Q2 2025 Owlet Inc Earnings Call
Speaker #1: Good afternoon. Thank you for attending today's Owlet, Q2 25 earnings conference call. My name is Tamia, and I will be your moderator for today's call.
Speaker #1: All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you'd like to ask a estion, please press star one on your telephone keypad.
Speaker #1: I would now like to pass the conference over to your host, Jay Gentzkow, investor relations. You may proceed.
Speaker #2: Good afternoon, everyone, and thank you for joining us. Earlier today, Owlet released financial results for second quarter ended June 30th, 2025. I'm ased to be joined today by Kurt Workman, Owlet's CEO and co-founder, president, Jonathan Harris, and CFO, Amanda Crawford.
Speaker #2: 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.owletcare.com.
Speaker #2: This call is also being webcast live with a link to the same website. The webcasting accompanying slides will be available for replay for 12 months following this call.
Speaker #2: The content of today's call is the property of Owlet. It cannot be reproduced or transcribed without our prior consent. Before we begin, I'd like to refer you to our safe harbor disclaimer on slide three of the presentation.
Speaker #2: 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.
Speaker #2: These risks and uncertainties include, but are not limited to, those described in our most recent findings with the SEC and in the risk factor section of our annual report on Form 10K, as updated in the company's quarterly reports on Form 10Q and other findings with the SEC.
Speaker #2: 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 #2: With that, it's my pleasure to turn the call over to Kurt.
Speaker #3: Thank you very much, Jay. Hello, everyone, and thank you for joining our second quarter 2025 financial results call today. I'm proud to report Q2 was another exceptional quarter for Owlet.
Speaker #3: Revenue exceeded our expectations at 26.1 million in the quarter, growing 26% year over year. Contributing to our largest first-half revenue performance in company history.
Speaker #3: Strong top-line growth led to gross margins expanding year over year for a ninth consecutive quarter, and we recorded our fifth consecutive quarter of adjusted EBITDA profitability.
Speaker #3: We've continued to ake great progress throughout the first half of 2025, and our focus on driving further gains through our strategic focus areas for growth.
Speaker #3: We're confident in our continued momentum into the back half of the year, and therefore are again raising full-year guidance. Underpinning ur performance was, again, the unmatched dedication of the Owlet team and our passionate community.
Speaker #3: We are building on Owlet's transformation as a comprehensive pediatric health platform, and we believe we are just scratching the surface of Owlet's potential. I'm extremely proud of our execution to deliver on this opportunity and our mission.
Speaker #3: Before we jump into the second quarter results, I want to take a moment to highlight an exciting and important leadership update. As of October 1st, I'll be transitioning out of the CEO role and into a new position as executive chairman of the board.
Speaker #3: This move will allow me to focus more deeply on the things I'm passionate about. Expanding access to Owlet's mission and helping guide the company's long-term strategy as we continue to grow.
Speaker #3: Starting October 1st, Jonathan will become the new CEO of Owlet. This is a meaningful moment for Owlet and one I'm incredibly excited about. I founded Owlet over 12 years ago with a simple but powerful belief: that every baby deserves access to medical-grade health monitors at home.
Speaker #3: Since then, we've created and led this category, launching the first smart sock in 2016, and establishing it as the gold standard with the first and only FDA-cleared health monitor available to parents in the US and abroad.
Speaker #3: Now we're closer than ever to ing that vision a reality. In my new role, in addition to overseeing the long-term strategy and board governance, I'll be focused on driving broader access to our technology through affordability, insurance coverage, and building on the clinical evidence needed to make health monitors part of the standard of care for families everywhere.
Speaker #3: This change allows me to focus my time and energy on where I believe I can make the biggest impact for parents and for the company.
Speaker #3: We've built incredible momentum, and I truly believe this next chapter will accelerate it even further. Owlet could not have a better CEO going forward.
Speaker #3: Jonathan is an extremely accomplished executive with the proven ability to consistently deliver value to a full range of stakeholders. Jonathan's ership and commitment to Owlet's mission has already made an incredible impact on the company over the last two years.
