Q4 2022 Owlet Inc Earnings Call
Good afternoon. Thank you for attending all the earnings Conference call. My name is Matt and I would be your moderator for today's call all lines will be muted during the presentation portion of the call up an opportunity for questions and answers at the end if you like to ask a question. Please press star one on your telephone keypad.
I would now like to pass the conference over to your host Mike Cavanaugh Investor Relations. Mike. Please go ahead.
Thanks, Matt.
Good afternoon, and thank you all for joining us today.
Earlier today I'll, let incorporated released financial results for the quarter ended December 31 2022.
The release is currently available on the company's website at investors Dot outlet care Dot com.
Curt Workman, Alex co founder, President and Chief Executive Officer, and Kate Skolnik, Chief Financial Officer will host this afternoon's call.
Before we get started I would like to remind everyone that certain matters discussed in today's conference call and or answers that maybe given to questions asked are forward looking statements that are subject to risks and uncertainties related to future events <unk> the future financial performance of the company.
Actual results could differ materially from those anticipated in these forward looking statements.
The risk factors that may affect results are detailed in the Companys. Most recent public filings with the U S Securities and Exchange Commission, including its quarterly report filed November 14 2022.
Other reports filed with the SEC, which can be found on its website at investors Dot I'll, let care dot com.
Or on the SEC's website at Www Dot FCC Dot Gov.
The information provided in this conference call speaks only as of today's live call.
I'll, let disclaims any intention or obligation except as required by law to update or revise any information financial projections or other forward looking statements, whether because of new information future events or otherwise.
Please also note that outlet or will refer to certain non-GAAP financial information on today's call.
You can find reconciliations of the non-GAAP financial measures to the most comparable GAAP measures in the company's earnings release, which is also available on the company's quarterly results page of its website.
I will now turn the call over to Curt Workman.
Thanks, Mike.
Good afternoon to everyone joining us today during our call today, Youll youre going to hear a lot of conviction.
About outlets fundamentals and our vision for the future.
I recognize that our confidence in our business conflicts with our reported financial results in 2022 due to the efforts required to rebuild our business I'd like to take a minute upfront to address this.
Throughout 2022, we made tremendous progress positioning outlet for sustainable profitable growth in 2023 and years into the future. We rebuilt our brand health Rebased, our operating expenses focused on rebuilding channel health and made milestone progress towards regulatory approval for both our medical device and de Novo product.
Vacations.
A few weeks ago.
With all its underlying business properly position, we raised $30 million of additional capital from both insiders and new investors, ensuring that we have the balance sheet to execute in 2023 from a position of strength.
The investors, who provided us with the new capital base their confidence on the fundamental improvements and strategy I'm going to discuss with you today.
Our plan for 2023 is clear.
<unk> outlet on the pathway to cash flow positive profitable and long term sustainable growth through a category defining products.
There are a few underlying trends in our business that give me confidence that outlet is on track to deliver this.
Our brand health has returned to all time highs levels not seen since 2021 NPS is at all time highs in marketing spend CPA has declined 80% since the start of 2022.
Our channel sell through growth.
Quarter over quarter, reaching nearly $20 million in gross revenue of sell through in Q4.
Inventory and channel is normalizing and we expect sell through to match sell in by the end of Q2 with improvements in Q1.
Our expenses are right sized and this will demonstrate our rebased operating expenses in Q1, and Q2 with a plan to spend no more than $40 million in 2023, adjusted operating expenses, excluding stock based compensation.
We are aggressively focused on achieving profitability and improving working capital.
<unk> targeting to be EBITDA breakeven in the back half of the year and to see working capital continue to improve each quarter.
I'll, let weathered a lot of change in 2022 today al. It is now in a position to focus on execution and we understand the best way to build trust with the market it's to deliver results each quarter as we progress through the year, we expect to deliver results that demonstrate that what we see internally in the organization that is on track to be profitable and growing with.
