Sonos (SONO) Q4 2025 earnings summary

Executive summary

• Q4 revenue grew 13% year over year, closing fiscal 2025 with positive adjusted EBITDA and improved operational discipline, despite a 5% annual revenue decline to $1.44B due to early-year challenges.

• Fiscal 2025 was a transitional year, marked by leadership changes, a new Chief Marketing Officer, major restructuring reducing workforce by 12%, and a strategic shift to focus on a cohesive, connected home audio system.

• The installed base expanded to 53.4 million devices in 17.1 million homes, with average devices per household rising to 3.13 and multi-product households at 4.49.

• The new strategy centers on delivering both first and third-party AI experiences, expanding beyond audio to broader home experiences, and leveraging international growth.

• Adjusted EBITDA grew 23% year over year to $132 million (9.2% margin), driven by cost transformation and operational efficiencies.

Financial highlights

• Q4 revenue reached $288 million, near the high end of guidance, with strong double-digit growth in EMEA and growth markets contributing over a quarter of Q4 growth.

• Fiscal 2025 revenue was $1.44 billion, down 5% year over year, but with strong growth in home theater and growth markets.

• Q4 GAAP gross margin was 43.7%, non-GAAP 45.2%, both at the high end of guidance and up significantly year over year due to cost savings and one-time items in the prior year.

• Adjusted EBITDA was $6.4 million in Q4, a $29 million improvement year over year; full-year adjusted EBITDA rose to $132.3 million.

• Free cash flow was $108 million, or $144 million excluding $35 million in non-recurring items, up 7% year over year.

Outlook and guidance

• Q1 2026 revenue guidance is $510–$560 million, representing -7% to +2% year-over-year change, with new product launches expected in the second half of fiscal 2026.

• Q1 GAAP gross margin expected at 44–46%, with non-GAAP about 110 basis points higher; Q1 adjusted EBITDA guidance is $94–$137 million, up 27% year over year.

• Operating expenses are expected to decline 19% year over year at midpoint for Q1, with non-GAAP OpEx for Q1 FY26 expected to be ~$16M lower than GAAP.