Good morning, and welcome to Sleep Cycle's third quarter earnings call. I'm Mikael Kågebäck, Acting CEO and CTO, and I'm joined today by Elisabeth Hedman, our CFO and Head of Investor Relations.

Q3, it was a quarter of a record B2B revenue, a leaner organization, and we have proposed to acquire Audiowell, which shareholders will vote on at the EGM on the 11th of November. Agenda today: I will take you through who we are and where we stand today.

We'll discuss the Audiowell proposal, and Elisabeth will then take us through the financials, and in the end, we will end with a summary and take your questions. Though we live in a time of change, I think we all can agree, our purpose here remains as relevant as ever.

We want to help people improve global health by helping them take control of their sleep. Sleep Cycle is in a unique position that is very hard to replicate for a newcomer.

We have analyzed now over 4 billion nights of sleep. We have been installed over 82 million times around the world, and we have about 2.5 million yearly active users enjoying our world-leading sleep tracking, our sticky smart alarm, and our scientifically based sleep programs.

This has all been built largely through organic growth. That data and that distribution, and more than a decade of sleep expertise, are exactly what every part of our strategy builds on.

Because sleep is much bigger than the sleep app category. It's been increasingly recognized as a driver of health, recovery, performance, and longevity, and too little sleep is linked to obesity, diabetes, and cardiovascular disease.

Due to this, sleep experiences are now moving into all kinds of things: wearables, pharma, digital health, smart home, and broader health platforms. Due to this, demand is growing for passive, continuous health insights built into products people already use, and that is exactly where our technology is strongest.

Sleep Cycle consists of three pillars. We have Sleep Cycle app, 1.4 million monthly active users and around 605,000 paying subscribers.

We have Apnea Alert, a contactless sleep apnea risk detector, planned to launch in the EU and UK in early 2027 under MDR Class I. Already more than 150,000 people have registered interest.

Finally, we have tech licensing that provide sleep tracking for partners' apps and hardware, and it's the fastest growing part of Sleep Cycle right now, representing 20% of our total revenue. Underneath all of this three pillars is the same shared technology platform powered by our patented sound-based AI model, trained on a massive proprietary data set, and needs nothing more than a microphone: no ring, no watch, just your phone.

Next, I want to give you the current status in our pillars, starting with the Sleep Cycle app. We are now seeing effects of our price increases, with a 2% improved ARPU.

Renewals, they remain stable, which highlights the strong stickiness in our product. However, new sales do remain weak, with a -24% in paying subscribers year-over-year, mainly due to falling organic traffic.

Focus going forward is to bend that curve, and we want to do that by introducing a new customer onboarding that sells the value early to the customer coming in. We optimize the paywalls and offer new win-back offers, and we are closely collaborating with Apple to ensure good experiences on the new iOS devices now being launched.

Next up, Apnea Alert. Now, with Apnea Alert, I think we're doing something very special.

We are bringing low-friction, contactless sleep apnea risk detection to the masses. Our goal here is to make it as easy as downloading an app.

If you're worried that you suffer from sleep apnea, then all you need is your phone and one night of sleep, and in the morning, you will know. Why is this so important?

An estimated 1 billion people have sleep apnea worldwide, and around 80% of those are undiagnosed, and they are suffering. They're suffering effects including excessive daytime fatigue, impaired memory, concentration, and cognitive performance, and an increased risk of cardiovascular disease and type 2 diabetes.

We estimate that the total addressable market for this is around 25 billion SEK. Diagnosis today relies on sleep labs with referrals, sensors overnight, and long waiting lists, or it relies on wearables, which only reach people who already own and wear the device when they sleep.

The effect of this is that those 80% are undiagnosed, most cases are never found. Apnea Alert needs one night with an iPhone on your bedside table, and we aim to reach people who never tested today.

The launch plan is early next year we will launch in the EU and UK under MDR Class I, and next step is going to be MDR Class IIa in the EU and FDA submission for the US. Finally, the third pillar, tech licensing.

We will license our sleep analysis as an SDK so that our partners can build contactless sleep and breathing measurements into their own apps, devices, and hardware. It only needs a microphone and is built on the same patented technology we use in the app and in Apnea Alert.

