Sonos Inc. topped revenue and earnings expectations for its holiday quarter despite supply disruptions that continued to weigh on its business.
The maker of smart audio equipment generated fiscal first-quarter revenue of $664.5 million, above the $645.6 million it posted a year prior and enough for a new holiday-quarter record. Analysts tracked by FactSet were expecting $642 million in revenue.
system components like its Port and Amp devices were strong performers in the quarter, while speaker revenue was down slightly due to more limited supply availability, according to Chief Financial Officer Brittany Bagley. She told MarketWatch that the company still has a backlog.
“We do continue to see strong demand when we have supply availability,” she said.
Unlike in the year-earlier quarter, Sonos held off on promotions given supply constraints.
Its shares were up more than 6% in after-hours trading Wednesday.
Sonos generated December-quarter net income of $123.5 million, or 87 cents a share, down from $132.3 million, or $1.01 a share, in the year-prior period. On an adjusted basis, Sonos earned $1.02 a share, down from $1.17 a share a year earlier but above the FactSet consensus, which was for 98 cents a share.
Gross margins expanded to 47.8% in the December quarter from 46.4% a year prior as Sonos benefitted from its lower promotional activity and a more advantageous product mix. These factors were partly offset by greater logistics costs, mainly around air freight.
Looking ahead at the full fiscal year, Bagley expects continued impacts from supply constraints but anticipates that the pressure could ease as the year goes on. The company could also come to benefit from price increases that it implemented in September.
“We saw inflation coming, saw increased cost in the supply chain and took our price increase relatively early,” Bagley said. Still, the company had to “work through its backlog” and honor existing prices there, which is why the price increases could have a more pronounced impact on results going forward.
The company slightly raised the lower end of its full-year outlook. It now expects revenue of $1.95 billion to $2.0 billion, up from a forecast of $1.925 billion to $2.0 billion issued previously. It also anticipates $290 million to $325 million in adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda), whereas it was previously calling for $280 million to $290 million.