Sleep Cycle (SLEEP) Q1 2025 earnings summary

Executive summary

• Net revenue grew 2.3% year-over-year to SEK 64.9 million in Q1 2025, driven by higher paying subscribers and partnerships despite macroeconomic headwinds.

• EBIT margin was 26.3%, reflecting strong profitability but slightly lower due to increased marketing and investment in new revenue streams.

• Subscriber base increased 1.2% year-over-year to 904,000, though down sequentially by 14,000.

• Market share increased despite a 10% decline in downloads and industry-wide headwinds.

• Strategic focus on product innovation, partnerships, and technology licensing, with new features and branding launched.

Financial highlights

• ARPU declined 1.5% year-over-year to SEK 272, mainly due to weaker new sales, currency effects, and more discounted subscriptions.

• EBIT totaled SEK 17.1 million, with a margin of 26.3%; adjusted EBIT margin remained above 25% for five consecutive quarters.

• Cash and cash equivalents at period end were SEK 157.1 million, with cash flow from operations at SEK 16.7 million.

• Net revenue growth was 2.3% year-over-year (1.6% currency adjusted).

• Earnings per share before and after dilution were SEK 0.68, up from SEK 0.57 in Q1 2024.

Outlook and guidance

• Financial targets reaffirmed: double revenues and maintain an EBIT margin of at least 25%, though growth is expected to be non-linear due to market volatility.

• Continued investment in product, upper funnel activities, and technology platform to drive future growth.

• Clinical trials for sleep apnea screening to begin in Q2 2025; no revenue expected from the project in 2025.

• Management remains cautious due to ongoing macroeconomic uncertainty and adverse currency effects.