Q1 2025 Owlet Inc Earnings Call
Investor Relations cause outlet, starting todays call and will be starting shortly thank you for standing by.
Operator: Thank you for Good afternoon and thank you all for attending the Owlet Q1 2025 Earnings Conference.
[music].
Speaker Change: Good afternoon.
Speaker Change: Thank you all for attending the outlet Q1, 'twenty 'twenty five earnings conference call.
Operator: My name is Brika and I will be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you wish to ask a question, please press star followed by one on your telephone key. And if you wish to remove that question, press star 2. And for operator assistance at any point, you press star then zero. Thank you.
breaker: My name is breaker and I will be your moderator for today.
breaker: All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end.
breaker: If you wish to ask a question. Please press star followed by one on your telephone keypad.
breaker: And if you wish to raise a question press star two.
breaker: Operator assistance at any point.
breaker: Right. Thank you I would now like to pass the conference over to your highest J J. So.
Jay Gentzkow: I would now like to pass the conference over to your host, Jay Gentzkow, Investor Relations. Thank you. You may proceed.
Speaker Change: Investor Relations. Thank you you May proceed.
Speaker Change: Okay.
Jay Gentzkow: Good afternoon, everyone, and thank you for joining us. Earlier today, Owlet released financial results for the first quarter ended March 31, 2025. I'm pleased to be joined today by Kurt Workman, Owlet's CEO and co-founder, President Jonathan Harris, and CFO Amanda Tweed Crawford.
Speaker Change: Good afternoon, everyone and thank you for joining US earlier today I'll, let released financial results for the first quarter ended March 31 2025.
Speaker Change: He used to be joined today by Curt Workman, CEO and cofounder President Jonathan Harris, our CFO Amanda Tweed Crawford.
Jay Gentzkow: Before we begin, please note that our financial results, press release, and presentation slides referred to on this call are available under the events and presentation section of our investor relations website at investors.owletcare.com. This call is also being webcast live with a link at the same website. The webcast and accompanying slides will be available for replay for 12 months following this call.
Speaker Change: Before we begin please note that our financial results press release and presentation slides referred to on this call are available under the events and presentations section of our Investor Relations website at investors, Don Allan care Dot com.
Speaker Change: Call is also being webcast live with a link at the same website the webcast and accompanying slides will be available for replay for 12 months. Following this call.
Jay Gentzkow: The content of today's call is the property valid. It cannot be reproduced or transcribed without our prior consent.
Speaker Change: Today's call is the property now it cannot be reproduced or transcribed without our prior consent.
Jay Gentzkow: Before we begin, I'd like to refer you to our safe harbor disclaimer on slide three of the presentation. Today's discussion will contain forward-looking statements based on the company's current views and expectations as of today's date. These statements are only predictions and are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. These risks and uncertainties include, but are not limited to, those described in our most recent filings with the SEC and in the risk factors section of our annual report on Form 10-K. Please note that the company assumes no obligation to update any forward-looking statements whether as a result of new information, future events, or otherwise, except as required by law.
Speaker Change: Before we begin I'd like to refer you to our safe Harbor disclaimer on slide three of the presentation. Today's discussion will contain forward looking statements based on the company's current views and expectations as of today's date.
Speaker Change: These statements are only predictions.
Speaker Change: Certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.
Speaker Change: These risks and uncertainties include but are not limited to those described in our most recent filings with the SEC and in the risk factors section of our annual report on Form 10-K. Please.
Speaker Change: Please note that the company assumes no obligation to update any forward looking statements, whether as a result of new information future events or otherwise except as required by law.
Jay Gentzkow: With that, it's my pleasure to turn the call over to our CEO, Kurt Workman. Kurt? Thanks, Jay.
Speaker Change: With that it's my pleasure to turn the call over to our CEO Kurt Workman Kurt.
Kurt Workman: And welcome everyone to Owlet's first quarter 2025 financial results call. As you saw from our earnings release, we had a fantastic start to 2025 with strong results we announced today, reflecting the ongoing momentum we are driving as a business. We exceeded our expectations for first quarter 2025 results by executing on our growth strategies, and leveraging our position as the only FDA and CE cleared infant health monitors on the market. As a result, we continue to capture market share. As parents increasingly choose Owlet to improve overall infant health, sleep, and safety, driving 43% year-over-year growth in our fourth consecutive quarter of break-even or better adjusted EBITDA.
Kurt Workman: Thanks, Jay and welcome everyone to outlets first quarter 2025 financial results call.
Kurt Workman: You saw from our earnings release, we had a fantastic start to 2025 with strong results, we announced today, reflecting the ongoing momentum we are driving in the business, we exceeded our expectations for first quarter 2025 results by executing on our growth strategies and leveraging our position as the only FDA and CE cleared infant health monitors on.
The market.
Kurt Workman: As a result, we continue to capture market share.
Kurt Workman: Increasingly choose outlet to improve overall infant health and safety driving 43% year over year growth and our fourth consecutive quarter of breakeven or better adjusted EBITDA.
Kurt Workman: We also just signed a new distribution partnership with Children's Hospital of the King's Daughters, one of the premier hospitals on the East Coast. As part of the collaboration, for the first time ever, babies are now able to leave the hospital with a baby fat or dream sock.
Kurt Workman: We also just signed a new distribution partnership with children's hospital of the King's daughters, one of the Premier hospitals on the East coast.
Kurt Workman: As part of the collaboration for the first time ever babies are now able to leave the hospital with a babysat or dream stock.
Kurt Workman: Finally, another takeaway from the quarter was the exciting momentum for Owlet360 subscriptions. The early results and feedback continue to trend very positively as we differentiate ourselves from a hardware company to a comprehensive pediatric health platform. Q1 was an outstanding quarter, setting a foundation for growth in 2025, and despite a more dynamic macro backdrop, we're seeing very positive trends for our business.
Kurt Workman: Finally, another takeaway from the quarter was the exciting momentum for outlet 360 subscription.
