Sonos Inc (NASDAQ:SONO), a leader in household audio and video equipment with a market capitalization of $1.79 billion and annual revenue of $1.52 billion, announced a change in its certifying accountant. According to InvestingPro data, the company maintains strong liquidity with a current ratio of 1.51 and holds more cash than debt on its balance sheet.
On Monday, the company's Audit Committee approved the engagement of KPMG LLP as the new independent registered public accounting firm for the fiscal year ending September 27, 2025.
The decision to appoint KPMG was effective immediately, following the dismissal of the previous auditor, PricewaterhouseCoopers LLP (PwC), on December 10, 2024.
PwC had served as Sonos's auditor for the fiscal years ending September 28, 2024, and September 30, 2023. While the company reported negative earnings in the last twelve months, InvestingPro analysis indicates that net income is expected to grow this year, with analysts forecasting a return to profitability.
The audit reports for these periods by PwC did not contain any adverse opinion, disclaimer of opinion, nor were they qualified or modified regarding uncertainty, audit scope, or accounting principles.
During the tenure of PwC, there were no disagreements between Sonos and PwC on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. Additionally, there were no reportable events as defined by the SEC regulations.
Before filing with the Securities and Exchange Commission, Sonos provided PwC with a copy of the Form 8-K report and requested that PwC furnish a letter to the SEC regarding their agreement with the statements made by Sonos in the report. PwC's letter, dated December 16, 2024, is filed as Exhibit 16.1 with the report.
Sonos has stated that neither the company nor anyone acting on its behalf consulted with KPMG about the application of accounting principles to any transaction or any matter that was subject to a disagreement or reportable event during the fiscal years mentioned or the subsequent interim period through December 10, 2024.
This strategic shift in auditors comes as Sonos continues to navigate the competitive consumer electronics landscape, maintaining a solid gross profit margin of 45.4%. Based on InvestingPro's comprehensive analysis, which includes over 10 additional exclusive insights and a detailed Pro Research Report, the company's stock currently appears to be trading above its Fair Value. The information provided is based on a press release statement and InvestingPro data.
In other recent news, Sonos Inc. grappled with a series of challenges in fiscal 2024, including a problematic app rollout that led to a $100 million hit to revenue. Despite these hurdles, the company saw successes with the launch of products like Arc Ultra, Sub 4, and the Ace headphones, the latter earning a spot on TIME's Best Inventions of the Year list. Sonos reported an increase in active households to 16.3 million and an average of 4.42 products per household.
However, the company experienced a decrease in revenue across various regions, with a significant 17% drop in EMEA. In response, Sonos is planning a $20 million to $30 million investment in app recovery and operational efficiency measures, which includes a 6% workforce reduction. The company's financial projections for Q1 2025 indicate a year-over-year decline, with revenue estimated between $480 million and $560 million.
Despite the challenges, Sonos remains committed to its strategy of launching at least two new products annually. The company is also preparing for a challenging holiday season with promotional strategies aimed at meeting consumer demand. These recent developments illustrate Sonos' commitment to navigating through its current difficulties and regaining its momentum in the competitive audio market.
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