Sonova : Annual Results 2024/25

About this update from Sonova Holding Ag

Annual Report 2024/25 Table of content Letter to shareholders 3 Our products and service offering 7 Strategy and businesses 13 Corporate governance 36 Compensation report 66 Financial review 106 5 year key figures 113 Consolidated financial statements 114 Financial statements of Sonova Holding AG 184 Investor Information 195 ESG Report 197 LETTER TO SHAREHOLDERS ‌Letter to shareholders Dear shareholders, Sonova achieved solid growth for the 2024/25 financial year. Successful product launches and further elevation of our commercial performance drove a substantial acceleration in sales and profitability through the course of the year. Although adverse currency exchange-rate developments held back reported growth in Swiss francs, we made further progress on our strategy: advancing our product portfolio, expanding market access, and delivering continuous improvement in our operational and commercial execution. We expect to build further on this momentum as we enter the 2025/26 financial year. This year featured breakthrough advances delivered by the innovation culture on which Sonovaʼs business thrives, further enhancing the hearing experience for our consumers. A disciplined approach to research and development, both in-house and in collaborations, has supported our long history of industry firsts, including groundbreaking improvements in sound quality, speech understanding, and connectivity. We have again clearly demonstrated the value of this approach with the launch of two new platforms under our core Phonak brand. Phonak Infinio, powered by the new ERA connectivity chip and launched in August 2024, provides significant improvements over its predecessor Lumity in sound quality and connection stability, delivering high user satisfaction and reduced listening effort. Phonak Audéo Sphere™ Infinio adds real-time artificial intelligence processing to separate speech from noise in all directions instantly, significantly outperforming competitors in real-world listening scenarios. It is powered by our new proprietary DEEPSONIC™ deep neural network chip, the result of more than six years of development and significant R&D investments. These new platforms have been overwhelmingly positively received. They are driving growth in our Hearing Instruments business and have enhanced our Audiological Care business through increased consumer appreciation of our premium productsʼ value, particularly in the second half-year. "It is highly satisfying to see that our significant innovation in hearing aids provides, yet again, very tangible benefits to consumers, helping them to live life to the fullest." Arnd Kaldowski This positive momentum reinforces our conviction that our strategy is an effective generator of profitable growth. You can find additional details in the Strategy and businesses section of this report. Our feature story for this year provides insight into Sonovaʼs innovation culture, detailing how it leads to cutting-edge solutions that deliver fundamental consumer benefits and sustain our leadership position in the hearing-care industry. Hearing Instruments segment Sales in the Hearing Instruments segment increased by 7.5% in local currencies, primarily driven by organic growth. Accelerating growth in the second half of the year was supported by the successful launch of the new Infinio and Sphere Infinio platforms in August, which received positive feedback from customers and consumers and drove growth in both the Hearing Instruments and Audiological Care businesses. The Consumer Hearing business posted strong growth in the second half, helped by an improving overall market. The main highlights in the Hearing Instruments business included the launch of the Phonak Infinio and Sphere Infinio hearing aid platforms in August 2024. We invested substantially in our most ambitious product launch to date, including a flagship event at the Sphere in Las Vegas that attracted over 1,000 hearing care professionals. Following the launch, we expanded the Phonak product range based on the new platforms to encompass additional price points and form factors, all contributing to market share gains. Meanwhile our Unitron brand broadened the offerings of its Vivante platform with its smallest and lightest behind-the-ear (BTE) model and a ʼsuper powerʼ device for consumers requiring greater amplification. Unitron also launched Ativo, a product designed to provide high performance at an accessible price. Our Audiological Care business overcame some initial challenges to accelerate growth and expand market share in the second half of the financial year. Growth in the first half had been restrained by a modest pipeline of prospective customers at the yearʼs start, combined with lower-than-expected demand, particularly in Europe. We therefore implemented a series of measures to drive growth and profitability, concentrating on improving the level and mix of lead-generation channels and executing structural improvements to streamline operations. The business also leveraged the innovative hearing aid solutions launched under our Phonak brand to stimulate consumer demand. These initiatives resulted in significantly increased growth in the second half-year. The Consumer Hearing business achieved strong growth during the second half-year, benefiting from the return of the global consumer audio market to growth after a challenging period, as well as a favorable comparison base. The business has achieved further progress on its strategic priorities, concentrating its effort in the premium market categories where the Sennheiser name and market-leading audiophile heritage have the most resonance. At the same time, Consumer Hearing is improving profitability by increasing customer reach in key markets and channels while optimizing product-related costs. Cochlear Implants segment Strong sales of new systems, reflecting an increased market share, drove a 9.5% rise in sales in local currencies for the Cochlear Implants segment. Upgrade sales declined as, after the 2021 introduction of the Marvel sound processors, many recipients have already taken up this latest technology. Performance in the US has been a highlight, driven by elevated commercial execution and improvements in lead generation. The Phonak + AB Cochlear Implant Network, in particular, assists with identifying hearing aid users whose hearing loss has progressed to a point where a cochlear implant is the optimal solution. Sales growth was also supported by the Remote Programming feature introduced in the previous financial year: enabled by Phonakʼs unique Made For All™ universal Bluetooth® connectivity, it allows cochlear implant recipients to attend remote consultations and benefit from real-time adjustments with their audiologists via smartphone. Financial performance Group consolidated sales for the 2024/25 financial year were CHF 3,865.4 million, up 7.6% in local currencies. The continued significant strengthening of the Swiss franc reduced reported sales by CHF 37.7 million, resulting in sales growth of 6.6% in Swiss francs. Growth was supported by accelerating performance in the Hearing Instruments, Audiological Care, and Consumer Hearing businesses during the second half of the financial year, while the Cochlear Implants business achieved a solid performance throughout the year. Reported operating profit before acquisition-related amortization (EBITA) reached CHF 749.8 million, an