Wall Street has been witnessing a rush of companies filing to go public, encouraged by the favorable IPO market and the prospects of raising handsome proceeds. The majority of the IPO aspirants so far this year were tech companies, and the trend is catching up fast in the sector.
The latest to join their league is smart speaker maker Sonos, which on Friday filed for an IPO with the goal of raising $100 million. The unique strategy of the company is to pursue partnerships with streaming service providers like Spotify (SPOT) and Apple (AAPL) and leading home device makers.
Going by its business model, Sonos needs to strengthen its foundation by pumping in the substantial capital. Revenue volatility and continuous losses have been the major hassles for scaling up operations. While seeking to strengthen its foothold in the home audio segment, the Southern California-based company is also eying the lucrative market for voice-assisted speaker systems.
Sonos filed for an IPO with the goal of raising $100 million. It is planning to list on Nasdaq under the symbol ‘SONO’
Having unveiled its own voice-assisted speaker last year, Sonos is currently planning to forge tie-ups with the likes of Amazon (AMZN) and Apple (AAPL) to combine their popular Alexa and Siri systems with its products. The idea is to come up with speakers compatible with all voice assistants and music streaming services.
Building such a business model, probably the first of its kind in the industry, is easier said than done, considering the huge investment and long-term planning it demands. Also, tie-ups with established players in the same industry might create situations where Sonos would be depending on and competing with its partners at the same time.
In a statement filed in the Securities and Exchange Commission in connection with the IPO, Sonos said the proceeds from the public offering would be used for working capital, general corporate purposes and making investments. It is planning to list on Nasdaq under the symbol ‘SONO’.
The company incurred a net loss of $14.2 million or $0.50 per share in the most recent fiscal year when total revenues came in at $992.5 million. Referring to the trade tension between the US and China – the main supplier of electronic components to US firms – Sonos has cautioned that its future financial results might be impacted by the crisis.