Kurt Workman: The early results and feedback continue to trend very positively as we differentiate ourselves from a hardware company to a comprehensive pediatric health platform.
Kurt Workman: Q1 was an outstanding quarter setting a foundation for growth in 2025, and despite a more dynamic macro backdrop, we're seeing very positive trends for our business.
Kurt Workman: Before we detail the strong first quarter results, I'd like to highlight just one of many Owlet stories that really underscores why our team is so passionate about our mission. My husband and I originally purchased our DreamStock for peace of mind. What we didn't know is how much this device would actually help us. One night at 1 a.m., we received a notification that my son's heart rate was 250 to 280 beats per minute. But he didn't seem to be in distress. We took him to the ER, which resulted in an inconclusive cardiac workup. We continued to monitor independently with our DreamStock at home, which allowed us to pick up two additional episodes of high heart.
Speaker Change: Before we detailed the strong first quarter results I'd like to highlight just one of many outlet stores that really underscores why our team is so passionate about our mission.
Speaker Change: My husband and I originally purchased our Greenstock for peace of mind, but we didn't know is how much. This device would actually help us one night at one end we received a notification that my son's heart rate was 250 to 280 beats per minute.
Speaker Change: But you didn't seem to be in distress.
Speaker Change: Welcome to the ER, which resulted in an inconclusive cardiac workout.
Speaker Change: We continued to monitor independently with our dreams docket hub, which allowed us to pick up two additional episodes of high heart rate.
Kurt Workman: After another ER visit and hospital admission, we received a diagnosis of SVT. We never would have picked up on this without our DreamSock, as my son never seemed to be in distress. With home monitoring, we were able to seek medical care quickly and are now managing with daily medication. We are so grateful to have had this technology.
Speaker Change: After another ER visits and hospital admission we received a diagnosis of SPT we.
Speaker Change: We never would have picked up on this without our dreams dock as my son never seem to be in distress.
Speaker Change: With home monitoring we were able to seek medical care quickly and are now managing with daily medication. We're so grateful to have had this technology.
Kurt Workman: We received countless testimonials from parents and caregivers about the impact Owlet has made on their infants lives and livelihoods. It's part of our mission here at Owlet and makes me incredibly proud of what we're delivering to the world.
Speaker Change: We received countless testimonials from parents and caregivers that the impact Alex is made on their infants lives and livelihoods.
Speaker Change: Our mission here at outlet and makes me incredibly proud of what we're delivering to the world.
Kurt Workman: Now recapping Q1 results on slide 6, we kicked off the year with a very strong quarter exceeding expectations across all key metrics. Revenue was $21.1 million in the first quarter of 2025, up 43% versus first quarter 2024. The top line strength drove gross margins of 53.7%, an improvement of 930 basis points compared to prior year, and our eighth consecutive quarter of year-over-year gross margin expanded. Revenue growth and margin strength supported break-even adjusted EBITDA, a $3.1 million improvement year-over-year, helping us outperform our expectations. This was our fourth consecutive quarter of breakeven on better-adjusted EBITDA, even with Q1 traditionally being our seasonally lowest revenue contribution quarter, as we look to expand adjusted EBITDA profitability going forward.
Speaker Change: Now recapping Q1 results on slide six we kicked off the year with a very strong quarter exceeding expectations across all key metrics revenue was $21 1 million in the first quarter of 2025 up 43% versus first quarter 2020 for the top line strength drove gross margins of 53, 7% an improvement of 930 base.
Speaker Change: <unk> points compared to prior year, and our eighth consecutive quarter of year over year gross margin expansion.
Speaker Change: Revenue growth and margin strength supported breakeven adjusted EBITDA of $3 1 million dollar improvement year over year, helping us outperform our expectations.
Speaker Change: This was our fourth consecutive quarter of breakeven or better adjusted EBITDA, even with Q1 traditionally being our seasonally lowest revenue contribution quarter as we look to expand adjusted EBITDA profitability going forward.
Kurt Workman: It was a very strong quarter of execution, and as a result, we're raising 2025 revenue guidance to account for first quarter outperformance and our outlook for the balance of the year. While the tariff situation and macro visibility remain limited, creating some uncertainty, we are incredibly well positioned to drive continued strong financial performance throughout 2025 and beyond.
Speaker Change: It was a very strong quarter of execution and as a result, we are raising 2025 revenue guidance to account for first quarter outperformance and our outlook for the balance of the year, while the tariff situation and macro visibility remains limited, creating some uncertainty we are incredibly well positioned to drive continued strong financial performance throughout 2025 and.
Speaker Change: Beyond.
Kurt Workman: Amanda will go into more detail about our guidance. In summary, Owlet continues to fire on all cylinders. We are seeing strong performance in our core DreamSock and DreamDuo products.
Speaker Change: Amanda will go into more details about our guidance.
Speaker Change: In summary, our continued to fire on all cylinders, we are seeing strong performance in our core Dream Socgen Dream dual products. In addition, we are layering in three additional growth verticals of international expansion.
Kurt Workman: In addition, we are layering in three additional growth verticals of international expansion, Owlet 360 subscription, and healthcare channels that are changing the profile of the business and will propel durable, profitable growth in this next phase of Owlet's evolution.
Speaker Change: I'll, let 360 subscription and healthcare channels that are changing the profile of the business and will propel durable profitable growth in this next phase of Alex evolution.
Jonathan Harris: I'd now like to pass the call to Jonathan to walk through recent progress against our strategic focus areas. Thanks, Kurt. I'm thrilled with the execution of our team on delivering an amazing first quarter.
Speaker Change: I'd now like to pass the call to Jonathan to walk through our recent progress against our strategic focus areas.
Jonathan: Thanks Kurt.
Jonathan: Thrilled with the execution of our team on delivering an amazing first quarter.
Jonathan Harris: Before an update on our strategic focus areas, I'll quickly touch on the tariff situation and our strategic positioning. Up front, I'm incredibly proud of Owlet's team's ability to anticipate and evaluate the risks in our supply chain prior to the most recent tariff decisions and move decisively such that where the tariff framework stands today, we don't see material risks to our business. In the last two quarters, we've taken steps to transition manufacturing of our cameras from China to Vietnam. As a result, today we have minimal China manufacturing exposure, aside from some accessories, which we are presently evaluating alternative sourcing options.
