Sonos (SONO 2.05%) stock jumped 4.9% through 12:15 p.m. ET Wednesday after beating on top and bottom lines in its fiscal Q1 2026 earnings announcement last night.
Heading into the report, analysts forecast Sonos to earn $0.68 per share (adjusted for one-time items) on sales of $536.9 million. Instead, Sonos reported an adjusted profit of $0.93 per share on sales of $546 million.
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Sonos Q1 earnings
The news wasn't all good. Revenue may have "beat estimates," but it was still down 1% from last year's Q1.
The better news is that Sonos cut costs dramatically, on everything from cost of goods sold and selling, general, and administrative expenses (which is good) to research and development spending -- down 26% year over year, which is actually probably bad for Sonos, long term, if it makes the company's audio products less attractive than rivals who are growing R&D spending.
Still, the result of all this cost-cutting is that Sonos's per-share profit as calculated according to generally accepted accounting principles (GAAP) nearly doubled year over year, to $0.75 per share.
Free cash flow also improved, albeit less dramatically, up about 3% to $150.8 million.
NASDAQ: SONO
Key Data Points
Is Sonos stock a buy?
That's free cash flow number is important for investors.
Q1 results notwithstanding, you see, Sonos still reported negative earnings for 2025 as a whole -- and has in fact lost money in each of the last four years. The company's free cash flow, however, is a healthy $122.5 million, and valued on that metric, Sonos stock costs only 15 times FCF at present, and it's even cheaper after backing out net cash.
So long as the cash keeps flowing as it has been, I can only call Sonos stock a buy.
