Sonos Inc Q1 FY2026 earnings call

Tom outlined five growth dimensions: 1. Product innovation, with tight alignment of hardware and software roadmaps and new products like Sonos Amp Multi planned. 2. Return to customer advocacy, with progress in system performance and reliability across software upgrades, and price reduction of Arrow 100 driving new customer growth. 3. More intentional and effective marketing, rebuilding go-to-market engine around a full funnel brand architecture. 4. Geo expansion, seeing opportunity to expand global footprint. 5. Tapping demand from emerging external trends, including conversational AI in the home. Saori discussed Q1 financials, including revenue above guidance midpoint, gross margin improvements, operating expenses decline, share repurchases, and inventory reduction.

In Q1, Sonos generated revenue of $546 million. Gross profit dollars grew 5% year over year. Adjusted EBITDA grew 45% year over year to $132 million. Revenue in The Americas grew 1% year over year, while EMEA revenue declined by 4% and APAC by 5%. On a product basis, plug-ins delivered double-digit growth, driven by strong performance from ERA100. GAAP gross margin was 46.5%, and non-GAAP gross margin was 47.5%.

Q2 revenue is expected to be in the range of $250 million to $280 million, down 4% to up 8% year over year and up 2% at the midpoint. For fiscal 2026, revenue is expected to be $796 million to $826 million, flat year over year at the midpoint. Q2 GAAP gross margin is expected to be in the range of 44% to 46%, with non-GAAP gross margin approximately 20 basis points higher than GAAP. Q2 adjusted EBITDA is expected to be in the range of negative $18 million to positive $10 million. For fiscal 2026, midpoint of guidance implies GAAP operating expenses of $3.08 billion down 16% year over year, and non-GAAP operating expenses of $276 million down 9% year over year.

Memory cost inflation and supply chain volatility are risks, as memory pricing is a headwind across the hardware industry, though the team is taking action to secure suppliers and manage costs.

Q: Could you address memory cost impact on gross margins and availability issues?

A: Memory pricing is a headwind, but the team has secured additional memory suppliers and our products have modest memory requirements. We have the supply situation under control for products planned in the second half.

Q: When will we see the impact of Colleen's marketing contribution?

A: Colleen is already aligning creative and messaging, and activity will ramp relatively quickly, shifting to a more sustained marketing presence.

Q: Flesh out AI vision for Sonos users?

A: AI can be applied in interaction models, anticipatory design, and inside operations, making the system smarter, more personal, and accelerating innovation workflows.

Q: Take on broader health of premium home theater market?

A: We continue to grow share in Americas and EMEA, with a well-positioned product portfolio, and the installer channel is important.

Q: Bridge gap on gross margin performance?

A: Tailwinds include cost reduction, FX, and price increases; headwinds include tariffs and product mix.

Q: CEO changes and geographic color?

A: First year focused on improving core experience, now focused on five growth dimensions. Americas grew slightly, growth markets outpace others, and plug-ins led by Arrow 100 are driving growth.