A wireless speaker manufacturer that considers itself as “an emerging growth company” as defined under federal securities laws has provided a prospectus to the Securities and Exchange Commission that outlines its plans for an initial public offering of stock.
Sonos will offer an as-yet-determined number of shares on Nasdaq, and has a placeholder value on the IPO at $100 million. The number of shares of common stock to be outstanding after this offering is based on 46,195,324 shares of common stock outstanding as of March 31.
A $12,450 registration fee has been paid by Santa Barbara, Calif.-based Sonos.
“We have applied to list our common stock on the Nasdaq Global Select Market under the symbol ‘SONO,'” the company said in a Friday filing.
One of Sonos’ key marketing pitches is how it brings together sound. A key product is the new Sonos Beam with Amazon Alexa.
It’s “smart speaker for music lovers” is the Sonos One, which launched in October 2017.
“We debuted the world’s first wireless multi-room home sound system in 2005, and have since been a leading innovator in wireless home audio,” the company said. Today, Sonos products include wireless speakers, home theater speakers and components “to address consumers’ evolving home audio needs.”
As of March 31, 2018, Sonos customers had registered over 19 million products in approximately 6.9 million households globally.
“Based on customer data, we estimate that, on average, our customers listen to approximately 70 hours of content per month and to approximately 80% more music after purchasing their first Sonos product,” the company boasts. “We also estimate that our customers listened to five billion hours of audio content using our products in fiscal 2017, which represents 33% growth from fiscal 2016.”
How profitable is Sonos?
“We generated revenue of $655.7 million in the six months ended March 31, 2018, an 18% increase from $555.4 million in the six months ended April 1, 2017,” it says. “For the six months ended March 31, 2018, our net income was $13.1 million and our adjusted EBITDA was $50.5 million. We generated revenue of $992.5 million in fiscal 2017, a 10% increase from $901.3 million in fiscal 2016. In fiscal 2017, our net loss was $14.2 million and our adjusted EBITDA was $56.0 million.”
Among the risks offered by Sonos to potential investors: Its “significant operations” in China.
“If significant tariffs or other restrictions are placed on Chinese imports or any related counter-measures are taken by China, our revenue and results of operations may be materially harmed,” the company warns. “The Trump Administration has signaled that it may alter trade agreements and terms between China and the United States, including limiting trade with China and/or imposing a tariff on imports from China. In March 2018, President Trump imposed a 25% tariff on steel imports and a 10% tariff on aluminum imports and announced additional tariffs on goods imported from China specifically, as well as certain other countries. The materials subject to these tariffs to date do not impact our raw material costs. However, if further tariffs are imposed on a broader range of imports, or if further retaliatory trade measures are taken by China or other countries in response to additional tariffs, we may be required to raise our prices, which may result in the loss of customers and harm our reputation and operating performance.”