Sonos
Addressing blowback from Sonos' wildly unpopular app redesign will cost the company $20 to $30 million "in the short term," according to CEO Patrick Spence.
In May, Sonos launched an updated app that aggravated many users due to its removal of common functions, like accessibility features and the ability to edit playlists and song queues, use sleep timers, and access local music libraries. Sonos said it wanted to modernize the app's interface and make it easier to navigate. While the app initially succeeded in making certain things quicker, like adjusting the volume, the changes caused outrage among Sonos' typically loyal user base. In July, Spence apologized for the maligned redesign and said Sonos would fix the app with biweekly updates.
During Sonos' fiscal Q3 2024 earnings call yesterday, Spence said that fixing the app and managing related customer fallout will cost Sonos millions. The costs come from three primary areas—app updates, customer support, and winning back customers and partners—and are “necessary to right the ship for the long term," Spence said.
“We have identified the key bugs, have a plan to fix them, and are improving our processes and staffing to ensure we successfully execute our action plan,” Spence told investors.
Sonos brought in the software's original architect, Nick Millington, to fix the app. Spence said the updated app’s “modular developer platform based on modern programming languages” enables quicker updates and will eventually enable features the previous app could not support. The executive didn’t get into specifics.
Because of the app, Sonos has to spend more on customer and partner support. It looks like the company is also planning to offer financial discounts to try to win back customers and partners. Spence said Sonos will launch “programs” this quarter and next “to both support and thank our customers and partners for sticking with us through this period and turn their dissatisfaction to delight.”
Further, Sonos reduced its fiscal 2024 guidance due to problems stemming from the redesign.
Software problems delay hardware launches
The app problems are having a ripple effect within Sonos. In addition to the remediation that will cost Sonos up to $30 million, the company is also delaying two hardware releases.
Spence said:
The app situation has become a headwind to existing product sales, and we believe our focus needs to be addressing the app ahead of everything else. This means delaying the two major new product releases we had planned for Q4 until our app experience meets the level of quality that we, our customers, and our partners expect from Sonos.
Sonos didn't specify the devices affected, but Sonos has been rumored to be planning a new flagship soundbar to succeed the Arc.
With these delays in mind, Sonos expects $240 to $260 million in fiscal Q4 revenue, compared to $397.1 million in fiscal Q3 2024 and $305.1 million in fiscal Q4 2023.