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Sonos Inc. has been a big winner during the pandemic amid booming sales of smart speakers to suit the at-home lifestyle, but the company says that it can maintain its momentum even after people resume normal living.
The company set a target of $2.25 billion in annual revenue for fiscal 2024, which it disclosed in a release ahead of its investor day presentation Tuesday afternoon. That would mark an increase from the $1.33 billion in revenue that Sonos SONO, +7.10% generated in its latest fiscal year that ended in September, and it would also come in ahead of the $2.1 billion that analysts tracked by FactSet were projecting for fiscal 2024.
The fiscal 2024 target represents a 13% compound annual growth rate relative to the midpoint of Sonos’ fiscal 2021 revenue outlook, the company said. Prior to the pandemic, Sonos was targeting annual revenue growth of greater than 10%. The company also set a new gross-margin target of 45% to 47% for fiscal 2021, above its prior gross-margin outlook of 42% to 44%.
Sonos shares have surged more than 250% in the past 12 months as the pandemic drove greater demand for the company’s suite of high-end audio products, including speakers and TV sound systems, but Chief Executive Patrick Spence said that the company is still in the early days of tapping its market opportunity.
Sonos sees 116 million affluent homes in the countries where it operates, and Spence said that the company only has a 9% share of those households currently. He also sees Sonos as underpenetrated when thinking about the $18 billion that the company says is spent on premium audio equipment every year, with Sonos taking about a 7% share of that.
Spence points to a number of trends that could benefit Sonos going forward, including what he calls the “golden age of audio” with the company seeing a 33% year-over-year increase in the amount of time users spent listening to content within its ecosystem last year. Sonos doesn’t currently play into hot audio social platforms like Clubhouse and Twitter Inc.’s TWTR, +6.36% Spaces, but the growing popularity of those services shows that people are increasingly interested in listening to content, Spence said, especially after long days of staring at screens.
Another trend that Spence expects to work in Sonos’ favor is the continued growth of streaming, with media companies sending top films to their streaming services more quickly and more often. That could drive demand for sound bars like Sonos’ Arc as people try to create a more theatrical experience in their homes.
He also thinks the company will benefit from the changing ways that people are thinking about work in the wake of the COVID-19 crisis. If more people gain the flexibility to work remotely, they can move out of big cities and into homes that they can then outfit with sound systems, Spence said.
The company later confirmed that it’s making a push into cars through a new partnership with Audi that will give “Sonos-tuned audio” a place in Audi’s Q4 e-tron vehicle.
Another goal for Sonos is increasing the number of products owned by existing customers, who currently have an average of 2.9 Sonos products in their homes. Spence is hoping to reach 4 to 6 products over time as people expand into new categories or buy products for additional rooms.
“It’s still unique in the whole hardware world” for the company to drive so much business from existing customers, Spence said, with upwards of 40% of product registrations coming from these customers in the last fiscal year.
The Move, a portable speaker, proved popular with existing customers last year, the company disclosed in a November earnings call. Sonos announced Tuesday that it’s adding the Roam, an additional portable speaker, to its lineup, with the new device being much smaller and more portable.
See more: Sonos announces portable Roam speaker for $169
Both are Bluetooth-enabled, but the Roam costs $169 and weighs less than a pound whereas the Move sells for $399 and weighs more than 6 pounds.