Jonathan: For an update on our strategic focus areas I'll quickly touch on the tariff situation and our strategic positioning.
Jonathan: Up front I'm incredibly proud of outlets teams ability to anticipate and evaluate the risks in our supply chain prior to the most recent tariff decisions and move decisively such that where the tariff framework stands today, we don't see material risk to our business.
Jonathan: And the last two quarters, we've taken steps to transition manufacturing of our cameras from China to Vietnam.
Jonathan: As a result today, we have minimal China manufacturing exposure.
Jonathan: Aside from some accessories, which we are presently evaluating alternative sourcing options.
Jonathan Harris: Thailand is our largest manufacturing source as they supply our DreamStock and DreamDuo products. As a result, assuming the current tariff rates, we are assessing the 10% additional tariff costs that are being applied to both Thailand and Vietnam. Historically, there have been exemptions for tariffs on medical devices for which we qualified. While that is not the case as we speak today, we continue to evaluate numerous ways to reduce our tariff impact. I'd also add that the majority of camera monitoring products in this category have meaningful exposure to China, which we do not. As a result, given our positioning, we view the current situation as an opportunity to actually gain share in the infant health monitoring market.
Jonathan: Thailand is our largest manufacturing source as a supplier dream sock and dream duo products.
Jonathan: As a result, assuming the current tariff rates, we are assessing the 10% additional tariff costs that are being applied to both Thailand and Vietnam.
Jonathan: Historically, there has been exemptions for tariffs on medical devices for which we qualified.
Jonathan: That is not the case as we speak today, we continue to evaluate numerous ways should reduce our tariff impacts.
Jonathan: I would also add that the majority of camera monitoring products in this category have meaningful exposure to China, which we do not.
Jonathan: As a result, given our positioning we view the current situation as an opportunity to actually gain share in infant health monitoring market.
Jonathan Harris: The tariff situation is very fluid, and like all companies, we're adapting and assessing in real time.
Jonathan: The tariff situation is very fluid and like all companies, we're adapting and assessing in real time.
Jonathan Harris: Now, turning to our strategic focus areas, we made excellent progress in the first quarter on driving continued global adoption of DreamSoc. Transitioning Owlet into a service through the Owlet 360 subscription, supporting parents from infancy into their toddler years and increasing customer lifetime value, and expanding healthcare channels to offer an insurance reimbursed monitor. We had another quarter of exceptional performance from our Dreamstock business.
Jonathan: Now turning to our strategic focus areas, we made excellent progress in the first quarter on.
Jonathan: Driving continued global adoption of Dream sock.
Jonathan: Transitioning outlet into a service through the I'll, let 360 subscription supporting parents from infancy into their toddler years, and increasing customer lifetime value.
Jonathan: And expanding health care channels to offer an insurance reimbursed monitor.
Jonathan: We had another quarter of exceptional performance from our dream Sock business.
Jonathan Harris: The U.S. momentum remains high, with a strong quarter of domestic DreamSock sell-through growth of 40% compared to Q1 2024. The strong sell-through growth is a testament to the adoption and awareness we are driving for DreamSock, as well as a severe cold season that saw the highest hospitalization rates since 2011 and continued strength from Amazon. Additionally, a leading indicator of how our core business is trending, baby registries, first quarter showed a 63% year-over-year increase in Dream Sock as parents continue to prioritize Owlet for their nursery. We also expanded our market share position in the quarter. Based on consumer research firm Cercana and our own data, Owlet again increased our share of total dollars spent on baby moms. Finally, Grand Health remains in a strong position with Dream Socks NPS being at 73 to end the first quarter.
Jonathan: The U S momentum remains high with a strong quarter of domestic dream soft sell through growth of 40% compared to Q1 2024.
Jonathan: The strong sell through growth is a testament to the adoption and awareness we are driving for drain stock as well as a severe cold season. It saw the highest hospitalization rates since 2011.
Jonathan: And continued strength from Amazon.
Jonathan: Additionally, a leading indicator of how our core business is trending maybe registries first quarter showed a 63% year over year increase in dream Sock as parents continue to prioritize outlet for their industry.
Jonathan: We also expanded our market share position in the quarter based on consumer research firms to Kona and our own data I'll, let again increased our share of total dollars spent on baby monitors.
Jonathan: Finally brand health remains in a strong position with Greenstock NPS being at 73 in the first quarter.
Jonathan Harris: Customer satisfaction is further supported by our return rates remaining at levels lower than historical average.
Jonathan: Customer satisfaction is further supported by our return rates remaining at levels lower than historical averages.
Jonathan Harris: Internationally, DreamSock adoption remains robust. In the first quarter of 2025, international revenue growth was up 104% year-over-year. France and Germany demonstrated particular strength, including sell-through up of 95% and 72% respectively. Looking ahead, we see plenty of opportunity to drive adoption through our current global sales channels, as well as add new countries over time, supporting this additional growth sector in our business. Furthermore, we're excited about rolling out Owlet 360 internationally later this year.
Jonathan: Internationally Dream Sock adoption remains robust in the first quarter of 2025 international revenue growth was up 104% year over year.
Jonathan: France, and Germany demonstrated particular strength, including sell through up of $95 and 72% respectively.
Jonathan: Looking ahead, we see plenty of opportunity to drive adoption through our current global sales channels as well as add new countries over time.
Jonathan: Supporting this additional growth factor in our business. Furthermore, we're excited about rolling out I'll, let 360 internationally later this year.
Jonathan Harris: Turning to Owlet360, our new subscription service continues to be a standout since its official launch on January 28. We've continued a strong growth trajectory with over 48,000 paying subscribers and growing, and we are seeing steady growth in attach rates as more and more parents are taking advantage of this additional tool to unlock an elevated level of infant care at home. Post-January's launch, we began marketing to drive awareness and adoption of subscription, including building in-app prompts, email and SMS flows to educate current users on the benefits of subscribing to Owlet360. as well as an updated website and product pages to highlight the value of the service.
