Sonos (NASDAQ:SONO) opened fiscal 2026 with what management described as a strong start, driven by improved profitability, steady demand for key “gateway” products, and cost actions that have reshaped the company’s earnings profile over the past 18 months. On the company’s first quarter fiscal 2026 earnings call, CEO Tom Conrad and CFO Saori Casey emphasized a strategy centered on “systemness”—positioning Sonos as an expandable whole-home audio system rather than a set of standalone devices—while outlining plans for new product introductions in the second half of the year.
Quarterly results: Revenue slightly down, profitability sharply higher
Sonos reported first-quarter revenue of $546 million, which Casey said was above the midpoint of guidance and represented a 1% year-over-year decline. Despite the slight revenue decrease, the company delivered a significant step up in profitability. GAAP gross profit dollars increased 5% year-over-year, and Adjusted EBITDA rose 45% to $132 million, coming in at the high end of guidance.
Regional performance was mixed. Casey said revenue in the Americas grew 1% year-over-year, while EMEA declined 4% and APAC declined 5%. She added that the company’s “growth markets” continued to outpace the rest of its markets.
Margins, tariffs, and cost actions
Gross margin results came in above guidance. Sonos posted GAAP gross margin of 46.5% and non-GAAP gross margin of 47.5%, which Casey said represented nearly 300 basis points of year-over-year improvement. Management attributed the gross margin expansion to lower costs, foreign exchange tailwinds, and some favorable one-time items, partially offset by unfavorable product mix.
Tariffs remained a notable headwind. Casey said tariffs were an approximately 300 basis point drag on gross margin, but Sonos offset the impact through mitigation actions led by pricing adjustments made toward the end of September.
Operating expenses were also down sharply year-over-year, though Casey noted first-quarter opex was “unseasonably low” due to the timing of product launches and associated spending. GAAP operating expenses were $153 million, down 21%, while non-GAAP operating expenses were $137 million, down 19%. Stock-based compensation declined to $15.2 million from $25.3 million a year earlier.
Non-GAAP earnings per share increased to $0.93 from $0.68 last year. Adjusted EBITDA margin expanded 760 basis points to 24.2%, which Casey called the company’s highest in four years.
Demand drivers: Era 100, customer advocacy, and “system” expansion
Management highlighted product and marketing actions intended to accelerate household additions and repeat purchases. Conrad said Sonos reduced the price of Era 100 to strengthen its role as a “critical gateway” into the ecosystem, calling the move an early decision that is “paying off.” Casey said “plug-ins” delivered double-digit growth, driven by Era 100, and Conrad noted Q1 marked the third consecutive quarter of accelerating new customer growth among households starting with Era 100, up more than 40% year-over-year.
Conrad also pointed to improving customer satisfaction tied to system performance and reliability work. He said Sonos delivered 10 software upgrades during the quarter and that the improvements are showing up in higher customer satisfaction across channels and measures.
Beyond new customer acquisition, management framed expansion within the installed base as a major long-term lever. Conrad reiterated the company’s belief that Sonos’ system behavior drives repeat purchase over time, offering examples such as multi-room use and coordinated experiences. He cited an estimate that moving from an average of almost 4.5 devices per multi-product household to 6 devices would represent roughly $5 billion in incremental revenue, while converting single-product households to multi-product levels could add another $7 billion.
Product roadmap and installer channel focus
After a pause in new hardware introductions last year to strengthen the software foundation, Conrad said the company is returning to new products, with “a lot planned” for the rest of fiscal 2026. Sonos recently announced Sonos Amp Multi, which Conrad described as a multi-zone amplification product designed for professional installers and integrators, with simpler installation, configuration, and tuning.
Conrad and Casey both emphasized the importance of the installer channel. Conrad said it represents 22% of the business and is growing, adding that Sonos sees an opportunity to be built into the architecture of sophisticated homes. Casey noted that Amp Multi is not included in second-quarter revenue guidance because it will not be generally available until the second half of fiscal 2026.
Guidance: Quiet second quarter, improvement expected in the back half
For the second quarter, Sonos guided revenue to a range of $250 million to $280 million, representing down 4% to up 8% year-over-year (up 2% at the midpoint). For the first half of fiscal 2026, Sonos expects revenue of $796 million to $826 million, flat year-over-year at the midpoint, which Casey said reflects continued improvement versus declines in fiscal 2025.
Gross margin guidance for Q2 was 44% to 46% on a GAAP basis, with non-GAAP gross margin expected to be about 220 basis points higher. Casey noted the margin outlook embeds higher memory costs in Q2, while also pointing out Sonos products have modest memory requirements (generally 512 MB to 2 GB, with many at 1 GB or less).
Adjusted EBITDA guidance for Q2 was negative $18 million to negative $10 million, implying first-half adjusted EBITDA of $128 million, up 42% year-over-year. Casey said the second-quarter profile reflects seasonality and increased operating expenses tied to product introduction timing later in the year.
During Q&A, Conrad addressed investor concerns around memory pricing and supply, saying the company has secured and certified additional memory suppliers to reduce reliance on spot market pricing and that Sonos expects to be “good” on supply for planned second-half product ramps. He also discussed early marketing work underway with new CMO Colleen DeCourcy, saying Sonos aims to move away from episodic marketing spikes tied to launches and toward a more sustained presence anchored in a consistent “system narrative.”
Conrad also reiterated the company’s interest in exploring conversational AI in the home and other AI-driven experiences that feel “invited rather than tacked on,” while noting Sonos is also integrating AI productivity tools into internal workflows, particularly software development.
On capital allocation, Casey said Sonos repurchased $25 million of shares in Q1 at an average price of $16.79, reducing share count by 1.2%, with $105 million remaining under the current authorization. Net cash ended the quarter at $363 million, including $51 million of marketable securities. Free cash flow was $157 million, up from $143 million a year ago.
About Sonos (NASDAQ:SONO)
Sonos, Inc is a consumer electronics company specializing in wireless home audio systems. The company’s core business revolves around designing, developing and manufacturing smart speakers and soundbars that deliver high-fidelity audio and seamless multi-room listening experiences. Sonos products connect via Wi-Fi or Bluetooth and integrate with popular streaming services, enabling users to control music and other audio content through a dedicated mobile app, voice assistants or traditional controls.
Sonos offers a diversified product lineup that includes compact speakers such as Sonos One and Sonos Roam, premium models like Sonos Five and Sonos Move, home theater solutions including Sonos Beam and Sonos Arc, as well as accessories such as the Sonos Sub and Sonos Amp.
