Smart speaker manufacturer Sonos announced the layoff of approximately 200 employees, representing nearly 12% of its workforce.
Interim CEO Tom Conrad revealed the restructuring plan in a letter to staff, which Sonos posted on its website on Wednesday (February 5). As of September 28, the Santa Barbara, California-based company had 1,708 full-time employees, according to industry data.
“I’ve made the very difficult decision to eliminate about 200 positions at our company… There’s no way around the fact that this is a terrible outcome,” said Conrad, who stepped in as Interim CEO less than a month ago following the departure of Patrick Spence as CEO and board member. Conrad has been an independent member of the Board since 2017.
That came on the heels of a problematic app update last May that affected Sonos’ product ecosystem.
The company laid off 100 employees, or around 6% of its workforce, in August. That same month, Spence, who was CEO at the time, said, “I’ve asked Nick Millington, the original software architect of the Sonos experience, to do whatever it takes to address the issues with our new app.”
Last month, Sonos said Spence’s departure is “unrelated” to Sonos’ fiscal Q1 (three months ended December 28, 2024) results, which are due out on Thursday (February 6).
“There’s no way around the fact that this is a terrible outcome.”
Tom Conrad, Sonos
Sonos’ revenue tumbled 8% YoY in fiscal 2024, ending September 28, to USD $1.52 billion, which the company attributed to “softer demand due to challenging market conditions and challenges resulting from our recent app rollout.” Revenue in fiscal Q4 dropped 16% to $255.4 million from $305.1 million a year earlier.
For fiscal Q1, Sonos’ revenue is projected to decline 15% YoY to $520 million from $613 million, according to estimates compiled by FactSet. Non-GAAP net income for the quarter ended December 28 is anticipated to have plummeted 65% to $37 million from $106 million in the previous fiscal year, FactSet data showed.
In his letter to staff, Conrad explained the company’s decision, saying the restructuring aims to streamline operations by creating smaller, more focused teams.
“We’ve become mired in too many layers that have made collaboration and decision-making harder than it needs to be. So across the company today we are reorganizing into flatter, smaller, and more focused teams,” Conrad said.
The company’s Product organization will transform significantly, shifting from dedicated business units for individual product categories to functional groups covering Hardware, Software, Design, Quality, and Operations.
“With this simpler organization in place, cross-functional project teams will come together to improve our core experience and deliver new products. Being smaller and more focused will require us to do a much better job of prioritizing our work — lately we’ve let too many projects run under a cloud of half-commitment. We’re going to fix this too.”
Speculations about a sale of the company have grown in recent months, with Bloomberg recently suggesting that Spotify and Amazon are the most probable suitors, each offering distinct advantages for a potential acquisition.
Other potential buyers include Samsung Electronics, which has struggled to gain traction in the home speaker market despite owning the Harman brand, Bloomberg’s Mark Gurman said, adding that while larger tech companies like Apple, Google, and Meta could be potential buyers, they are unlikely candidates due to existing strategies and past relationships with Sonos.
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