Jonathan: Turning to I'll, let 360, our new subscription service continues to be a standout since its official launch on January 28th week.
Jonathan: We've continued a strong growth trajectory with over 48000 paying subscribers and growing and we are seeing steady growth in attach rates as more and more parents are taking advantage of this additional tool to unlock an elevated level of infant care at home.
Jonathan: Post January launch, we began marketing to drive awareness and adoption of subscription including building an app prompts email and SMS flows to educate current users on the benefits of subscribing to outlet 360, as well as an updated website and product pages to highlight the value of that.
Jonathan: Service.
Jonathan Harris: We're really beginning to see the impact from these marketing strategies, which we expect to drive ongoing positive adoption trends. Additionally, the customer feedback we're receiving from Owlet360 has supported why we were so excited to launch this new service. Parents are reporting improved peace of mind, better parenting confidence with the ability to compare their baby's health metric trends against our pediatric health database. And we've also received testimonials that the value of Owlet360 has enabled parents to avoid an unnecessary health care visit, a key goal of the service. It's really exciting to see the value of our pediatric data set unlocked for parents through Owlet360.
Jonathan: We're really beginning to see the impact from these marketing strategies, which we expect to drive ongoing positive adoption trends.
Jonathan: Additionally, the customer feedback we're receiving from <unk> 360 has supported why we were so excited to launch this new service.
Jonathan: Parents are reporting improved peace of mind, better parenting confidence with the ability to compare their baby's health metric trends against our pediatric health database and we've also received testimonials that the value of I'll. Let 360 has enabled parents to avoid an unnecessary health care visits a key goal of this.
Jonathan: Service.
Jonathan: It's really exciting to see the value of our pediatric dataset unlock for parents through I'll, let 360.
Jonathan Harris: With new features, international rollout, and the telehealth opportunity still on the horizon, the future is bright as Owlet360 subscription evolves the profile of the business into a comprehensive pediatric data platform.
Jonathan: With new features international rollout and the telehealth opportunity still on the horizon. The future is bright as all at 360 subscription evolves the profile of the business into a comprehensive pediatric data platform.
Jonathan Harris: In our final strategic growth area, we continue to gain traction in our healthcare channels with baby We are excited to announce a new strategic partnership with the Children's Hospital of the King's Daughter of Virginia. For the first time ever, babies are now able to leave the hospital with an Owlet Infant Health Monitor. This landmark initiative will serve as a critical reference point for BabySats value and continued scaling. In addition, in the first quarter, we launched a babysat Android app to accompany our existing iOS app, driving further health equity for infants and their caregivers. We also soft launch OwletConnect, a platform for integrating Owlet's pediatric health data into clinical workflows and remote monitoring programs. Finally, we continue to make progress in our partnership with ADAPT Health.
Jonathan: And our final strategic growth area, we continue to gain traction in our healthcare channels, but babysat.
Jonathan: We are excited to announce a new strategic partnership with the children's hospital of the King's daughter in Virginia for the first time ever babies are now able to leave the hospital with an outlet infant health monitor.
Jonathan: This landmark initiative will serve as a critical reference point for babysat value and continued scaling.
Jonathan: In addition in the first quarter, we launched a babysat Android app to accompany our existing iOS app driving further health equity for infants and their caregivers. We also soft launched I'll look to connect our platform for integrating outlets pediatric health data into clinical workflows and remote monitoring.
Jonathan: Programs.
Jonathan: Finally, we continue to make progress in our partnership with adapt health as of today adapt health includes Medicaid reimbursement in 12 states supporting babysat products.
Jonathan Harris: As of today, ADAPT Health includes Medicaid reimbursement in 12 states supporting baby SAP products. Scaling into the healthcare market continues to take time, but there is a clear need for a wireless and wearable at-home solution for high-risk babies. As evidenced by the breakthrough with King's Daughters Hospital, we continue to receive strong feedback from medical professionals that BabySatch FDA-cleared solution fulfills a unique value proposition previously unavailable to the market.
Jonathan: Scaling into the health care market continues to take time, but there is a clear need for a wireless and wearable at home solution for high risk babies.
Jonathan: As evidenced by the breakthrough with King's daughters Hospital, we continue to receive strong feedback from medical professionals that babysat FDA cleared solution that fills a unique value proposition previously unavailable to the market.
Jonathan Harris: To conclude, Owlet is making meaningful and consistent progress across all our strategic focus growth areas. Despite an uncertain macro backdrop, we are hitting every checkpoint to maximize the opportunity for Owlet, and we're incredibly well positioned for long term success.
Jonathan: To conclude I'll, let us, making meaningful and consistent progress across all of our strategic focus growth areas. Despite an uncertain macro backdrop, we are hitting every check point to maximize the opportunity for outlet.
Incredibly well positioned for long term success.
Amanda Crawford: I'll now pass the call to Amanda to discuss our Q1 results in more detail, as well as our updated 2025 outlook. Amanda? Thank you, Jonathan, and good afternoon, everyone. I'll begin on slide nine. Unless noted otherwise, I will be comparing our first quarter 2025 results to the first quarter of 2024. Q1 was another strong quarter as we kicked off 2025, exceeding expectations across all key metrics. Owlet continues to execute at a very high level. Revenue in the first quarter was $21.1 million, a year-over-year increase of 43.1 percent. Revenue growth outperformed expectations, driven primarily by very strong sales of Dream Sock and Dream Duo.
Jonathan: I'll now pass the call to Amanda to discuss our Q1 results in more detail as well as our updated 2025 outlook Amanda.
Amanda: Thank you Jonathan and good afternoon, everyone I'll begin on slide nine unless noted otherwise I will be comparing our first quarter 2025 results to the first quarter of 2024.
Amanda: Q1 was another strong quarter as we kicked off 2025 exceeding expectations across all key metrics I'll, let continues to execute at a very high level.
