We kick off today’s update by looking at the latest earnings release from Sonos. The discussion then turns to Spotify’s earnings with a focus on the company’s subscriber trends.

Hello everyone. Welcome to December. This month is going to fly by.

Two quick notes:

1) The Elon Musk saga took another twist yesterday. Tim Cook invited Musk to Apple Park. This was the first time Musk and Cook have talked with each other. According to Musk, "Tim was clear that Apple never considered [removing Twitter from the App Store]." Musk had just said the opposite - that Apple had "threatened to withhold Twitter from its App Store" without explanation – two days earlier. Musk’s initial tweet never sounded accurate to me. It’s not clear what Cook actually told Musk while walking around Apple Park yesterday. The following tweet that I wrote yesterday sums up the situation:

2) Looking back over the past two months of updates, we have gone over 10 earnings reports from various Apple competitors.

Warner Bros. Discovery (Nov 16)
Roku (Nov 10)
Peloton (11/10)
Disney (11/9)
Amazon (11/8)
Microsoft (11/8)
Meta (11/2)
Apple (10/28, 10/31, 11/1)
Alphabet (10/26)
Netflix (10/19)
Nike (10/3)

In today’s update, we will go over two earnings reports that have been on my list: Sonos and Spotify. Sonos was one of the last companies to report earnings. As for Spotify, it’s been six months since we took a closer look at the company’s subscriber trends.

Sonos 4Q22 Earnings

Sonos reported FY4Q22 earnings two weeks ago. Management had previously warned that things were going to look funky with demand slowing a bit over the summer and the company placing what ended up being poorly-timed bets on inventory.

4Q22 revenue was down 12% to $316M.
Gross margins dropped by 720 basis points (to 39.2%). Management claims the drop is temporary.

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