Sleep Number (SNBR) Q4 2025 earnings summary

Executive summary

• 2025 marked a pivotal turnaround year, with a reshaped team driving operational and strategic changes across all business areas.

• Achieved $185 million in annualized cost savings and launched new products, including the ComfortMode bed, which outperformed expectations with 3.5x planned sales and stronger margins.

• Delivered on prior guidance for net sales and exceeded adjusted EBITDA expectations, despite a challenging industry environment.

• Full-year net loss was $132 million, compared to a $20 million loss last year, mainly due to lower sales and a deferred tax valuation adjustment.

• Significant cost reductions and a leaner organization established a foundation for future growth.

Financial highlights

• Full year net sales were $1.41 billion, down 16% year-over-year but in line with guidance.

• Adjusted EBITDA reached $78 million, surpassing the $70 million outlook, with a full-year margin of 5.5%.

• Q4 net sales were $347 million, 8% below the prior year, with sequential improvement throughout the year.

• Q4 gross profit margin was 55.6%, down 430 bps due to a $9.6 million non-recurring inventory charge; adjusted margin was 58.4%.

• Full-year net loss was $132 million, with Q4 net loss at $59 million.

Outlook and guidance

• No formal 2026 guidance provided due to ongoing transformation, but expectations are for sequential revenue improvement and positive free cash flow.

• Q1 2026 net sales expected to decline in the high teens percent, with significant improvement in Q2 as new products launch.

• Double-digit sales and adjusted EBITDA growth anticipated in the second half of 2026, driven by new products and marketing initiatives.

• Implementing an additional $50 million in annualized fixed cost savings in 2026.