Speaker #3: With him leading our global go-to-market directly following FDA and CE marked clearances. Spearheading international growth and distribution, standing up our Owlet 360 subscription offering, and driving a more focused, streamlined organization.
Speaker #3: It's without question that the momentum and performance we've delivered in recent quarters are a direct result of Jonathan's impact on the business and his valuable leadership.
Speaker #3: Jonathan has been pivotal in transformation of Owlet as a comprehensive pediatric health platform, and he is ideally suited to lead as Owlet's CEO through this next phase of growth.
Speaker #3: I'm grateful to our board for their support in this planned transition and excited to assume the executive chairman role. And continue to actively support and collaborate Jonathan as well.
Speaker #3: It's been a pleasure and a privilege to be the CEO of Owlet. With that, I'll pass it on to Owlet's new CEO, Jonathan Harris.
Speaker #4: Thanks, Kurt. I could not be more thrilled at this opportunity to lead Owlet in this next chapter. On behalf of Owlet's board and all of the Owlets, we'd like to thank Kurt for his passion and dedication to this company.
Speaker #4: Simply put, there would not be an Owlet without him. He has been the driving force in our mission to bring safety and peace of mind to new parents, and we are fortunate that he will continue to play a critical role as executive chairman.
Speaker #4: We are at an exciting time with the significant opportunity to deliver on the amazing potential of this business. To be the leading pediatric health platform in the world, and I'm honored help drive this mission forward as Owlet's CEO.
Speaker #4: Thank you. Okay, now onto the financial results from the second quarter. Looking at slide five, it was another outstanding quarter for Owlet. Exceeding our expectations across all metrics.
Speaker #4: Revenue was 26.1 million in Q2, up 25.9% compared to the second quarter, 2024. Gross margins expanded 180 basis points to 51.3%. Representing our ninth consecutive quarter of year over year, gross margin expansion.
Speaker #4: Gross margins included the impact from tariffs in Q2. Which Amanda will go into in more detail. Adjusted EBITDA was 0.3 million or fifth consecutive quarter of adjusted EBITDA profitability.
Speaker #4: Finally, we are raising our full-year 2025 guidance to reflect both our outperformance in the second quarter and the confidence in our outlook. Amanda will provide more detail on our updated guidance.
Speaker #4: We are excited to maintain the momentum of the business into the back half of the year. Turning to our strategic focus areas for growth, we continue to ake really strong progress on driving continued global adoption of DreamSock.
Speaker #4: Transitioning Owlet into a service through the Owlet 360 subscription, supporting parents from infancy into the toddler years, and increasing our customer lifetime value. And expanding healthcare channels to offer an insurance reimbursed monitor.
Speaker #4: Starting with our core business, DreamSock, both domestic and international adoption continues to be very exciting. In the US, DreamSock demand remains strong. Q2 saw other quarter of domestic sales through growth of 37% versus Q2 2024.
Speaker #4: Sales through strength was driven by ongoing demand DreamSock, as well as solid execution by the sales and marketing teams. We also continue to see positive trends in our registry data.
Speaker #4: A valuable leading indicator for our core business. Q2 showed a 54% year over year increase in total DreamSock additions to the registries we track.
Speaker #4: Which includes Amazon, Babylist, and Target. We also continue to maintain our market leadership in the baby monitor category. In the quarter, Owlet again creased our share of total dollars spent on baby monitors versus prior year.
Speaker #4: Based consumer research firms Circana and our own data. In addition, the data is showing our overall category is growing within the 12-month trailing time period.
Speaker #4: Supporting that consumer spending on baby monitors is the highest it's been in five years. We also continue to be a company with innovation at our core.
Speaker #4: As we continue to invest to maintain our lead in the pediatric health space. Brand Health also remains in a very good position. With DreamSock's NPS over 73 to end the second quarter.
Speaker #4: Owlet also had our most successful Amazon event in company history at the Prime Day in July. The record sales of both our DreamSock and Duo products with total sales through units up 72% versus prior year.
