Sonos, the company known for its popular multiroom wireless speakers, filed to go public on Friday. Aside from a first look at the company’s financials – Sonos is on track to pass $1 billion in revenue for the first time this year – the IPO filing contains some interesting insights about the company’s user base and customer satisfaction.
As of March 31, 2018, Sonos customers had registered more than 19 million speakers in 6.9 million households worldwide, meaning that on average every Sonos user has 2.7 speakers in its home. In fact, the filing reveals that 61 percent of Sonos households are equipped with more than one speaker and that 4 in 10 of those households have at least three of the company’s products. Moreover, customers who buy one Sonos product, buy an average of 1.4 additional devices within 4 years of the initial purchase, indicating a large degree of customer satisfaction and system “lock-in”.
Despite the fact that Sonos is apparently hitting the right note with its customers, potential investors should carefully consider whether to buy shares in the upcoming IPO. Sonos’ loyal customer base notwithstanding, the company is facing off against companies many times its size. To make things worse, the likes of Apple, Amazon and Google are not only Sonos’ main competitors, but the company also depends on them. One of the big advantages of Sonos’ system is the fact that users can play music from a variety of sources on their speakers. Those sources include the streaming services of Apple, Amazon and Google, who, if they decide to pull their services from Sonos’ platform, could deal their competitor a significant blow.