Sonos (SONO) Q1 2026 earnings summary

Executive summary

• Q1 FY26 revenue was $546 million, down 1% year-over-year but above guidance midpoint, with Adjusted EBITDA up 45% to $132 million and net income of $94 million, driven by cost discipline and strong plug-ins performance, especially Era 100.

• Non-GAAP gross margin expanded to 47.5%, and GAAP gross margin reached 46.5%, both up year-over-year due to cost savings and favorable one-time items, partially offset by tariffs and product mix.

• Fiscal discipline and transformation efforts over the past 18 months drove over $100 million in run rate savings, supporting ongoing investment in innovation and operational efficiency.

• The business is stabilizing with a clear plan for durable growth, focusing on system-driven repeat purchases, customer lifetime value, and new product launches like Amp Multi.

• Free cash flow improved to $157 million, up from $143 million last year, and the company ended the quarter with $313 million in cash and equivalents.

Financial highlights

• Q1 revenue was $546 million, down 1% year-over-year but above guidance; Americas grew 1%, EMEA declined 4%, APAC declined 5%.

• GAAP gross margin was 46.5%, non-GAAP 47.5%, both above guidance; gross profit dollars up 5% year-over-year to $253.5 million.

• Adjusted EBITDA margin rose 760 basis points to 24.2%, the highest in four years; non-GAAP EPS grew 37% to $0.93.

• Operating expenses decreased 21% year-over-year to $153 million, reflecting transformation and cost controls.

• Free cash flow was $157 million, and cash and marketable securities totaled $363 million at quarter end.

Outlook and guidance

• Q2 revenue expected between $250 million-$280 million, down 4% to up 8% year-over-year; first half revenue expected flat year-over-year at midpoint.

• Q2 GAAP gross margin guided at 44%-46%, with non-GAAP about 220 basis points higher; gross profit dollars expected to grow 5% GAAP, 2% non-GAAP.

• Q2 GAAP operating expenses expected at $150 million-$160 million, down 11% year-over-year; first half adjusted EBITDA expected to grow 42% year-over-year.

• Second half expected to benefit from new product launches, including Amp Multi, driving further revenue improvement and return to growth.

• Management expects continued operational efficiency from cost transformation and supply chain consolidation.