Speaker #4: Resulted in Owlet ranking as the number one seller in the baby monitor and baby safety categories. And finally, Owlet was recently recognized with two awards for innovation in baby care.
Speaker #4: DreamSock took home baby monitor product of the year in the 2025 baby innovation awards. Secondly, we earned top honors at the 2025 Mother and Baby Awards.
Speaker #4: Winning silver for best baby monitor and bronze for overall innovation of the year. With Mother and Baby naming it a game-changing device. We're proud to be recognized as an innovation leader in our efforts to advance health and safety in the pediatric industry.
Speaker #4: Turning to international. We continue to execute on our addressable global market opportunities. In Q2 2025, international revenue was 1.8 million versus 4.8 million in Q2 2024.
Speaker #4: It is important to note that revenue was down compared last year, given the timing shift of open orders to Q3. However, with Q2 sales through up 33% year over year, we're confident in the continued growth in international business through the back half of the year.
Speaker #4: In the quarter, Owlet UK had a record Amazon Prime Day. Showing sales through units up 144% compared to prior year. And Owlet achieved the number one seller in the baby monitor category.
Speaker #4: France and Germany were again global standouts, with sales through up over 200% and up over 100% year over year, respectively. Shifting to Owlet 360 subscription, we are now full six months since launch.
Speaker #4: In Q2, we made meaningful progress expanding the value of our subscription offering while driving continued growth. Total paying subscribers recently surpassed 66,000. With strong second quarter growth, across monthly reoccurring revenue, attached rate, retention rate, and consumer satisfaction compared to the first quarter.
Speaker #4: The strong trends and overall feedback have really been outstanding. Improving enhancing subscription also continues. In Q2, we launched sleep position. One of our most requested features.
Speaker #4: Which gives caregivers visibility into how much time their baby spends on their back, side, or tummy. This insight directly supports safer sleep practices and peace of mind.
Speaker #4: We also invested in scalable growth infrastructure building out in-app and email marketing automation tools to continue driving adoption. Looking ahead to the second half of the year, our focus is on bringing even more value to subscribers through deeper insights and expanded capabilities.
Speaker #4: We're planning to launch historical data trends which allow caregivers to track progress and spot patterns over time. By the end of the year, we will also begin piloting AI-generated sleep insights built from Owlet's proprietary pediatric data set.
Speaker #4: Offering caregivers personalized, data-backed guidance that only Owlet can provide. We're targeting a fourth-quarter telehealth pilot launch to better align with our broader ecosystem of caregiver partners.
Speaker #4: This timing also gives us the opportunity to deliver a more connected and valuable experience for our users. These innovations will continue to strengthen our relationship with caregivers, enhance the daily utility of our platform, and drive long-term subscriber growth as Owlet 360 enables our evolution from a consumer device company to a comprehensive pediatric health platform.
Speaker #4: While unlocking the value of what we believe is the largest and most scaled database of pediatric health data in the world. Finally, we're excited about the opportunity to roll out Owlet 360 internationally.
Speaker #4: And we're in a strong position from a software development perspective. However, this year we are prioritizing our DreamSock and camera feature set as well as the telehealth pilot and will be rolling out Owlet 360 internationally next year.
Speaker #4: Finishing up on our third strategic area of focus, we continue to progress our mission to expand medical and healthcare channels to offer insurance reimbursed monitor.
Speaker #4: In the quarter, we continue development of a key component of our althcare strategy. Owlet Connect. Our enterprise data integration platform and service. Through Owlet Connect, for first time ever, Owlet families will be le to share their baby's health data via BabySat, with healthcare providers in real time.
Speaker #4: Owlet Connect is critical to our holistic healthcare solution as it enables integration of Owlet's unique pediatric data into clinical workflows, electronic health records, and research databases.
Speaker #4: Our new alliance with Children's Hospital of the King's Daughters, or CHKD, is progressing as planned. This includes beginning to integrate with CHKD via Owlet Connect to expand the servable baby population with BabySat.
