SONOS INC (SONO.US): Delivers strong growth. Pushed by strong demand. Supply chain difficulties experienced. Excess cash generated.
Based in Santa Barbara, Sonos Inc, designs, develops, manufactures multi-room audio products such as wireless speakers, home theater speakers, components and accessories in 3 regions: EMEA, Americas and Asia Pacific
SONO sales grew by 29% in 2021 to $1.7 Bn, boosted by contents providers such as Spotify, Apple Music, Netflix, Amazon Prime Video, increasing interests in home theater systems and higher levels of discretionary income (per house) given the conditions caused by the pandemic which helped build demand in Sonos sound system.
Its allows a customer to start with one product and then expand gradually the sound system., Over 60% of the 12.6 million Sonos households had registered more than one Sonos product and listened to 12.1 Bn hours of contents.
The smart speaker company Sonos success still goes on after a slow start with $208M raised in its 2018 IPO. With millions of products sold: modestly priced web connected speakers and easy to install, which has greatly improved the lives of audiophiles and music fans. Q4-2021 has concluded a record fiscal year driven by strong demand, success of new product launches as some products were impacted by continued constrained product availability. In addition, new partnerships have been made to fuel SONO business revenue stream: For instance, the Audi partnership will put SONO in a position of bringing a new sound experience in its future models. Overall, $359.3 M revenue generated in the fourth quarter, +6% growth vs last year (and that’s+22% since Q4-19).
The only issue remains in its supply chain difficulties which are the sourcing of sufficient chips for its products in which to overturn situation implemented a 10% price hike across most of its products. A way for SONO to meet deadlines, logistics challenges and high customer demand. Still, gross margin remains very high: 47.2% FY2021 (vs 43.1% in FY2020).
In terms of cash, SONO keeps ensuring a strong balance sheet (with no debt) and a significant cash flow: over $207M in FY2020 (+61% y/y) pushed by strong cash flow from operations (+56% y/y) and expenditures in the development of manufacture-related components to support the launch of new products. SONO ended with over $640M in net cash (0$ in debt).
SHARE PRICE – YTD, the stock surged by 31%. The share price (15/12/2021) closed at $29.90 per share.
Revenue growth range: 10% on average per year
FY2022 expected revenue: $1.8 Bn – $2 Bn
Expected share price: $49 per share (+64% upside)