increase of 5.9% in local currencies or 3.1% in Swiss francs. Adjusted for restructuring, transaction, integration, and certain legal costs, EBITA reached CHF 807.8 million, up 7.4% in local currencies and 4.7% in Swiss francs. The adjustments primarily reflect the extensive restructuring measures undertaken to enhance productivity and improve our cost structure, thereby putting us in a stronger position for the upcoming financial year. The resulting margin was 20.9%, compared to 21.3% in the 2023/24 financial year, and mainly reflects the strong currency headwind. Adjusted earnings per share (EPS) reached CHF 10.81 (2023/24: CHF 10.06), up 10.6% in local currencies or 7.4% in Swiss francs. Dividend proposal The Board of Directors is pleased to propose to the Annual General Shareholdersʼ Meeting (AGM) in June 2025 a dividend of CHF 4.40 per share. This represents a slight increase over the previous year and an adjusted payout ratio of approximately 41%, which is in line with our Total Shareholder Return (TSR) strategy. Sonova confirms its TSR strategy, targeting moderate leverage while maintaining a healthy balance sheet. Environmental, social, and governance (ESG) Sonova maintains its long-standing commitment to good environmental, social, and governance (ESG) practice: IntACT, our ESG strategy, is firmly embedded in our overall Sonova Group strategy. In the 2024/25 financial year, we made further progress towards our ESG targets, including a 24.5% reduction in scope 1-3 CO 2 emissions compared to the 2019/20 financial year. In line with our efforts to expand access to hearing care, units sold in low- and middle-income countries increased by 67% over the 2018/19 financial year. The share of women in senior management increased compared to the previous financial year from 28.3% to 30.5%, and in middle management from 39.9% to 41.6%. Sonova maintains strong ratings from external ESG agencies. Sustainalytics ranked us first in the medical devices industry, while TIME Magazineʼs "Worldʼs Most Sustainable Companies" named us as top in healthcare and 18th overall. Sonova was included in the Dow Jones Sustainability Index for the eleventh consecutive year, and received an AAA ESG rating from MSCI. You will find further and more detailed information in our ESG Report . Changes to the Board of Directors and to the Management Board As previously communicated, the Board of Directors will propose changes to its membership at the upcoming AGM, in line with its established long-term succession planning. After many years of dedicated service, current Chair Robert Spoerry, Stacy Enxing Seng, and Lukas Braunschweiler will not stand for re-election; Robert Spoerry and Lukas Braunschweiler are approaching the age limit stipulated in the Organizational Regulations of Sonova Holding AG. The Board has nominated Gilbert Achermann, who was elected as a member of the Board at the 2024 AGM, for election as Chair and Laura Stoltenberg for election as a new member of the Board at the upcoming AGM. After a transition period in the 2024/25 financial year, the Board will reduce its membership from 10 to 8 members. Further details can be found in the AGM invitation. As announced in previous communications, Elodie Carr-Cingari, who brings extensive financial leadership experience, will join the Management Board as CFO starting July 2025. Our thanks We sincerely thank our employees for their unwavering commitment to enhancing the hearing experience for ever more consumers: this is the firm foundation of Sonovaʼs strong performance in a notable year. We are also grateful to the consumers who ask us to accompany them on their hearing journey, and the professionals who support them. And our renewed thanks go to our shareholders for their continued trust in our strategy for sustainable, profitable growth. Outlook Building on our solid momentum, increased market share, positive market reception for our new products, and the continued execution of our strategy, we are entering the new financial year from a position of strength. The outlook is based on the current sentiment and growth trends in the hearing care market, as well as the tariffs currently in place. It reflects the recent decline in consumer confidence, particularly in the USA, along with the associated moderate market slowdown observed in recent months. This outlook assumes no significant additional tariffs or other major economic disruptions beyond those already known at the time of this reportʼs publication. For the full 2025/26 financial year, Sonova expects consolidated sales to increase by 5% - 9%, and EBITA - normalized for special items but including restructuring costs - to grow in a range of 14% - 18% when measured at constant exchange rates. Robert Spoerry Chair of the Board of Directors Arnd Kaldowski CEO A personal note from the Chair As previously communicated, I will be retiring from Sonova at the upcoming AGM due to reaching the age limit. It has been an honor and privilege to serve this remarkable company for such a long time, including 14 years as its Chair, and I give warmest thanks to colleagues and shareholders for the trust they have placed in me during our journey together. Sonova is a great company with a clear lead in the market, and I am happy to leave in the knowledge that it is well positioned for the future. Robert Spoerry Chair of the Board of Directors "As my time at Sonova ends, I am convinced that the company is strongly positioned for a successful and sustainably profitable future." Robert Spoerry ‌Our product and service offering Sonova is a global leader in innovative hearing care solutions: from personal audio devices and wireless communication systems to audiological care services, hearing aids, and cochlear implants. Our product brands - Phonak, Unitron, Sennheiser (under license), and Advanced Bionics - create compelling new products to offer the optimal solution for an ever growing consumer base through our globally diversified sales and distribution channels, including our well established global audiological care business. Phonak Elevating Sound Quality with the New Infinio Portfolio Phonak continues to enhance the hearing experience with the Infinio portfolio. Powered by the advanced ERA chip, the Infinio platform offers significant enhancements, including a 93% user preference from the first fit, a 45% reduction in listening effort 1) , and a 61% improvement in speech understanding when combined with Roger ON 2) . With industry-leading connectivity, the Infinio portfolio ensures seamless hands-free calls and streaming across extended distances, all while being engineered for durability to withstand everyday challenges. Phonak remains dedicated to transforming the hearing experience, empowering users to connect with the world around them. Building on the Infinio platform, the Audéo Sphere Infinio is the worldʼs first hearing aid powered by a dedicated real-time AI chip for speech separation from noise. By addressing the critical challenge of speech understanding in noisy environments, the Audéo Sphere Infinio delivers exceptional speech clarity from any direction, achieving a 10dB improvement in Signal-to-Noise Ratio (SNR) compared to leading competitors 1) , allowing users to engage in conversations effortlessly, regardless of background noise. 