Speaker #4: There's still a lot of progress to make in the healthcare side of the business, given the size of the opportunity that each of these steps from development of Owlet Connect to partnering with our first Children's Hospital are important milestones to unlocking BabySat's long-term opportunity in healthcare.
Speaker #4: Now, I'd like to turn the call over to Amanda to discuss Q2 results and our updated 2025 outlook.
Speaker #5: Thanks, Jonathan, and good afternoon, everyone. I'll begin on slide 10. Unless noted otherwise, I will be comparing second quarter 2025 results to the second quarter of 2024.
Speaker #5: We delivered another strong quarter in Q2, exceeding expectations across all key metrics. Revenue in the second quarter was 26.1 million and increased of 25.9% compared to prior year.
Speaker #5: Revenue strength was primarily driven by stronger-than-expected sales of DreamSock and DreamDuo. Gross margin in the second quarter was 51.3%, an increase of 180 basis points versus the prior year, marking our ninth consecutive quarter of year-over-year gross margin expansion.
Speaker #5: Gross margin improvement primarily reflects strong product mix, improved fixed cost absorption, lower direct product and fulfillment costs, partially offset by the tariff impacts. The tariff situation remains fluid, and we are adapting and evaluating in real time.
Speaker #5: In the second quarter, gross margins were impacted by the 10% tariffs assessed in Thailand and Vietnam. With Vietnam tariffs now confirmed to increase to 20% and Thailand to 19%, we are modeling these impacts into the forecast.
Speaker #5: Total operating expenses in the second quarter were 15.3 million versus 12.5 million in the same period last year. As a percentage of revenue, Q2 operating expenses were 58.7% compared 60.4%, in Q2 2024.
Speaker #5: As we continue to drive strong operating leverage as we scale the business. Operating loss in the second quarter was 1.9 million compared to 2.2 million in the same period last year.
Speaker #5: Net loss in the second quarter was 37.6 million versus 1.1 million in the same period last year. The increase was primarily driven by a 34.8 million non-cash mark-to-market adjustment related to our common stock warrant liability.
Speaker #5: Excluding this adjustment, our net loss would have been 2.8 million. We announced earlier today that we've come to an agreement with various holders of our Series A and Series B warrants to exchange their warrants for shares of common stock, which will result in the elimination of over 90% of the Series A warrants and all of the Series B warrants.
Speaker #5: We're very pleased to simplify our capital structure and eliminate the uncertainty the warrants have presented for current and prospective investors. The exchange will be subject to stockholder approval at our upcoming annual meeting and other customary closing conditions.
Speaker #5: I'd refer those on this call interested in further information to refer to our Form 8K and press release both issued earlier today. Q2 adjusted EBITDA was 0.3 million and improvement of 0.2 million compared the same period last year.
Speaker #5: Strong revenue growth despite tariff costs drove the increase. Our fifth consecutive quarter adjusted EBITDA profitability. Cash and cash equivalents as of quarter end June 30th were 21.8 million versus 16.3 million at end of the first quarter 2025.
Speaker #5: In the quarter, we drew down on our line of credit increasing to 14.9 million at the end of Q2 versus 8.5 million at the end of Q1.
Speaker #5: The primary driver of our cash balance increase. Turning to our financial outlook. We are updating our 2025 guidance to reflect our strong first half 2025 performance and confidence in expectations for the balance of year.
Speaker #5: As well as incorporating recent tariff cost increases. As was our message in last quarter's guidance update, the fluidity of the macro backdrop creates some uncertainty, specifically tariff policies that have the potential to change.
Speaker #5: As a result, today's updated 2025 guidance includes our best estimate based on the data we have available to us today. Owlet continues to execute at a high level and as a result of our first half 2025 revenue strength and outlook for the second half of the year, we are raising our revenue guidance.
Speaker #5: For full year 2025, we now expect revenue in range of 97 to 100 million, representing 24 to 28 percent growth year over year. Turning to our gross margin guidance, we are reflecting the new increased tariff expectations of 20% on imports from Vietnam in 19% on imports from Thailand in the product cost of goods sold for our updated outlook.
