonos, Inc. (Nasdaq: SONO) today reported First Quarter Fiscal 2026 results. “Fiscal 2026 is off to a good start for Sonos as we make progress toward a return to growth,” said Tom Conrad, Chief Executive Officer of Sonos. “We’re focused on coordinated execution across the growth dimensions that matter, from product and software to marketing and global expansion. With the announcement of Amp Multi, and with more planned later this year, we’re returning to product innovation that strengthens Sonos as a system, pairing great products with a simpler, more reliable, and more powerful platform designed to create long-term value for our customers, partners, and the business – all while maintaining our commitment to operational discipline.” “In Q1 we delivered revenue above the midpoint of our guidance range and strong Adjusted EBITDA that expanded 45% over the prior year, resulting in us generating more profit in Q1 than we did in all of Fiscal 2025,” commented Saori Casey, Sonos Chief Financial Officer. “This marks our sixth consecutive quarter of solid execution as we balance strong financial discipline with reinvestment for long-term growth.” First Quarter Fiscal 2026 Financial Highlights (unaudited) Revenue of $546 millionGAAP gross margin of 46.5%, Non-GAAP gross margin of 47.5%GAAP net income of $94 million, GAAP diluted earnings per share (EPS) of $0.75Non-GAAP net income of $116 million, Non-GAAP diluted EPS of $0.93Adjusted EBITDA of $132 million Guidance The company will provide guidance on its First Quarter Fiscal 2026 earnings call. Supplemental Earnings Presentation The company has posted a supplemental earnings presentation accompanying its First Quarter Fiscal 2026 results to the Earnings Reports section of its investor relations website at https://investors.sonos.com/reports-and-filings/default.aspx#section=earningsreports. Conference Call, Webcast and Transcript The company will host a webcast of its conference call and Q&A related to its First Quarter Fiscal 2026 results on February 3, 2026, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). Participants may access the live webcast in listen-only mode on the Sonos investor relations website at https://investors.sonos.com/news-and-events/default.aspx. The conference call may also be accessed by dialing (888) 330-2454 with conference ID 8641747. Participants outside the U.S. can access the call by dialing (240) 789-2714 using the same conference ID. An archived webcast of the conference call and a transcript of the company’s prepared remarks and Q&A session will also be available at https://investors.sonos.com/reports-and-filings/default.aspx#section=earningsreports following the call. Condensed Consolidated Statements of Operations and Comprehensive Income (unaudited, in thousands, except share and per share amounts) Three Months Ended December 27, 2025 December 28, 2024 Revenue $ 545,662 $ 550,857 Cost of revenue 292,202 309,451 Gross profit 253,460 241,406 Operating expenses Research and development 59,762 80,838 Sales and marketing 65,273 86,644 General and administrative 28,009 25,831 Total operating expenses 153,044 193,313 Operating income 100,416 48,093 Other income (expense), net Interest income 1,348 1,861 Interest expense (116 ) (110 ) Other (expense) income, net 420 (6,029 ) Total other income (expense), net 1,652 (4,278 ) Income before provision for (benefit from) income taxes 102,068 43,815 Provision for (benefit from) income taxes 8,270 (6,422 ) Net income $ 93,798 $ 50,237 Earnings per share: Basic $ 0.78 $ 0.41 Diluted $ 0.75 $ 0.40 Weighted-average shares used in computing earnings per share: Basic 120,489,548 122,071,586 Diluted 124,662,298 124,731,619 Total comprehensive income Net income 93,798 50,237 Change in foreign currency translation adjustment 1,736 (1,116 ) Net unrealized gain (loss) on marketable securities 16 (84 ) Comprehensive income $ 95,550 $ 49,037 Condensed Consolidated Balance Sheets (unaudited, in thousands, except par values) As of December 27, 2025 September 27, 2025 Assets Current assets: Cash and cash equivalents $ 312,504 $ 174,668 Marketable securities 50,987 52,858 Accounts receivable, net 116,270 65,847 Inventories 125,332 171,020 Prepaids and other current assets 35,146 39,642 Total current assets 640,239 504,035 Property and equipment, net 65,547 72,277 Operating lease right-of-use assets 44,721 45,297 Goodwill 82,854 82,854 Intangible assets, net 70,932 75,356 Deferred tax assets 10,545 10,509 Other noncurrent