Why Sonos Chose This Moment for Its IPO | News & OpinionJuly 11, 2018
Sonos is dealing with stiff smart-speaker competition from Amazon, Apple, and Google, but going public now lets the company cash in on its strong sales numbers and market penetration before the tech giants eat it up.
The smart speaker market is getting more competitive every day,
Sonos has grown its device sales and customer loyalty at a healthy clip over the past half-dozen years but faces some complex issues as it continues to grow. New high-end speakers such as the Sonos Beam rely on cloud service integrations with the tech giants—for example, the Beam uses Amazon Alexa support—while at the same time competing with a ballooning ecosystem of Amazon Echo devices.
What do you do if you’re Sonos? With strong books on one side approaching $1 billion in revenue and on the other, mounting competition from major players, the company decided that now is the sweet spot to go public.
According to Sonos sales statistics from its IPO filing compiled by Statista, Sonos customers have registered more than 19 million speakers in 6.9 million households worldwide. That means that on average, every Sonos user has 2.7 speakers at home.
Sonos has grown its annual unit sales steadily from 1.5 million in 2013 to 4.6 million in 2018, but customer loyalty is the most important factor underpinning why Sonos chose to do its long-awaited IPO now. The filing states that 61 percent of Sonos households are equipped with more than one speaker, and four in 10 of those households have at least three of the company’s products.
That vendor lock-in is even more apparent when you look at buying habits. Sonos stated that customers who buy one Sonos product buy an average of 1.4 additional devices within four years of the initial purchase.
There are plenty of reasons for investors to be skeptical of Sonos stock, particularly when its devices’ access to cloud and streaming services is at the mercy of the company’s biggest competitors. While Sonos’ financials look strong, the IPO was now or never.