Sonos (SONO) Q2 2025 earnings summary

Executive summary

• Q2 FY2025 revenue was $259.8 million, up 2.8% year-over-year, driven by new product launches like Arc Ultra and Ace, and supported by cost transformation and restructuring, including a 12% workforce reduction and CEO transition.

• Adjusted EBITDA improved to $(0.8) million from $(33.6) million a year ago, reflecting significant expense reductions and operational discipline.

• Net loss for the quarter was $70.1 million (net loss margin (27.0%)), with non-GAAP net loss at $21.7 million.

• Free cash flow for the six months was $77.8 million, down from $147.9 million in the prior year period.

• Nine major software updates delivered in 120 days, with a focus on reliability and strategic pricing actions.

Financial highlights

• Q2 FY2025 GAAP gross margin was 43.7%, non-GAAP gross margin 44.3%.

• Operating expenses decreased 4.5% year-over-year to $174.8 million, with non-GAAP operating expenses at $135.1 million.

• Cash and cash equivalents at quarter end were $173.2 million, with marketable securities of $50.3 million and no outstanding borrowings under the $100 million credit facility.

• Inventory decreased to $138.4 million from $231.5 million at prior fiscal year end.

• $60.6 million of common stock repurchased in the first half of FY2025; $150 million repurchase program authorized.

Outlook and guidance

• Management expects $42 million in cost savings for the remainder of FY2025 from restructuring.

• Guidance for future quarters will be provided during the earnings call.

• Focus remains on operating efficiency, product roadmap rationalization, and innovation.