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In recent years, newly created computer hardware companies have not been kind, but Sonos Inc. hopes to get out of this situation by relying on the help of tech giants like Amazon. com Inc.
Sonos
SONO, + 0.00%
makes high-end speakers, and the company has attempted to capitalize on increased interest in voice commands by giving its products "smart" capabilities . Sonos currently sells products compatible with Amazon's
AMZN, + 0.64%
Alexa voice assistant, and Sonos expects his speakers to work with Alphabet Inc.
GOOGL, + 1.21%
GOOG, + 1.41%
Google Assistant later this year.
Do not miss it: When will we have the choice of our voice assistant?
The addition of Siri compatibility is a little more complicated because Apple Inc.
AAPL, + 1.39%
do not generally play well with equipment manufactured by other companies. Sonos plans to introduce Siri on its speakers later in 2018 through Airplay 2, a sort of back door that allows Apple devices to stream audio to other devices. Sonos also has his own voice commands.
Investors looking for a pure game about the increase in voice assistants might have an opportunity in the coming months, as Sonos filed a prospectus Friday with the Securities and Exchange Commission. public offer. The filing gave an overview of Sonos' finances, including a more moderate revenue growth compared to other recent IPOs as well as small net annual losses.
Sonos intends to raise up to $ 100 million by its offer, according to the prospectus, but it's usually a reserved amount that will be updated in future filings. In the event of a finalization of the IPO, the shares will be traded on the Nasdaq under the symbol SONO.
Here are five things to know about Sonos and his plans to become public
Mature Growth Profile
Sonos exists since 2002, which means he's in a different financial location than many young people technology companies. According to FactSet, the company has not raised money since 2014, and its business figure is expected to reach $ 1 billion for the fiscal year ending in September.
The company achieved a turnover of $ 992 million for its 2017 fiscal year compared to $ 901 million in 2016, a growth rate of 10%. Sonos recorded a net loss of $ 14 million in 2017, compared with a net loss of $ 38 million in 2016.
For the first six months of Sonos' 2018 fiscal year, including the holiday season, the company generated net income of $ 13 million. Sonos was also profitable in the first half of its previous fiscal year.
See also: How we use voice assistants, in a graph
"They do not need to show investors that they have a path to profitability, but they need a response to the 800-pound gorilla, "said Phil Haslett, co-founder of EquityZen, an online marketplace for pre-IPO stocks. This means that Sonos will have to show how it plans to compete with the devices of "diversified and cash-rich companies" like Amazon and Google
Dependence on retailers
Sonos generates the majority of its revenues from physical retailers or retailers. their websites. . Best Buy Co. Inc.
BBY, + 0.73%
is its largest distributor in the United States, accounting for 16% of year-end sales closed last September, while Also Group is its largest distributor in Europe, with 12% Sales.
"Whenever you have concentrated the distribution of a product, that entails risks," Haslett told MarketWatch. What is worrying is that Sonos has only generated 45% of last year's revenue from the United States, which means that nearly a third of sales American originates from Best Buy.
On the plus side, Haslett said that Sonos' ability to build strong relationships with distributors in the United States and Europe bodes well for its likely attempts to do the same in Asia.
A loyal clientele
proven capable of conducting repeat purchases from its customers. By the end of March, more than 19 million Sonos devices were registered by customers and are used in approximately 6.9 million homes. The company said in its prospectus that 61% of households had more than one device, and among those who initially purchased a Sonos product, the average person purchased 1.4 more.
The base of loyal users is encouraging given that Sonos gets high prices for its products. The company's entry-level wireless speaker costs $ 149 and Sonos sells several items for $ 699. However, there are obvious limitations to the number of speakers a household might reasonably need.
Read: "OK Google, give a voice to everyone in America"
Sonos may end up annoying his loyal users in an effort to get them to buy more products because he seems ready to stop updating on some of his older speakers. The company lists among its risk factors the possibility of "customer dissatisfaction" if Sonos decides to stop supporting older versions of its products. According to the filing, customers "have hoped" to benefit from this support, but Sonos predicts "that in the short or medium term, this backward compatibility will no longer be practical or profitable."
Get out of the material curse?
An IPO of material evokes some major disappointments in recent years, as a share of Fitbit Inc.
FIT, + 3.78%
and GoPro Inc.
GPRO, + 5.31%
are trading well below their IPO prices. The biggest success story was Roku Inc.
ROKU, + 2.84%
who focused on his "platform" activity during his roadshow and now generates more than half of his revenue from non-revenue sources material
Is Sonos a Fitbit or a Roku? Maybe neither. Haslett of EquityZen pointed out that unlike Fitbit and GoPro, Sonos has been around for some time and its financial results reflect a mature company. Sonos investors will probably not expect massive growth as were the first Fitbit investors. Compared to Roku, however, Sonos does not have an obvious path to becoming a platform-based company.
Simple Voting Structure
Many companies that have recently become public have complex voting structures from multiple stock classes, but the Sonos ranking shows only one category of voting. ; actions. In the past, investors have not been too put off by two-class structures, but the simple arrangement of Sonos is, at the very least, not negative.
With regard to stock distributions, Haslett is encouraged by the fact that Patrick Spence, CEO of Sonos, is not the founder of the company.
Sonos has "a diverse base of owners compared to a founder trying to keep a lot of control," he said.
The largest owner before the issue is KKR Stream Holdings, with 25.7% of the shares, followed by entities affiliated with Index Ventures, with 13% of the outstanding shares.
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