Amanda: Revenue in the first quarter was $21 1 million a year over year increase of 43, 1%.
Amanda: Revenue growth outperformed expectations, driven primarily by very strong sales of dream sock entering dwell. We also believe a heavy flu season was a contributing factor in the stronger than expected Q1 sales.
Amanda Crawford: We also believe a heavy flu season was a contributing factor in the stronger-than-expected Q1 sales. Gross margin in the first quarter was 53.7%, an increase of 930 basis points year-over-year. This was our highest gross margin since going public and our eighth consecutive quarter of year-over-year gross margin expansion. The significant gross margin improvement reflects strong volume growth, favorable product mix towards DreamSoft and DreamDuo, a reduction in return rates, and improved fixed cost absorption. Entering Q1, our leading position in the baby monitoring category provided us with leverage to negotiate improved terms with our vendor partners, contributing to year over year margin expansion.
Amanda: Gross margin in the first quarter was 53, 7% an increase of 930 basis points year over year. This was our highest gross margin since going public and our eighth consecutive quarter of year over year gross margin expansion.
Amanda: <unk> gross margin improvement reflects strong volume growth favorable product mix towards the dream Sock and dream dwell a reduction in return rates and improved fixed cost absorption.
Amanda: And during Q1, our leading position in the baby monitoring category. It provided us with leverage to negotiate improved terms with our vendor partners contributing to year over year margin expansion.
Amanda Crawford: Total operating expenses in the first quarter were $14 million, including stock-based compensation of $1.7 million and one-time litigation settlement costs of $0.9 million related to the shareholder derivative suit we detailed in Q4. This represents an increase of $1.7 million versus the same period last year. Operating loss in the first quarter was $2.7 million compared to a loss of $5.7 million in the same period last year. Net income in the first quarter was positive $3 million versus $3.3 million in the same period last year, including a $6.7 million gain on warrant mark-to-market. Q1 adjusted EBITDA was $0.0 million, an improvement of $3.1 million compared to the same period last year.
Amanda: Total operating expenses in the first quarter were $14 million, including stock based compensation of $1 7 million and one time litigation settlement costs of <unk> 9 million related to the shareholder derivative suit. We detailed in Q4. This represents an increase of $1 7 million versus the same period.
Amanda: Last year.
Amanda: Operating loss in the first quarter was $2 7 million compared to a loss of $5 7 million in the same period last year net income in the first quarter was positive $3 million versus $3 3 million in the same period last year, including a $6 7 million gain on the warrant mark to market.
Amanda: Q1, adjusted EBITDA was 0.0 million and improvement of $3 1 million compared to the same period last year topline growth in combination with focus on operating efficiency drove the increase our fourth consecutive quarter of breakeven or better adjusted EBITDA.
Amanda Crawford: Top-line growth in combination with focus on operating efficiency drove the increase, our fourth consecutive quarter of break-even or better adjusted EBITDA.
Amanda Crawford: Turning to our balance sheet, cash and cash equivalents as of quarter end March 31st, 2025 were $16.3 million versus $20.2 million at the end of the fourth quarter, 2024. At the end of Q1, we had drawn $8.5 million on our line of credit and $7.5 million was outstanding on the term loan.
Amanda: Turning to our balance sheet cash and cash equivalents as of quarter end March 31, 2025, or $16 3 million versus $22 million at the end of the fourth quarter 2024.
Amanda: At the end of Q1, we had drawn $8 5 million on our line of credit and seven 5 million was outstanding on the term loan.
Amanda Crawford: Now turning to an update on our financial outlook. We are updating our 2025 full year guidance to reflect the continued momentum of the business, including the very strong start to the year in Q1, as well to incorporate recent changes in tariff policies. We are navigating through a macro backdrop that creates some uncertainty, specifically tariff policies that have potential to change. Given the fluidity of the situation, our updated 2025 guidance includes our best assessment of these factors based on the data we have available to us today, as well as a consumer macro environment that remains consistent to the start of 2025.
Amanda: Now turning to an update on our financial outlook. We are updating our 2025 full year guidance to reflect the continued momentum of the business, including the very strong start to the year in Q1 as well if you incorporate recent changes and tariff policies. We are navigating through a macro backdrop that create some.
Amanda: Uncertainty, specifically tariff policies that have potential to change.
Amanda: Given the fluidity of the situation. Our updated 2025 guidance includes our best assessment of these factors based on the data we have available to us today as well as a consumer macro environment that remains consistent to the start of 2025.
Amanda Crawford: It was a very strong start to the year for Owlet, and as a result of our Q1 outperformance and outlook for the balance of 2025, we are raising our revenue guidance. For full year 2025, we now expect revenue in the range of $91 to $95 million, or 17 to 22% year-over-year growth. As Jonathan detailed, the Owlet team has done an excellent job navigating the dynamic tariff situation. We have eliminated material exposure to tariffs in China. However, we have included the current assessed impact from newly implemented 10% tariffs on imports from Thailand and Vietnam in our updated outlook.
Amanda: It was a very strong start to the year for outlet and as a result of our Q1 outperformance and outlook for the balance of 2025, we are raising our revenue guidance for full year 2025, we now expect revenue in the range of $91 million to $95 million or 17% to 22%.
Amanda: Year over year growth.
Amanda: As Jonathan detailed the outlet team has done an excellent job navigating the dynamic tariff situation, we have eliminated material exposure to tariffs in China. However, we have included the current assessed impact from newly implemented 10% tariffs on imports from Thailand, and Vietnam and our updated outlook.
Amanda Crawford: As a result, we have revised full year 2025 gross margin expectations to a range of 46 to 50%. Our strong revenue forecast and the improved vendor terms we previously outlined positioned us for positive gross margin trends before the implementation of the new tariffs, which have since affected our growth margin expectations. And finally, our adjusted EBITDA guidance remains unchanged as stronger revenue expectations were offset by the impact of tariff costs. We continue to strive for full year 2025 adjusted EBITDA profitability.
