Chip stocks fall with Nvidia after data center rev disappointment
Today, Sonos Inc . (NASDAQ:SONO), a leader in household audio and video equipment, disclosed a significant reduction in its workforce, affecting approximately 6% of its employees. This decision, announced on August 14, 2024, is subject to local legal and consultation requirements in various countries.
In an effort to streamline its operations and enhance its cost structure for long-term success, Sonos has also decided to reduce its real estate footprint. The company anticipates incurring restructuring and related charges estimated between $9 to $12 million, with employee severance and benefits costs accounting for $6 to $8 million of the total. The majority of these charges are expected to be recorded in the fourth quarter of the fiscal year 2024.
While Sonos is taking these steps to improve its operating model, the actual costs and timing of the restructuring are dependent on several assumptions and may materially differ from current estimates.
In other recent news, SoundHound AI (NASDAQ:SOUN) reported robust second quarter earnings, outpacing analyst estimates. The company's Q2 revenue surged by 54% YoY to $13.5 million, surpassing analyst projections of $13.09 million. The non-GAAP loss per share was $0.04, a narrower loss than the $0.09 analysts had anticipated.
SoundHound also raised its 2024 revenue guidance, now expecting to exceed $80 million, a significant increase from the previous consensus estimate of $70.29 million. The company also provided an initial 2025 revenue outlook of over $150 million.
In terms of business developments, SoundHound announced the acquisition of enterprise AI company Amelia, aiming to spur growth in new verticals. The company also secured new contracts, including one with one of the world's largest pizza chains and expanded collaborations with major automakers like Stellantis (NYSE:STLA).
Despite these positive developments, SoundHound's GAAP net loss widened to $37.3 million from $23.3 million a year ago. The non-GAAP adjusted EBITDA loss stood at $13.8 million. The company ended Q2 with $201 million in cash after prepaying $100 million in debt during the quarter.
InvestingPro Insights
In light of Sonos Inc.'s recent announcement regarding workforce reductions and operational streamlining, a glance at the company's financial health and market performance through InvestingPro data and tips may offer additional context for investors. With a market capitalization of $1.36 billion, Sonos shows a negative P/E ratio of -85.27, indicating investor concerns about profitability. Despite a quarterly revenue growth of 6.37% in Q3 2024, the company has experienced an overall revenue decline of -5.92% over the last twelve months as of Q3 2024.
On the brighter side, one of the InvestingPro Tips notes that Sonos holds more cash than debt on its balance sheet, which could provide some financial flexibility in executing its restructuring plan. Additionally, the company is expected to see net income growth this year, which may be a sign of potential recovery and a positive outcome from the cost-cutting measures.
Investors might also consider the company's shareholder yield, which is highlighted as high according to another InvestingPro Tip. While Sonos does not pay a dividend, the aggressive share buyback program could be a factor in this assessment. For those interested in further analysis, there are additional InvestingPro Tips available, providing a comprehensive view of Sonos's financials and market expectations.
As the company navigates through its restructuring phase, these insights could prove valuable for investors weighing the risks and opportunities presented by Sonos's current strategy.
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