Speaker #5: As a result, we are reaffirming our 2025 gross margin guidance range of 46 to 50 percent. We expect our raised revenue guidance will be offset by the increased tariff costs.
Speaker #5: And finally, with Q2 adjusted EBITDA outperforming expectations, and given our confidence in our outlook, we now fully expect to be adjusted EBITDA profitable for full year 2025.
Speaker #5: With that, we will now take your questions.
Speaker #6: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad.
Speaker #6: If for any reason at all you would like to remove that question, please press star followed by two. Again, to ask a estion, please press star one.
Speaker #6: The first question comes from Charles Reihi with TD Callen. You may proceed.
Speaker #7: Yeah, thanks for taking the questions and, and congrats on the quarter here. Also, obviously, John and Kurt, congrats on the new roles.
Speaker #7: a lot hard work done here, so congrats. may-maybe if I could start, on, you know, what Amanda, on the on the guidance here, just trying to understand a ittle bit, if you could help maybe quantify roughly what you think the, the tariff costs will be to cost of goods sold in .
Speaker #7: And I guess with 51% gross margins here in the second quarter, guiding 46 to 50, maybe you can give us a sense on what that implies for, for back half.
Speaker #7: I, I guess it would imply something more in the mid-40s. Is that a, a, a right way to think of ?
Speaker #8: Yeah. So when it comes to tariffs this quarter, the impact was less significant than we're expecting. In Q3 and Q4, just because the tariffs were temporarily set at 10%.
Speaker #8: And then increased, to 19% for Thailand, and 20% for Vietnam on August 1st. So, during Q2, we saw about a $500,000 impact, to gross profit.
Speaker #8: when we pushed that forward looking ahead to Q4, we're expecting about a 5% impact on gross margin. And then Q3 will be kind a blend between the two quarters just because we'll continue to have the 10% rate, which is in our inventory right now, and then as the cost.
Speaker #8: Hopefully, we'll see, a little bit of an increase in Q3 as well.
Speaker #7: Okay. That makes sense. A-and just remind me, e, how many days inventory are you are you typically carrying?
Speaker #8: we, target about six weeks. So it just depends on
Speaker #7: Six weeks, okay.
Speaker #8: the schedule.
Speaker #7: That's pful.
Speaker #8: Yeah. Yep.
Speaker #7: Okay. a-and then maybe, you ow, Kurt, or, or, or Jonathan, maybe, maybe a, a progress on, on the healthcare side, with DME vendors. And just if there's a if you can give us an estimate on how much maybe healthcare revenue contributes in the arter.
Speaker #3: Yeah. healthcare continues to, be a slow progress for us, so we're continuing , to drive on that. the revenue was inco-inconsequential, but we have expanded, Adapt is currently accepting Medicaid plans in 29 states.
Speaker #3: So we are seeing an increase in our adoption of reimbursement, and we are making great progress on CHKD with the integration into, Owlet Connect.
Speaker #3: so I think once that's fully up and stood up, I think we're gonna continue to see additional hospitals, healthcare systems, join on board and, and continue to grow.
Speaker #3: So, it's a it's a it's, it's a slower, slow process, but we're, we're, we're continuing to gain momentum.
Speaker #7: Great. A-and maybe one last question for me then. the warrant exchange, you ow, and, and I saw the announcement that, that is just com that it has been that you announced this.
Speaker #7: What does that turn into for Common Shares if they're all exchanged?
Speaker #3: We'll have to get back to you on that, Charles.
Speaker #7: Okay. All right. okay. Well, anyways, that, that's all I had. thanks a lot and, congrats on the, on the strong performance.
Speaker #3: Thanks, Charles.
Speaker #6: Thank you.
Speaker #1: The following comes from Ben Haynor with Lake Street Capital Markets. You may proceed.
Speaker #9: good afternoon, guys. Thanks for ing the estion.
Speaker #10: Well, let's just answer, but.
