Sleep Number (SNBR) investor relations material

Executive summary

• Net sales for Q3 2025 were $343 million, down 19.6% year-over-year, driven by lower volume and reduced store count.

• Operating loss was $40 million versus $8 million operating income a year ago, with net loss widening to $40 million ($1.73 per diluted share) from $3 million ($0.14 per share) last year.

• Adjusted EBITDA for Q3 was $13.3 million, down from $28 million a year ago.

• Leadership is executing a comprehensive turnaround strategy, including a bank agreement extension through 2027 to support future growth.

• Significant restructuring and non-recurring costs were recorded in Q3, totaling $41 million, with $30 million non-cash related to asset impairments and store closures.

Financial highlights

• Q3 net sales were $343 million, down 19.6% year over year; nine-month net sales were $1.1 billion, down 18%.

• Gross profit margin was 59.9%, down from 60.8% last year but up 82 basis points sequentially from Q2.

• Operating expenses, excluding restructuring and non-recurring costs, declined 18% year-over-year to $204 million.

• Free cash flow for the nine months was negative $17 million, compared to $34 million provided last year.

• Leverage ratio at quarter-end was 5.0x EBITDAR, below the amended covenant maximum of 5.25x.

Outlook and guidance

• Full-year 2025 net sales expected to be approximately $1.4 billion, with gross profit margin around 60%.

• Operating expenses (excluding restructuring and non-recurring costs) projected at $825 million for 2025, $135 million less than 2024.

• Adjusted EBITDA forecasted at $70 million and negative free cash flow of $50 million for 2025.

• Q4 sales expected to improve slightly, aided by a 53rd week, with media spend only slightly down year over year.

• Amended bank agreement provides covenant flexibility to enable business turnaround.