Sonos revenue falls in the aftermath of company’s messy app debacle
Sonos is still trying to climb out from the hole it dug itself earlier this year by recklessly shipping an overhauled mobile app well before the software was actually ready. Today, just a couple weeks after the release of its latest hardware products — the Arc Ultra and Sub 4 — Sonos reported its fiscal Q4 2024 earnings. And the damage done by the app debacle is clear.
Revenue was down 8 percent year over year, which Sonos attributed to “softer demand due to challenging market conditions and challenges resulting from our recent app rollout.” During the quarter, the company sank $4 million into unspecified “app recovery investments.” (Sonos previously estimated it could spend up to $30 million to resolve all of the trouble that has stemmed from the rebuilt app.)
“To date, we have released 16 updates and restored 90 percent of missing features,” the company wrote in its earnings presentation. “Moving forward, we’ll alternate between major and minor releases. This will allow us to maintain our momentum of making improvements while also ensuring adequate beta testing.”
CEO Patrick Spence has taken accountability for the app situation, and last month, Sonos announced multiple commitments that it believes will prevent another colossal misstep like this from happening again. Some aspects of the plan are focused on more rigorous testing and greater transparency — both inside the company and out. But others, like executives potentially losing out on their annual bonuses, have been mocked by customers as meaningless, half-hearted measures.
“The Sonos flywheel remains strong, as evidenced by the fact that the number of new products per home increased in fiscal 2024,” Spence said in today’s press release. The company also reported its “all-time highest annual market share” in home theater, another positive sign at a time when morale among Sonos employees has taken a serious hit.
The rebuilt app is in a better place now, which you’d hope would be the case after several months of bug fixes and performance enhancements. The mood within Sonos community spaces like the company’s subreddit has also improved, with less of the vitriol that felt non-stop (understandably so) from late spring through the early fall.
As far as hardware is concerned, Sonos seems to be getting back on track. Early reviews of the Arc Ultra have been largely positive. (Yes, I’ll have one coming in the near future.) One early bug with the new soundbar affected Trueplay tuning and, for some customers, resulted in lackluster bass response from a paired subwoofer. Sonos just rectified this issue with a software update that went out earlier today.
But some of the company’s most loyal customers are still feeling a sense of wariness and frayed trust towards the brand. Sonos’ next major new product is rumored to be a video streaming box. I’m still flummoxed as to just how the company plans to stand out from competitors in that space. But hopefully there won’t be another major controversy to derail the product, as was the case with the Sonos Ace headphones.