Tom Conrad took over as CEO of Sonos in January as it continues to recover from last year’s disastrous mobile app update, and now the company has issued its first quarterly earnings report after he dropped the interim tag from his title. Beyond the numbers, with $344.8 million in revenue and a net loss of $3.4 million, Conrad acknowledged the impact that President Trump’s tariffs will have on its business, saying that “it has become clear that we’ll need to raise prices on certain products later this year,” as reported earlier by Bloomberg.
Conrad didn’t go into detail on the price changes and said that Sonos is working with its partners to share the extra costs, as nearly all of its products for the US are made in Vietnam and Malaysia, which are both facing higher tariff rates soon.
Conrad:
With respect to our operations, like many companies, the most significant near-term challenge has been the uncertain tariff environment. As a reminder short of a few accessories, and our passive speaker partnership with Sonance (I think this is what he said?) we do all of our us-bound manufacturing in Vietnam and Malaysia.
We talked last quarter about the contingency planning we underwent to minimize the effects of terrorists on our business, while also doing what we can to limit the downstream impact to our customers. Last week’s news, the tariff rates we were subject to going forward, appeared to be 20 percent for Vietnam and 19 percent for Malaysia.
We continue to work closely with our contract manufacturers and our Channel Partners to share tariff costs, though it has become clear that we’ll need to raise prices on certain products later this year. As these pricing changes land, we’ll monitor consumer behavior closely as well as competitive Trends across our categories and will make adjustments in collaboration with our Channel Partners, when and if necessary, to ensure we’re exploring every opportunity to optimize our respective top and bottom lines.
In response to one of the analyst’s questions, Conrad said, “I think the best way to think about what we’re trying to do here strategically is to craft a pricing plan that supports our goal of optimizing growth profit dollars.” As a result, the executive said that the price changes could vary across different products, depending on the market and with an eye towards what competitors are doing. He pointed to some software updates Sonos has released lately, like multiuser TV audio swap and TrueCinema audio adjustments for its Ace headphones, and a recent AI speech enhancement for the Arc Ultra.