Amanda: As a result, we have revised full year 2025 gross margin expectations to a range of 46% to 50%.
Amanda: Our strong revenue forecast and the improved vendor terms that we previously outlined positioned us for positive gross margin trends before the implementation of the new tariffs, which have since affected our gross margin expectations.
Amanda: And finally, our adjusted EBITDA guidance remains unchanged as stronger revenue expectations were offset by the impact of tariff costs. We continue to strive for full year 2025, adjusted EBITDA profitability.
Amanda Crawford: With that, we will now take your questions. Thank you, Amanda.
Amanda: With that we will now take your questions.
Speaker Change: Thank you Amanda you will now start the question session.
Operator: We will now start the question and answer session. If you would like to ask a question, you can do so by joining the queue by pressing star followed by one on your telephone. And if for any reason you would like to remove that question, you can do so by pressing star followed by 2. And again, to ask a question, please press star then 1.
Speaker Change: We'd like to ask a question you kind of do set by joining the queue by pressing star followed by one on your telephone keypad.
Speaker Change: And if for any reason you would like to meet that question you can do so by pressing star fleet.
Speaker Change: And again to ask a question. Please press Star then one.
Lucas Romanski: The first question we have on the phone line comes from Charles Rhyee with TD Cowan. You may proceed. Hi, this is Lucas on for Charles. Thanks for taking the questions and congrats on the quarter. I want to ask about your guys' partnership with the Children's Hospital of the King's Daughters. I guess one, can you, you know, kind of give us some better understanding of how this partnership works, you know, in terms of, you know, parents being, you know, shown the DreamSock and Duo, just kind of how that works on the ground. And then I guess two, since this partnership, have you guys seen any, or at least, you know, reached out to other hospitals and sought to create other partnerships?
Speaker Change: The first question we have from the phone line comes from Charles <unk> with TD Cowen You May proceed.
Lucas: Hi, This is Lucas on for Charles Thanks for taking my questions and congrats on the quarter. One asked about you guys have a partnership with the children's hospital the King's daughters.
Speaker Change: I guess one can you.
Speaker Change: Kind of give us some.
Speaker Change: Better understanding of the partnership works.
Speaker Change: In terms of.
Speaker Change: Parents being.
Speaker Change: <unk> shown the dream sock and duo.
Speaker Change: How that works on the ground and then I guess to Sensus partnership have you guys seen any or at least reached out to other hospitals and sought to create other partnerships.
Kurt Workman: Yeah, great question.
Speaker Change: Yes, great question.
Kurt Workman: We're really excited about this partnership. For the first time ever, babies are now able to leave the hospital with an Owlet infant health monitor. So this collaboration involves implementing a consignment program in the NICU for discharges, integrating the Owlet data into the remote patient monitoring workflows as well. So this is super exciting. And this is the first that ADAPT has helped us partner with. And we have many more in the queue as well.
Speaker Change: Really excited about this partnership for the first time ever babies are now able to leave the hospital with an outlet infant health monitor. So this collaboration involves implementing a consignment program in the NICU for discharge is integrating the outlet data into the.
Speaker Change: Patient monitoring workflows as well.
Speaker Change: So this is super exciting and this is the first.
Speaker Change: Then adapters helped us.
Speaker Change: And we have many more in the queue as well.
Kurt Workman: Great. And then I guess maybe you want to ask about the Owlet360 offering and the strong uptake that you're seeing. You know, I understand that most of the revenue contribution, or at least the outperformance came in DreamSock and Duo, but obviously some stronger than our estimates uptake of subscribers. So I guess, you know, what's resonating well there? You know, you did give some customer feedback earlier. I guess, how should we be thinking about the contribution from this product moving forward? Yeah, I mean, the feedback from parents has been overwhelmingly positive. Just in terms of the product experience, they now have access to insights around their baby's health, their sleep, we're capturing key moments with the camera.
Speaker Change: Great.
Speaker Change: And then I guess, maybe you want to ask about the our <unk> offering and the strong uptake that youre seeing.
Speaker Change: I.
Speaker Change: I understand that most of the revenue contribution or at least the outperformance came and <unk> duo, but obviously some strong.
Speaker Change: Stronger than our estimates uptake of subscribers, so I guess whats resonating well there.
Speaker Change: You did give some.
Speaker Change: Customer feedback earlier, I guess, how should we be thinking about the contribution from this product moving forward.
Speaker Change: Yes, I mean, the feedback from parents, who has been overwhelmingly positive just in terms of the product experience. We now have access to insights around their babies, how their sleep for capturing key moments with the camera. So parents love having access to that we went from 25000 subscribers that we shared last quarter.
Kurt Workman: And so parents love having access to that. We went from 25,000 subscribers that we shared last quarter, to over 50,000 subscribers in just a couple months. So the adoption is, has been incredible. And we're going to continue to drive it. In terms of contribution to the quarter, we're still filling up that subscriber base, and we just changed the price to 999. So that'll continue to be an awesome contributor, especially if that funnel fills up and we have an even larger cohort of subscribers. So it'll make meaningful contribution towards the end of this year, we're hoping.
Speaker Change: So over 50000 subscribers just a couple of months so the adoption is.
Speaker Change: <unk> been incredible and we're going to continue to drive that.
Speaker Change: In terms of contribution to the quarter, we're still filling up that subscriber base and we just change the price to 999. So that will continue to be an awesome contributor, especially is that funnel fills up and we have an even larger cohort of subscribers make meaningful contribution towards the end of this year, we're hoping.
Amanda Crawford: Okay, thanks.
Speaker Change: Okay. Thanks, and then last question for Amanda.
Amanda Crawford: And then last question for Amanda. Obviously, you raised the guidance to reflect 1Q strength. How should we think about the revenue cadence throughout the year? Should we think about it generally being the same, maybe on a, you know, off of a higher 1Q base? Yeah, any color there would be great. Yeah, we're we're expecting from a quarterly basis to see sequential growth each quarter, with Q4 being the biggest quarter for the year, which is due to the holiday promotional season.
