What happened

Shares of Sonos Inc. (NASDAQ:SONO) fell 22% on Tuesday, after the smart-speaker specialist announced mixed fiscal third-quarter 2018 results.

More specifically, Sonos' quarterly revenue declined 6.6% year over year to $208.4 million, despite an 11.4% increase in its number of products sold, to 886,514. On the bottom line, that translated to a net loss of $27 million, or $0.45 per share, widening from a $0.26-per-share loss in the same year-ago period. Analysts, on average, were looking for a significantly narrower net loss of $0.22 per share on slightly lower revenue of $208 million.

SONOS Airplay 2 smart speaker on a table next to a bowl of fruit and a smartphone


So what

To explain the disparity between Sonos' revenue declines and product unit growth, the company noted the $699 Playbase product that launched in last year's fiscal third quarter. By contrast, sales this quarter were dominated by its lower-priced, lower-margin Sonos One product, which launched last October with an MSRP of $199.

But Sonos' results certainly had bright spots as well. For one, the company is rightly pleased that it's expanding its reach; Sonos launched in Japan shortly after the end of the quarter, and management notes that its quarterly direct-to-consumer revenue soared 20% year over year.

Now what

Looking ahead to the full fiscal year, Sonos expects revenue in the range of $1.109 billion to $1.114 billion, roughly in line with Wall Street's consensus estimates. 

To be fair, investors should note that Sonos stock had climbed more than 40% from its $15-per-share IPO last month leading up to this report, including a more than 13% pop yesterday as the market anticipated its first quarterly report as a public company.

Given its bottom-line shortfall relative to estimates, however, and with the stock still susceptible to post-IPO volatility, it's hardly surprising to see shares pulling back today.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.