Sonos Cuts 7% Of Employees As Speaker Demand Slows; Plans To Reduce Office Spaces

Wireless home sound system provider Sonos laid off about 7% of its workforce Wednesday as demand for the company's speakers slowed down significantly. The Santa Barbara-based company is also looking to reduce its office space in the coming months.

"On June 14, 2023, Sonos, Inc. (the "Company") announced a reduction in force involving approximately 7% of our employees. Decisions regarding the elimination of positions are subject to local law and consultation requirements in certain countries. The company also committed to further reducing its real estate footprint and re-evaluating certain program spend," Sonos said in a filing with the Securities and Exchange Commission (SEC).

The company is expecting to incur around $11 to $14 million in restructuring and related costs. Around $9- $11 million of it will be dedicated to employee severance and benefits.

Sonos had 1,844 employees as of October 2022. If the headcount is the same in June, Wednesday's cuts could mean the company is letting go of at least 130 employees, The Verge estimated.

"In the face of continued headwinds, we have had to make some hard choices, including eliminating some positions and reevaluating program spend," Sonos CEO Patrick Spence said in a statement. "We have acknowledged that if we started to deviate from our performance expectations, we would take action to adapt and protect profitability while still investing in our exciting product roadmap to drive future growth."

Spence noted the company was focused on providing the necessary support to its departing employees but didn't go into detail about the severance packages.

He also did not specify what "headwinds" affected the company. The Verge reported there had been a noticeable slowdown in demand for speakers and home theater system products.

Sonos last cut its global workforce in 2020 "due to the uncertainty and challenges stemming from the COVID-19 pandemic."

The speaker maker let go of approximately 12% of its global workforce at the time. It also shut down its New York retail store and six satellite offices.

"The company believes these initiatives will better align resources to provide further operating flexibility and more efficiently position the business for its long-term strategy," the company had said.

The latest developments came weeks after Sonos won a $32.5 million patent case against Google. A San Francisco jury decided late last month that the search engine giant infringed on one of Sonos' wireless audio device patents.

The companies previously collaborated to integrate Google's streaming music service into Sonos products but the latter accused the big tech giant of copying its technology during the project.

"This is a narrow dispute about some very specific features that are not commonly used. Of the six patents Sonos originally asserted, only one was found to be infringed, and the rest were dismissed as invalid or not infringed," Google said in a statement to Engadget after the jury's verdict.

Sonos, on the other hand, said it was "deeply grateful" that the jury upheld "the validity of our patents." The company also said the verdict only reaffirmed that Google was "a serial infringer" of Sonos' patent portfolio.