Numerous avenues for future growth, including organic marketplace opportunities regulatory clearances in new products for our connected nursery portfolio.
Turning to our 2022 business results.
After relaunching, our flagship sock monitoring product in the U S in January and transitioning from our Cam wants your campus here in July we achieved full year product portfolio revenues of $69 2 million within our targeted range, while retaining strong satisfaction. It is notable that sense.
January 2022 we've reduced the cost of our immediate acquisition spend CPA by 80% outlet is now the number one selling monitor on Amazon year to date in 2023.
After effectively marketing and advertising our dream portfolio relaunch in early 2022 we believe consumer satisfaction of our products and trust and belief in the brand is strong the MTS of our product continues to improve throughout the course of the year with successful introduction of dream sock in our cancer product transition.
PFS across our portfolio is now at or above 2021 levels.
Our Q4 reported revenue does not represent the current sell through of our business.
That is because the first half of 2022 seven was materially greater than sell through as we reentered the market and initially stopped all retail and distribution channels with our dream products as we rebuilt brand health through 2022 sell through continued to improve growing nearly 47% from the first half to the second half of 2022.
You're giving us confidence that our brand and products resonate with consumers.
However, inventory and channel is substantially greater than our targeted tend to 10 to 14 weeks, which resulted in materially less sell in in Q4.
As a result, our reported revenue and does not represent the current sell through across our channels.
We expect a similar effect in Q1, 2023 as inventory and channel normalizes looking to Q2, we expect sell in to begin to align with sell through.
In partnership with our retailers that we are highly focused on sell through and recognized managing inventory in the channel is essential to maintaining strong brand health better margins and delivering consistent results.
2022, gross margins were 34% and within our targeted range for the year.
There were multiple factors that adversely affected gross margins in 2022 which we believe will not be present in 2023.
Headwinds for margins last year were primarily related to the return to vendor program. We offered to all domestic retailers as a result of the FDA warning letter.
Substantial write off of prior generation inventory deemed obsolete.
Additional promotions to support the launch of our dream portfolio.
Elevated PPV costs incurred due to supply chain shortages from 'twenty to 'twenty, one and inventory adjustments and reconciliations cleanup in.
In retrospect this was an unprecedented and costly operational challenge for a company of our size to execute and we did our best under very difficult circumstances moving forward one of our biggest operating priorities is working towards getting back to $40 to 50% gross margin in future periods through tighter management of promotional spend and supply.
Cogs, it's important to note that the contract cost of manufacturing a product does not increase which gives us confidence in our ability to return to these prior gross margin levels in the future.
For 2022 total operating expenses were 95 million $95 1 million, excluding stock based compensation sequentially declining each quarter through the year in the first half of 2022 our focus was getting our dream product portfolio into the market and we spent heavily in marketing and promotion to build back and reposition effectively in the marketplace.
We were we were able to successfully position our dream portfolio back into the number one position.
Retailers by mid year, and I've also been able to improve customer experience and satisfaction with our products to previous levels, while putting together two FDA submissions and two European submissions for medical device clearance.
Last two quarters, we've taken multiple steps to significantly reduce our day to day operational spending.
These expense run rate improvements, including head count reductions variable spend controls and finishing programs related to regulatory clearances were somewhat masked in Q3, and Q4 due to cleanup adjustments such as bad debt reserves and other items incurred in prior periods and as such the improvements. We've made are not yet fully reflected in the final.
Cancel statements, we exited the fourth quarter with operating expenses, excluding stock based compensation of $19 6 million when factoring out bad debt reserves and one time expenses expenses, such as costs from our financing activities severance regulatory clearances in out of period expenses the underlying spend to operate the company was 15.
Our run rate operational expenses under $13 million in Q1, excluding stock based compensation and adjustments and financing transaction costs.
We will continue to find opportunities to reduce costs in the first half of 2023 to maintain operating expenses under $40 million in 2023, excluding stock based compensation in Q1 financing transaction costs.
