Q3 FY2026
Filed Jul 29, 2026Sonos Reports Third Quarter Fiscal 2026 Results: Q3 Revenue, GAAP and Non-GAAP Gross Margin and Adjusted EBITDA near high end of guidance range
Revenue increased 9% year-over-year to $375 million, GAAP net income was $30 million versus a prior-year loss, non-GAAP net income increased 51% to $33 million, Adjusted EBITDA increased 24% to $44 million, and free cash flow increased by $8 million to $40 million. Results also included $23.2 million of IEEPA tariff refunds.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| RevenueGAAP | $375 million | – | increased 9% year-over-year |
| Cost of revenueGAAP | $ 185,950 | – | – |
| Gross profitGAAP | $ 189,310 | – | – |
| Gross marginGAAP | 50.4% | – | – |
| Gross profitnon-GAAP | $ 170,822 | – | – |
| Gross marginnon-GAAP | 45.5% | – | – |
| Research and development expenseGAAP | $ 67,875 | – | – |
| Research and development expensenon-GAAP | $ 57,932 | – | – |
| Sales and marketing expenseGAAP | $ 59,624 | – | – |
| Sales and marketing expensenon-GAAP | $ 56,694 | – | – |
| General and administrative expenseGAAP | $ 30,277 | – | – |
| General and administrative expensenon-GAAP | $ 19,970 | – | – |
| Total operating expensesGAAP | $ 157,776 | – | – |
| Operating expensesnon-GAAP | $ 134,596 | – | – |
| Operating income (loss)GAAP | $ 31,534 | – | – |
| Net income (loss)GAAP | $30 million | – | increased by $33 million year-over-year |
| Diluted earnings (loss) per shareGAAP | $0.25 | – | increased by $0.28 year-over-year |
| Non-GAAP net incomenon-GAAP | $33 million | – | increased 51% year-over-year |
| Non-GAAP diluted EPSnon-GAAP | $0.27 | – | increased 52% year-over-year |
| Adjusted EBITDAnon-GAAP | $44 million | – | increased 24% year-over-year |
| Free cash flowGAAP | $40 million | – | increased by $8 million year-over-year |
| Provision for income taxesGAAP | $ 4,448 | – | – |
| Basic earnings (loss) per shareGAAP | $ 0.25 | – | – |
Capital returns
- Returned $30 million to shareholders through repurchase of 2.0 million shares.
- Payments for repurchase of common stock were $ 95,277 for the nine months ended June 27, 2026.
- Payments for repurchase of common stock related to shares withheld for tax in connection with vesting of stock awards were $ 20,417 for the nine months ended June 27, 2026.
- Excise tax on share repurchases, accrued but not paid, was $ 258 for the nine months ended June 27, 2026.
What drove it
- Revenue increased 9% year-over-year to $375 million.
- GAAP gross margin was 50.4%, including $23.2 million of IEEPA tariff refunds.
- Non-GAAP gross margin was 45.5%.
- The company reported that revenue growth accelerated from 2% in the first half to 9% in Q3.
- Nine-month research and development expense was $ 191,771, versus $ 218,011 in the prior-year period.
- Nine-month sales and marketing expense was $ 187,273, versus $ 213,430 in the prior-year period.
Concerns
- GAAP results included $23.2 million of IEEPA tariff refunds, which were excluded from non-GAAP Gross Margin, Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP EPS.
- GAAP research and development expense increased to $ 67,875 from $ 59,750.
- Total GAAP operating expenses increased to $ 157,776 from $ 152,653.
- Accounts receivable were $ 117,190 as of June 27, 2026, versus $ 65,847 as of September 27, 2025.
- The filing did not provide numeric forward guidance in the press release.
What to watch
- Guidance to be provided on the Third Quarter Fiscal 2026 earnings call.
- Whether revenue growth continues following the reported acceleration to 9% in Q3 from 2% in the first half.
- Gross-margin performance excluding the $23.2 million IEEPA tariff refund benefit.
- The pace of share repurchases following $30 million returned to shareholders in Q3.
Balance sheet and cash flow
- Cash and cash equivalents were $ 206,894 as of June 27, 2026, versus $ 174,668 as of September 27, 2025.
- Marketable securities were $ 54,132 as of June 27, 2026, versus $ 52,858 as of September 27, 2025.
- Inventories were $ 158,143 as of June 27, 2026, versus $ 171,020 as of September 27, 2025.
- Total assets were $ 882,121 as of June 27, 2026, versus $ 823,278 as of September 27, 2025.