1) Additional information available at: https://www.phonak.com/en-int/professionals/audiology-hub/evidence-library 2) Thibodeau L. M. (2020). Benefits in Speech Recognition in Noise with Remote Wireless Microphones in Group Settings. Journal of the American Academy of Audiology, 31(6), 404-411. Unitron Celebrating 60 years of innovation This year Unitron proudly celebrated 60 years of innovation and dedication to helping people hear better and delivering decades of delightful experiences. The successful Vivante™ platform was expanded with two new styles: the Stride™ V-M, the smallest and lightest Behind-The-Ear (BTE) hearing aid in the lineup, and the Stride V-SP, designed for those needing a powerful option with extended battery life. Both models utilize standard batteries, thus eliminating the need to recharge. The Remote Plus app enhances the experience by providing access to many exclusive Experience Tech Tools, including the enhanced Coach, which offers tips and reminders through convenient notifications that stay available in the app for easy, anytime access. Additionally, Unitron introduced the Ativo hearing aids, expanding the portfolio with a competitive option in the basic segment. Available in four non-rechargeable models, Ativo supports hands-free calls and media streaming from Bluetooth® devices 1) . 1) The Bluetooth® word mark is a registered trademark owned by the Bluetooth SIG, Inc. and any use of such marks by Sonova AG is under license. AudioNova Attracting, empowering, and retaining the best talent The Audiological Care Academy provides a broad range of education opportunities for hearing care professionals (HCPs) across 20 markets through its diverse and comprehensive training programs. It is an integral part of the value proposition of the Audiological Care business to current and prospective HCPs. The global shortage of audiology professionals is a pressing industry challenge, one that is further amplified by the growing demand for hearing care worldwide. Attracting new talent to audiology, recruiting and certifying HCPs, and fostering continuous learning have never been more critical or more challenging. In 2024, Sonovaʼs Audiological Care Academy with its global network of trainers and academies enrolled nearly 1,000 trainee HCPs worldwide across Sonova, including many from low- and middle-income countries. By investing in education and collaboration, we continue to elevate hearing care standards and empower professionals to make a meaningful impact in their communities. Growth doesnʼt stop upon certification and continuous education remains a core focus of the Audiological Care Academy offerings. In 2024 alone, the Audiological Care Academy trained nearly 5,000 HCPs globally on the latest innovations, including smart hearing aids and the applications of Artificial Intelligence in hearing care. Furthermore, upskilling in critical areas such as cognition and its connection to hearing loss, as well as tinnitus management, remains a key component of the curriculum. Thanks to this knowledge, HCPs can provide holistic hearing care and deliver exceptional outcomes. Sennheiser Sennheiser MOMENTUM 4 Wireless goes from strength to strength MOMENTUM 4 Wireless was created with a bold vision: to lead the market with audiophile-inspired sound quality while excelling in every other area that defines a premium listening experience. Launched in August 2022, the Sennheiser 1) MOMENTUM 4 headphones have proved to be a great success with over 1 million units sold and still going strong. Sales volumes of the headphone have continued to increase in the 2024/25 financial year with new color versions, special editions, and software updates keeping the headphones fresh in the eyes of the consumer. With 60 hours battery life, premium comfort, active noise cancelation, and outstanding sound, MOMENTUM 4 also won the 'Forbes Vettedʼ award for 'Best Travel Headphones Overall'. This was further supported by the launch of a co-branded Lufthansa special edition that is provided to passengers of the airlineʼs new Allegris First Class Suites that launched in November 2024. MOMENTUM 4 not only represents Sennheiserʼs commitment to audio excellence but also its dedication to making high-quality sound accessible and enjoyable for all. 1) Sennheiser is a registered trademark of Sennheiser electronic GmbH & Co. KG and is used under license by Sonova Advanced Bionics Empowering digital hearing health Advanced Bionics (AB) continues its mission to improve lives by developing technologies and services that help people with significant hearing loss achieve their full potential, with the launch of the AB ListenFit app and the Advanced DigiCare collection of digital tools and resources. The innovative AB ListenFit app helps users track their hearing progress, providing personalized insights on their hearing journey. Tests like the Phoneme and Matrix Sentence Tests allow users to monitor their hearing progress anytime, anywhere. AB ListenFit is part of ABʼs Advanced DigiCare portfolio, designed for patients, professionals, and caregivers. Included in these tools are the AB Remote Support app, which allows audiologists to adjust cochlear implants remotely, and platforms such as HearingSuccess and Hearing Journey™, which facilitate hearing training and foster community engagement. These resources offer a flexible, personalized approach to the hearing journey. By providing tools such as Remote Programming and auditory training, everyone can better understand their hearing health and improve their well-being. The AB ListenFit app is another step in ABʼs commitment to making hearing care more accessible, efficient, and personalized. * AB ListenFit is compatible with Marvel CI and/or Phonak Link M Hearing Aid. AB ListenFit is intended for educational use by adults and children aged 13 and older, and younger children with caregiver assistance. It is not a substitute for professional medical advice, diagnosis, or treatment recommendations. Please consult with your healthcare provider for any medical concerns about managing your cochlear implant(s). ** Test availability may vary by region. STRATEGY AND BUSINESSES ‌Strategy and businesses We elevate our consumersʼ experience through groundbreaking innovation that powers better hearing performance and consumer experience across our industry and deepens customer relationships around the world. Sharing joyful moments with family, friends, and colleagues; enjoying the best of music, drama, and storytelling; experiencing the changing moods of nature - often quiet, but always meaningful. Good hearing isnʼt just a gift, itʼs a necessity for a full, rich life. Over more than 75 years, we at Sonova have worked with one simple goal in mind: to bring the delight of hearing to ever more people and empower them to live a life without limitation. Our quest to reach this goal has repeatedly taken us to the frontier of innovation in a broad range of technologies, scientific disciplines, and commercial activities - but our ultimate measure of success remains, "do we transform the consumerʼs hearing experience?" This year, we are proud to announce yet another innovation that meets this high standard. The Sonova Group The Sonova Group is a leading global provider of hearing care solutions. Its businesses are deeply connected, sharing innovation, customer access, talent, and market expertise across their various activities. They collaborate in R&D, manufacturing, marketing, sales, and customer support to ensure sustained, fruitful relationships with consumers, business partners, and hearing care professionals. The Groupʼs innovation process develops new