Over the past 12 months out as shown operational resilience with the vision and commitment to be the long term leader impacting pediatric health in February as I previously mentioned, we raised $30 million in capital to support our balance sheet.
And we are working to restructure our lending commitments for access to working capital. Our 2023 planning will be to limit cash burn under $15 million as we strive for profitability and cash flow positive in the back half of the year.
As we set the foundation for profitability and gain FDA clearances, we believe how it has a very healthy high growth opportunity.
The most critical accomplishments towards I'll, let digital health care future is the work we've done to pursue regulatory clearances for our products in 2022.
As stated in prior calls we believe in making the highest quality care available to every baby by democratizing access to two technology and information that has previously been limited to clinical settings.
Our team has completed significant work, which enabled us to file FDA submissions for monitoring platforms, which have cleared.
Further long term opportunity and growth for outlets over the past year, we've greatly increased our communication with the FDA, maintaining frequent conversations and meetings and developing too clear distinct paths forward for our submission in October of 2022, we filed a five 10-K premarket notification to the FDA for a new prescription monitoring device.
But the device, which we internally call babysat uses pulse oximetry technology and is intended to be prescribed by physicians to assist with the in home monitoring of babies under a physician's care.
<unk> provides alerts to parents and their baby's heart rate, where oxygen saturation level or <unk>.
Paul does not fall within prescribed ranges.
Does that represent significant advantages to the large wired hospital monitoring technologies on the market today with its wireless wearable form factor and cloud connected data integration designed for home use in December .
We filed our second submission to the FDA for our software as a medical device as an over the counter product that offers heart rate and oxygen notifications in conjunction with the existing dream sock sleep monitoring capabilities. They didn't know about application includes both the display of heart rate and oxygen currently in the dream Sock and additional notification features that software.
The medical device.
We are currently in or in the review process with the FDA and are working to respond promptly to any questions or clarifications that come out. We've also made substantial progress towards our U K and CE medical applications and continue to maintain our empty stop and ISO 13, 45 certifications passing several audits in 2022.
Look forward to sharing more updates on these submissions when we have news to share. We believe the FTA authorizations will position I'll, let to better help parents navigate the gap between hospital in the home and increase our ability to use our large and growing data set as a critical tool for pediatric care.
We're determined to execute as best we can through this near term macroeconomic uncertainty and remain focused on the milestones that will best position us for the strongest long term potential for a healthy profitable business. Thank.
Thank you for your continued support of valid Pete over to you.
Okay.
Thank you and good afternoon, everyone turning to our Q4 and fiscal 2022 results crushed stone into the fourth quarter were $15 4 million down from $23 4 million in Q3 sequentially Q.
Keep our product promotions and discounts for 2 million, primarily associated with seasonal and promotional activity for all of that dot com and Q1 retail promotional discounts.
This compares to product promotions and discounts of $3 2 million sequentially in Q3.
Returns and allowance reserves for Q4, 2022, or $1 5 million nine 7% and cross selling this.
This compares to reserves sequentially in Q3 of $2 7 million 11, 5% of cross selling.
Q4 revenues for 12 million, including the impact of adjustments such as promotions disc.
Discounts returns and other allowances.
Cost of goods sold in Q4 was $8 6 million in gross profit was $3 3 million.
Q4, gross margin was 27, 5% compared to 26, 6% gross margin sequentially.
Costs and other items impacting our gross margin unfavorable in Q4 were from inventory adjustments and obsolete inventory P. P P and promotions.
Year to date 2022 gross margin was approximately 33, 7%.
And our targeted range.
It's quite detailed the largest nonrecurring cost impacts we experienced in 2022 related to the return to vendor program.
Elevated promotional discounts and product costs related to our FDA warning letter and launching our dream products.
And our highest operational priorities in 2020 trading is gross margin improvement.
We're actively working to put the volatility of the FDA warning letter and put behind us.
In addition to the nonrecurring aspects of the cost. This past year, we are highly focused on the operational efficiency levers within our control to improve margins, but the golf returning to pardon me to 50% gross margins in the future.
