Sonos returns to growth as memory costs cloud the margin path

Fiscal 2026 revenue rose 7% to $1.55 billion, or 5% excluding the 53rd week, restoring Sonos to annual revenue growth. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased 39% to $184 million. Memory prices cut $56 million from that measure, leaving $184 million rather than the $240 million Casey estimated without the headwind.

What powered the return to growth?

Fourth-quarter revenue rose 20% year over year to $344 million, or 11% excluding an extra week, Chief Financial Officer Saori Casey said. New products helped offset memory inflation, while adjusted EBITDA was roughly flat at $6 million after absorbing $33 million of higher memory costs.

Chief Executive Officer Tom Conrad said: “We returned Sonos to growth, including double-digit growth in the fourth quarter. We held our discipline on cost, and we drove a very significant step-up in profitability.” The 11.9% full-year adjusted EBITDA margin quantifies that step-up, although memory costs prevented a cleaner advance.

Sonos posted positive adjusted EBITDA in all four quarters of fiscal 2026, the first such run since fiscal 2021. Non-GAAP (management-defined) earnings per share roughly doubled to $1.23, while free cash flow (cash remaining after capital spending) increased 14% to $123 million.

What did component costs do?

GAAP (generally accepted accounting principles) loss per share narrowed to $0.04 from $0.31 a year earlier, including a $0.16-per-share benefit from tariff refunds. Non-GAAP earnings were $0.04 per share, compared with a $0.06 loss.

GAAP gross margin reached 46.1%, aided by $18 million in tariff refunds; without them, Casey said, the margin would have been 40.9%. Non-GAAP gross margin was 42.1%, as higher memory prices reduced the measure by nearly 1,000 basis points (one-hundredths of a percentage point), or 10 percentage points, year over year.

Sonos ended the quarter with $227 million in net cash and marketable securities. Inventory rose 60% year over year to $273 million, which Casey attributed to higher memory costs and the timing of new product launches.

What does the holiday outlook show?

Sonos set three thresholds for the holiday quarter. Its forecast spans revenue, adjusted EBITDA and gross margin:

• Sonos forecasts revenue of $570 million to $630 million, up 4% to 15% year over year.
• The company projects adjusted EBITDA of $73 million to $111 million.
• Expected GAAP gross margin is 36% to 37%, with non-GAAP gross margin approximately 90 basis points higher.

Memory and component costs are expected to create a roughly 1,200-basis-point year-over-year headwind, while a stronger dollar should reduce gross margin by nearly another 100 basis points. Sonos also expects full-year revenue growth, without providing a numerical target.

Memory-cost mitigation is on track to deliver approximately 500 basis points of annualized gross-margin improvement at the fiscal 2027 exit rate, Casey said. Conrad said more than half was already contemplated in results so far, with further benefits expected from memory efficiency and pricing.

Conrad said Sonos has historically delivered gross margins in the mid-40% range, although the return depends partly on when and how much memory prices ease. Conrad also said Sonos intends to expand its installer channel and improve its direct-to-consumer business, or sales through Sonos rather than retailers.

Which products and software moved the numbers?

Sonos introduced five products during fiscal 2026. Casey said their contributions differed by launch timing:

• Casey said Sonos Play and Era 100 SL continued to generate demand in their second full quarter of availability.
• She said Amp Multi, Beam Ultra and Ace Ultra made meaningful contributions to fourth-quarter results.

At fiscal year-end, the installed base reached 17.7 million households, up from 17.1 million a year earlier. Conrad said 62% of Sonos households own more than one product, and 44% of the year’s registrations came from homes already owning Sonos equipment.

Conrad said Sonos 27, the audio software platform introduced in September, will receive annual releases each fall. Conrad said the in-house voice assistant 27voice is set for early access this month. The 27mcp interface, which lets outside AI agents discover and control Sonos systems, is already in early access, he said.

What did Sonos do with the balance sheet?

Sonos repurchased $130 million of shares during fiscal 2026, completing its existing $150 million authorization. The board approved a new $150 million authorization in early November, and all of it remained available at the time of the earnings call.

Sonos (NASDAQ:SONO) designs and sells wireless audio products and software for home entertainment. Its lineup includes wireless speakers, soundbars, subwoofers, amplifiers and related components, usable individually or connected through the platform to play audio in multiple rooms.

The company said its products support music and other audio from a range of streaming services, plus television and home-theater setups. Sonos Radio and other software extend the offering, while sales run through its website and retail partners in markets around the world.