Key Takeaways
- The state of the Sonos app has forced Sonos to postpone the launch of two products.
- The company expects the decision will impact its earnings at the end of the year.
- Sonos plans to spend $20-30 million to fix the app.
Sonos has had a tumultuous past two months, including the launch of its first headphones, Sonos Ace, and a new Sonos app that garnered a lot of attention for its ill-fated and confusing release. The company addressed the situation in its third-quarter earnings report on Wednesday, with CEO Patrick Spence acknowledging a strong quarter.
“Our long-awaited entry into the headphone market with Ace, our third quarter saw year-over-year sales growth and slightly above expectations,” Spence said, “but this was overshadowed by issues our customers and partners experienced with the rollout of our new app, which has forced us to lower our fiscal 2024 guidance.”
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Since its release in May, the new app has been riddled with missing features and bugs.
App glitches have delayed the product, impacting projected revenue
The company expects sales to decline in the fourth quarter as it focuses on rebuilding trust with customers.
The financial impact of the flawed app’s release is also impacting the launch of two new products that were scheduled for later this year, Spence explained during the company’s earnings call on Wednesday.
“The app situation is creating headwinds for sales of our existing products and we believe we need to focus on our app first and foremost,” he said. “This means delaying two major new product releases planned for Q4 until the app experience reaches the quality level that we, our customers and partners have come to expect from Sonos.”
“While this will have a painful impact on us by reducing our fourth quarter revenue guidance, we believe it will lay the foundation for even greater success for our future products in the medium to long term,” Spence continued.
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Sonos Ace supports TV audio exchange with Ray and Beam soundbars
A software update will also extend Arc’s audio swap support to Android devices.
Focus shifts to fixing buggy Sonos app
Sonos plans to spend up to $30 million to fix the app
Sonos
Spence also stressed that Sonos is heavily focused on fixing bugs and adding missing features to the app, and that the company plans to release updates every two weeks to iron out these issues bit by bit.
The financial costs of this focus are expected to be between $20 million and $30 million to the company, and Spence said these costs are “necessary to keep the company on track for the long term.”
While the situation is clearly affecting Sonos’ vibe and overall strategy, Spence said on the conference call that the company “will not rest until we address these issues and get our customers raving about Sonos again.”
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