What factors drove SONO's EPS outperformance in 2024?

Sonos's EPS outperformance in 2024 can be attributed to several key factors:

1. **Revenue Outperformance**: Sonos reported Q1 revenue of $551 million, which was towards the high end of its guidance range. This achievement underscores the company’s effective revenue management despite the broader challenges it is facing in the market. The company's total revenue for the MRQ was $550.86 million, indicating a slight increase in revenue, which contributed to the EPS outperformance.

|code|Ticker|Name|Date|Total Revenue|Net Income|Diluted EPS|market_code|
|---|---|---|---|---|---|---|---|
|SONO|SONO.O|Sonos|2024 Q2|2.52662E8|-6.9709E7|-0.56|185|
|SONO|SONO.O|Sonos|2024 Q3|3.97146E8|3709000|0.03|185|
|SONO|SONO.O|Sonos|2024 Q4|2.5538E8|-5.3093E7||185|
|SONO|SONO.O|Sonos|2025 Q1|5.50857E8|5.0237E7|0.4|185|

2. **Cost Management**: Sonos demonstrated improved operational efficiency, with GAAP operating expenses at $193 million and non-GAAP operating expenses at $169 million, both reflecting a year-over-year decrease of 5% and 6%, respectively. This indicates the company’s focused efforts on cost management and operational streamlining. Effective cost management contributes to higher profitability, which in turn affects EPS.
3. **Strong Cash Flow**: Sonos had a strong cash position, with a free cash flow of $269 million in Q1, resulting in a free-cash-flow margin of 44%. This financial flexibility allows the company to invest in growth opportunities and return capital to shareholders through share repurchases, which can enhance EPS.
4. **Product Demand and Market Share Gains**: The company experienced stronger than expected demand for its new Arc Ultra soundbar, which led to the highest ever quarterly market share in the US home theater segment on a dollar basis. This success highlights the robust consumer interest and market acceptance of Sonos’s latest product offerings. New product demand and market share gains can lead to higher revenue and profitability, thus impacting EPS positively.

In conclusion, Sonos's EPS outperformance in 2024 can be attributed to a combination of revenue outperformance, cost management, strong cash flow, and product demand. These factors collectively contribute to higher EPS and demonstrate the company's effective management and market positioning.