assets 33,037 32,950 Total assets $ 947,875 $ 823,278 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 203,812 $ 184,109 Accrued expenses 87,688 79,094 Accrued compensation 21,711 21,331 Deferred revenue, current 22,283 21,771 Other current liabilities 52,675 46,107 Total current liabilities 388,169 352,412 Operating lease liabilities, noncurrent 52,101 53,288 Deferred revenue, noncurrent 61,256 59,453 Deferred tax liabilities 129 126 Other noncurrent liabilities 2,894 2,774 Total liabilities 504,549 468,053 Commitments and contingencies Stockholders’ equity: Common stock, $0.001 par value 124 123 Treasury stock (47,782 ) (37,398 ) Additional paid-in capital 505,709 502,775 Accumulated deficit (18,280 ) (112,078 ) Accumulated other comprehensive income 3,555 1,803 Total stockholders’ equity 443,326 355,225 Total liabilities and stockholders’ equity $ 947,875 $ 823,278 Condensed Consolidated Statements of Cash Flows (unaudited, dollars in thousands) Three Months Ended December 27, 2025 December 28, 2024 Cash flows from operating activities Net income $ 93,798 $ 50,237 Adjustments to reconcile net income to net cash provided by operating activities: Stock-based compensation expense 15,191 25,334 Depreciation and amortization 14,022 17,611 Provision for excess and obsolete inventory 153 1,305 Deferred income taxes 48 123 Other 2,025 841 Foreign currency transaction (gain) loss (1,625 ) 2,129 Changes in operating assets and liabilities: Accounts receivable (49,120 ) (41,374 ) Inventories 45,534 89,308 Other assets 4,263 (6,437 ) Accounts payable and accrued expenses 31,224 (5,940 ) Accrued compensation 546 12,394 Deferred revenue 2,073 1,513 Other liabilities 5,175 9,129 Net cash provided by operating activities 163,307 156,173 Cash flows from investing activities Purchases of marketable securities (12,506 ) (10,128 ) Purchases of property and equipment (5,958 ) (13,106 ) Maturities of marketable securities 14,400 13,900 Net cash used in investing activities (4,064 ) (9,334 ) Cash flows from financing activities Payments for repurchase of common stock (25,000 ) (27,165 ) Payments for repurchase of common stock related to shares withheld for tax in connection with vesting of stock awards (10,873 ) (9,044 ) Proceeds from exercise of stock options 13,232 2,411 Payments for debt issuance costs (780 ) — Net cash used in financing activities (23,421 ) (33,798 ) Effect of exchange rate changes on cash and cash equivalents 2,014 (2,818 ) Net increase in cash and cash equivalents 137,836 110,223 Cash and cash equivalents Beginning of period 174,668 169,732 End of period $ 312,504 $ 279,955 Supplemental disclosure Cash paid for interest $ 67 $ 63 Cash paid for taxes, net of refunds $ 1,469 $ 658 Cash paid for amounts included in the measurement of lease liabilities, net of tenant improvement reimbursements received $ 1,899 $ (2,531 ) Supplemental disclosure of non-cash investing and financing activities Purchases of property and equipment in accounts payable and accrued expenses $ 1,950 $ 3,693 Right-of-use assets obtained in exchange for new operating lease liabilities $ 586 $ — Excise tax on share repurchases, accrued but not paid $ 281 $ 668 Reconciliation of GAAP to Non-GAAP Cost of Revenue and Gross Profit (unaudited, in thousands, except percentages) Three Months Ended December 27, 2025 December 28, 2024 Reconciliation of GAAP cost of revenue GAAP cost of revenue $ 292,202 $ 309,451 Stock-based compensation expense 1,327 1,349 Amortization of intangibles 4,381 3,330 Non-GAAP cost of revenue $ 286,494 $ 304,772 Reconciliation of GAAP gross profit GAAP gross profit $ 253,460 $ 241,406 Stock-based compensation expense 1,327 1,349 Amortization of intangibles 4,381 3,330 Non-GAAP gross profit $ 259,168 $ 246,085 GAAP gross margin 46.5 % 43.8 % Non-GAAP gross margin 47.5 % 44.7 % Reconciliation of Selected Non-GAAP Financial Measures (unaudited, dollars in thousands) Three Months Ended December 27, 2025 December 28, 2024 Research and Development (GAAP) $ 59,762 $ 80,838 Stock-based compensation 6,489 13,315 Amortization of intangibles 20 178 Restructuring and other charges - (60 ) Research and Development (Non-GAAP) $ 53,253 $ 67,405 Sales and Marketing (GAAP) $ 65,273 $ 86,644 Stock-based compensation 2,845 5,632 Amortization of intangibles - - Restructuring and other charges - - Sales and Marketing (Non-GAAP) $ 62,428 $ 81,012 General and Administrative (GAAP) 28,009 25,831 Stock-based compensation 4,530 5,038 Legal and