Shares of Sonos Inc (NASDAQ:SONO) plummeted 5% in intraday trading on Friday, following the company's Q1 2025 earnings release that highlighted ongoing challenges and a strategic reorganization underway.

The home audio company reported Q1 revenue of $551 million, down 10% year-over-year, reflecting softer demand due to market conditions and challenges from their 2024 app rollout. Despite achieving its highest US home theater market share driven by strong Arc Ultra soundbar sales, Sonos faced cyclically challenged and highly promotional categories, particularly in portables, impacting overall performance.

In response to these challenges, Sonos executed a reduction in force, saying goodbye to about 200 employees, including nearly 50 managers and executives. The company has reorganized its product and engineering staff into functional teams to maximize efficiency and focus on high-value market opportunities. Interim CEO Tom Conrad emphasized the need to clarify focus areas, enhance the core customer experience, and drive innovation to improve operational and financial performance.