OWLT - Earnings call transcript Q4 2021

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Operator

Good evening. Thank you for attending today's Owlet Q4 2021 Earnings Call. My name is Tania and I will be your moderator for today's call. [Operator Instructions] I'd now like to pass the conference over to your host, Mike Cavanaugh. Please go ahead. and for afternoon us Good Cavanaugh thank joining you today. Mike results Owlet the quarter Incorporated today, for full released XXXX. and Earlier XXXX financial the XX, ended year December www.investors.owletcare.com. available Company’s is on release currently website The at the Scolnick, Kurt Workman, Owlet’s Officer and Chief call. host afternoon’s Chief and this Executive will Financial Officer Co-Founder Kate

to the to like that get note reports results conference SEC, www.sec.gov. today’s only The XX, required today’s information are the its and in Exchange as factors at the Owlet of that answers at Owlet XXXX, website or financial obligation call also Company. would quarter everyone that performance on and recent in call. materially update be forward-looking conference any call questions quarterly any are certain SEC’s statements to of this or investors.owletcare.com disclaims or with risks risk live these will website revise which given financial forward-looking filed non-GAAP law intention asked and we U.S. Securities except refer information subject certain ended report its found on as to projections can Before results and/or I on September other whether of affect that most matters Actual by or speaks new the relating in detailed Please that events, from provided in those otherwise. to because information, to are statements, filings including other anticipated may and/or or future call. may information, The future Commission, the remind differ the started, future the discussed today’s uncertainties be looking-statements. for forward in events financial Company’s could public

to GAAP over the I of also which to You Company’s comparable can in non-GAAP now on earnings Company’s turn release, call available will of page its most measures website. is the press financial measures the reconciliations the find investor Kurt.

Kurt Workman

We're thank share earnings And update today as the joining our on Mike. excited business. to all you for made us for year. an a we've first Thanks the of call progress

offerings on Sock the the progress roadmap. Duo now are our great US Dream and in product we're and Our making Dream market product in

adoption markets, continued we're and confident products in opportunity our we're term Additionally, of of the long seeing our us. acceleration and international in ahead

the XXXX alleging quickly through our First device a to in parents medical retail the the of marketing product with home, the launched halted letter Owlet while quarter season. unexpected received team we we of there fourth related Cooperating products our all rate the platform. the ability goals efforts Smart the requiring or Sock the technology to the of effectively our The look We at mission supporting to an back certain from of year met manage of to clearance exceeding speak our three holiday XXXX. claims the of dedication pre-market warning quarter a transition during pivot breadth at our here experience requests, from and heart and customer October just days, sales of FDA. a FDA's approval the developed revenue revenue From XXXX. relationships focusing on US FDA the Sock first Smart our in in XX Sock and XXXX, XXXX, and product of new rendered of deepening team about in Owlet Smart just our in did notifications at the beginning our XXXX the full quarters when development third that oxygen the on and

Owlet their we as ecosystem a X, and know to Sock system with which line for Over They when Dream better new and deliver better XXXX parents includes on most Dream parents. insights to our back brand one's deal Sock The while consists our Dream The the intelligent Sock continue Duo, by they letter. babies forward the of FDA in Dream accomplished the major course following the Dream US great little monitor help as a January sleep, assist the on milestone the connected and product the Duo support baby is our team understand launching and This their of Cam sleep. and true for information off parents empowering sleep. sleep We and fourth Dream Duo we've Dream a already today's get yet. for Owlet quarter, monitoring kicked track bundle. to

launch. non-promotional me sales were Duo On the and Dream days Outlet characterize few X Sock the of January January ever. weeks online Dream and X, Let first best our

retailers all line. now are Dream selling Sock carried Sock previously Additionally, the that the Dream

the midwives the our expansion. from coming that rollout the international revenue share are the on Outside Smart out the retail we results launches in In Germany, the XXXX. as to Owlet the a [indiscernible] so in by recommend is just are We'll over XXXX. we outlook terms look still with pleased Our would XXXX and and US, additional time XX thoughtful now XXX% customer received call progress, International Sock. we can additional to demand be in initial ahead feedback. we back of products in results, both a need available with for our news continue product of of grew on report XX with and next XXXX. to some we XXX countries

areas. well world. on continued update adoption We In are like our to regards as recommendations around three these ongoing an conversations FDA product the with regulatory as matters, around the US excited about center

or use are make to subject could products ensuring clearance them for not approval. which intended pre-market FDA First Dream devices, that as medical the

both pursue heart prescription who Second, home. the oxygen our FDA XXXX are recently at Smart MDSAP and similar European rate previously and and and product Owlet, to And investment development we features working continuing area as point, the submitting Union applications for for an certificates internationally. the in device of Sock in pre-market medical for need finally, stock the medical the In devices work notification Smart on international we an gaining Canada. UK, toward of a authorization to only the Sock domestically important ISO babies strategic receive second towards Medical the regards focus update, line. and monitoring to

