Sleep Number (SNBR) investor relations material

Executive summary

• Net sales declined 19.7% year-over-year to $328 million in Q2 2025, driven by lower volume, reduced store count, and a 30% cut in marketing spend.

• Leadership transition with new Interim CFO and CEO, focusing on turnaround, cost discipline, and organizational realignment.

• Net loss was $25 million, including a $13–14 million deferred tax asset adjustment, compared to $5 million loss last year.

• Adjusted EBITDA was $23.6–24 million, down year-over-year, with margin improving 30 bps to 7.2%.

• Free cash flow used was $7 million for H1 2025, compared to $9 million provided last year.

Financial highlights

• Gross profit margin held steady at 59.1% year-over-year, with cost reductions offsetting lower volumes.

• Operating expenses (excluding restructuring) at $185 million, down 21% year-over-year and $51 million lower sequentially.

• Sales and marketing expenses decreased 20% to $146 million, but remained 44.7% of net sales.

• General and administrative expenses fell to $30 million, or 9% of net sales.

• Research and development expenses were $9 million, down from $12 million.

Outlook and guidance

• Full-year 2025 net sales expected at ~$1.45 billion, a 14% year-over-year decline.

• Gross profit margin for H2/2025 forecasted at ~61%, with tariff impacts mitigated.

• Operating expenses (excluding nonrecurring) forecast at ~$830 million, $130 million less than 2024.

• Breakeven cash flow targeted for H2 2025; priority on debt reduction.

• $8 million in additional restructuring costs expected in H2 2025.