Smart-speaker company Sonos files to go public

  • Sonos, a high-end speaker company, filed paperwork to go public on Friday.

  • The initial-public-offering filing comes roughly three months after Spotify's direct listing.

  • Sonos estimates its customers listen to 70 hours of content per month — and says its devices have been registered in 7 million homes.

  • It also warned it could be forced to raise prices if Trump's trade war escalates.

Sonos, a maker of smart speakers, filed regulatory paperwork on Friday for an initial public offering on the Nasdaq stock exchange under the ticker "SONO."

The California-based audio company says it will use the proceeds, which it hopes will total as high as $100 million, to invest in its marketing and development efforts.

"We intend to use the net proceeds from this offering for working capital and other general corporate purposes, which may include sales and marketing activities, research, product development, general and administrative matters and capital expenditures," Sonos said in its S-1 filing. "We may also use a portion of the net proceeds for the acquisition of, or investment in, complementary businesses, products, services, technologies or assets."

For the fiscal year ending September 30, 2017, Sonos said it lost $14.22 million — or $0.50 per share — on revenue of $992.53 million. That revenue of less than the $1.07 billion that qualifies it as an "emerging growth company." Sonos also said it has accumulated a deficit of $174.9 million as of March 31, 2018.

The company also warned that its revenue growth has been volatile, and is highly dependent on new device sales. Sonos speakers, which range from the $199 Sonos One to a $1,899 home-theatre system, have to compete with major competition from the likes of Amazon, Google, and Apple. Some of Sonos' newer products have Amazon Alexa integrations that allow users to control the speakers with their voice.

Sonos says 19 million of its products are registered in approximately 6.9 million households globally, as of March 31, 2018. Based on that data, the company estimates its customers listen to roughly 70 hours of content per month.

Sonos' filing comes roughly three months after the direct-listing of Spotify. While the streaming company is not directly a Sonos competitor yet, Spotify has filed dozens of patents in recent months for hardware devices as well as music-discovery software.

In a recent CNBC interview, Patrick Spence, Sonos' CEO, said he looked to Spotify's business model and streaming at large, as the future of the music industry. And in a letter accompanying the filing, he said Sonos' life as a public company is best suited for long-term investors, but does not intend to pay dividends.

"Short-term fluctuations and uneven product cadences are built into our business model," he said. "This means we won’t be right for every investor. But if you share our desire to achieve long-term success, our commitment to being open, our dedication to doing the hard things and our excitement about the potential of the Sonic Internet, then we invite you to join us."

Morgan Stanley and Goldman Sachs are serving as the lead underwriters on the offering.

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