Sonos reported QQ4 2025 revenue of $287.9 million, up 12.7% year over year, but down 16.5% sequentially from the prior quarter. Gross profit rose to $125.8 million, yielding a gross margin of 43.7%, underscoring a robust product cost structure even as the company remains structurally unprofitable on an GAAP basis. The quarter produced an operating loss of $34.4 million and a net loss of $37.9 million (EPS -$0.31), with EBITDA negative at $17.9 million. The year-over-year improvement in operating income (reported YoY margin improvement) contrasts with a heavy QoQ revenue decline that pressured profitability in QQ4. The balance sheet shows solid liquidity metrics (current ratio 1.43, cash ratio 0.50) and modest leverage (debt-to-capitalization ~13%, debt-to-equity ~15%), but profitability remains the main challenge as operating and net margins stayed negative.
Key takeaway for investors is that Sonos sits at a crossroads: (1) a still-healthy gross margin in a premium hardware segment and (2) a heavy expense base that has not yet translated into sustained profitability. The company generated positive operating cash flow per share (approx. $0.024) but delivered negative free cash flow per share (~$0.019), reflecting ongoing reinvestment and capex needs. The guidance and trajectory for turning EBITDA and free cash flow positive remain contingent on managing operating costs, differentiating through services or higher-margin products, and maintaining solid revenue momentum in core markets. Given the current mix, the stock presents a cautious, selective risk/reward profile until clearer signs of sustained profitability emerge.