The Sonos App Fiasco, Sonos Earnings, YouTube Premium Is Having A Moment
Hello everyone. We will begin today's update by focusing on the Sonos app fiasco. Our attention will then shift to Sonos earnings. The update concludes with an observation regarding YouTube Premium, YouTube's ad-free subscription offering.
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Sonos FY4Q23 Earnings, Sonos Discloses New Installed Base Data, Sonos’ Product Roadmap for 2024
Happy Tuesday. Today’s update will be dedicated to discussing Sonos. The company reported earnings a few days prior to the Thanksgiving break. Sonos is on a path to being a more direct competitor to Apple.
Let’s jump right in.
Sonos FY4Q23 Earnings
Two weeks ago, Sonos reported FY4Q23 earnings (July through September).
Sonos is feeling the impact of the consumer gadget recession. Revenue was down 3.5% to $305M as the number of products sold were down 8% and speaker registrations were down 13%. The 500 basis point gap between products sold and registrations is due to channel inventory fill. This means quarterly results were boosted by Sonos putting speakers into the channel ahead of the holidays. The stronger revenue total (-3.5%) versus products sold (-8%) was due to higher speaker ASP.
The following exhibit shows Sonos speaker sales on a TTM.
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Sonos FY3Q23 Earnings, Sonos Taking Speaker Share, Sonos vs. Apple
Happy Wednesday. For today’s update, we take a closer look at Sonos’ FY3Q23 earnings. The discussion then goes over Sonos taking market share in the speaker categories that the company competes in. We conclude with key differences/similarities between Sonos and Apple.
Let’s jump right in today’s update.
Sonos FY3Q23 Earnings
Sonos has had a very busy 2023. New speakers (Era 100 and 300), services (Sonos Pro), and partnerships (Apple Music spatial audio) have fulfilled the company’s promise of continuing to move the platform forward. However, Sonos is unable to escape the consumer electronics gadget recession. Sales promotions continue to be needed to maintain speaker sales trends.
The following exhibit shows Sonos speaker sales on a TTM (trailing twelve months) basis to remove the seasonality associated with the holidays. The sales decline is becoming more noticeable.
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Sonos Earnings, Sonos Unveils Sonos Pro, Peloton Earnings
Hello everyone. Two quick follow-ups to yesterday’s update:
The “ESPN in 100M households at its peak” vs. "Netflix’s 74M paying subscribers in the U.S. and Canada" is not a simple comparison. Not only is password sharing rampant with Netflix - making it likely that Netflix is found in more than 74M U.S. households – but it’s also very simple to signup/cancel a Netflix subscription. ESPN was, and still is, only available as part of a $$ bundle.
A few people reached out to me to say that they have never had a woven/fabric Apple Watch band tear or split despite years of usage. Such wear and tear for a band specifically marketed as rugged seems odd. I agree with that statement. At least based on my experience, Alpine Loop was far too delicate to be part of the Apple Watch Ultra series. That doesn't mean Apple should move away from comfortable materials for Ultra bands. Instead, they should introduce more rugged bands that begin to provide additional utility to the wearer.
In today’s update, we begin to wrap up our CY1Q23 earnings reviews with smaller companies that remain intriguing to keep an eye on from an industry/competition standpoint: Sonos and Peloton. We will cover Spotify tomorrow.
Sonos Earnings
Sonos was not able to escape the consumer gadget recession. CY1Q23 revenue was down 24% to $304M (vs. $400M last year) as fewer people bought premium speakers in the home. The closest equivalent to unit sales was down by about 30% While Sonos fell victim to a tough year-over-year compare, similar to what Apple experienced in a few product verticals, sell-through demand was also weaker.
Here is Sonos speaker sales on a TTM basis to remove the seasonality associated with the holidays:
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Sonos 4Q22 Earnings, Spotify Subscriber Trends (Daily Update)
We kick off today’s update by looking at the latest earnings release from Sonos. The discussion then turns to Spotify’s earnings with a focus on the company’s subscriber trends.
Hello everyone. Welcome to December. This month is going to fly by.
Two quick notes:
1) The Elon Musk saga took another twist yesterday. Tim Cook invited Musk to Apple Park. This was the first time Musk and Cook have talked with each other. According to Musk, "Tim was clear that Apple never considered [removing Twitter from the App Store]." Musk had just said the opposite - that Apple had "threatened to withhold Twitter from its App Store" without explanation – two days earlier. Musk’s initial tweet never sounded accurate to me. It’s not clear what Cook actually told Musk while walking around Apple Park yesterday. The following tweet that I wrote yesterday sums up the situation:
2) Looking back over the past two months of updates, we have gone over 10 earnings reports from various Apple competitors.
Warner Bros. Discovery (Nov 16)
Roku (Nov 10)
Peloton (11/10)
Disney (11/9)
Amazon (11/8)
Microsoft (11/8)
Meta (11/2)
Apple (10/28, 10/31, 11/1)
Alphabet (10/26)
Netflix (10/19)
Nike (10/3)
In today’s update, we will go over two earnings reports that have been on my list: Sonos and Spotify. Sonos was one of the last companies to report earnings. As for Spotify, it’s been six months since we took a closer look at the company’s subscriber trends.
Sonos 4Q22 Earnings
Sonos reported FY4Q22 earnings two weeks ago. Management had previously warned that things were going to look funky with demand slowing a bit over the summer and the company placing what ended up being poorly-timed bets on inventory.
4Q22 revenue was down 12% to $316M.
Gross margins dropped by 720 basis points (to 39.2%). Management claims the drop is temporary.
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HomePod: The Discontinuation That Still Has Unanswered Questions (Above Avalon Report)
An examination of the run-up, decision, and fallout related to Apple’s most curious product discontinuation.
Written by Neil Cybart
In March 2021, Apple discontinued the original HomePod with the stated reason of focusing on the HomePod mini. The decision was a curious one, not only because Apple rarely discontinues products, but also the HomePod mini is an all-around inferior product in comparison to the HomePod.
More than a year later, all of the questions related to Apple’s decision to discontinue HomePod remain just as valid today. The HomePod was one of the more impressive products Apple had shipped in years. The stellar music listening experience obtained by pairing two HomePods together remains an eye-opening experience. It’s hard to imagine Apple executives have replaced original HomePods in their homes with HomePod minis.
HomePod may be up there as the most questionable product discontinuation in modern Apple. In its quest to say no much more often than yes, the HomePod may have fallen victim to Apple’s focus culture.
The Stationary Smart Speaker Market
In the late 2010s, we experienced a stationary smart speaker mirage. Companies were using smart speakers to take advantage of an awkward phase of technology in which there didn’t seem to be any clear direction as to where things were headed.
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