- Total liabilities were $ 478,589 as of June 27, 2026, versus $ 468,053 as of September 27, 2025.
- Total stockholders’ equity was $ 403,532 as of June 27, 2026, versus $ 355,225 as of September 27, 2025.
- Net cash provided by operating activities was $ 144,167 for the nine months ended June 27, 2026, versus $ 133,948 for the nine months ended June 28, 2025.
- Purchases of property and equipment were $ 16,681 for the nine months ended June 27, 2026, versus $ 23,418 for the nine months ended June 28, 2025.
- Net cash used in investing activities was $ 17,957 for the nine months ended June 27, 2026, versus $ 24,167 for the nine months ended June 28, 2025.
- Net cash used in financing activities was $ 93,373 for the nine months ended June 27, 2026, versus $ 78,703 for the nine months ended June 28, 2025.
- Net increase in cash and cash equivalents was $ 32,226 for the nine months ended June 27, 2026, versus $ 31,541 for the nine months ended June 28, 2025.
Analysis
Sonos reported a strong third quarter, with revenue increasing 9% year-over-year to $375 million. Management said growth accelerated from 2% in the first half to 9% in Q3. The quarter produced GAAP net income of $30 million and GAAP diluted EPS of $0.25, compared with a prior-year GAAP net loss of $ (3,379) and diluted loss per share of $ (0.03). Non-GAAP net income increased 51% year-over-year to $33 million, while Adjusted EBITDA increased 24% to $44 million.
Gross margin was a central feature of the release. GAAP gross margin reached 50.4%, compared with 43.4% in the prior-year quarter, while non-GAAP gross margin was 45.5%, compared with 44.7%. The distinction is important because GAAP cost of revenue and gross profit included a $23.2 million IEEPA tariff refund benefit. The company explicitly excluded this non-recurring benefit from non-GAAP Gross Margin, Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP EPS.
Expense trends were mixed at the quarterly level. Total GAAP operating expenses increased to $157,776 from $152,653. Research and development expense rose to $67,875 from $59,750, while sales and marketing declined to $59,624 from $62,576 and general and administrative expense was nearly unchanged at $30,277 versus $30,327. The resulting GAAP operating income was $31,534, compared with an operating loss of $ (2,929) a year earlier.
Cash generation and capital allocation were positive. Free cash flow increased by $8 million year-over-year to $40 million, and the company returned $30 million through repurchases of 2.0 million shares in Q3. For the nine months ended June 27, 2026, net cash provided by operating activities was $144,167, cash and cash equivalents ended at $206,894, and payments for repurchase of common stock were $95,277. Inventories declined to $158,143 from $171,020 since September 27, 2025, while accounts receivable increased to $117,190 from $65,847.
The press release stated that revenue, GAAP and non-GAAP gross margin, and Adjusted EBITDA were near the high end of guidance, but it provided no numerical outlook. The company said guidance would be provided on its Third Quarter Fiscal 2026 earnings call. The next focus is the magnitude and composition of that outlook, the durability of revenue growth, and underlying profitability excluding the IEEPA tariff refund benefit.
Management, verbatim
Our third quarter demonstrates the inflection we've been talking about, as revenue growth accelerated and the reinvention of the business continued to take hold.
Tom Conrad, Chief Executive Officer of Sonos
Over the past 18 months, we've built a leaner, more focused company and a healthier core business centered around our system strategy, and that work is showing up in our results.
Tom Conrad, Chief Executive Officer of Sonos
Q3 was another strong quarter, as revenue and Adjusted EBITDA both landed near the high end of our guidance range. We generated healthy free cash flow and built our cash balance sequentially and year over year, while returning $30 million to our shareholders through share repurchases.
Saori Casey, Chief Financial Officer of Sonos
Not in the filing
stated, not guessed- Numeric forward guidance for revenue, gross margin, operating expenses, tax rate, Adjusted EBITDA, EPS and other metrics was not included in the provided press release.
- Previous-period outlook was not provided, so no comparison with prior guidance is available.
- Segment revenue and segment drivers were not reported in the provided filing text.
- Quarterly operating cash flow was not reported in the provided filing text.
- Quarterly capital expenditures were not reported in the provided filing text.
- A debt balance was not reported in the provided balance sheet.
- The provided filing text was truncated within the reconciliation of selected non-GAAP financial measures; the complete detailed reconciliation for Adjusted EBITDA, non-GAAP net income and non-GAAP EPS was not available.
- Prior-year amounts for the headline non-GAAP net income, non-GAAP diluted EPS, Adjusted EBITDA and free cash flow were not printed in the provided text.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.