transaction related costs 2,510 195 Amortization of intangibles 24 23 Restructuring and other charges - - General and Administrative (Non-GAAP) $ 20,945 $ 20,575 Total Operating Expenses (GAAP) $ 153,044 $ 193,313 Stock-based compensation 13,864 23,985 Legal and transaction related costs (1) 2,510 195 Amortization of intangibles 44 201 Restructuring and other charges - (60 ) Operating Expenses (Non-GAAP) $ 136,626 $ 168,992 Total Operating Income (GAAP) $ 100,416 $ 48,093 Stock-based compensation 15,191 25,334 Legal and transaction related costs (1) 2,510 195 Amortization of intangibles 4,425 3,531 Restructuring and other charges - (60 ) Operating Income (Non-GAAP) $ 122,542 $ 77,093 Depreciation 9,597 14,080 Adjusted EBITDA (Non-GAAP) $ 132,139 $ 91,173 Total Operating Income (GAAP) $ 100,416 $ 48,093 Stock-based compensation expense 15,191 25,334 Legal and transaction related costs (1) 2,510 195 Amortization of intangibles 4,425 3,531 Restructuring and other charges - (60 ) Operating Income (Non-GAAP) $ 122,542 $ 77,093 Interest income 1,348 1,861 Interest expense (116 ) (110 ) Pre-tax Income (Non-GAAP) $ 123,774 $ 78,844 Provision for (benefit from) income taxes 8,270 (6,422 ) Net income (Non-GAAP) 115,504 85,266 Weighted-average shares non-GAAP, diluted 124,662,298 124,731,619 Non-GAAP earnings per share, diluted $ 0.93 $ 0.68 (1) Legal and transaction-related costs consist of expenses related to our intellectual property ("IP") litigation against Alphabet and Google, as well as legal and transaction costs associated with our acquisition activity, which we do not consider representative of our underlying operating performance. Reconciliation of Net Income to Adjusted EBITDA (unaudited, dollars in thousands except percentages) Three Months Ended December 27, 2025 December 28, 2024 (In thousands, except percentages) Net income $ 93,798 $ 50,237 Add (deduct): Depreciation and amortization 14,022 17,611 Stock-based compensation expense 15,191 25,334 Interest income (1,348 ) (1,861 ) Interest expense 116 110 Other expense (income), net (420 ) 6,029 Provision for (benefit from) income taxes 8,270 (6,422 ) Legal and transaction related costs (1) 2,510 195 Restructuring and other charges (2) — (60 ) Adjusted EBITDA $ 132,139 $ 91,173 Revenue $ 545,662 $ 550,857 Net income margin 17.2 % 9.1 % Adjusted EBITDA margin 24.2 % 16.6 % (1) Legal and transaction-related costs consist of expenses related to our intellectual property ("IP") litigation against Alphabet and Google, as well as legal and transaction costs associated with our acquisition activity, which we do not consider representative of our underlying operating performance. (2) On August 14, 2024, we initiated a restructuring plan to reduce our cost base involving approximately 6% of our employees (the "2024 restructuring plan"). Restructuring and other charges for the three months ended December 28, 2024, reflect a gain resulting from the impact of remaining restructuring costs that were lower than our estimated liability under the 2024 restructuring plan. Reconciliation of GAAP Net Income to Non-GAAP Net Income (unaudited, in thousands, except share and per share amounts) Three Months Ended December 27, 2025 December 28, 2024 GAAP net income $ 93,798 $ 50,237 Stock-based compensation expense 15,191 25,334 Legal and transaction related costs (1) 2,510 195 Amortization of intangibles 4,425 3,531 Restructuring and other charges - (60 ) Other expense (income), net (420 ) 6,029 Non-GAAP net income $ 115,504 $ 85,266 Earnings per share GAAP earnings per share, diluted $ 0.75 $ 0.40 Non-GAAP earnings per share, diluted $ 0.93 $ 0.68 Shares used to calculate earnings per share Weighted-average shares GAAP, diluted 124,662,298 124,731,619 Weighted-average shares non-GAAP, diluted 124,662,298 124,731,619 (1) Legal and transaction-related costs consist of expenses related to our intellectual property ("IP") litigation against Alphabet and Google, as well as legal and transaction costs associated with our acquisition activity, which we do not consider representative of our underlying operating performance. Reconciliation of Cash Flows Provided by Operating Activities to Free Cash Flow (unaudited, dollars in thousands) Three Months Ended December 27, 2025 December 28, 2024 Cash flows provided by operating activities $ 163,307 $ 156,173 Less: Purchases of property and equipment (5,958 ) (13,106 ) Free cash flow $ 157,349 $ 143,067 Revenue by Product Category (unaudited, dollars