By Jorge Mercado Friday, February 7th, 2025

It has been a turbulent start to the year for Santa Barbara-based Sonos with changes in its executive leadership team and a mass layoff.

But maybe there are sunnier days on the horizon for the audio equipment manufacturer, as the company announced its earnings for the first quarter of 2025.

For the quarter ended Dec. 28, Sonos generated revenue of $551 million, down from revenue of $612.8 million in the same quarter a year ago, but it was enough to beat analysts’ expectations. 

The same holds true for the company’s adjusted net income, which was at $91.7 million, or 64 cents per share, down from $115.2 million in the first quarter of last year.

Non-adjusted net income for Sonos was at $50.2 million, down more than $30 million from the same quarter a year ago.

Analysts expected adjusted earnings per share of 30 cents on revenue of $519.7 million. 

Sonos shares soared initially after the earnings beat and layoff announcement.

Announced before the markets opened Feb. 6, Sonos shares were up 19% in pre-market trading and were up as high as 10% during the trading day.

Shares fell back down to earth, however, on Feb. 7, closing at $13.88, down more than 7% from the Feb. 6 close price.

Saori Casey, Sonos’ CFO, said the first-quarter results show the team’s “commitment to execution as we navigate a difficult environment.”

“We continue to make great progress in our transformation journey that will set us up well for the future,” she said.

Tom Conrad, Sonos’ interim CEO, said despite recent progress “our core experience still needs significant improvement.”

Conrad became the interim CEO on Jan. 13 after former chief executive Patrick Spence stepped down after eight years.

The move came eight months after Sonos released its overhauled app back in May, which faced almost immediate backlash from even its longest customers due to apps missing numerous key features and being an overall glitchy mess.

Chief Product Officer Maxime Bouvat-Merlin, who played a key role in a lot of Sonos developments, announced his departure from the company the next day.

“As a longtime passionate customer myself, I know the magic of Sonos, but I also know the extreme disappointment of the company’s recent tech challenges,” Conrad said.

“I’m returning Sonos to a scrappier and more focused enterprise.”

Conrad noted Sonos will be looking to “drive operational efficiency and improve our financial performance.”

As a result, the company announced on Feb. 5, one day before the earnings announcement, that the company would be laying off 200 people, or approximately 12% of its workforce.

That also included 50 managers and executives, Conrad said.

With those layoffs, Conrad added that the company would be creating “functional groups for hardware, software, design, quality and operations, and away from dedicated business units devoted to individual product categories.”

“Our focus is now on the total overhaul of the product organization, which houses more than half of our employees. While these actions represent a major milestone in our transformation journey, we are not finished. We will continue to carefully scrutinize the allocation of all dollars to ensure that they’re being applied to the highest return opportunities,” Conrad said.

“The leaner and more effective we are as a company, the better we can capitalize on the opportunities in front of us.”

Conrad believes this decision will also improve the company’s ability to deliver new products.

“Being smaller and more focused will require us to do a much better job of prioritizing our work — lately we’ve let too many projects run under a cloud of half-commitment. We’re going to fix this too,” he said.

Sonos estimates that the job cuts will incur approximately $15 to $18 million of restructuring and related charges, the majority of it relating to employee severance and benefits costs. 

Conrad concluded his opening statement during the earnings call by noting that Sonos is currently conducting a robust national search for the next permanent CEO.

Conrad himself is a candidate for the permanent role.

“While that process plays out, there’s no time to lose in pushing forward the vital work of fixing, restructuring andinnovating. Sonos today has the deepest, most innovative product lineup in its history,” he said.

During the call, Conrad confirmed that despite the CEO shakeup, Sonos is still committed to new products coming out each year, however, he would not commit to the two new products a year goal that Spence had.

Asked about the Ace headphones, Sonos’ first headphones product that was released alongside the app debacle, Casey said the product is continuing to see both revenue growth and great reviews from customers.

The company does not disclose exact results.

“Ace was launched at the worst time possible from an app launch timing perspective, but as we continue to go through the recovery of our brand, we’re certainly making progress,” Casey said.

Sonos is projecting second-quarter revenue in the range of $240 million to $265 million.

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