Sonos (SONO) Q4 2025 earnings summary

Executive summary

• Fiscal 2025 revenue was $1.44 billion, down 5% year-over-year, but Q4 revenue grew 13% YoY to $288 million, closing the year with strong operational discipline and transformation.

• Adjusted EBITDA for the year rose 23% to $132 million (9.2% margin), with Q4 Adjusted EBITDA at $6.4 million, reflecting cost transformation and operational efficiencies.

• The company shifted to a system-centric strategy, deepened household engagement, and integrated AI, while leadership changes included a new Chief Marketing Officer.

• Installed base expanded to 17.1 million households (+5% YoY) and 53.4 million devices (+6% YoY), with average devices per household rising to 3.13.

• Major restructuring in February 2025 reduced workforce by 12%, streamlined management, and optimized real estate and IT.

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 from $1.52 billion the prior year, with home theater and growth markets showing strong double-digit growth.

• Q4 GAAP gross margin was 43.7% (up 340 bps YoY); non-GAAP gross margin was 45.2% (up 400 bps YoY), driven by cost savings and recovery from prior year one-time hits.

• Adjusted EBITDA for Q4 was $6.4 million, a $29 million YoY improvement; full-year adjusted EBITDA rose 23% to $132 million, with margin up 210 bps to 9.2%.

• Free cash flow was $108 million, down from $135 million in 2024 due to $35 million in non-recurring items; excluding these, cash flow would have been $144 million, up 7% YoY.

Outlook and guidance

• Q1 2026 revenue guidance: $510–$560 million, representing -7% to +2% YoY; growth expected to improve with new product launches in the second half.

• Q1 GAAP gross margin expected at 44–46%, with non-GAAP about 110 bps higher; margin to benefit from holiday sales and lower effective tariff rates.

• Q1 adjusted EBITDA guidance: $94–$137 million, up 27% YoY, with margin expansion of roughly 500 bps.

• Non-GAAP OpEx for Q1 FY26 expected to be ~$16 million lower than GAAP, with continued focus on cost discipline.

• Guidance for the next period will be provided during the earnings call.