in thousands) Three Months Ended December 27, 2025 December 28, 2024 (In thousands) Sonos speakers $ 459,240 $ 467,142 Sonos system products 65,058 60,274 Partner products and other revenue 21,364 23,441 Total revenue $ 545,662 $ 550,857 Revenue by Geographical Region (unaudited, dollars in thousands) Three Months Ended December 27, 2025 December 28, 2024 Americas $ 328,877 $ 324,583 Europe, Middle East and Africa 189,441 197,612 Asia Pacific 27,344 28,662 Total revenue $ 545,662 $ 550,857 Stock-based Compensation (unaudited, dollars in thousands) Three Months Ended December 27, 2025 December 28, 2024 (In thousands) Cost of revenue $ 1,327 $ 1,349 Research and development 6,489 13,315 Sales and marketing 2,845 5,632 General and administrative 4,530 5,038 Total stock-based compensation expense $ 15,191 $ 25,334 Amortization of Intangibles (unaudited, dollars in thousands) Three Months Ended December 27, 2025 December 28, 2024 Cost of revenue $ 4,381 $ 3,330 Research and development 20 178 Sales and marketing - - General and administrative 24 23 Total amortization of intangibles $ 4,425 $ 3,531 Use of Non-GAAP Measures We have provided in this press release financial information that has not been prepared in accordance with generally accepted accounting principles (“U.S. GAAP”), including Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP operating (loss) income, non-GAAP pre-tax (loss) income, free cash flow, non-GAAP gross margin, non-GAAP net (loss) income and non-GAAP diluted earnings (loss) per share. These non-GAAP financial measures are not based on any standardized methodology prescribed by U.S. GAAP and are not necessarily comparable to similarly titled measures presented by other companies. We use these non-GAAP financial measures to evaluate our operating performance and trends and make planning decisions. We believe that these non-GAAP financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses and other items that we exclude in these non-GAAP financial measures. Accordingly, we believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects and allowing for greater transparency with respect to a key financial metric used by our management in its financial and operational decision-making. Non-GAAP financial measures should not be considered in isolation of, or as an alternative to, measures prepared in accordance with U.S. GAAP. Investors are encouraged to review the reconciliation of these financial measures to their nearest U.S. GAAP financial equivalents provided in the financial statement tables above. We define Adjusted EBITDA as net (loss) income adjusted to exclude the impact of depreciation and amortization, stock-based compensation expense, interest income, interest expense, other expense (income), income taxes, restructuring and other charges, legal and transaction related fees and other items that we do not consider representative of our underlying operating performance. We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue. We define non-GAAP operating (loss) income as total operating loss adjusted to exclude stock-based compensation expense, legal and transaction related costs, amortization of intangibles and restructuring and other charges. We define non-GAAP pre-tax (loss) income as non-GAAP operating (loss) income adjusted to include interest income and to exclude interest expense. We define free cash flow as net cash from operations less purchases of property and equipment. We define non-GAAP gross margin as GAAP gross margin, excluding stock-based compensation, amortization of intangible assets and restructuring and other changes. We calculate non-GAAP net (loss) income as GAAP net (loss) income less stock-based compensation, legal and transaction related fees, amortization of intangibles, other expense (income) and restructuring and other charges. We calculate non-GAAP diluted earnings (loss) per share as non-GAAP net (loss) income divided by non-GAAP weighted average diluted shares outstanding during the period. We do not provide a reconciliation of forward-looking non-GAAP financial measures to their comparable GAAP financial measures because we cannot do so without unreasonable effort due to unavailability of information needed to calculate reconciling items and due to the variability, complexity and limited visibility of the adjusting items that would be excluded from the non-GAAP financial measures in future periods. When planning, forecasting and analyzing future periods, we