Q4, operating expenses were $24 1 million compared to $26 4 million sequentially.
Excluding stock based compensation Q4, operating expenses were $19 6 million.
Within our Q4 expenses, we had a few discrete expenses worth noting.
Q4 operating expenses included $2 4 million and preliminary bad debt reserves subject to change.
$600000 in fundraising transaction costs.
$500000.
Spend toward our regulatory submissions.
And approximately $400000 in partner marketing expenses from prior periods, which we don't expect to see in future.
We also took a $300000 write off for retail store displays related to buy buy baby stores and we are monitoring their financial situation closely.
Excluding stock based compensation items, we believe are onetime in nature operating expenses were $15 2 million in Q4.
Operating loss and net loss for Q4, 2022, or $20 7 million and $19 5 million Q.
Q4, adjusted EBITDA loss was $15 2 million.
Turning to the balance sheet cash and cash equivalents as of December 31 were approximately $11 2 million.
Receivables were at 16 million down $4 5 million sequentially from $25 million in Q3.
Inventory at the end of Q4 was $18 5 million down $5 3 million sequentially.
$23 8 million in Q3.
Looking ahead over the course of 2022, we actively work to best position, our dream portfolio for success in the connected nursery category.
Two regulatory submissions of our products that have the opportunity to open new markets Empire more parents globally.
But the areas that are within our control and we are focused on driving the activities that maximize supporting and achieving sell through of our core products and therefore driving down some retail inventory for future selling opportunities, making strides in our medical device clearances and efficiently managing our operating plan towards breakeven and profitability.
We navigated through very difficult circumstances over the last 12 months and we will continue to find the best ways to adapt to any uncertainty in the macroeconomic environment.
Recently, we successfully raised $30 million in capital to support our balance sheet and meet our operational goals in 2023.
They've been customers of Silicon Valley Bank for a long time, and we were impacted along with everyone else given this past week's events.
Based upon recent announcements from SPP have confirmed their loan agreement in credit facility remain in place.
Currently have access to our deposits when we're in the process of amending our loan agreements and line of credit as previously disclosed.
For 2023.
Current inventory levels and expectations for our Q2 promotions. We're currently forecasting Q1 revenues to be sequentially down from Q4.
As we support continued sell through inventory momentum with our retailers, we anticipate selling revenue both sequentially improve through the year after Q1.
We'll provide additional outlook when we report our Q2 earnings call.
For the full year, we plan to improve gross margins about two 2022 levels.
2022, we estimate that nonrecurring costs from the FDA warning letter activities that impacted our margins by at least 800 to 900 basis points.
And we plan to reduce our operating expenses for the full year was $49 million excluding stock based compensation.
The objective of training the business towards adjusted EBITDA margin breakeven between Q3 and Q4 in 2023.
Thank you for the time today, operator, let's open up for questions.
Absolutely.
If you'd like to ask a question. Please press star followed by one on your telephone keypad. If for any reason you would like to remove that question. Please press star followed by two again to ask a question press Star one.
As a reminder, if you're using a speaker phone. Please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered.
Okay.
The first question is from the line of chose re with TD Cowen. Your line is now open.
Hey, guys. Thanks for taking the question.
Okay I just wanted to talk through this the sell through and sell in issue.
Obviously the guidance range you gave for for Q was fairly wide.
Roughly 12 to 17.
And if we think between the bond at the top end there.
That's like call it in there.
$5 million.
You know and you attribute a lot of it to the first half the sell in was huge and that accounts for about 21, and a half unless any 18 in the second quarter.
What was the sell sell through that in the first half of the year.
Like can you give us a sense like the magnitude I mean, where are we selling through maybe.
$5 million 6 million in the first quarter, because it seems like a lot due to rightsize here in the back half of this year and into the first quarter if.
If you could just kind of give us a sense of that.
