Sonos, Inc. SONO, a creator of wireless home sound systems, priced its initial public offering at $15 per share and the stock opened for trading at $16. Here's what investors need to know about the newly public company.
What Happened
Consumers and investors for the most part aren't aware of Sonos' proposition offering, CEO Patrick Spence said during a Thursday CNBC interview. Soros makes smart speakers and home sound systems, which implies it is a hardware company but this is not the case, the CEO said: over 50 percent of Sonos' employees work on software, which is what "really makes the magic happen."
Sonos stands out in the technology space by creating devices that are long-lasting, as 93 percent of all products shipped over the past 14 years are still active today, the executive said. Instead of forcing customers to upgrade old devices, the company manages to build a strong relationship and sell customers new products.
onos' business remains in the red with a net loss of $14.2 million on revenue of nearly $1 billion. To convince investors a shift to profit is possible, Spence said the company is focused on capitalizing on the strong streaming music market. Over the past six months, the company added 1 million new users who mostly stream music; the total addressable market is 176 million users who stream music across the world, he said.
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Why It's Important
Sonos is not the only player in the smart home speaker market, but it is the only company that offers a truly open platform, Spence said.
While Apple Inc. AAPL pushes its Apple Music streaming platform to its smart speaker consumers, Sonos offers Apple Music, Alexa, Spotify and other platforms that make it "closest to the consumer."
"Nobody thought we could put all the competitive streaming services on one platform."
What's Next
Sonos hopes its unique business model will help it achieve profitability. Last year, 38 percent of total sales came from existing customers who were adding a new device to their home. The company is confident over time existing and new customers will be adding more devices to their homes.
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Photo courtesy of Sonos.
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