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California-based Sonos (NASDAQ: SONO) is an audio company that specializes in high-quality speakers, and its shareholders are certainly feeling good today. As of 9:50 a.m. ET, Sonos stock had soared 13% higher because of financial results that it just reported. The company generated more revenue than expected during its latest quarter, and that certainly sounds good to the market today.

Here’s what Sonos just reported

After the market closed yesterday, Sonos reported financial results for its fiscal fourth quarter of 2023. The company’s revenue in fiscal 2023 was down 5.5% year over year to a little less than $1.7 billion. But Wall Street had expected its top line to contract a little more than that, so it was pleasantly surprised today.

Many premium brands, including Sonos, have struggled to find sales as the economy slows and discretionary income decreases. But shareholders can also be encouraged that Sonos appears to have loyal fans.

For evidence, 44% of new Sonos product registrations came from existing customers in fiscal 2023. And the average Sonos household now has 3.05 products on average, compared with an average of 2.98 products in fiscal 2022. This brand loyalty is carrying the company through this challenging time.

Things are looking up…a little

Among the problems in fiscal 2023, Sonos took a step back with its gross-profit margin. This problem contributed to its full-year net loss. At the midpoint of guidance for its fiscal 2024, management expects sales to be flat, which isn’t great. But it does expect to regain some of its lost gross margin.

Sonos’ management is guiding for a gross margin of 45% to 46% in fiscal 2024, compared with a gross margin of 43.3% in fiscal 2023. This should help carry it back into net profitability.

Management is also communicating its optimism by repurchasing shares of Sonos stock. The company just announced a new authorization of $200 million, which is a big deal considering its market capitalization is under $1.7 billion. Therefore, things are looking up a little for Sonos’ shareholders as it heads into its new fiscal year.

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Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Sonos. The Motley Fool has a disclosure policy.

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