breakthrough capabilities for ever-better hearing experience, while rapidly extending the benefits of new technologies right across the industryʼs broadest solutions portfolio. Sonova operates through four businesses with their own well-respected brands. Each serves a specific segment of the broader industry through the channels best suited to its customer base, but they also work closely together where those bases overlap, or where the consumer would benefit from a wider range of solutions. The Hearing Instruments business stands at the core of Sonovaʼs identity as a champion of better hearing. Operating through the globally-known Phonak and Unitron brands, it drives innovation in hearing aids and wireless communications devices. Combining strong audiological expertise with specialist skills in electroacoustics, chip design, wireless technology, software development, and precision manufacturing, its disciplined innovation process regularly sets new milestones in hearing performance, which are then reflected in the offerings of all four businesses. The Audiological Care business, operating under the AudioNova and other renowned national brands, leverages the full range of Sonova products with expert professional hearing care, delivered in-store and through other channels with audiological expertise, efficiency, and personal attention. Consumer Hearing offers a range of premium wireless headphones, earbuds, and soundbars under the Sennheiser brand (under license), providing a deep immersive experience for consumers who love great sound, along with early-entry hearing devices that seamlessly address the first stages of hearing loss. Cochlear Implants, operating under the Advanced Bionics brand, provides complete hearing solutions for those whose hearing loss is too advanced for hearing aids. Its solutions bring Sonovaʼs audiological and technical innovations to a new group of consumers, helping to transform their hearing experience. A strategy that delivers Sonovaʼs strategy is closely aligned with our mission - and it has proven to be effective. Innovation leadership is the driver for every strategic cycle. Each successive innovation is brought to market by expanding consumer access, extending value-adding partnerships, and investing in high-potential developing markets. At the same time, we continuously identify and implement opportunities for process improvement, structural optimization across the businesses and functions, and commercial excellence. Where appropriate, organic development is supplemented by strategic M&A activity. STRATEGY AND BUSINESSES This year, the strategic cycle has gained powerful impetus from the launches of the Phonak Infinio and Sphere Infinio platforms, the fruits of more than six years of intensive technical development. Infinio delivers significant sound quality and connectivity enhancements over its predecessor, Lumity. Sphere Infinio adds groundbreaking technology: a proprietary new chip that combines real-time processing with artificial intelligence to instantly separate speech from noise in any direction, providing substantial hearing benefits for consumers. These launches, representing the largest marketing effort in our history, have significantly elevated our innovation leadership in the eyes of customers across the globe and created further growth opportunities for our Audiological Care business. The unique value proposition of Advanced Bionics cochlear implants combined with Phonak sound processors has opened the door to new business, and the Sennheiser brand, with its strong presence in the audiophile market, has established further commercial partnerships. Sonova X, our business system and mindset for continuous process improvement, has grown in six years from a new idea for Sonova to an integral part of day-to-day work in all our businesses, delivering significant improvements in quality, sales conversion, productivity, and - most importantly - customer satisfaction. The next step in a rich history of breakthrough innovations Our Sphere Infinio platform, with its DEEPSONIC Deep Neural Network chip, supports an unprecedented leap forward in tackling the central challenge to delivering good hearing: making speech more comprehensible in noisy environments. Its technical performance (signal-to-noise ratio) is markedly higher than that of the best solutions previously available - and this is just at the start of tapping into the technologyʼs potential. From the first moment of experiencing it, consumers and their audiologists have been overwhelmingly positive in their response. How is such revolutionary innovation achieved? By building on our tradition of innovation. Sonovaʼs history is regularly marked by industry firsts: multi-microphone beam steering, digital processing, wireless communication, universal connectivity, rechargeability, and now real-time AI sound processing. Over many decades, we have been willing to commit to high-risk, long-term development projects when we were convinced that they would transform consumer experience. We constantly reinforce our in-house audiological and technological expertise through strong partnerships and interaction with the academic, industry, and start-up communities. Our "open innovation" culture accelerates time-to-market by leveraging all our core competences, while embracing the diversity provided by partnership and acquired talents - all in the service of a clearly-defined shared goal. Six years ago, the goal was "significantly improved speech-in-noise performance," a goal that we knew would require entirely new enabling technology. Now that goal has been more than achieved - and on schedule. ESG: sustainable business success Our environmental, social, and governmental (ESG) strategy, IntACT, continues to drive substantial progress toward meeting Sonovaʼs targets in a broad range of material topics. These include increasing access to hearing care around the world: this year we achieved a 67% increase in units sold in low- and middle-income countries (LMIC) compared to the 2018/19 financial year, combined with 555 graduations, up 50% compared to the 2023/24 financial year, from our Swiss International Hearing Academy (SIHA) training program for hearing care professionals in these countries. Our diversity and inclusion (D&I) initiatives have further increased the share of women in senior management from 28.3% to 30.5% and middle management from 39.9% to 41.6% over the previous financial year. We are achieving significant reductions in our environmental footprint, including a 24.5% reduction in our Scope 1-3 CO 2 emissions compared to the 2019/20 financial year on a comparable basis. We have also lowered our energy consumption per full-time employee (FTE) by 13% compared to 2022/23. Sonovaʼs ratings from external ESG agencies and indices remain consistently high: we are included in the Dow Jones Sustainability Index for the eleventh consecutive year, ranking shared first out of 275 companies in the health care equipment and supplies sector. MSCI has again awarded us their highest-possible AAA ESG rating, and Sustainalytics listed us in first place out of more than 200 assessed companies in the medical devices industry. Sonova also ranked #1 in healthcare and #18 overall in TIME Magazineʼs "Worldʼs Most Sustainable Companies." You can find further detailed information in our ESG report . FEATURE STORY ‌A culture of innovation At Sonova, we lead the way in hearing care, driven by our vision to create a world where everyone can enjoy the delight of hearing and live life without limitations. We proudly introduced Audéo Sphere Infinio, a clear demonstration of our commitment to innovative hearing care solutions. As the first company to integrate real-time AI into hearing aids, we are leading the way in advancing the industry. This journey also reflects our teamʼs capabilities and passion for making a meaningful difference in peopleʼs lives. We believe that together, we can transform lives and empower communities every day. At the forefront of hearing technology For decades, Sonova has been at the forefront of technological advancements in hearing care. With every new technology - directional microphones, Bluetooth, rechargeable devices, AI for personalized fittings - we have delivered high quality and customer-focused options. Launching Phonak Audéo Sphere Infinio in August 2024, using real-time AI for the first time, was another proud milestone for us at Sonova. 