Speaker #9: For me, just, just. Good. Can you hear me okay?
Speaker #8: Yeah. We can hear you.
Speaker #9: Oh, okay. Great.
Speaker #8: Can you hear us?
Speaker #9: yeah. I can I can hear you fine. Sorry about that. on, you know, just kinda wanted to touch on, on telehealth, and I apologize I'm umping between a couple calls here.
Speaker #9: I-any update to the, the plans there? is that something that you expect to kinda roll out, similarly to the subscription offering where you initially offer it to a subset of, of folks on the, on the platform and then they expand it later and have you set pricing or any, any other details there?
Speaker #3: Yeah. So we're, we're super excited about the opportunity to roll in the telehealth. it's still under development. Integration's taking a little bit longer than expected.
Speaker #3: so we will roll it out, by the of this year. and we have not set or, structured pricing on that at this time.
Speaker #9: Okay. Fair enough. A-and then a-any more color on kinda the interest level from, from other children's hospitals, other entities, after seeing, CHKD?
Speaker #3: Yeah. The dialogue our hospitals has really picked up since that announcement. And, we're, we're, we're lining them up. You know, nobody wants to be first, but, you know, they've sure don't wanna be last.
Speaker #3: So we're ally, standing up to our Owlet Connect, once we get CHKD set up with that, then we're gonna begin rolling out to other hospital groups.
Speaker #3: But we are in conversations with a few as we speak.
Speaker #9: Okay. Got it. A-and then, I think lastly, for me, just, just following up on, on, on the prior question, on BabySat and, you know, 29 states, are you seeing any trends that are similar to, to what you've seen as you kinda get, adoption to a certain level in, in a given geography, amongst these, these sort of Medicaid populations?
Speaker #9: Or is it, or is it too early for that?
Speaker #3: Yeah. It's I'd say it's still too early for that. We're, we're still we're building momentum, but it is a, it's a slower process than, than the consumer side.
Speaker #9: Fair enough. congrats on the quarter and the guidance, and, the new roles, Jonathan and Kurt.
Speaker #8: That's awesome for me.
Speaker #9: Okay. Thank you.
Speaker #1: Thank you. As a quick reminder, if you'd like to ask a estion, please press star one on your telephone keypad. The next question comes from Owen Rickert with Northland Capital Markets.
Speaker #1: You may proceed.
Speaker #10: Hi, guys. Thank you for taking my question and congrats on a great quarter. just can, can you dive a bit deeper into this Owlet Connect offering, maybe just provide us with a little bit more color there?
Speaker #10: But w-what are you excited about with this one?
Speaker #3: Yeah. G-great estion. we're cited because this is gonna provide real-time monitoring back from our, our babies that are discharged from the hospital from the NICUs into their homes.
Speaker #3: This will get real-time information back to the neonatologists, through, through the through the Connect. So this is not changing the workflow on the neonatologist side, but, for the first time able to share information with their doctors back, at their offices or back at the hospital, in real time.
Speaker #3: ever, babies at home will be For, discharges and children at home.
Speaker #3: So, we're super excited about this opportunity. you know, it's taking a little bit longer to init and get the full integration, but we believe once this is live, this will be groundbreaking, technology.
Speaker #10: Great. Thank ou.
Speaker #1: Thank ou. The following question comes from Alex Furman with Lucid Capital Markets. You may proceed.
Speaker #11: Hi, guys. Thanks y much for taking my question. wanted to ask about the Owlet 360 subscription offering that, that's pretty big growth, from last quarter getting the city's 66,000 subscribers.
Speaker #11: can you talk a little bit about what you've learned over the past couple of ths? It looks like you've, you've inda, changed the price a couple of times as ou've tested, things like that.
Speaker #11: Has there been any sensitivity to price and what, what has your onboarding, you know, as you've been elling new devices, what, what kind of attached rate you gotten on the subscription to, to activators of the devices?
Speaker #8: All right. Thanks for thanks for the question and thanks for calling in. We've en really strong progress on subscription. We're seeing everything that we want to see.
