Q3 Revenue, GAAP and Non-GAAP Gross Margin and Adjusted EBITDA near high end of guidance range
SANTA BARBARA, Calif., July 29, 2026--(BUSINESS WIRE)--Sonos, Inc. (Nasdaq: SONO) today reported Third Quarter Fiscal 2026 results.
"Our third quarter demonstrates the inflection we've been talking about, as revenue growth accelerated and the reinvention of the business continued to take hold," said Tom Conrad, Chief Executive Officer of Sonos. "Over the past 18 months, we've built a leaner, more focused company and a healthier core business centered around our system strategy, and that work is showing up in our results. Revenue grew 9% in Q3, up from 2% in the first half, and we're now growing revenue, expanding gross margin, and growing profit at the same time. We're carrying this momentum into the fourth quarter as we focus on building durable growth while operating with discipline."
"Q3 was another strong quarter, as revenue and Adjusted EBITDA both landed near the high end of our guidance range. We generated healthy free cash flow and built our cash balance sequentially and year over year, while returning $30 million to our shareholders through share repurchases," said Saori Casey, Chief Financial Officer of Sonos. "Q3 marks our eighth consecutive quarter of disciplined execution against our commitments and structurally improving our business."
Third Quarter Fiscal 2026 Financial Highlights (unaudited)
Revenue increased 9% year-over-year to $375 million
GAAP gross margin2 of 50.4%, Non-GAAP gross margin1 of 45.5%
GAAP net income3 increased by $33 million year-over-year to $30 million, GAAP diluted income per share (EPS)3 increased by $0.28 year-over-year to $0.25
Non-GAAP net income1 increased 51% year-over-year to $33 million, Non-GAAP diluted EPS1 increased 52% year-over-year to $0.27
Adjusted EBITDA1 increased 24% year-over-year to $44 million
Returned $30 million to shareholders through repurchase of 2.0 million shares
Free cash flow3 increased by $8 million year-over-year to $40 million
(1) Non-GAAP Gross Margin, Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP EPS are non-GAAP figures and exclude the non-recurring benefit from IEEPA tariff refunds received in Q3 of Fiscal 2026. See "Use of Non-GAAP Measures" and reconciliations to GAAP measures below |
(2) Includes $23.2 million of IEEPA tariff refunds |
(3) Includes $23.2 million of IEEPA tariff refunds and $0.8 million of interest earned on IEEPA tariff refunds |
Guidance
The company will provide guidance on its Third Quarter Fiscal 2026 earnings call.
Supplemental Earnings Presentation
The company has posted a supplemental earnings presentation accompanying its Third Quarter Fiscal 2026 results to the Earnings Reports section of its investor relations website at https://investors.sonos.com/reports-and-filings/default.aspx#section=earningsreports.
Conference Call, Webcast and Transcript
The company will host a webcast of its conference call and Q&A related to its Third Quarter Fiscal 2026 results on July 29, 2026, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). Participants may access the live webcast in listen-only mode on the Sonos investor relations website at https://investors.sonos.com/news-and-events/default.aspx.
The conference call may also be accessed by dialing (888) 330-2454 with conference ID 8641747. Participants outside the U.S. can access the call by dialing (240) 789-2714 using the same conference ID.