17 Sonova Annual Report 2024/25 FEATURE STORY Innovating with purpose: Sonovaʼs journey Explore Sonovaʼs timeline of innovation that has revolutionized the hearing care industry. From the launch of the first behind-the-ear hearing aid in 1978 to the introduction of the DEEPSONIC™ real-time AI chip in 2024, our journey underscores our commitment to continuously improve the hearing experience for people in need. Each milestone, including the Marvel 1) hearing aids with Bluetooth connectivity and the Neptune™ 2) sound processor for swimmers, shows the need to keep listening and turn their needs into impactful solutions that improve lives. Audéo Sphere Infinio uses real-time AI to address one of the most pressing needs of people with hearing loss: understanding speech in noisy situations. Background noise in restaurants, on the street, or during gatherings with family and friends can make it hard to hear what others are saying, which may limit involvement and enjoyment. Using extra effort to be part of the conversation is tiring too, all of which leads some people with hearing loss to avoid noisy environments altogether. Despite improvements in hearing technology, noisy environments have continued to be a challenge for people who wear hearing aids - until now. Running on an AI sound processing chip, DEEPSONIC™, Audéo Sphere Infinio provides unprecedented speech clarity from any direction 3) . "Based on the feedback we get from our customers, this is a big step forward for anyone struggling in noisy environments. Innovating where it matters most, makes us proud and highlights Sonovaʼs dedication to providing the best possible sound quality and user experience,"says CEO Arnd Kaldowski. It begins with people The philosophy that drives innovation at Sonova is so deeply held that it is written on the walls of our headquarters in Stäfa. "At Sonova we say 'Ohni Lüüt gaht nüüt' ('Nothing works without people') and this concept is really fundamental in this company," says Andi Vonlanthen, who served as Senior Vice President for Hearing Instruments Research & Development at Sonova for more than 40 years. "Innovation is all about people. You need a vision of where you want to go and then you give people the responsibility and trust them to achieve it." Sonova Annual Report 2024/25 18 FEATURE STORY A visionary journey in hearing technology https://mms-websitedaten.s3.eu-central-1.amazonaws.com/sonova/GB24_25/SON_ENG_FEATU As a leader in wireless technology, Andiʼs work on the Marvel product line has redefined connectivity, allowing users to seamlessly connect with their devices. His persistent commitment to innovation and a customer-first approach has best positioned Sonova to meet future challenges and continue making a meaningful impact in hearing solutions. At Sonova, we firmly believe that Andiʼs legacy will resonate for years to come, inspiring our people and guiding our future R&D initiatives. In the dynamic world of hearing technology, Andi Vonlanthen stands out as a true innovator. For 40 years at Sonova 4) , he drove groundbreaking advancements, fostering an open innovation culture that led to the creation and successful market launch of the Infinio Sphere - a revolutionary real-time AI platform addressing the most challenging problem for people with hearing loss: understanding speech in background noise. His remarkable contributions also include the personal integrated communication system (Pics), Audio Zoom, and Claro products, all designed to improve user experience and connection. Andi connects the open layout of the workplace at Sonova, which is designed to encourage interaction, to the companyʼs enduring success. "Itʼs about creating an environment where people can work together and innovate without hurdles or hierarchies," he says. Volker Kuehnel, who works in Sonovaʼs technology development and integration team, believes that people need time and space to "think, explore, try out". This is an equally important aspect of the innovation culture at Sonova. This is often how incremental improvements to products are found, alongside big leaps forward like Audéo Sphere Infinio. The adjustment to the default software settings of a hearing aid in response to fitting data is also an example of our innovation. "We learn and we iterate," explains Volker. Listening to the customer Unmet needs, open minds, and belief there is a solution - this is always how innovation begins at Sonova. Product manager Shin-Shin Hobi is closely involved in the development of new hearing instruments. She observes: "We donʼt build a product just because we can. We do it because we know thereʼs a need for it from listening to our consumers." Our determination to solve speech understanding in noisy environments led us to develop a specific deep neural network for this purpose, a type of real-time AI model inspired by the way the human brain works. This deep neural network achieved astonishing results in speech enhancement on a laptop. But could that performance be replicated in a hearing aid? 19 Sonova Annual Report 2024/25 FEATURE STORY From powerful processing to match-sized performance Everyone involved in the project recognised this was a high-risk venture. "We thought we had a good shot at making this into a product, but there were many unknowns because the hearing aid is such a complex device," says Paul Mayer-Rachner, one of Sonovaʼs Technical Directors. Working at the very edge of possible Andi Vonlanthen knows all about the persistence and resilience required when pushing into new territory. "I can tell you, innovation hurts. Itʼs a lot of work and itʼs not something you can do overnight," he says. Chip designers, software engineers, data scientists and audiological specialists were part of the team that worked relentlessly to fit real-time AI into a hearing aid and integrate it with the other functions. Delivering processing power without compromising battery life for the user was one of the many technical problems to overcome. "We were working at the edge of what is possible," recalls Volker Kuehnel. Left: Team experimenting with Sonovaʼs DNN technology. Middle: The advanced DEEPSONIC™ chip. Right: Team testing the Audéo Sphere Infinio Developing any new product is a long and uncertain journey, so it is only natural to have moments of doubt along the way, especially when working with an emerging technology like real-time AI. "It took me some time to believe we can really do this," says Sebastian Stenzel, an AI software architect on the project. Audiologist