Sonos CEO Patrick Spence welcomes investors to take another look at its financials this year and its recent product launches.
SONO) deserves more respect on the Street because it’s not simply a hardware company.
“I don’t think investors necessarily understand our business, we have only been public for a year. We are starting to see some of them understand it,” Spence said on Yahoo Finance’s The First Trade. “But we are living in a world where there are a lot of software companies and that’s the shine of the moment. The hardware space has been damaged by how some have approached the space and not delivered on what they said they would. We have delivered on what we said we would as a public company.”
gives the Move high marks for its power and ease of use. Spence said the debut is big for Sonos, an entry into an entirely new market.
The Move launch comes on the heels of Sonos’ entry into the mass market via a tie-up with Ikea several weeks ago. Sonos and Ikea joined forces to build two pieces of furniture that come equipped with a Sonos smart speaker inside. The relatively low price points for the products, Spence said, are likely to drive more people into the Sonos brand for the first time. That should position Sonos to capitalize on those consumers looking to trade up to its more expensive home theater and smart speaker offerings over the long-term.
Sonos’ growing product momentum is taking hold in its financials. For the nine months ended June 29, Sonos’ operating profits clocked in at $30.5 million versus a loss of $9.1 million a year earlier. Fiscal third quarter sales increased solidly in all four of Sonos’ product categories: wireless speakers, home theater, components and other.
“We are incrementally more positive given an improved product cycle via the IKEA partnership, consistent quarterly execution, and a reasonable valuation. While we question the recurring nature of the business, we believe that the IKEA partnership will help expand SONO’s addressable market,” Jefferies analyst Brent Thill wrote in a note to clients.
With Sonos shares up about 50% this year, it shows at least some investors are finally understanding the company. As more get it, Sonos’ shares could be looking at another 50% move higher over the next 12-months.
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