Earnings

Sonos earnings: Sales down, but speaker use surging

Sonos earnings: Sales down, but speaker use surging
  • Fiscal Q2 revenue: $175M (-17% YoY, -69% QoQ, vs. $208M expected)
  • Q2 loss: $52.3M (Up 129% YoY from $22.8M Q2 2019)
  • Q3 guidance: Sonos withdrew its FY 2020 guidance, and has historically not offered quarterly guidance.

The big number: The smart speaker maker's sales tanked during the quarter as retailers closed stores across the globe, with revenue declining 23% in March alone. The company's business stabilized in April, only trailing April 2019 revenues by 5%.

People are talking: "It's a very volatile time," Sonos CEO Patrick Spence told Protocol on Wednesday. "I don't think anybody really knows what the next few months hold." Spence said his company has been looking for ways to weather the storm, including by reducing costs through a freeze on new hires and raises. However, Spence also said the company may spend more on marketing in the coming months to position itself as a solution for people staying at home. "The world just changed," he said. "That means our marketing does need to change."

Opportunities: Sonos introduced three new products Wednesday, including a redesigned sound bar that should reinvigorate demand. What's more, stay-at-home orders have yielded a massive surge in use of existing Sonos products. Listening hours in March were up 32% year-over-year, and increased an estimated 48% year-over-year in April. That's good news for the company's nascent services business; Sonos launched its first ad-supported streaming service in April.

Threats: It's been a challenging couple of years for the consumer electronics industry as a whole. In 2018, component shortages slowed manufacturing. Last year, the threat of tariffs kept the industry on edge. Now, COVID-19 provides the latest hit. "There's always something," Spence said. "The companies that can adjust and then persevere through this, I think it just makes you stronger as you think about the future."

The power struggle: One of the big industry transformations affecting Sonos is the shift from traditional retail to ecommerce, and COVID-19 seems to be accelerating this. The company's web sales were up 400% year-over-year in April as retail closed its doors. That momentum changes how Sonos is thinking about sales in general. In the past, many assumed that consumers would want to listen to a $500 speaker before opening up their pocketbooks. "That's questionable," Spence said. "We've seen that acceleration of people being confident in their ecommerce purchases."

Protocol | Policy

5 things to know about FCC nominee Gigi Sohn

The veteran of some of the earliest tech policy fights is a longtime consumer champion and net-neutrality advocate.

Gigi Sohn, who President Joe Biden nominated to serve on the FCC, is a longtime net-neutrality advocate.

Photo: Alex Wong/Getty Images

President Joe Biden on Tuesday nominated Gigi Sohn to serve as a Federal Communications Commissioner, teeing up a Democratic majority at the agency that oversees broadband issues after months of delay.

Like Lina Khan, who Biden picked in June to head up the Federal Trade Commission, Sohn is a progressive favorite. And if confirmed, she'll take up a position in an agency trying to pull policy levers on net neutrality, privacy and broadband access even as Congress is stalled.

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Ben Brody

Ben Brody (@ BenBrodyDC) is a senior reporter at Protocol focusing on how Congress, courts and agencies affect the online world we live in. He formerly covered tech policy and lobbying (including antitrust, Section 230 and privacy) at Bloomberg News, where he previously reported on the influence industry, government ethics and the 2016 presidential election. Before that, Ben covered business news at CNNMoney and AdAge, and all manner of stories in and around New York. He still loves appearing on the New York news radio he grew up with.

If you've ever tried to pick up a new fitness routine like running, chances are you may have fallen into the "motivation vs. habit" trap once or twice. You go for a run when the sun is shining, only to quickly fall off the wagon when the weather turns sour.

Similarly, for many businesses, 2020 acted as the storm cloud that disrupted their plans for innovation. With leaders busy grappling with the pandemic, innovation frequently got pushed to the backburner. In fact, according to McKinsey, the majority of organizations shifted their focus mainly to maintaining business continuity throughout the pandemic.