Stefan Raufer describes the first time he heard the denoising effect in a live environment, when the software was demonstrated in the busy cafeteria at Stäfa during the peak of the lunch service. "That was my 'wow' moment, when I realized we have invented a technology that can change the lives of so many people," he says. "This was really exciting!" Sonova Annual Report 2024/25 20 FEATURE STORY Sonovaʼs investment in this technology helped cross the threshold from demo to prototype to viable commercial product. The project required dedicated hardware and software development resources, additional computing power to train the real-time AI, new testing equipment to get precise performance data, and extra clinical trials to back up marketing claims. Fethi Cherigui, from Hearing Instruments Research & Development, appreciates having a management team that understands what it takes to bring innovation to fruition. "Sonovaʼs willingness to invest in innovation is a real competitive advantage," he says. Hearing the difference Hearing loss affects approximately 430 million people globally 5) . Addressing this issue is crucial, as untreated hearing loss can lead to reduced quality of life, as well as to reduced socio-emotional and cognitive well-being 6) . "Our product brings a true benefit for people in need - because it helps them to communicate and stay socially active, especially in challenging listening situations," says Maren Stropahl, Director Holistic Hearing Care for R&D Audiology and Health Innovation. "Customers tell us they feel more at ease and confident in social settings, which highlights the real-world impact of our innovations." Left: Aaron, an Audéo Sphere Infinio user. Middle: Tiffany, a hearing care professional. Right: Maren, who focuses on holistic hearing care. Hearing care professional Tiffany Wilson, a Licensed Hearing Instrument Specialist at AudioNova US, part of Sonovaʼs Audiological Care business, confirms that being able to engage in conversation without the frustration of background noise makes a significant difference in the lives of her customers 7)8) . "Being able to hear their grandchild in the back of the car, or their spouse in a busy restaurant, this is what really matters to people. Audéo Sphere Infinio gives our customers the ability to understand and keep up regardless of the type or level of noise in the environment," says Tiffany. "It makes me proud to be able to support them in their time of need!" Reduced listening effort is another benefit for Audéo Sphere Infinio users 9) . For professional soccer player Rylee Foster, easier listening means she has more energy for training and performance. Rylee says: "I no longer have hearing burnout. After a long training day, I would be exhausted. I can now have conversations without feeling overwhelmed." 21 Sonova Annual Report 2024/25 FEATURE STORY Ryleeʼs remarkable comeback Now playing for Durham Women FC in Englandʼs FA Championship, Rylee has also made her mark internationally, winning the Golden Glove in the U17 CONCACAF Championship. With the Infinio Sphere, she has experienced a significant improvement in her hearing, allowing her to connect more easily with teammates and coaches. "For the first time, I can easily understand speech," she shares, highlighting how this technology has transformed her interactions. Ryleeʼs story is not just about overcoming challenges; itʼs about living a full life with hearing loss and inspiring others to embrace their own journeys with courage and authenticity. Rylee Fosterʼs journey is a remarkable tale of resilience and authenticity. After a near-fatal car accident three years ago, this Canadian goalkeeper defied the odds to return to the pitch and pursue her dream of a law degree. While she is hearing-impaired, she has not experienced the severe hearing loss that affects her mother and sister. Inspired by her motherʼs determination to succeed in a people-oriented career, Rylee credits her grit to her upbringing, the challenges she has faced, and her beloved city. Phonak ambassador Aaron Small has a busy schedule too as he trains for his next shot at Olympic glory. He welcomes feeling less fatigued thanks to the sound quality of Audéo Sphere Infinio 10) . "Iʼve noticed my social battery has been given an upgrade," says Aaron "Voices stand out more and I donʼt struggle with picking them out from a loud room." Sonova Annual Report 2024/25 22 FEATURE STORY Making our best even better While the launch of a product is a something to celebrate, it is not an end but the beginning of a new innovation cycle. The second generation of Audéo Sphere Infinio is already in the pipeline, with improvements that show our commitment to making the best even better for our customers. And the lessons learned and investments made in bringing Audéo Sphere Infinio to market have opened up new possibilities for future innovation. CEO Arnd Kaldowski says: "We are just getting started with using real-time AI to improve hearing performance. This is a whole new innovation vector for Sonova, and Iʼm excited for what lies ahead." Watch this video to experience the future of hearing care with Phonak. 1) Phonak Marvel: revolutionary hearing aids offering exceptional sound, Bluetooth streaming, rechargeability, and remote support. Revolutionary Phonak Marvel hearing aids: the ultimate combination of exceptional sound quality and universal Bluetooth® connectivity | Sonova International, visited in April 2025 2) Neptune™ Sound Processor: a versatile cochlear implant system designed for seamless audio connectivity and water activities. Neptune™ Processor | Advanced Bionics, visited in April 2025 3) Raufer, S., Kohlhauer, P., Jehle, F., Kühnel, V., Preuss, M., Hobi, S. (2024). Spheric Speech Clarity proven to outperform three key competitors for clear speech in noise. Phonak Field Study News retrieved from https:// https://www.phonak.com/evidence 4) Andi Vonlanthen retired from Sonova on March 31, 2025 5) World Health Organization. Deafness and hearing loss, published 26 February 2025 at: https://www.who.int/ news-room/fact-sheets/detail/deafness-and-hearing-loss. Last accessed: April 2025 6) Vercammen, C., Ferguson, M., Kramer, S.E., Meis, M., Singh, G., Timmer, B., Gagné, J.-P., Goy., H., Hickson, L., Holube, I., Launer, S., Lemke, U., Naylor, G., Picou, E., Scherpiet, S., Weinstein, B., & Pelosi, A. (2020). Well-Hearing is Well-Being: A Phonak Position Statement. Hearing Review, 27, 18 - 22 7) Thibodeau, L. M. (2020). Benefits in Speech Recognition in Noise with Remote Wireless Microphones in Group Settings. Journal of the American Academy of Audiology, 31(6), 404-411 8) Appleton-Huber, J., et al. (2024). Speech Enhancer reduces listening effort of speech from adjacent room. Phonak Field Study News retrieved from https://www.phonak.com/evidence 9) Habicht, J. & Schuepbach-Wolf, M. (2024). Speech Enhancer reduces subjective listening effort of speech by up to 45%. Phonak Field Study News retrieved from https://www.phonak.com/evidence 10) Latzel, M, Heeren, J and Lesimple, C. (2024) "Speech Enhancer reduces listening effort and fatigue."phonak Field Study News retrieved from https://www.phonak.com/evidence 23 Sonova Annual Report 2024/25 STRATEGY AND BUSINESSES STRATEGY AND BUSINESSES Hearing Instruments business Our culture of innovation regularly delivers breakthrough advances, bringing the delight of hearing to ever more consumers. Sonovaʼs Hearing Instruments business operates through our