Sleep Cycle AB (publ)

We have the formula to the greatest performance enhancer in the world. We'll make you stronger, faster, smarter and happier because we have the keys to healthy sleep. with a third of the population being sleep deprived, but a market potential of more than 130 billion US dollars in the US alone. We don't think sleep is a problem. We think sleep is an opportunity to reach your goals, to be a stronger, faster, smarter, and happier you, because we are the future of sleep health, and you are welcome to join us.

Hi everyone and welcome to the Q1 earning report. I'm Erik Gilmark, I'm the CEO of SleepCycle. With me today I have our CFO Per Andersson and our chief commercial officer Peter Alsterberg. Both of you will hear more from later. All of us live with our smartphones. They are the key to access many things in life. Your finances, your children's schedule, your work and communicating with your loved ones. They're the one piece of technology that are in the center of our life. Currently, there are almost 4 billion people using smartphones. That is our market. Those are our potential users. Our technology is your constant companion. and we're proud of our achievements so far. We have more than 3 billion nights of data collected, 1 million daily active users in 150 markets across the world. Our technology spans across iOS, Android and smartwatches, making us a global leader in sleep analysis. So we use that technology to help our users fall asleep easily. with our coaching programs and sound library. We help our users wake up rested thanks to our patented smart alarm. We help our users to analyze their sleep and provide insights to their sleep habits. And we use that data to coach them to better sleep. So let's have a look at Q1. It was positive subscription growth from last year. We managed to become more efficient in user acquisition. We saw continued ARPU growth despite less FX impact. Positive mixed changes and an upward trend from previous price increases. We had 13% revenue growth, which is an increased growth from previous periods. 11% adjusted for FX. meaning a better underlying growth and strong numbers that we haven't seen in a while. We have an EBIT margin of 22%, 31% adjusted for costs related to the reorganization and the office closure, good cost control and efficient user acquisition. Q1 was a stable quarter with a solid profitability while we shaped the organization for increased revenue growth. If we zoom in, the number of paying subscribers are up from last year. No change from Q4. We started Q1 good, but saw a decline mainly related to less renewed users. So good growth in new users, but we suffer from the decline in new users from last year, which negatively impacts the number of users that are up for renewal this year in Q1. Revenues grow at a higher pace than previous quarters, mainly a result from accrued sales in the second half of 2023. We now start to see the impact from the user growth in last year. During Q1, we implemented a new strategy focusing on three areas. One, user acquisition. We want to improve the upper funnel traffic. We want to be visible in more channels and Expose sleep cycle to more potential users. We will leverage known tactics to build brand and awareness without spending marketing dollars. Secondly, user engagement. We will continue to invest in the product, work with conversion, increase engagement and thereby decrease churn. Thirdly, we're looking forward to add a new layer of revenues, monetizing data and the technology, and this is something that we will speak more about in the future. One and two are about doubling down on the core product. We are the market leader and we will remain so. Also, to support this strategy, we have consolidated our team in Gothenburg to enable more cross-functional collaboration and also to reach efficiencies. We have also completed a few key hires, Peter Alsterberg as our chief commercial officer, Petter Eglander as our chief product officer, and Elisabeth Hedman who will join us as the new CFO in June. With that, the leadership team is complete. When sharing the strategy, we also presented our financial targets. We aim to double the revenues in mid-term. We want to have around 25% EBIT on annual basis. and we left the dividend policy unchanged. Now I will hand over to Peter, who will speak about his area of focus going forward. Peter.

Thank you, Erik, and I'm super excited to join SleepCycle from the beginning of this month, taking the role as a chief commercial officer, driving some of the areas that Erik has mentioned when it comes to adding some incremental growth to the company. Three things that I will work with is working with partnerships and driving data monetization and also being more active when it comes to revenue management. And I'll do that using my experience having worked for about 20 years advising supporting companies across the globe to find a way to sort of partner with them tailored to their needs. So the first thing that I will stab into is partnership. So what we will do there is to first take an assessment of the current partnerships that we have and find what works well and what can be improved. But we want to expand from there and to do that we are working upon putting in place a partner proposition and a strategy to start build sort of the pipeline with partnerships going forward. When it comes to my experience of how we make that successful, there are a few things that I take into consideration. One is to make sure that we always focus upon the value for our partners. We are a product company, but we need to tailor our product to fit into the mission and to the needs of the company that we work with. Also, I think it's crucial that we work with scalable partners. We are a small company, so we need to make the right bets, making sure that we put focus upon working with partners that we can scale along with to make sure that we move the needle on a global scale. Last but not least, we also need to be smart in making sure that we not put complexity into the partnerships. Being a small organization, we need to make sure that we find smart ways to work with our partners. So that gives a little bit of teaser of what the partnership approach is all about. With that said, I will hand it over to Per Andersson, our CFO.