In Q3, we've added partners in four different segments. In wearables, Ultrahuman converted its pilot into a commercial SDK license.

In digital health, we signed the Ant Group, our entry into China. In smart home, Movera launched its mattress with our analysis running directly on their hardware without a phone.

Finally, we are doing things in public health as well. We finalized a joint research program with the UKHSA, so that's the UK Health Security Agency, and it showed that our cough data can give them an early warning detection system signal to find flu waves and COVID-19 waves in the UK.

We are now discussing a commercial pilot with the UKHSA. Taking all of this together, this progress is exactly why we have seen record numbers in our B2B business area this quarter.

That brings me to the organization. In September, we introduced a more AI-driven way of working with fewer decision levels and smaller teams that own their own results.

Three things, really, three things have changed. We are now AI-first, completely AI-first.

We build it into how we develop, how we analyze, and how we operate the business. The roles have become broader.

Very small teams, sometimes one person, can own their own results end-to-end, which eliminates costly handovers between individuals. Finally, decisions are much faster because there are fewer levels between the decision and the work being done.

What we have gained, well, we have annual savings of around 35 million SEK, with large effect already in the fourth quarter. I think even more importantly, we are already seeing very good results and a higher pace in getting development into the hands of our users.

We are slimmer, more focused, and we have a clearer path to profitable growth. That makes us ready for the next chapter.

The proposed acquisition of Audiowell. Audiowell is an independent record label and music publisher for sleep and relaxation music, founded in Stockholm in 2013.

The idea behind the acquisition is quite simple: Sleep Cycle's sleep analysis and user base combined with Audiowell's music catalog. It widens our offer from sleep to well-being, it adds additional revenue streams in apps, in streaming, and in white-label solutions, and with clear synergies between music streaming and Sleep Cycle's popular sleep aid feature.

As a group, it lets us tailor content to each user and launch faster. To give you an idea of the size of the combined business, the 2025 numbers are going to be 625 million SEK in net sales, it was 282 million in EBIT, and a 45% profit margin.

The acquisition will be paid in Sleep Cycle shares. Shareholders vote at the EGM at the 11th of November, and we expect closing in the fourth quarter.

If the deal goes through, Audiowell CEO Gustav Forshell is intended as CEO of the group, and I will take the role of CTO in the new group. With that, I hand over to Elisabeth.

Thank you, Mikael. Let me start with the big picture.

This was a quarter of change, and underneath it, the profitability is in good shape. Our top line is still under pressure, with net sales falling 12% currency-adjusted, and the reason is the one Mikael described: we are bringing in fewer new subscribers, mainly through the App Store.

The customers we bring in, however, are worth more to us. At the same exchange rates as last year, ARPU rose with 5% to 282 SEK from 269 SEK.

Price increases are holding, renewal rates are stable. B2B is becoming a real second leg.

It's now almost 20% of the revenue against about 5% two years ago. Reported EBIT looks weak this quarter because it carries 14 million SEK in one-off costs for the CEO exchange and the reorganization that Mikael mentioned as well.

Excluding those, the adjusted margin was close to 30%, higher than a year ago. That shows that strong underlying profitability of the business even with lower revenue.

This is before the organizational changes take effect. The new organization saves around 35 million SEK a year, starting in Q4 with full effect from Q1.

We also keep investing for growth. The liquidity went down over the year, mainly because we are investing in sleep apnea with the product Apnea Alert and our SDK, and all of this is funded with our own cash.

I'll go through the details on the next slide. The reported EBIT is 1.1 million SEK and the adjusted EBIT is 15.1 million SEK, corresponding to the margin of 29.7% 29.7%.

The gap between the reported and adjusted EBIT this quarter is almost entirely the CEO change and the reorganization, plus a small amount for the public offer in Q2. These costs are now fully taken, and nothing carries over into Q4.

In Q4, we will instead expect one-off costs related to the proposed acquisition of Audiowell as items affecting comparability. Let me go one level deeper into the quarter.

The revenue story is the one you have already heard: consumer sales is down because fewer new subscribers are coming in, while B2B is growing fast, up almost 50%. I think the cost story is more interesting.