do so primarily on a non-GAAP basis without preparing a GAAP analysis as that would require estimates for items such as stock-based compensation, which is inherently difficult to predict with reasonable accuracy. Stock-based compensation expense is difficult to estimate because it depends on our future hiring and retention needs, as well as the future fair market value of our common stock, all of which are difficult to predict and subject to constant change. In addition, for purposes of setting annual guidance, it would be difficult to quantify stock-based compensation expense for the year with reasonable accuracy in the current quarter. As a result, we do not believe that a GAAP reconciliation would provide meaningful supplemental information about our outlook. Forward Looking Statements This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding our long-term outlook, financial, growth and business strategies and opportunities, our ability to expand our footprint with existing customers, market growth and our market share, our ability to expand our products globally, our operating model and cost structure, our ability to create a seamless platform for the home, and other factors affecting variability in our financial results. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors, including, but not limited to: difficulties in and effect of implementing improvements to our operating model and cost structure; the risk that restructuring and related charges may be greater than anticipated or not occur in the expected time frame; local law requirements in various jurisdictions regarding elimination of positions; our ability to accurately forecast product demand and effectively forecast and manage owned and channel inventory levels; our ability to successfully introduce software updates, including with respect to our redesigned app; our ability to maintain, enhance and protect our brand image; the impact of global economic, market and political events, including tariffs, global trade tensions, continued inflationary pressures, high interest rates and, in certain markets, foreign currency exchange rate fluctuations; changes in consumer income and overall consumer spending as a result of economic or political uncertainty or conditions, including tariffs; changes in consumer spending patterns; our ability to successfully introduce new products and services and maintain or expand the success of our existing products; the success of our efforts to expand our direct-to-consumer channel; the success of our financial, growth and business strategies; our ability to compete in the market and maintain or expand market share; our ability to maintain relationships with our channel, distribution and technology partners; our ability to meet product demand and manage any product availability delays; supply chain challenges, including shipping and logistics challenges and component supply-related challenges, including memory costs; our ability to protect our brand and intellectual property; our use of artificial intelligence; and the other risk factors identified in our filings with the Securities and Exchange Commission (the “SEC”), including our most recent Annual Report on Form 10-K and subsequent filings. Copies of our SEC filings are available free of charge at the SEC’s website at www.sec.gov, on our investor relations website at https://investors.sonos.com/reports-and-filings/default.aspx or upon request from our investor relations department. All forward-looking statements herein reflect our opinions only as of the date of this press release, and we undertake no obligation, and expressly disclaim any obligation, to update forward-looking statements herein in light of new information or future events. Sonos and Sonos product names are trademarks or registered trademarks of Sonos, Inc. All other product names and services may be trademarks or service marks of their respective owners. About Sonos Sonos (Nasdaq: SONO) is a leading audio company dedicated to elevating life through sound. Sonos has built a connected system that brings together all the sounds people love, from music and movies to stories and conversations. Its portfolio of home theater speakers, components, plug-in and portable speakers, and headphones grows more powerful with every room and device added. Trusted by more than 17 million households in over 60 countries, Sonos is headquartered in Santa Barbara, California. Learn more at www.sonos.com. Source: Sonos