Sonos’ first quarterly earnings report disappointed investors as revenue declined 6%, sending shares of the maker of high-end speakers tumbling in after-hours trading Monday.
The stock had jumped 13.3% to $21.24 in the regular session, its best day since Sonos went public last month. But after the release of the third-quarter earnings report, it gave back those gains in extended trading, falling 13.5% to $18.38.
The report showed Sonos’ revenue declined to $208.4 million from $223.1 million a year ago while its net loss widened to $27 million, or 45 cents a share, from 26 cents a share.
Sonos attributed the revenue drop to a negative comparison with the year-ago quarter when it launched the Playbase audio streaming device. Playbase revenue was approximately $18 million lower in the third quarter, offsetting a 25% increase in sales of wireless speaker products sold, led by the new Sonos One product.
Revenue from home theater speakers declined 20% to $66.7 million while revenue from components, including the Connect and Connect:Amp products, was down 4% year over year at $42.28 million.
“We are focused on driving sustainable, profitable growth for the long-term,” CEO Patrick Spence said in a letter to shareholders, noting that Sonos has grown revenue for 12 consecutive years.
“Given the nature of our business and the impact of seasonality and new product launches, we measure our financial progress on an annual basis, not a quarterly basis,” he added. “We are focused on delivering a compound annual revenue growth rate of at least 10% and growing adjusted EBITDA at a compound annual growth rate of at least 20% over the coming years.”
For its full 2018 fiscal year, Sonos is expecting to report $1.109 to $1.114 billion in revenue. Analysts had expected guidance of $1.112 billion in revenue.
Sonos’ growth strategy includes Sonos Beam, a three-in-one speaker that began shipping to retailers toward the end of the third quarter. “Although it’s still early in Beam’s life, media, retailer and customer feedback are in line with our expectations thus far,” Spence said.