An archived webcast of the conference call and a transcript of the company's prepared remarks and Q&A session will also be available at https://investors.sonos.com/reports-and-filings/default.aspx#section=earningsreports following the call.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) | ||||||||||||||||
(unaudited, in thousands, except share and per share amounts) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
June 27, 2026 | June 28, 2025 | June 27, 2026 | June 28, 2025 | |||||||||||||
Revenue | $ | 375,260 | $ | 344,764 | $ | 1,202,449 | $ | 1,155,376 | ||||||||
Cost of revenue | 185,950 | 195,040 | 635,030 | 650,637 | ||||||||||||
Gross profit | 189,310 | 149,724 | 567,419 | 504,739 | ||||||||||||
Operating expenses | ||||||||||||||||
Research and development | 67,875 | 59,750 | 191,771 | 218,011 | ||||||||||||
Sales and marketing | 59,624 | 62,576 | 187,273 | 213,430 | ||||||||||||
General and administrative | 30,277 | 30,327 | 88,001 | 89,357 | ||||||||||||
Total operating expenses | 157,776 | 152,653 | 467,045 | 520,798 | ||||||||||||
Operating income (loss) | 31,534 | (2,929 | ) | 100,374 | (16,059 | ) | ||||||||||
Other income (expense), net | ||||||||||||||||
Interest income | 2,182 | 1,572 | 5,442 | 5,406 | ||||||||||||
Interest expense | (110 | ) | (117 | ) | (330 | ) | (336 | ) | ||||||||
Other income (expense), net | 695 | 661 | (246 | ) | (5,176 | ) | ||||||||||
Total other income (expense), net | 2,767 | 2,116 | 4,866 | (106 | ) | |||||||||||
Income (loss) before provision for income taxes | 34,301 | (813 | ) | 105,240 | (16,165 | ) | ||||||||||
Provision for income taxes | 4,448 | 2,566 | 10,475 | 7,121 | ||||||||||||
Net income (loss) | $ | 29,853 | $ | (3,379 | ) | $ | 94,765 | $ | (23,286 | ) | ||||||
Earnings (loss) per share: | ||||||||||||||||
Basic | $ | 0.25 | $ | (0.03 | ) | $ | 0.79 | $ | (0.19 | ) | ||||||
Diluted | $ | 0.25 | $ | (0.03 | ) | $ | 0.77 | $ | (0.19 | ) | ||||||
Weighted-average shares used in computing earnings (loss) per share: | ||||||||||||||||
Basic | 118,961,126 | 120,423,439 | 119,886,795 | 120,804,730 | ||||||||||||
Diluted | 120,982,504 | 120,423,439 | 122,761,707 | 120,804,730 | ||||||||||||
Total comprehensive income (loss) | ||||||||||||||||
Net income (loss) | 29,853 | (3,379 | ) | 94,765 | (23,286 | ) | ||||||||||
Change in foreign currency translation adjustment | (416 | ) | 3,496 | (444 | ) | 3,036 | ||||||||||
Net unrealized loss on marketable securities | (29 | ) | (23 | ) | (71 | ) | (140 | ) | ||||||||
Comprehensive income (loss) | $ | 29,408 | $ | 94 | $ | 94,250 | $ | (20,390 | ) | |||||||
Condensed Consolidated Balance Sheets | ||||||||
(unaudited, in thousands, except par values) | ||||||||
As of | ||||||||
June 27, 2026 | September 27, 2025 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 206,894 | $ | 174,668 | ||||
Marketable securities | 54,132 | 52,858 | ||||||
Accounts receivable, net | 117,190 | 65,847 | ||||||
Inventories | 158,143 | 171,020 | ||||||
Prepaids and other current assets | 55,844 | 39,642 | ||||||
Total current assets | 592,203 | 504,035 | ||||||
Property and equipment, net | 60,141 | 72,277 | ||||||
Operating lease right-of-use assets | 42,790 | 45,297 | ||||||
Goodwill | 82,854 | 82,854 | ||||||
Intangible assets, net | 64,418 | 75,356 | ||||||
Deferred tax assets | 10,043 | 10,509 | ||||||
Other noncurrent assets | 29,672 | 32,950 | ||||||
Total assets | $ | 882,121 | $ | 823,278 | ||||
Liabilities and stockholders' equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 179,897 | $ | 184,109 | ||||
Accrued expenses | 87,889 | 79,094 | ||||||
Accrued compensation | 31,249 | 21,331 | ||||||
Deferred revenue, current | 21,989 | 21,771 | ||||||
Other current liabilities | 45,775 | 46,107 | ||||||
Total current liabilities | 366,799 | 352,412 | ||||||
Operating lease liabilities, noncurrent | 50,192 | 53,288 | ||||||
Deferred revenue, noncurrent | 58,515 | 59,453 | ||||||
Deferred tax liabilities | 113 | 126 | ||||||
Other noncurrent liabilities | 2,970 | 2,774 | ||||||
Total liabilities | 478,589 | 468,053 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity: | ||||||||
Common stock, $0.001 par value | 121 | 123 | ||||||
Treasury stock | (46,529 | ) | (37,398 | ) | ||||
Additional paid-in capital | 465,965 | 502,775 | ||||||
Accumulated deficit | (17,313 | ) | (112,078 | ) | ||||
Accumulated other comprehensive income | 1,288 | 1,803 | ||||||
Total stockholders' equity | 403,532 | 355,225 | ||||||
Total liabilities and stockholders' equity | $ | 882,121 | $ | 823,278 | ||||
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