Phonak, Unitron, and other local and private label brands. We are a market leader in developing, manufacturing, and selling hearing aids and wireless communication products through a multitude of channels, including independent audiologists and Ear, Nose and Throat (ENT) clinics, large hearing care chains, and government health agencies. We are proud of our track record of innovation, regularly delivering step-change improvements in our consumersʼ hearing experience through our rigorous focus on the essentials of hearing performance and ease of use. Our market-leadership strategy calls for excellence in each aspect of our business: in continuous innovation, in extending the breadth of our solutions portfolio, in enriching the experience of our business partners and the consumers they serve, and in improving our processes and expanding market access. Innovation is a journey marked by repeated technological breakthroughs Over many years, Sonovaʼs Hearing Instruments business has time and time again elevated consumer experience through a cadence of industry firsts: multi-microphone directionality, automatic sound classification, adaptive directional beamforming, rechargeable lithium-ion battery power, and universal Bluetooth® connectivity. Each of these breakthroughs has been further refined and extended through our continuous cycle of technology platform advances. There are always improvements to be made in the key aspects of hearing experience: sound quality, speech understanding in noise, connectivity, reliability, and personalization. We therefore take a structured multi-disciplinary approach to product development: collaborating with clinical, technology and research organizations, investing in in-house innovation capabilities, building competence in proprietary technologies, and driving a culture that links innovation with learning from the market. STRATEGY AND BUSINESSES Launched in August 2024, the Phonak Infinio family of hearing aids, powered by the new ERA chip, achieves remarkable improvements in sound quality and connectivity. These include first-fit satisfaction - 93% of users prefer Infinio at first fit over a key competitor - 45% reduction in listening effort, 21% less fatigue , and up to six times the previous Bluetooth® transmission power, for more stable connections with uninterrupted handsfree calls and streaming over significantly greater distances. All this comes in a durable water-resistant format, Swiss-engineered to withstand everyday challenges, with fitting and programming options that allow audiologists and consumers to personalize the hearing experience. Infinio alone represents a major step forward in hearing performance and ease of use - but it is not the whole story. Understanding speech in noise has always been the challenge that consumers most want their hearing aids to tackle, and successive sound-processing advances have certainly improved the experience of listening to conversation in noisy environments. Now, however, there is a completely new solution that delivers unprecedented performance: Phonak Sphere™ Infinio, powered by our proprietary DEEPSONIC™ deep neural network chip, an industry-first innovation that works together with ERA in a dual-chip system. The result of six yearsʼ development and trained on 22 million sound samples, DEEPSONIC has 4.5 million neural connections that perform 7.7 billion operations each second, allowing real-time artificial intelligence to separate speech from the babble in the background - no matter which direction it is coming from. Where even our own industry-leading classic noise-cancelling technology delivered around 6.4 decibels improvement in signal-to-noise ratio, Sphere Infinio achieves up to 10.2 decibels, making consumers 2 - 3 times more likely to understand every word, from any direction, compared with leading competitors 1) . https://mms-websitedaten.s3.eu-central-1.amazonaws.com/sonova/PH_Movie_AudeoSphere_E The marketʼs response to Infinio has been strongly positive: 98% of hearing care professionals (HCPs) at the launch event said that they thought the new platforms would "change the lives" of their patients. The new products have gained significant market share and established traction with major-market customers who had not ordered the previous platform. We also saw an upward impact on product mix, demonstrating that consumers recognize the clear step change in hearing experience that these innovations provide. The sound quality, connectivity, and personalization advances introduced with Infinio all contain the potential for further performance improvements and consumer benefits. The DEEPSONIC chip continues to be trained in new listening situations to further improve performance and efficiency in upcoming product releases - the innovation process never stands still. Commercial excellence sustains the strongest launch in our history The Phonak Infinio portfolio was introduced to a thousand customers at a launch event in the Sphere venue in Las Vegas. More than twenty industry journalists with a combined reach of over 100 million followers were given an exclusive introduction to the technology; their response was overwhelmingly favorable. Compared with previous launches, we achieved much higher reach and social media engagement, and greatly increased the volume of website traffic. Infinio and Sphere are big advances, and we wanted to make sure that the stories were heard. Breakthrough innovation deserves breakthrough communication. The launch program also went beyond communication to include training and education for HCPs. We launched the new platforms in more than 70 countries, training HCPs in more than 10,000 clinics around the globe. The training and the sound demos allowed them to experience firsthand the groundbreaking innovation and how Infinio and Sphere Infinio will transform the lives of their clients - as we say, hearing is believing. The result is that consumers have been coming to HCPs to ask specifically about the unique capabilities of our two new platforms. 1) Additional information available at: https://www.phonak.com/en-int/professionals/audiology-hub/evidence-library STRATEGY AND BUSINESSES STRATEGY AND BUSINESSES Audiological Care business We provide expert, personalized, and technologically advanced audiological care, easily accessible through multiple channels of engagement, bringing Sonova solutions to a growing consumer base. The Audiological Care business, operating through the AudioNova brand and other strong national brands, offers best-in-class hearing care through a network of around 3,600 points of sale in 20 key markets, employing more than 7,000 dedicated hearing care professionals (HCPs). Our goal is to engage and excite consumers about how our solutions can help them enjoy the delight of hearing and live their lives without limitations. We achieve this goal by focusing closely on each consumerʼs experience of interacting with us, from the very first moment of contact. We establish relationships as the consumer chooses - digitally or in-store. We provide attentive, personalized, and expert care through engaged and highly-skilled professionals. And we aim for a consistent, inspiring experience of visiting our stores, where consumers and their loved ones are encouraged to deepen their understanding of hearing loss and the solutions we provide. Our strategy puts the consumer firmly in first place. More satisfied consumers mean increased market share and sustained profitable