We launch of working plan our to grow well. we the QX a new we have robust sleepwear later We expand as to also Outlet and XXXX, a in Owlet that product to In year line. version launched wearable are plan Sleeper, product line. Cam blanket, the of XXXX, roadmap this and a sleepwear

smart to continue also work We crib. our on sleep ecosystem, including a expanding

From grow the a building research to to new Dream continued we more for opportunities the and on Kate QX and international about are the future optimistic line and for parts to full and product year the ahead turn will a financials share We I'll roadmap now XXXX. updates. of review the expansion, out from time the over outlet. ecosystem development of in continuing continued

Kate Scolnick

Thank you and afternoon, good everyone.

As US products financial halt Kurt first goals. receipt retailers. the accept Sock three XXXX, Letter of great In Smart of and quarters demonstrated sales from the the the our company fourth Owlet Warning the operational of outlined, for from quarter from in and chose returns to US all the momentum towards FDA,

EBITDA Operating scaling for million was and loss expenses business XXXX to $X.X ended products. return received primarily for million EBITDA in with Dream monitor and anticipate as operating for initial loss EBITDA compared loss the not periods. adjustments approximately period and other promotion, sold cash included to XX, The do planned goods were for Sock December partnership such cessation the Adjusted quarter quarter product year impact and including and loss quarter product million. duo QX gross of compared future billings million compared XXXX. return expenses as year returns QX million, million. and XXXX US in accrued for and yet XX, expected $XX.X spend. were fourth marketing of and the expenses gross balance same the same over the loss same was recorded compared revenue XX, higher million $X.X in in of We for year $XX.X million As $X.X which and before of net fourth $XX And December quarter gross XXXX, as inventory Owlet cost $XX.X adjustment EBITDA Smart fourth for result, with anticipated negative invoiced adjusted $X.X asset quarter our to developed US total our inventory the million of Return XXXX. sales million returns customers. the and net December in in for related a for operating quarter net period and a however, associated period XXXX. equivalence million include period XXXX was loss recorded $XX.X returns It with million allowances. and $X QX product we of the does Smart XXXX $XX.X The promotions liabilities. Operating current Related $XX.X returns were returned for fourth million a for the in loss products. estimates $XX.X respectively be of discounts of the not at million sheet, approximately $X.X Duo XXXX. and revenues not million shipments in $X.X of of the profit XXXX the spending Owlet has for for for was the with the of the $X.X a fourth benefit XXXX, cash billings million and same as in for in loss XXXX Sock million and returns the to fourth as amounts was $X.X $X.X received, negative resulted and portion in adjustments for prepaid increases company $XX as of the material other retailers, million to Smart product for to but company of inventory on contra the within million reserves million for $XX.X a to increase assets received define Sock were were XXXX. of an

product Given the company the transportation until as we begin return and not late product retailers returns inventory quarter, early each US did in arrangements yearend with with timing receiving February began mid-January received planning for unique little and of retailer. in fourth for earnest any

To periods retailers, not as in received. as in cost returns. to product as little To is over the future Sock process rework adjustments expect do incurred. and return date, be expense We inventory, half material in the were we partnership the Smart return of We period product are reworking expected estimates do anticipate of a additional such our the reiterate with in received have it we for developed actively US.