Yeah, I don't curriculum to make any comment on that I think from a color perspective, if you recall our initial launch into the market was at the very end the sell in was at the very end of Q1.
We talked about loading into the retailers and the distribution into Q1, and so really sell through.
Did not take place until Q2, Curt I don't know if you want to make another comment beyond that.
Yeah, I would just say it was substantial right. So you know we.
After the warning letter, we took all the product back to repackage reprogram those you know to position for the Dream Sock launch.
And we did that but it was sort of throughout the first quarter right. So we didn't get into all of our retailers by the end, but there were significant loaded to get back to previous levels of smart sock inventory in retail.
But our sell through did not start off as strongly as our previous smart sock fell through you know was was moving in Q3 of 2021, and so that created an inventory imbalance.
You know we did everything we could in Q1 and Q2 to push sell through as fast as we could and continue to sell into retailers in Q2.
And the sell through or just took a little longer to materialize I think the good news is that you know about Q4 and now moving into this year you know sell through levels are.
Our getting back to those previous levels that we had before.
Okay. So then so does that mean right. So if you're if you're saying in the first quarter.
Got it to be sequentially down to support the sell through.
Does that.
Well, our inventory levels to be back to that 10 to 14 weeks and then if that's the case should we expect then a significant step up in revenue in the second quarter.
Or in the rest of the I mean does that work or is it still more kind of a slope up.
I think what you'll see is a step function.
Q1 to Q2.
And you know part of that is that we're reducing inventory levels this quarter.
And moving forward by 15% to 20%.
We're also growing sell through and as we move into Q2 with mother's day and father's day, we'd expect that to grow.
With Prime day heading into Prime day in July and so there's inventory needs for crime there as well so there's quite a few catalysts in Q2.
Just on reducing inventory levels growing sell through and the promotional events that support it so would you expect.
A step up a nice step up from Q1 to Q2.
Okay and my last question would be you know.
In this 40 million Opex.
Excluding stock based comp.
What is your assumption for stock based compensation I guess.
Secondly.
What do you what would you expect for the exit rate like I mean could you talk about breaking even so it's kind of like would we expect fourth quarter to be actually positive so where is the frontloading the opex loss.
And is that all coming from gross margin.
Yeah.
Yes, so that the opex is higher than the front half and then.
Lower in the back half yes.
That is true.
And the change is that largely <unk>.
Gross margin improvement then.
No. We have we have a decrease again sequentially in operating expense from Q4 to Q1, and then again in Q2. So we have additional tapering we do have some expense.
A little bit of expense related to clearances in Q1, and then some additional optimization that we're doing.
<unk> expenses so.
We've had this four quarter trend of taking on expenses and we still have identified some additional rationalization that we're doing and so that that is still around the operating expense, but we are also expecting gross margin improvement. So the bulk of the levers we are using to get there.
Uh huh.
And stock based compensation assumption should we.
Should we think about 2022 is the right amount or.
Or would you expect that to be more or less.
It's about the right amount.
Okay.
I'll jump back in the queue.
Yes.
Okay.
Thank you for your question.
The next question is from the line of Allen Lutz with Bank of America.
Hi, good afternoon, and thanks for taking the questions. Curt you mentioned the cost per acquisition down 80%.
At the beginning of 'twenty, two that's clearly a really good.
Form of operating leverage here I guess, what is that due to and then as you think about sort of the run rate of sales and marketing spend in for Q, just trying to understand if there is more juice to squeeze on that line or if most of the leverage is going to come from a.
G&A.
Yeah.
Yeah, Great question, I would think about that in kind of two ways first.
First getting the dream Sock portfolio launched we spent aggressively to do that so we had to reposition.
You know all of our products, we had to get our rankings on line, which is a key indicator of sales and sell through.
Backup we had to start moving.
Lot of momentum to get back out there in the marketplace and then there's a lot of confusion around.
It does all itself products are not what's in the product and so we did a lot of education. So I think the first half spend with heavy and then the second half we did find a lot of.
