Sonos Stays the Course Amid Arrival of IPO Day
For 16 years Sonos has done nothing but disrupt one of the most stable consumer technology markets while building a product portfolio that can stand among the best in the business. Along the way, they’ve managed to place some 19 million speakers in a little more than 7 million consumers homes in over 50 different countries. So, excuse them if they view their Initial Public Offering day as just another milestone in the company’s brief but already-impressive history.
During its first day on the Nasdaq, Sonos—which is trading under the ticker symbol SONO—opened at $16 per share, rose as high as $21, and ultimately closed its first day out at $19.91, or a market valuation of about $1.95 billion.
But while the day certainly brought about a ton of attention for the company (capped off by their re-engineering the Nasdaq bell), Sonos is dead set on maintaining its commitment to its developing kick-ass speakers and innovative customer experiences. Frankly, as Sonos Vice President of Product Management Chris Kallai told Dealerscope in a phone interview Thursday, they’d don’t want to view IPO day as some turning point in the company’s history.
“We're pretty focused on our long-term strategy,” he said. “We're not using this moment to alter anything we're doing or really change the vision or direction of the company. We're really looking at this as a milestone. We're bringing on some capital that we can use to reinvest in the business and fuel our growth further.”
And that mindset is absolutely made clear by simply looking at the past few month’s worths of activity that Sonos has been involved in. Beyond the news of the IPO, Sonos launched their new Beam soundbar with Alexa support, that followed the Sonos One smart speaker launch last year, they’ve added AirPlay 2 support to their products, and they have a recently announced partnership with IKEA that could result in some new products and store-specific demos within the next year.
From a going-public standpoint, though, Sonos is looking to change the narrative around consumer tech companies not named Apple, Google, Microsoft, or Amazon. The big names aside, hardware-producing tech companies have not had a solid track record in public trading. Two of the biggest names that come to mind are Fitbit and GoPro, both of which have seen their market share plummet in the years since their IPO days.
Kallai believes Sonos has a very different value proposition from those other companies that make it a more viable tech firm—namely, they view themselves not just as a hardware company.
“We’re a system; we're not just a one-off product,” he said. “We're a system where all of the products interact together. … That's super important for everyone to understand, because that open platform is enabling things to happen like—we have over 40 different smart home companies working on Sonos, we have over 100 different streaming music services, we’ve got Alexa on the Sonos Beam and Sonos One today, and then in our announcement last month we said that we'd have Google's Assistant running by the end of the year. It's just kind of a whole different dynamic and how we're approaching the audio market and the wireless speaker market.”
And consumers have more than bought into that dynamic. Sonos’ data shows that last year, 38 percent of new product registrations came from existing customers who returned to expand their system. And it’s not like those speakers just sit there, customers put them to use: Sonos homes listen to an average of 80 percent more music, and 93 percent of units shipped since the company’s launch in 2005 are still in use.
So, what’s ahead for Sonos? The company very much has its roots in in-home audio entertainment, and that’s where Kallai said their focus will remain. But adding some additional overhead should certainly help with R&D efforts as Sonos looks to expand beyond the home. But there’s also the possibility that Sonos delves deeper into that open software platform and expands the capabilities and partnerships there.
“We've got great APIs, we've got a whole bunch of CE and tech and custom installation type product companies developing onto those platforms,” Kallai said. “We're deeply integrated with Apple, Amazon, and Google, and we’ve got the streaming partnerships. So we're definitely a healthy blend of software and hardware when you look at the total Sonos experience.”
Sonos has always been a fun and interesting company to follow. Watching that “total Sonos experience” expand and evolve over time (and getting an inside look at how their longterm plan impacts the bottom line now that they’ve gone public) looks like it will only add to the excitement of covering them in the months and years ahead.