IPO

Sonos Pushes Forward With IPO

Though not much of a surprise to anyone, speaker company Sonos has filed to go public, and will likely be trading on the public markets by the end of the month. The Wall Street Journal first reported that a June IPO was in the firm’s future back in April.

The news comes as the company is reporting a net loss of $14.2 million on revenue of $992.5 million for its most recent fiscal year. Though a loss is generally not great news, it is an improvement over the previous year’s performance when Sonos lost $38.1 million on revenue of $901.3 million. The latter half of the year, which ended on March 31 for Sonos, saw the firm reporting a solid $655.7 million in revenue. That is a big jump from the same time the previous year, as sales picked up 18 percent overall from 2017. Net income for the period totaled $13.1 million, a decrease of 14 percent from the year-ago period.

Sonos is a brand meant to appeal to the lover of richer, higher-end sound. It is, by most media accounts, a brand for “music nuts.” Audiophiles are a nice niche demographic — Sonos has also pushed hard as of late to make its devices do more and better things than “sound pretty.” Linked and synced with both Google‘s Home Assistant and Amazon‘s Alexa, Sonos rolled out the voice-activated Sonos One speaker to cap off 2017. It’s a big step, and gets out ahead of both Bose and Samsung when it comes to taking the next step and making its speakers not just sharp-sounding, but good and useful across areas.

According to Sonos, its average listeners spends about 70 hours per month listening to its sonorous sounds. And the Sonos family is fairly large — according to a March 31 filing, the brand has 19 million registered users on products spread throughout 7 million households worldwide. The global picture is particularly key for Sonos, as half of its business originates outside the U.S.

The filing noted the importance, and perhaps tenuousness, of the firm’s relationships with other firms — particularly Spotify, Apple and Amazon. The filing also noted that the partnership with Amazon, that gives the Sonos One and Sonos Beam access to Alexa, can be revoked by Amazon with “limited notice.” That might set up a future situation where Amazon decides it wants to market its own high-end speakers or just keep its Alexa product on its home family of speakers.

On one hand, Amazon in general is a pretty good collaborator in this regard and likes to work with other firms, particularly if it has the next effect to help Amazon expand and solidify its own commerce ecosystem. On the other hand, Amazon and Google are in the midst of a long and ongoing spat over Chromecast sales and YouTube on Amazon devices, so it is not outside the range of possibility that Amazon might rethink its Sonos deal.

Sonos’ largest investor at present is KKR, which owns about 26 percent of the firm, according to its IPO filing. Index Ventures as well as Sonos’ Co-founder and former CEO John MacFarlane each own 13 percent.

The IPO will debut on the Nasdaq under the “SONO” symbol. It is not known yet how many shares will be up for sale on IPO day, nor is it known what the offering price will be. As of now, the placeholder amount is $100 million, though most think Sonos is targeting something higher.

Morgan StanleyGoldman Sachs and Allen & Company are the lead underwriters of the offering.

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