The third quarter in summary (July-September 2025)

• Net sales totaled tSEK 61,523 (65,873) and decreased by 6.6% (+8.4%). Currency-adjusted net sales growth amounted to -4.7% (9.9%).
• Operating profit amounted to tSEK 16,792 (20,612), with an operating margin of 27.3% (31.3%). The quarter has not been affected by any costs affecting comparability.
• The total number of paying subscribers at end of period was 832k (915k).
• ARPU in the quarter totaled SEK 271 (280). Currency-adjusted ARPU amounted to SEK 276.
• Earnings per share before and after dilution for the quarter amounted to SEK 0.67 (0.82).

The period in summary (January-September 2025)

• Net sales totaled tSEK 190,007 (194,772) and decreased by 2.4% (+11.4%). Currency-adjusted net sales growth amounted to -1.3% (10.5%).
• Operating profit amounted to tSEK 51,902 (55,419), with an operating margin of 27.3% (28.5%). The previous year was affected by costs affecting comparability of tSEK 5,756 and the adjusted operating margin was 31.4%.
• The total number of paying subscribers at end of period was 832k (915k).
• ARPU for the period totaled SEK 274 (278). Currency-adjusted ARPU amounted to SEK 277.
• Earnings per share before and after dilution amounted to SEK 2.06 (2.23) for the period.

Important events during the quarter

• On September 15, a new Liquid Glass design was launched in conjunction with Apple's iOS 26 release, and plans for an AI sleep coach were announced.
• On September 30, it was announced that Sleep Cycle is launching the Sleep SDK (Software Development Kit) and strengthening the "Powered by Sleep Cycle" strategy for external partners.

Important events after the period end

• On October 1, the Nomination Committee announced that Christian Kanstrup had been proposed as a new member of the board and that they intended to convene an Extraordinary General Meeting.
• On October 2, the shareholders were invited to an Extraordinary General Meeting to be held on October 28, 2025, in relation to the Nomination Committee's proposal above.

Commenting on the quarter, CEO Erik Jivmark says:

“The third quarter was characterized by continued progress in Sleep Cycle's transformation. With stable growth in partnerships of 55 percent compared to the previous year, corresponding to 11 percent of the total quarterly revenue, we are seeing good momentum in our strategic initiatives that strengthen the company's position for the future.

We achieved an EBIT margin of 27.3 percent while making progress in technology licensing, clinical validation, and product innovation—areas that together build a more resilient and diversified company.

STRONG MOMENTUM TO CAPTURE NEW OPPORTUNITIES
By successfully implementing our strategy Powered by Sleep Cycle and launching Sleep SDK we have positioned the company to take advantage of new opportunities in technology licensing. In the coming quarters, we will build on this strong momentum to accelerate growth. At the same time, our sleep apnea screening initiative is progressing, with approximately 20 percent of the clinical study now completed—an important milestone on the road to medical certification and future commercialization. Together, these investments strengthen our foundation and bring us closer to growth beyond the consumer app segment.

IMPROVED USER EXPERIENCE AND STRONGER REVENUE BASE
In the third quarter, total net sales decreased by 6.6 percent compared with the previous year, or 4.7 percent adjusted for currency effects, reflecting a continued slowdown in the market for consumer-facing sleep apps after several years of strong growth. The number of paying subscribers amounted to 832,000, a decrease of 9 percent compared to the previous year. This is a natural consequence of our focus on revenue quality over volume. Our consumer business continues to perform well relative to the category as a whole, supported by price adjustments, high engagement, and continuous product innovation, and we are gradually winning additional market share in the segment.

In September, price increases of around 10 percent were implemented for new sales in major markets such as the US – a step that will strengthen growth over time while maintaining demand. In the fourth quarter, we continue to adjust pricing, focusing on revenue rather than subscriber growth. The pace of innovation in the app is also increasing. The new Liquid Glass design, launched in conjunction with Apple's iOS 26, improves the user experience and increases visibility for our products, with positive effects not least on app downloads. In the fourth quarter, we will launch the first version of our AI Sleep Coach, designed to make Sleep Cycle a more proactive companion that helps users build long-term sleep habits, strengthens engagement over time, and opens up new user segments.

PARTNERSHIPS THAT DRIVE GROWTH
Our partnerships continue to grow steadily, with an increase of 13 percent compared to the second quarter and 55 percent compared to the third quarter of the previous year. Partnerships now represent 11 percent of the quarter's revenues, confirming the strength of our brand and the relevance among our user base. Partnerships are an important part of our strategy - they diversify our revenue, reduce our dependence on app stores, and strengthen Sleep Cycle's presence in the broader health ecosystem.

BUILDING RESILIENCE THROUGH DIVERSIFICATION
We enter the last quarter of the year with focus and confidence. Progress across all areas of the business demonstrates that Sleep Cycle is building a stronger and more resilient company—one that leverages our data, technology, and partnerships to create multiple revenue streams for the future. In the fourth quarter, we continue to capture the increased interest in our new products, especially Powered by Sleep Cycle, and continue to strengthen the foundation for long-term growth.

In conclusion, I would like to extend a big thank you to our shareholders and our employees - your continued trust and commitment are crucial to our success and to the transformation that is now taking shape within Sleep Cycle.”

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 24 of October at 9:30 CET. The presentation can be followed on https://sleep-cycle.events.inderes.com/q3-report-2025

Written questions can be sent in the webcast.

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