Speaker Change: Yes, obviously you raised the guidance to reflect <unk> strength, how should we think about the revenue cadence throughout the year should we think about it generally being the same maybe im off.
Speaker Change: Higher <unk> base.
Speaker Change: Yes, any color there would be great.
Speaker Change: Yeah, we're expecting from a quarterly basis to see sequential growth each quarter with Q4 being the biggest quarter for the year.
Speaker Change: Which is due to the holiday promotional season.
Amanda Crawford: Okay, appreciate it.
Speaker Change: Okay I appreciate it I'll leave it there thanks again, congrats on the quarter.
Operator: I'll leave it there.
Operator: Thanks again and congrats on the quarter. Thank you.
Operator: Thanks for joining. Thank you.
Speaker Change: Thank you and thanks for joining.
Speaker Change: Yes.
Operator: As a reminder, if you would like to ask any further questions, you can do so by pressing star followed by one on your telephone keypad.
Speaker Change: Thank you as a reminder, if you would like to ask any further questions you can DSA.
Speaker Change: <unk> staff by one on your telephone keypad now.
Colin Ricker: We have a question from Colin Ricker with Northland Capital. Please go ahead. Hey guys, congrats on a pretty stellar quarter here.
Colin: We have a question from Colin <unk> with Northland Capital. Please go ahead.
Colin: Hey, guys, congrats on a pretty solid quarter here.
Kurt Workman: Quickly, can you provide us with some color on your overall marketing strategy for 2025? And what levers are you pulling on here? And what should we be keeping our eye on going forward? Yeah, great, great question. We're really continuing to drive on our FDA and CE medical clearances. That's really resonating with parents of having that peace of mind and the clearance from the FDA. But ongoing, we're continuing to work on our every baby communication of really bringing this baby and parent stories forward, which ties in extremely well to Owlet 360 subscription, and really bringing a breadth of services and insights to parents.
Speaker Change: Quickly can you provide us with some color on your overall marketing strategy for 2025, and what levers are you pulling on here and what should we be keeping our eye on going forward.
Speaker Change: Yes, great Great question, we're really continuing to drive on our FDA and CE medical clearances, that's really resonating with parents of having that peace of mind in the clearance from the FDA.
Speaker Change: Ongoing we're continuing to work on our every baby communication of really bringing this baby and parents stories forward, which ties into extremely well to I'll, let 360 subscription and.
Speaker Change: And really bringing a breath of services and insights to parents. So what's working today continues to work and we're building that momentum.
Kurt Workman: So what's working today continues to work and we're building that momentum. And we're seeing very strong response. You know, the baby registry gives us a great idea of what is happening in the marketplace in the interest of new parents and wanting to bring an Owlet into their nursery. And we're seeing over 50% growth quarter on quarter. So the messaging is working, we're continuing to lean in and drive on that.
Speaker Change: And we're seeing very strong response.
Speaker Change: The baby registry this gives us a great idea.
Speaker Change: What is happening in the marketplace in the interest of new parents and wanting to bring in outlet into their nursery and were seeing over 50% growth quarter on quarter. So the messaging is working we're continuing to lean in.
Speaker Change: And drive on that.
Kurt Workman: Great, and secondly, per the call in the PR, it doesn't really sound like you're seeing any shift in consumer behavior, you know, just given some of the ongoing macro difficulties, but is there anything that you're seeing there? Are your typical customers just more insulated to these macro headlines? Yeah, that's that's a great question. Again, we're keeping a close eye on it and baby registry gives us our best insight. But as of right now, we're driving and continuing to have robust sell through and continued success. But, you know, we'll see where it goes, but we're cautiously optimistic on the year.
Speaker Change: Great.
Speaker Change: And secondly for the call in the PR It doesn't really sound like Youre seeing any shift in consumer behavior.
Speaker Change: Just given some of the ongoing macro difficulties, but is there anything that youre seeing there or your typical customers just more insulated to these macro headwinds.
Speaker Change: Yes, that's a great question again, we're keeping a close eye on it and baby registry gives us our best insight.
Speaker Change: But as of right now we're <unk>.
Speaker Change: Driving and continuing to have robust sell through.
Speaker Change: Continued success, but.
Speaker Change: We'll see where it goes but we're cautiously optimistic on the year.
Colin Ricker: Perfect. Thanks for answering my questions and congratulations on the quarter. Thank you.
Speaker Change: Perfect. Thanks for answering my questions and congratulations on the quarter.
Speaker Change: Thank you.
Ben Haynor: Your next question comes from Ben Haynor with Lake Street Capital Markets. Thanks for taking the questions and congrats on the quarter. It was fantastic. First off, for me, just on the Owlet 360 subscription offering, you know, getting done 50,000 customers already, you know, what sort of I guess marketing or pop-ups or awareness raising has occurred, you know, within the app. Is there still things that you can dial up there? Is, you know, how would you characterize maybe how impressive you've been with the making people aware of it? Yeah absolutely. So we do have in-app messaging so you know every new parent that comes onto the Owlet platform downloads the app so we have access immediately to the parents through in-app messaging but we have other marketing tools as well such as email and sms that we're leveraging and then we're going to continue to drive our messaging through our advertising through social sharing stories and really just continuing to drive that drumbeat onto the awareness.
Speaker Change: Your next question comes from Ben <unk> with Lake Street Capital markets. Your line is open.
Ben: Good afternoon, guys. Thanks for taking the questions.
Speaker Change: Congrats on the quarter is fantastic.
Speaker Change: First off for me just on the hour.
Speaker Change: Our 360 subscription offering.
Speaker Change: 50000 issue.
Speaker Change: Customers already.
Speaker Change: What sort of.
Speaker Change: I guess marketing or pop ups or awareness raising as.
Speaker Change: As occurred within the App is there are still things that you can dial up there is.
Speaker Change: Would you characterize it.
Speaker Change: Maybe how aggressive you Ben.
Speaker Change: Making people aware of it.
Speaker Change: Yeah, absolutely. So we do have in App messaging. So every every new parent that comes onto the outlet platform.