Personnel expenses look high with 24.7 million SEK, but more than half of that, 13.4 million, is the one-off costs for the CEO change and reorganization. Strip that out, and personnel costs were 11.2 million, almost a fifth lower than a year ago.

We have also been more careful with money elsewhere. Marketing is down by about a third, and that's a deliberate choice.

We want to fix the onboarding first so that more users that we bring in become paying subscribers, and then every marketing krona works harder when we step up again. The total other external costs are down 8% on an adjusted basis.

The business is spending less, earning a higher margin even on lower sales, and that's why the adjusted EBIT went up from 27% to almost 30%. Looking at the first nine months gives us a fair picture of a year in transition.

Sales is down with 14% currency-adjusted for the same reason as in the quarter. B2B has grown 40%, is now a sixth of the revenue, up from less than a tenth a year ago.

On costs, even excluding one-offs, personnel and external costs are higher than last year, and that reflects the first half of the year before we reorganized. The savings from the new organization only start in Q4, you do not see them in these numbers yet.

The one-off costs so far this year totals about 25 million SEK related to CEO change, reorganization, and the public offer. Excluding them, the adjusted margin for the nine months is 16%.

At the same time, we are investing for the future. We have capitalized around 35 million SEK of development this year, mainly for Apnea Alert, but also for the SDK.

Where does this take us? The chart shows the adjusted margin quarter by quarter.

After a weak first half, Q3 came in close to 30%, helped by less marketing, fewer consultants, and record high B2B revenue. From Q4, the new organization starts to work for us.

We have reduced the organization by around 15 positions and ended several consultancy contracts and external services. Together, that saves around 35 million SEK a year, with a clear effect already seen in Q1 full effect from Q1 Q4 and Q1, sorry.

That is why we expect an adjusted EBIT margin of around 20% for the full year. We're at 16% for the first nine months, so that means that Q4 should come in around 30%, in line with Q3.

Including the one-offs we have taken this year, about 25 million SEK, the reported margin lands at around 7%. The outlook covers our current business.

It does not include the proposed Audiowell acquisition or its transaction costs. Those will be reported separately as items affecting comparability.

We go into 2027 with a lower cost base, a growing B2B business, and a new product on the way with Apnea Alert. With that, I'll hand back over to you, Mikael.

Thank you, Elisabeth. All right, to sum up, before we take questions, the B2C business remains under pressure, while the B2B revenue is continuing to grow and reached a record 10 million SEK this quarter, almost 20% of the total revenue.

Apnea Alert is now planned to launch in the EU and UK in early 2027. We launched a new, more efficient organization that saves around 35 million SEK a year, starting in Q4, and shareholders will vote on the Audiowell acquisition at the EGM on the 11th of November.

With that, we are ready to take questions.

We have one question from Jessica Grünwald at Redeye: "How lasting is the margin, since we said that adjusted EBIT margin was close to 30% in Q3 before the 35 million savings has kicked in? How much of the improvement versus last year comes from ended consultant engagement and lower marketing?

How much comes from higher capitalization of development costs? Should we expect the 35 million to flow through the margins in 2027, or will part of it be reinvested?"

We will not give a prognosis or forecast of the margin, but what we can say is that the effects took place late in September, but the summer is always a time where our costs are a bit lower due to seasonality. You should expect a margin around 30% in Q4 as well, and let's see what's what's in store for us 2027 while we when when we have Apnea Alert as a product probably bringing in some new revenue.

As of the capitalization costs, most of the capitalized costs are related to the clinical studies. There are smaller amounts related to staff, but it's that's not the big picture.

Then we have one more question: "What is behind the B2B record, as we say that Movera was the main driver of the record B2B quarter? Is that revenue recurring per unit or per user, or was there an upfront or one-off element in Q3?

How should we think about the B2B run rate going into Q4 and 2027?" I can answer that as well.

Movera is a recurring revenue. It's a multi-year multi-year contract, and basically we can expect the same revenue from Movera during this period.

Some of the other customers are on shorter contracts, one-year contracts, but we're hoping to add new customers going into 2027, but we will not give a forecast on what to expect next year. That was all the questions that we have.

Let's say thank you and goodbye.

Thank you very much.