A month has gone by since the last earnings report for Sonos (SONO). Shares have added about 1.4% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Sonos due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Sonos Q3 Earnings & Revenues Beat Estimates

Sonos reported third-quarter fiscal 2024 non-GAAP earnings per share of 23 cents. It had registered earnings per share of 16 cents in the prior-year quarter. On a GAAP basis, the company reported earnings of 3 cents against a loss of 18 cents in the year-ago quarter. The Zacks Consensus Estimate was pegged at 19 cents.

Quarterly revenues increased 6% year over year to $397.1 million, primarily benefiting from the launch of Sonos’ first over-the-ear Bluetooth headphone, Sonos Ace, earlier this quarter.  The top line surpassed the Zacks Consensus Estimate by 1%.

Sonos launched a major app redesign in May 2024 to enhance the streaming experience, but the execution fell short. Undetected bugs surfaced during the rollout, leading to a less satisfactory experience for many customers. This incident also delayed the two major new product releases planned for the fiscal fourth quarter.

Revenue Details

Revenues from Sonos speakers were $301.1 million, up 3.9% year over year. 

Sonos system products’ revenues of $75.2 million rose 17.1% year over year. 

Revenues from Partner products and other totaled $20.9 million, up 7.5% year over year. 

Region-wise, revenues from the Americas of $264.6 million increased 5.2% year over year. Europe, the Middle East and Africa generated revenues of $110.9 million, up 5.3%. Revenues from the Asia Pacific rose 31.7% year over year to $21.6 million.

Other Details

Non-GAAP gross profit was $193.3 million, up 11.6% on a year-over-year basis. Non-GAAP gross margin expanded 230 basis points to 48.7%, resulting from improved inventory management.

Total operating expenses amounted to $179 million, down from $193 million in the year-ago quarter, reflecting lower research and development costs as well as general and administrative costs.

Non-GAAP adjusted operating income was $38.4 million compared with $23.6 million in the year-ago quarter. Adjusted EBITDA totaled $48.9 million compared with $34.3 million a year ago.

Cash Flow & Liquidity

For the fiscal third quarter, Sonos used $63.5 million of cash from operations. Free cash outflow was $40.3 million.

As of Jun 29, cash and cash equivalents were $227.1 million compared with $291.6 million as of Mar 30, 2024.

The company returned $52.5 million to shareholders through stock repurchases in the quarter. It has $71 million worth of shares left for repurchase under the current $200 million buyback authorization.