Efficiencies and optimization that you know areas of spend that we spent for years and as we tested and optimized and turn things off we realized they weren't contributing and they weren't efficient.
And and you know I would say that the other piece of driving that efficiency is the product set.
Satisfaction improvements you know, we launched our camp too we launched predictive sleep the second half of the year, we launched a new app submission update almost every week to improve that that product experience, 53% of our purchases come from word of mouth, and it's a really using that word of mouth and finding other organic ways to get them.
People to consider the product we're talking you know organic on kick talk and social to the tune of tens of millions of views and interactions that we didn't have to pay for so I think the team got really creative which is the kind of the second piece to this.
As we move forward there will be a decrease Q4 to Q1 with marketing spend and where we're at today is more efficient than we were in Q4 and I think that will start to stabilize through 2023, I don't know that Q1 to Q2, you'll see a lot more efficiency decrease but you will Q4 to Q1 from a sales and marketing perspective in terms of.
Variable marketing expense.
Got it and then one for Kate on.
The gross margins as we think about them over the course of 2023 and versus 'twenty 'twenty. Two you mentioned that nonrecurring costs impacted margins by almost 1000 basis points 800 to 900, I guess as we think about those nonrecurring costs or just the impact over the course of.
2023 should we think about where you ended 2022 is sort of the starting point and then.
You know a step function over the course of the year higher.
I'm, just trying to get a sense because that's a pretty big range from where you ended 2022 to getting back to the 40, 45% plus margins before just trying to understand the timing and the size of the margin increase over the course of the year.
Yeah, what I would say is that you know our goal will be to be back in the range. Some of that that came out was really just a lot of that rework costs that happened.
A lot of the you know just a back and forth nature of the entire liability that we took in and working with the retailers.
There's probably a little bit of a step function at the very beginning of the year, but we should be able to have that type of range. Most of the year with with that type of cost completely behind us there.
There is some PPD associated.
That concept associated depending on when the inventory specific has flowed through so it's not a complete snap back, but I would say is that that the real cost related to the overall warning letter should be overall out and then you just kind of see the opportunity for most.
A year.
Great and then kind of a two pointed question. So Kurt you mentioned the NPS.
Is it at all time highs here and if we sort of look at the model from a revenue perspective over the past couple of years its been key.
Clearly very challenging to kind of understand what type of normal seasonality of this business.
Would have in a normal year. When you you talked about mother's day father's day and Prime day, driving a lot of demand I'm. Just curious as we think about sort of some of the onetime dynamics that are still playing out how would you think about the seasonality of this business in a more normalized year.
And would it be reasonable to assume that Q3, Q should be kind of viewed as a more normalized year. Thanks.
Yeah.
Yeah, that's a really good question because if you go back for the past two years, there's definitely quite a bit of nuance to the story with the warning letter and then getting dream stock back in the market. So I appreciate the question.
I think in a normal year you usually what you see is Q1 is is the lightest quarter, it's not as seasonal as like your normal consumer electronics companies, where you know, it's just it's 70% back half weighted.
A little bit more even than that but Q1 is generally down 10% to 15% from Q4.
Q2 picks up really nicely because you have the mother's day father's day, and then you do a load in for Prime day.
Q3.
Baby safety month in September and then you load in in Q3 for your holiday promotions for.
Black Friday, cyber Monday fault Prime day any promotions you do in December usually that loading happens in Q3, and then you see a little bit of a kind of a tail off in Q4 for us in terms of sell in if you're tracking revenue.
I think what you'll see you'll definitely see a step function in Q1 to Q2 I think it's you know we're still gonna be getting healthy. So it's not gonna be totally normal in Q3, starting Q2, I think it starts to normalize in Q3, so Kate anything you'd add to that.
No no that's great.
Very helpful. Thank you very much.
Thank you for your question.
That is all the questions that we have registered in the queue.
Yeah.
Thank you Matt.
We'd also like to take this time to answer a few questions that we've been getting from investors during recent.
