Business Description

Overview Sleep Number is the leader in personalized sleep wellness. Its mattresses are designed to evolve with each sleeper to help them feel and perform their best. With adjustable firmness, pressure-relieving support and temperature balancing comfort built into every mattress, Sleep Number beds adapt to customers’ changing needs, night after night, year after year. Backed by over 40 years of innovation, over 1,000 patents and patents pending, and billions of hours of sleep data, Sleep Number has helped more than 16 million people achieve their best sleep. The fully integrated model ensures quality, durability, and care at every step—from design and craftsmanship to delivery and long-term support. Sleep Number products are awarded the industry's top recognitions, including ranked #1 in customer satisfaction for mattresses purchased in-store and online, and #1 in comfort, by J.D. Power. In addition, the company is the Official Sleep + Wellness Partner of the NFL, marking a relationship that leverages players, team partnerships, and league-wide initiatives to amplify brand awareness and drive consumer engagement. Sleep Number’s life-changing, differentiated smart mattresses combine physical and digital innovations, integrating unparalleled physical comfort with a highly advanced sleep wellness platform. The smart beds offer the Company’s signature firmness adjustability, enabling each sleeper adjustable comfort. Embedded digital sensors learn the sleep needs of each individual; “sense and do” technology uses the sensed data to automatically adjust the smart mattress to keep the sleeper comfortable throughout the night. T emperature balancing technology supports the ideal climate for each sleeper and solves a prevalent sleep challenge. Additionally, smart mattresses are an exceptional value, with personalized sleep insights delivered daily, new features regularly added to all smart mattresses through over-the-air updates and prices to meet most budgets. Sleep Number’s mattresses provide unmatched features, benefits and comfort that can lead to improved sleep health and wellness for both sleepers. The Company’s advantaged business model is supported by its consumer innovation strategy: an individualized, digital sleep wellness platform, a network of millions of highly engaged Smart Sleepers who are loyal brand advocates, a vertically integrated operating model and a team member culture of individuality. The Company’s 3,100 mission-driven team members are focused on driving value creation, including our exclusive direct- to-consumer selling in 600 stores and online, which meets customers whenever and wherever they choose to provide an exceptional experience and a lifelong relationship. Additionally, the Company partners with world-leading institutions to bring the power of over 38 billion hours of longitudinal sleep data to sleep science and research. Turnaround Strategy 2025 was a transformational year for Sleep Number. Under the leadership of its new CEO, Linda Findley, who joined the Company in April 2025, the business has undergone change at every level. The Company: • Created a more streamlined operation designed to enable faster decision‑making by consolidating roles across key functions and strengthening accountability; • Reduced operating costs across the business by $136 million as compared to 2024, excluding restructuring and other non-recurring costs; • Added financial flexibility by extending the Credit Agreement through the end of 2027; and • E xecuted the Twelfth Amendment to the Amended and Restated Credit and Security Agreement, dated as of February 14, 2018 (as amended, supplemented or otherwise modified from time to time), among U.S. Bank National Association, as Administrative Agent, Swing Line Lender and Issuing Lender, and certain other financial institutions party thereto (the “Credit Agreement”) to amend financial covenants . 4 | 2025 FORM 10-K SLEEP NUMBER CORPORATION W ith a stronger foundation, in November 2025, the Company introduced its turnaround strategy “Sleep Number Shifts,” a focused, company-wide effort to reposition the brand, expand reach to new customer groups, and reignite growth. The aim is to drive value for shareholders, customers and team members with efforts rooted in the consumer through all dimensions of the business.…