growth. Consumers are satisfied by the consistent experience of excellent personalized care. Excellent care relies on engaged, highly-trained employees along with a versatile, targeted approach to attract and satisfy new consumers. All this is supported by continuous improvement of our processes and the consumerʼs experience while allowing our audiologists to spend more time on audiology and consumer interaction. At the same time, we continuously optimize our local and global support structure, matching our offering to local consumer needs and growing our physical presence to align with high-potential markets. Taking audiology to the next level Central to our brand, and to all we do, is what we call "pinnacle audiology." This means providing an experience of care that is outstanding in all its aspects: outstanding in the precision of hearing assessment and the technology that supports it. Outstanding in the sympathetic attention and willingness to explain of the hearing care professional, in the opportunities to work through specific concerns, involve friends or family in decisions, and try out our hearing solutions in realistic listening environments. And outstanding in our flexibility, enabling us to provide excellent care in whatever way the consumer wishes: in person, on the phone, online, or through our suite of apps. Delivering pinnacle audiology demands a great deal from our hearing care professionals. We are therefore deeply aware of our responsibility to provide the tools they need to excel in their profession. It starts with excellent training; we have set up award-winning programs and university partnerships leading to HCP certification in the US, China, Germany, the UK, France, and Brazil; these graduate around 500 new HCPs every year, and we plan to grow this number further going forward. Our Hearing Care Academy brings to life our vision of creating a global network of academies to connect, educate, and train HCPs to meet the growing demand for the high quality, holistic care that differentiates us in the market. HCPs are able to access personalized learning when they need it, engage in best-practice exchange, and have direct access to internal and external experts. For those HCPs who are doing outstanding work in the field, they will have opportunities to be recognized as experts and support their peers around the world - and to pursue further career opportunities across all of Sonovaʼs businesses. In a marketplace where purchasers are often hesitant to take the first step, attracting the first-time consumer is a vital challenge. Our dedicated in-house lead-generation team connects us with new, younger consumers, generating a higher conversion rate and average purchase value - all at a lower cost - than would be possible using an outside agency. But there are also valuable services we provide on this journey, to help establish and strengthen that first contact. For example: tinnitus is a condition often associated with a significant hearing loss. Our SilentCloud™ app is a medically-regulated tool for self-paced tinnitus management that offers therapies, education, and counseling by audiological care experts. At the same time, it opens a way to start a one-to-one conversation about hearing, and to mobilize the data to support and inform each consumerʼs future hearing care. Ear, nose, and throat specialists and other hearing care professionals can see how our medical solutions add value, and therefore feel comfortable in recommending us. These professional referrals are a very important step in beginning a trusted relationship with the consumer. And when the referred consumer has been fitted with a hearing aid, our MyAudioNova app, known to some as "the audiologist in your pocket," continues the easy-to-use, user-controlled, information-rich, and personal contact that marks all our software offerings. Deepening ties with the consumer We base our business on our consumersʼ "hearing journey." As their life circumstances change, their hearing needs change, and it is our role to accompany, advise, and assist on that journey with ever-improving solutions. This role demands great flexibility, as consumersʼ needs are never exactly the same. Our lead generation - the start of the journey - therefore makes use of a mix of media, both traditional and digital, to ensure that we contact the full spectrum of potential consumers, wherever they decide to start their personal hearing journey. We continue to expand our network, both through acquisitions and greenfield openings, based on strategic considerations and in-depth analysis. We apply to stores across our network the lessons learned in our flagship World of Hearing stores - now operating in 14 markets and five continents -by, for example, including "experience rooms" where consumers can hear how different hearing aids perform in a variety of virtual situations, such as a concert or noisy restaurant, and where friends and family can hear simulations of what their loved oneʼs hearing loss is actually like. Each of these steps helps to reinforce our connections with the consumers we serve as we continue to expand our network. STRATEGY AND BUSINESSES We also learn lessons from consumers themselves. We have started the process to measure consumer satisfaction and excitement consistently across all our 20 key markets and down to the individual store level, allowing clear actionable analysis of the effect of our initiatives on consumer sentiment and helping to ensure that everything we do makes a real, positive contribution to the consumerʼs experience. We already know that satisfied existing consumers are most likely to be excited about further innovation - and therefore to continue with us as their partner on their hearing journey. Supporting our global brand proposition With a business model centered on pinnacle audiology and committed to satisfied consumers, engaged employees, and sustainable, profitable growth, Audiological Careʼs brand values are the key to distinguish us from our competition and help us to stake a clear claim to audiological leadership in each market. In markets where we have no strongly established national brand, we are consolidating our presence under the AudioNova brand: for instance, all our stores in the US and in Japan are currently being rebranded as AudioNova. But whatever the name above the door, all our stores will have a recognizably uniform appearance, layout, technology, and working practices, supporting our clearly differentiated brand proposition. This uniformity gives us a strong platform for continuous improvement, based on the Sonova X business system and mindset, in productivity, store performance, and consumer lifecycle management. It allows us to learn from local excellence and swiftly apply it across the global network. We continuously support the delivery of personalized, expert audiological care with initiatives to improve commercial execution and optimize structural efficiency. This year, we have launched an 18-month program that will secure cost savings, protect critical capabilities, and expand profitability by streamlining global and local headquarters functions, optimizing the store network and its capacity levels, and reviewing the structural adjustment of non-core business models. The goal is straightforward: to ensure that our resources and talents are applied most profitably to the activities that matter most to the consumer.

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