Conversations that are probably on everybody's mind, so I'd like to.
And a couple over to Curt and Kate right now so the first one this is for Kate and you did address this a little bit, but maybe for everybody's refreshing everybody's memory. What is the outlet exposure to Silicon Valley Bank and do you have access to all of your cash.
What happens to the latest LSA.
Yeah sure so as I mentioned in prepared remarks.
We were impact along with everybody else given this week's past events.
N customers of Silicon Valley Bank for a long time, so we do have access to our deposit.
And we are confirming that our loan agreement in credit facility do remain in place and we are in the process of amending our long agreement and line of credit with them as previously disclosed.
Yeah.
Okay, Great and then and then a couple for Kurt Kurt.
Regarding the FDA submissions you previously mentioned on earlier calls in 90 day FTA window.
Starts after submission and pauses as questions come in.
With the average decision coming around the six month Mark since we're coming up on five we're coming up now in five months since submission.
Can you share any personal thoughts on how you feel the process is going and.
Potentially some of the color color around some of the questions that the FDA is asking during the.
The process and then finally regarding that de Novo submission can you.
Can you share what the FDA timeline, typically looks like and would that be similar to the five 10-K submission.
Yeah.
So just kind of as a quick refresher we have the two submissions with the FDA. The first is our prescription device called babysat, which is a five 10-K that will address babies, who are sick and need a prescribes medical monitor that submission is subject to the typical five 10-K rules, which is the 90 day clock stops when the FDA asks questions.
The company that has 180 days together information and provide a response. So we're currently working through our response to questions from the FTA not going to comment on the specific details of that submission. We are really confident in our products.
In December we filed a second submission to the FDA for a software as a medical device as an over the counter product that offers the heart rate and oxygen notifications in conjunction with the existing dream sock sleep monitoring capabilities that de Novo application includes both the display of heart rate and oxygen currently in the dream sock and the additional notification features.
As software as a medical device so de Novo applications with FDA FDA has 150 days to review and then the company has 180 days to respond.
So I'm just you know I would just comment I'm really proud of our team for getting both submission than during 2022, while lunching Dream Sock camp too and our new predictive sleep features and passing the two audits the empty stop on it and I still 13 45.
So it's a very busy year and I'm really proud of everything they've accomplished I'm also very confident in our products.
And their ability to meet FDA standards.
Okay, Great and then one final one final question.
On international regulatory clearances.
Many international regulatory card submission does outlet currently working on and when can we expect to see each of those are submitted.
Okay.
Yeah, we've made substantial progress towards our international applications. There's two there's the U K application in the CE applications, which are similar in nature, but one will allow us to gain clearance in the U K and the other rollouts of the game.
EU medical device certification.
Both submissions will be filed with the notified body in the second quarter of this year.
We also continue to maintain our N V SAP and I have to I saw 13, 45 certifications for that international compliance and so our vision is to have medical device status globally, which we believe will better empower parents and in every region to deliver the best care possible for their baby.
Yeah.
Yeah.
Great. Thanks, and operator, I think we may have another question in the queue.
Yes, we have a follow up from Charles Your line is now open.
Oh, Thanks, I was going to ask about the submission. So you guys answered it so I appreciate it thanks guys.
Yes, Thanks, Charles Thank you for your question.
There are no additional questions waiting at this time I will turn it back to Kurt for any closing remarks.
Yeah, I just wanted to take a minute to thank.
Thank everybody who has been so supportive of the business through the past year and getting back online with dream Sock getting our FDA submission then really grateful for the team that has dug in to accomplish a lot of work in a very short period of time to get all of it in a position to.
I'll be focusing on getting to profitability this year and getting FDA clearances, which we believe are going to provide a lot of future growth for the business and it also will help.
You know improve the safety and health of a lot of babies and help a lot of families. So thank you so much for your time today and.
We will continue to work hard.
That concludes the conference call. Thank you for your participation you may now disconnect your lines.