Speaker #8: Growth in total paying subscribers, the MRR, attached rate, retention rate, and overall satisfaction and feedback. We're not ready share those specific metrics yet. as this is still emerging, but currently, we've got 66 thousand paying subscribers.
Speaker #8: They are at different pricing levels as some were in an introductory period versus the, the more recent pricing structures. but something we are seeing, since we've increased the, the price, the conversion rate rea was slightly less, but not, to the extent that it was, it was worth having the higher price, if that makes sense.
Speaker #8: so we're seeing really, really good, strong, momentum, given our current price point. so we do expect to scale throughout the year, it's still early, but we are excited for the long-term impact that we expect, subscription to have on the business.
Speaker #8: just from a financial standpoint, but as well as we are in our transition to become platform.
Speaker #11: Okay. That's really helpful. anks, Amanda.
Speaker #1: Thank you. The next question comes from Boris Pieker with Titan Partners. You may proceed.
Speaker #12: Great. I'd wanna add my congratulations, to the great quarter. Just a few questions here. Maybe on, on the hospital side of things, what is the actual process, or at least from the contract that you signed already, what is the process of bringing, ou know, the hospital on board?
Speaker #12: Do they is there some kind an internal committee that needs to make a decision? Do they do a little pilot trial or just help us understand w how that works?
Speaker #12: and, what that can imply about kinda future
Speaker #12: contracts?
Speaker #3: Yeah. Great, great question, Boris. so yeah, it definitely comes through the through the, a pediatric health committee. working through that. And then it's getting the integration, through our Owlet Connect integrated into whatever their, re-remote patient monitoring platform that they're using.
Speaker #3: So there, there is an integration cycle. and then it's also partnered through, our one our DME partners to make sure that they're supplying the BabySats into the hospital itself.
Speaker #3: So it's sort of two components. One is the hardware itself. and then the second is the integration into the service, on the back side.
Speaker #3: So, it, it, it's, it's a little bit of a process and, as ou know, you know, hospital contracts can take a while to negotiate.
Speaker #12: Got it. And maybe just a question on tariffs. assuming that these higher tariffs, remain, i-is there, a strategy to bring manufacturing, to the US and maybe to another country with a lower tariff?
Speaker #12: Or is the kinda strategy to just continue paying them as that's the most optimal path forward?
Speaker #8: Yeah. We are looking into other options for, other manufacturing sites. At this point in our journey, we are hitting up against capacity and had it planned expansion anyway.
Speaker #8: So this is a really od opportunity. for us to diversify our sourcing. and look at other possible locations. So it's something that we're actively looking into and seeking to minimize the overall impact of the tariffs.
Speaker #12: Great. Thank you very much for taking my questions.
Speaker #1: Thank ou.
Speaker #8: Thanks for dialing in.
Speaker #1: There. Currently, no other questions.
Speaker #8: On the form.
Speaker #1: Just a quick reminder.
Speaker #8: Thank you. Just wanted address the question that Charles had just regarding the exchange agreement with the warrants. so we are exchanging about 7.2 million of Series A and 1.8 million of Series B for an aggregate amount of 5 million 426 429 newly issued shares.
Speaker #8: So that is disclosed in our press release in 8K. So I just wanted to make re that we answered that question.
Speaker #1: Thank you. As a quick reminder, if you'd like ask a question, please press star one on your telephone keypad. No more questions have queued at this time.
Speaker #1: I'll now turn it back over to Jonathan Harris for closing remarks.
Speaker #4: Thank you for joining us today. We're incredibly proud of the progress we've made this quarter from our strong financial performance to the continued expansion of our global footprint.
Speaker #4: Our commitment to empowering parents with the information they need to care for their babies remains at the heart of everything we do. We believe that our FDA-cleared products, combined with our strategic partnerships and growing subscription service, position us for sustained growth and profitability.
Speaker #4: We are confident in ur vision for the future and look forward to updating you on our progress. Thank you again for your time and continued support.