Sonos Inc. filed for a US initial public offering as the wireless speaker pioneer gears up to take on increasing competition from Amazon, Google and Apple. Along with rich rivals, the company warned that an escalation of the trade war between the US and China could significantly damage its business.
The Santa Barbara, California-based company filed with an offering size of $100 million (about Rs. 687.65 crores), a placeholder amount used to calculate fees that is likely to change. It plans to list on the Nasdaq Global Select Market under the symbol SONO, according to a regulatory filing Friday.
While the wireless speakers market is booming — Sonos says its customers listen to about 70 hours of content a month — competition has increased since the company introduced its first home-audio system in 2005. Sonos, which has traditionally marketed its sleek, high-end speakers to audiophiles who prize sound quality, cited an “extremely competitive and rapidly evolving” market among risk factors in its IPO. The company named Bang & Olufsen, Bose and Samsung Electronics among its main rivals, alongside newer entrants Amazon.com, Apple and Google.
Sonos is targeting a valuation of $2.5 billion (about Rs. 17,190 crores) to $3 billion (about Rs. 20,620 crores) in the IPO, people familiar with the matter said in April. The company was founded in 2002 and has been led by Patrick Spence since January 2017.
In recent years, voice-activated speakers from Amazon and others had Sonos scrambling to catch up. The company launched the Sonos One, an Amazon Alexa-controlled smart speaker that competes with the Echo, Google Home and Apple’s HomePod; in June Sonos debuted a new voice-controlled home theatre speaker for living rooms, called the Beam.
In an effort to make its products widely popular, Sonos lets users connect to multiple voice assistants and stream music via other companies’ services. Its products are being integrated in Apple’s new AirPlay 2 wireless music-streaming system and Google’s Assistant. Sonos doesn’t offer its own music or voice-activation services.
Sonos said as of March 31, its customers had registered more than 19 million products in about 7 million households around the world. In fiscal 2017, people listened to about 5 billion hours of audio content using Sonos products, about a third more than in the previous year, the filing says.
In preparation for its anticipated IPO, Sonos cut about 6 percent of its workers to help boost profitability. In fiscal 2017, the company posted a net loss of $14.2 million (about Rs. 97.6 crores) on revenue of $992.5 million (about Rs. 6,825 crores), down from a net loss of $38.2 million (about Rs. 262.7 crores) on $901.3 million (about Rs. 6,198 crores) of revenue in the previous financial year, according to the filing.
Morgan Stanley, Goldman Sachs and Allen & Co. are working on the listing.
Sonos’s largest investor is KKR & Co., which owned an almost 26 percent stake as of June 30, according to the filing. Its next largest holders are Index Ventures and Sonos co-founder and Chief Executive Officer John MacFarlane, who each own about 13 percent. The filing doesn’t detail how many shares they plan to sell in the offering. KKR initially invested $100 million (about Rs. 687.65 crores) in Sonos in 2012.