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Gaurav Kataria
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Protocol | Workplace

Adobe wants a more authentic NFT world

Adobe's Content Credentials feature will allow Creative Cloud subscribers to attach edit-tracking information to Photoshop files. The goal is to create a more trustworthy NFT market and digital landscape.

Adobe's Content Credentials will allow users to attach their identities to an image

Image: Adobe

Remember the viral, fake photo of Kurt Cobain and Biggie Smalls that duped and delighted the internet in 2017? Doctored images manipulate people and erode trust and we're not great at spotting them. The entire point of the emerging NFT art market is to create valuable and scarce digital files and when there isn't an easy way to check for an image's origin and edits, there's a problem. What if someone steals an NFT creator's image and pawns it off as their own? As a hub for all kinds of multimedia, Adobe feels a responsibility to combat misinformation and provide a safe space for NFT creators. That's why it's rolling out Content Credentials, a record that can be attached to a Photoshop file of a creator's identity and includes any edits they made.

Users can connect their social media addresses and crypto wallet addresses to images in Photoshop. This further proves the image creator's identity, but it's also helpful in determining the creators of NFTs. Adobe has partnered with NFT marketplaces KnownOrigin, OpenSea, Rarible and SuperRare in this effort. "Today there's not a way to know that the NFT you're buying was actually created by a true creator," said Adobe General Counsel Dana Rao. "We're allowing the creator to show their identity and attach it to the image."

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Lizzy Lawrence

Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She's a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school's independent newspaper. She's based in D.C., and can be reached at llawrence@protocol.com.

Protocol | China

Why another Chinese lesbian dating app just shut down

With neither political support nor a profitable business model, lesbian dating apps are finding it hard to survive in China.

Operating a dating app for LGBTQ+ communities in China is like walking a tightrope.

Photo: Nicolas Asfouri/AFP via Getty Images

When Lesdo, a Chinese dating app designed for lesbian women, announced it was closing down, it didn't come as a surprise to the LGBTQ+ community.

It's unclear what directly caused this decision. 2021 hasn't been kind to China's queer communities; WeChat has deactivated queer groups' public accounts and Beijing has pressured charity organizations not to work with queer activists.

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Zeyi Yang
Zeyi Yang is a reporter with Protocol | China. Previously, he worked as a reporting fellow for the digital magazine Rest of World, covering the intersection of technology and culture in China and neighboring countries. He has also contributed to the South China Morning Post, Nikkei Asia, Columbia Journalism Review, among other publications. In his spare time, Zeyi co-founded a Mandarin podcast that tells LGBTQ stories in China. He has been playing Pokemon for 14 years and has a weird favorite pick.

The Oura Ring was a sleep-tracking hit. Can the next one be even more?

Oura wants to be a media company, an activity tracker and even a way to know you're sick before you feel sick.

Over the last few years, the Oura Ring has become one of the most recognizable wearables this side of the Apple Watch.

Photo: Oura

Oura CEO Harpreet Rai swears he didn't know Kim Kardashian was a fan. He was as surprised as anyone when she started posting screenshots from the Oura app to her Instagram story, and got into a sleep battle with fellow Oura user Gwyneth Paltrow. Or when Jennifer Aniston revealed that Jimmy Kimmel got her hooked on Oura … and how her ring fell off in a salad. "I am addicted to it," Aniston said, "and it's ruining my life" by shaming her about her lack of sleep. "I think we're definitely seeing traction outside of tech," Rai said. "Which is cool."

Over the last couple of years, Oura's ring (imaginatively named the Oura Ring) has become one of the most recognizable wearables this side of the Apple Watch. The company started with a Kickstarter campaign in 2015, but really started to find traction with its second-generation model in 2018. It's not exactly a mainstream device — Oura said it has sold more than 500,000 rings, up from 150,000 in March 2020 but still not exactly Apple Watch levels — but it has reached some of the most successful, influential and probably sleep-deprived people in the industry. Jack Dorsey is a professed fan, as is Marc Benioff.

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David Pierce

David Pierce ( @pierce) is Protocol's editorial director. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

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