Sleep Cycle AB: Sleep Cycle Interim Report April - June 2025: Strong margin and growth in partnerships

The second quarter in summary (April-June 2025)

• Net sales totaled tSEK 63,559 (65,442) and decreased by -2.9% (+12.9%). Currency-adjusted net sales growth amounted to -0.6% (10.5%).
• Operating profit amounted to tSEK 18,019 (20,964), with an operating margin of 28.4% (32.0%). The quarter has not been affected by any costs affecting comparability.
• The total number of paying subscribers at end of period was 878k (898k).
• ARPU in the quarter totaled SEK 271 (282). Currency-adjusted ARPU amounted to SEK 277.
• Earnings per share before and after dilution for the quarter amounted to SEK 0.71 (0.84).

First half year in summary (January-June 2025)

• Net sales totaled tSEK 128,484 (128,899) and decreased by -0.3% (+13.0%). Currency-adjusted net sales growth amounted to 0.5% (10.8%).
• Operating profit amounted to tSEK 35,110 (34,807), with an operating margin of 27.3% (27.0%). The previous year was affected by costs of tSEK 5,756 and the adjusted operating margin was 31.5%.
• The total number of paying subscribers at end of period was 878k (898k).
• ARPU for the period totaled SEK 272 (279). Currency-adjusted ARPU amounted to SEK 274.
• Earnings per share before and after dilution amounted to SEK 1.39 (1.40) for the period.

Important events during the quarter

• In June, Sleep Cycle initiated a clinical trial for AI-based sleep apnea screening, targeting a billion-dollar market.
• In June, Sleep Cycle launched an in-app collaboration with HelloFresh, Factor, and YouFoodz.

Important events after the period end

• No significant events took place after the end of the period.

Commenting on the quarter, CEO Erik Jivmark says:

With a strong margin of 28.4 percent for the quarter, we are further consolidating our position as a technology leader in sleep and health. We are making progress in both clinical validation - as in our study for screening sleep apnea - and commercialization, with growing revenues from partnerships. Revenue from partnerships now accounts for over 9 percent of our net sales. At the same time, the quarter was impacted by a tougher market environment with slower customer growth and a two percent decline in paying subscribers. Market trends show that our long-term strategy is the right way forward, with a diversified offering and more verticals based on our sleep technology.

PARTNERSHIPS AS GROWTH DRIVERS
Partnership sales is a key part of our strategy - and it is yielding results. Revenue from partnerships has increased by over 68 percent compared to the same quarter in prior year and now accounts for more than 9 percent of our total net sales, which for the quarter amounted to SEK 63.6 million. During the quarter, we welcomed HelloFresh, Factor and YouFoodz as part of Sleep Cycle's partner program and opened up a new platform of in-app offerings, tailored to our health-conscious target audience.

SCREENING FOR SLEEP APNEA ENTERS CLINICAL PHASE
In June, we initiated our clinical study with over 700 participants for our AI-based screening of obstructive sleep apnea. The study is an important milestone towards medical certification and future approval by the US Food and Drug Administration (FDA). The goal is to offer a simple and accessible solution without expensive hardware or the need for a sleep clinic. We envisage both a service for consumers and offers to partners available in part through licensing.

TARGETED GROWTH INITIATIVES
Despite a challenging market situation for sleep apps, the demand for sleep aid is high and predicted to grow in the coming years. The renewal rate is gradually improving and development is outperforming competitors thanks to targeted product development such as Sleep Stages. The number of paying subscribers is down two percent from prior year and totals 878,000 for the quarter. Developments in the sleep app segment in the AppStore demonstrate the need to expand our business and that our strategy is the right way forward. We are working decisively on new customer acquisition, activation, partnerships, and tech licensing under the Powered by Sleep Cycle concept to reverse the trend and build an even stronger Sleep Cycle.

This marks a new chapter for us, and although sales cycles in B2B are longer than in the consumer business, we are confident that our technology meets a real need. We are building for long-term impact - and for a future where our technology becomes an integral part of the digital health ecosystem.

The market is changing - and we are changing with it. We are not only building for better sleep, but for a greater role in digital health, public health, research, and data analysis.

Thank you for your continued support and belief in our vision!

Erik Jivmark

The full interim report is available on https://investors.sleepcycle.com

Sleep Cycles CEO Erik Jivmark and CFO & Head of IR Elisabeth Hedman will give a presentation on Friday 22 of August at 9:30 CET. The presentation can be followed on https://sleep-cycle.events.inderes.com/q2-report-2025

Written questions can be sent in the webcast.

For more information please contact:

Elisabeth Hedman | CFO & Head of IR
[e-mail] | [phone]

Erik Jivmark | CEO
[e-mail]

About Sleep Cycle
Sleep Cycle is dedicated to making healthy sleep accessible to everyone. Our app helps users to build hero habits, identify potential sleep issues, and gain valuable insights into their sleep patterns. Leveraging patented sound technology and over 3 billion analyzed sleep sessions, Sleep Cycle provides unparalleled accuracy and personalized guidance. As part of its broader partnership program, Sleep Cycle offers company partnerships including in-app promotions, tailored SDK solutions, and an extensive data library, enabling businesses to expand their offerings with sleep solutions and insights. Sleep Cycle is listed on Nasdaq Stockholm under the ticker SLEEP, with its headquarters in Gothenburg, Sweden.

This information is information that Sleep Cycle is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out above, at 2025-08-22 07:30 CEST.