Key Takeaways
- Sonos lowered its outlook and delayed two product launches as it worked to fix a bug in its new app.
- The company said it had to put its full attention on repairing the app problem, which has led to problems for some customers of its audio products.
- The news overshadowed the firm’s better-than-expected fiscal third-quarter results.
Sonos (SONO) shares slumped on Thursday, a day after the maker of headphones and home sound systems cut its guidance and delayed two hardware releases as it races to fix bugs in its app.
Chief Executive Officer (CEO) Patrick Spence explained that while the company’s launch of its Ace headphones led to better-than-expected fiscal third-quarter results, those were “overshadowed by the problems that our customers and partners experienced as a result of the rollout of our new app.”
Spence pointed out that in the weeks following the app’s release on May 7, it was clear “that there were stubborn bugs we had not discovered in our testing,” which led to poor performance for some users.
App Glitch Delays Products, Hurts Sales
Spence said the company would delay two major product releases scheduled for the fourth quarter. “We believe our focus needs to be addressing the app ahead of everything else,” he said.
The product delays and sales headwinds stemming from the app’s issues led Sonos to reduce its outlook. It now sees full-year revenue between $1.5 billion and $1.52 billion, down from previous guidance of $1.6 billion to $1.7 billion.
In its fiscal third quarter, Sonos posted earnings per share (EPS) of $0.03, up from a per-share loss of 18 cents in the year-ago quarter, and revenue of $397.1 million. Both the top and bottom lines exceeded forecasts.
Shares of Sonos fell about 6% as of 12:45 p.m. ET Thursday to $11.27, their lowest level since November. The stock has shed a third of its value so far this year.