Speaker Change: Downloads the App. So we have access immediately to the parents, who in App messaging will be of other marketing tools as well such as E mail and SMS that we're leveraging.
Speaker Change: And then we're going to continue to drive our messaging through our advertising through social sharing stories.
Speaker Change: And really just continuing to drive that drumbeat onto the awareness.
Kurt Workman: Excellent. And then, you know, just kind of big picture, how, I know, another firm with which you compete has kept a lot of these kids and parents on the platform, you know, of a until they're several years old. Do you guys have kind of a cutoff of where you think that or how late in the child's development that that can potentially go? Yeah, so today parents use our SOC, we're FDA cleared for up to 18 months, but we do see that they use the camera for four years or more. So really building out the feature set and subscription around camera to continue to go as the child progresses from the crib into the bed and beyond.
Speaker Change: Excellent.
Speaker Change: Just kind of a big picture.
Speaker Change: No.
Speaker Change: Another with which you compete.
Speaker Change: <unk>.
Speaker Change: Yes.
Speaker Change: A lot of these.
Speaker Change: Yes.
Speaker Change: And parents on the platform.
Speaker Change: Until there are several years old do you guys have kind of.
Speaker Change: Coming off of where you think that are out in the trial.
Speaker Change: Development that could potentially go.
Speaker Change: With our.
Speaker Change: Todays currency, yes.
Speaker Change: Yes, so yes today currencies, our socks, where FDA cleared for up to 18 months.
Speaker Change: But we do see that these the camera for four years or more so really building up the feature set and subscription around camera to continue to go as the child progresses from from the crib.
Speaker Change: And do the bed and beyond.
Kurt Workman: We see a really strong opportunity to continue to drive that relationship that we've built with the parents from the day they bring their child home from the hospital.
Speaker Change: See a really strong opportunity to continue to drive that relationship that we built from the with their parents in the day they bring their child home from the hospital.
Kurt Workman: Okay, great. And then, lastly for me, and I apologize if you've already covered this, but just thinking through competitively, it would seem that many of the products that show up in the same category and baby registries likely would be impacted by tariffs. Do you see any tailwind from your competitors potentially getting hit by the tariffs? Yeah, yes, we do. Yeah, many of the camera manufacturers in particular are manufactured in China, which right now have very, very high tariffs. So we actually believe that, you know, if these 10% tariffs stick, which we hope they don't go up, we actually see this as a potential opportunity to capture additional market share.
Speaker Change: Okay, Great and then.
Speaker Change: Lastly for me and I apologize.
Speaker Change: <unk> already covered this.
Speaker Change: But just thinking through.
Speaker Change: <unk> would seem that many of the products that show up on.
Speaker Change: In the same category on Baby registry is likely would be impacted by tariffs do you see any tailwind from your competitors potentially getting hit.
Speaker Change: By the tariffs.
Speaker Change: Yes, yes, we do.
Speaker Change: Many of the camera manufacturers in particular are manufactured in China, which right now have very very high tariffs. So we actually believe that if the.
Speaker Change: 10% tariff stack, which we hope they don't we.
Speaker Change: We actually see this as a potential opportunity to capture additional market share.
Kurt Workman: And we're going to lean in with our partners and really try to push and increase our market share in the infant monitor market.
Speaker Change: We're going to lean in with our partners and really trying to push and increase our market share.
Speaker Change: The infant monitor market.
Ben Haynor: Fantastic. Well, that's all I have, folks, and thanks for taking the questions. Thank you very much. Thank you.
Speaker Change: Okay.
Speaker Change: Excellent well, that's all our airports and thanks for taking the questions.
Speaker Change: Thank you very much.
Operator: I can confirm.
Speaker Change: Thank you.
Kurt Workman: That does conclude the Q&A session, and I'd like to hand it back to Kurt Workman, the CEO and co-founder, for some final closing comments. Yeah, thank you. Appreciate it. And thank you all for your support of Owlet today. I'm really thrilled with the results in Q1, which sets us up. well to deliver continued growth through 2025. And I'm confident in our ability to navigate kind of the evolving market dynamics that we have. We're very well positioned to capture additional share in the category, execute on our growth opportunity, expand profitability, and create long-term value for all stakeholders.
Speaker Change: That does conclude the Q&A session and I'd like to hand, it back to kind of let.
Speaker Change: When the CEO and co founder for some final closing comments.
Kurt Workman: Yes. Thank you appreciate it and thank you all for your support of element to them I'm really thrilled with the results in Q1, which sets us up.
Kurt Workman: Well to deliver continued growth through 2025, and I am confident in our ability to navigate.
Kurt Workman: The evolving market dynamics that we have we're very well positioned to capture additional share in the category execute on our growth opportunity expand profitability and create long term value for all stakeholders.
Kurt Workman: Owlet is well on its way to transitioning from a consumer hardware company to a comprehensive pediatric health platform through Owlet360, through the medical device approvals that we've gotten, and the healthcare channels that we're opening up. We are going to be the platform for pediatrics, making a meaningful difference in the lives of parents and their children. And I'm just excited to continue to update you on this journey. So thank you so much.
Kurt Workman: Well on its way to transitioning from a consumer hardware company to a comprehensive pediatric health platform through Allo 360 through the medical device approvals that we've gotten and the healthcare channels that were opening up.
Kurt Workman: We are going to be the platform for pediatrics, making a meaningful difference in the lives of parents and their children and I'm just excited to continue to update you on this journey. So thank you so much.
Operator: Thank you all for joining the Outlook Q1 2025 Earnings Conference Call.
Kurt Workman: Thank you for joining the outlet Q1 2025 earnings conference call I can conclude todays call has concluded. Thank you for your participation and you may now disconnect.
Operator: I can confirm today's call has concluded. Thank you all for your participation and you may now disconnect.
Kurt Workman: [music].
Kurt Workman: Yes.
Kurt Workman: Yes.
Kurt Workman: Okay.
Kurt Workman: Okay.
Kurt Workman: Okay.
Kurt Workman: Okay.