Sonos Announces $150 Million Stock Repurchase Program

Rhea-AI Summary

Sonos (NASDAQ: SONO) has announced a new $150 million stock repurchase program, replacing their previous $200 million program which had $11 million remaining. The new program allows Sonos to purchase common stock through various means, including open market repurchases, privately negotiated transactions, and Rule 10b5-1 trading plans.

The repurchase program has no time limit and will be funded through existing cash, cash equivalents, or future cash flow. The timing and volume of share repurchases will depend on factors including stock price, trading volume, and market conditions. The company maintains discretion to modify, suspend, or discontinue the program at any time.

Positive

• New $150M stock repurchase program indicates strong cash position
• Flexible repurchase structure allows strategic timing of buybacks
• Program funded from existing cash and future cash flow without new debt

Negative

• Previous $200M buyback program wasn't fully utilized ($11M remaining)
• Company faces challenges with operating model and cost structure
• Experiencing product demand forecasting and inventory management issues
• Dealing with app-related issues and customer service challenges

Insights

Financial Analyst

The newly authorized $150 million stock repurchase program represents a significant capital allocation decision, equating to approximately 10.3% of Sonos's current market capitalization. This substantial commitment suggests strong confidence from management in the company's intrinsic value and future prospects.

The program's structure offers several strategic advantages:

• The absence of a time limit provides flexibility to execute purchases opportunistically when valuations are most attractive
• Multiple repurchase methods, including Rule 10b5-1 plans and accelerated share repurchases, allow for efficient execution while maintaining compliance
• The discretionary nature enables management to balance buybacks against other capital needs and market conditions

The timing of this announcement is particularly noteworthy in the current high-interest-rate environment. With the federal funds rate elevated, companies face higher opportunity costs for cash holdings. A buyback program can be more efficient than holding cash, especially when management believes shares are undervalued. The program's size relative to the previous $200 million authorization suggests a measured approach to capital return while maintaining financial flexibility for operational needs.

However, investors should note several key considerations:

• The program's execution will depend on market conditions and competing capital needs
• The actual impact on share price and EPS will vary based on the timing and volume of repurchases
• The company must balance buybacks against maintaining adequate liquidity for operations and potential growth investments

The replacement of the previous program, which had $11 million remaining, with a larger authorization indicates management's sustained commitment to returning capital to shareholders while maintaining strategic flexibility in execution.

SANTA BARBARA, Calif.--(BUSINESS WIRE)--

Sonos, Inc. (Nasdaq: SONO) today announced that its Board of Directors has authorized a common stock repurchase program of up to $150 million. The $11 million remaining under the company’s existing $200 million repurchase program expired upon approval of the new authorization.

Under the repurchase program, Sonos may purchase shares of common stock on a discretionary basis from time to time through open market repurchases, privately negotiated transactions or other means, including through Rule 10b5-1 trading plans or through the use of other techniques such as accelerated share repurchases. The timing and number of shares repurchased will depend on a variety of factors, including stock price, trading volume, and general business and market conditions. The repurchase program has no time limit, does not obligate Sonos to acquire a specified number of shares and may be modified, suspended or discontinued at any time at the company’s discretion.

Repurchases under this program will be funded from the company’s existing cash and cash equivalents or future cash flow.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties, such as statements regarding repurchases of our common stock under the stock repurchase program and our long-term financial and growth potential, among others. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors, including, but not limited to: difficulties in and effect of implementing improvements to our operating model and cost structure; our ability to accurately forecast product demand and effectively forecast and manage owned and channel inventory levels; our ability to introduce software updates to our new app on a timely basis and otherwise deliver on our action plan to address issues caused by our new app and related customer commitments; our ability to maintain, enhance and protect our brand image; the possibility that the repurchase program may be suspended or discontinued; the impact of global economic, market and political events, including continued inflationary pressures, high interest rates and, in certain markets, foreign currency exchange rate fluctuations; changes in consumer income and overall consumer spending as a result of economic or political uncertainty or conditions; changes in consumer spending patterns; our ability to successfully introduce new products and services and maintain or expand the success of our existing products; the success of our efforts to expand our direct-to-consumer channel; the success of our financial, growth and business strategies; our ability to maintain relationships with our channel, distribution and technology partners; our ability to meet product demand and manage any product availability delays; supply chain challenges, including shipping and logistics challenges and component supply-related challenges; our ability to protect our brand and intellectual property; our use of artificial intelligence; or other risks identified in our filings with the Securities and Exchange Commission (the “SEC”), including our most recent Annual Report on Form 10-K and subsequent filings. Copies of our SEC filings are available free of charge at the SEC’s website at www.sec.gov, on our investor relations website at https://investors.sonos.com/reports-and-filings/default.aspx or upon request from our investor relations department. All forward-looking statements herein reflect our opinions only as of the date of this news release, and we undertake no obligation, and expressly disclaim any obligation, to update forward-looking statements herein in light of new information or future events.

About Sonos

Sonos (Nasdaq: SONO) is one of the world’s leading sound experience brands. As the inventor of multi-room wireless home audio, Sonos’ innovation helps the world listen better by giving people access to the content they love and allowing them to control it however they choose. Known for delivering an unparalleled sound experience, thoughtful home design aesthetic, simplicity of use and an open platform, Sonos makes the breadth of audio content available to anyone. Sonos is headquartered in Santa Barbara, California. Learn more at www.sonos.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250224549544/en/

Investor Contact

James Baglanis

IR@sonos.com

Press Contact

Erin Pategas

PR@sonos.com

Source: Sonos

FAQ

How much is Sonos's new stock buyback program worth?

Sonos's new stock buyback program is worth $150 million, replacing the previous program which had $11 million remaining.

When does SONO's new stock repurchase program expire?

The new stock repurchase program has no time limit, though Sonos maintains the right to modify, suspend, or discontinue it at any time.

How will Sonos fund the $150M stock repurchase program?

Sonos will fund the repurchase program through existing cash and cash equivalents or future cash flow.

What methods will SONO use for the stock buyback?

Sonos may purchase shares through open market repurchases, privately negotiated transactions, Rule 10b5-1 trading plans, or other techniques like accelerated share repurchases.

How much was remaining from SONO's previous buyback program?

The previous $200 million repurchase program had $11 million remaining when it expired.