for XXXX. million, year million financial the $XX.X EBITDA million year for and the the respectively $X to $XX.X million increase loss compared the of $XX.X loss the million over drivers and to XXXX, full XXX loss XXXX. the for points million full approximately compared related revenue million $XX.X for year the was increased full XXXX net year million XXXX nine during spend XXXX. long-term were presented adjusted increases was in QX world year parents time, an goods EBITDA with points higher unexpected basis, year expenses contra success for full the of in of profit year for million warranty On of the significant $XX.X to lifetime over compared of global sold to expense. penetration, associated Approximately focusing EBITDA of million in XXXX. benefit to include scaling points. challenges. expenses over QX million US nursery over hard EBITDA a loss XXXX planned to increase related $XX.X Owlet. year loss the $X.X period million XXX business in in attributable a year year and Some million costs due same to QX, ensure in over Overall, support of million by material Adjusted around of for to of same a of In year $X.X increasing highlights period our increase quarter declined for net Owlet and basis selected authorizations $XX.X long-term basis expenses headwinds, Primary for million million technology investment XXXX. $XX.X of loss we fourth net as gross $XX.X for intact XXXX obtaining $XX.X marketing offset XXXX loss $X.X XXXX. and increased benefit offset inflationary and connected substantially our period margin returns the Operating $X.X basis in and basis of on to year including including and first XXX for product in was in market XXXX for include a $XX.X a points lower the by we've solutions. same expand XXXX. was product were XXX the and The with financial operating year same for in XXXX million innovation operating product the the from gross position to The was was months of Operating margin remain full loss and transportation and targeting our period business, spending marketing partially the were are revenue required. year goals merger. with XX.X%. was XXXX connected returns in period $XX.X include worked business Owlet's able to and customers impact key the markets short Cost compared objectives value nursery

As we retailers selling transitional is Quarter date off of online. and Owlet Owlet. started our quarter to the QX internal US our product meeting in are positive our our January to decline in customers US in XXXX, product and we start initial in retailers important been for for from has expectations on marketplace. initial and early December shipments an late launch We dream the feedback

and in international have have time business of of before stores year and and the strong QX. retailers January Dream We line Dream today, XXXX, same retailers promotions major had are many February After QX. start slight XXXX, available the their all XXXX. by gross line has anticipate Dream billings reserves for line online a very and in the than product to product All in our available end international Year fully a period our expansion strong US online in major will stores. us the product the

to in in XXXX. launched continue international with growth our are We new regions plans excited be to EMEA plan

liquidity are we terms variable of and and building towards spend sufficient inflationary operating In support receiving new, inventory. go business. stronger business mitigate where our QX to opportunities in product of is is reworking I'm product stores be XXXX our steps pressures the the process manage and expenses, Because finding beyond. possible continuing a summary, and will have ramping to Dream channels market the in global QX course to in In our over one actively rapidly to up online Owlet across of and we and

let's are not call when guidance expectations financial for time. anticipate We quarter providing XXXX at results. for first reporting this We up the outlook Operator, providing questions. an XXXX open updated

Operator

instructions] question Cowen. Rhyee [Operator line first Charles The is with the of from

open. Your is line

UnidentifiedAnalyst

Hey Thanks this on Gwen question. is taking Charles. for guys, for the

so. month seems million for Contra 'XX with XQ already the directional it Sock commentary even your XQ, adjusting be higher around out just being revenue account, rate, or to is kind the revenue but only than in billing So for the slightly a like Smart of $XX you did in

much range digits, can that XQ of low commentary the higher, you the Is of kind be means? or seasonality how that is what directional give you anything when say it and helpful. in would rough slightly really So digits, single a mid-single magnitude around factor

Kate Scolnick

Thanks question, Gwen. Yeah. your

new over think product trying not full to market some things in idea the to we're in overall -- but seeing few I high of commentary. with just just we over really the level some were just being give give the guidance how We're wanted directional weeks. last the there providing next

are number too. retail and we our of in a in the process in As product of our being our of most partners terms of open mentioned, stores channels getting are online

an apples really So apples comparison. it's not to

with QX. update a we're full and going so when to we're ready to, And wait

UnidentifiedAnalyst

Got it.

Thank Okay. you.

Operator

The of you. the is question Citigroup. Jim from Suva line with next Thank

Your line open. is

Jim Suva

I a a And at you. few time. just I'll Thank them question, have but ask first one

these to comments, feedback the to The accessories you gives of probably more for about that kind add are items or it. or and the out, a user? they give Kurt. so on user feedback one's Sock on, camera first primary wellness also the Kurt get we just Are just Smart the they'll to coming kind the prepared but going your where wellness in of auxiliary the to in some it's sense mentioned be auxiliary can of

Kurt Workman

Good accessories, new example, we Yeah. we're sleeper about Jim. that we primarily about line, our Thanks question. When Owlet talking accessories, non-smart talk sleepwear in QX. the for launched

other We to that going have coming significant some category a year. pretty Owlet has innovation work will and on improve some for it and exciting Sock. updates this that parents to It's that's the line Smart actually with big

So there's integrations there. some

that working about talked we're Smart also We on. Crib the

with will Sock development our well. Crib in Dream So that's all And together one Smart as in the camera, work the the and app ecosystem.

Jim Suva

Okay.

it like So that ones more is feedback items. Smart of and kind other way indeed to sounds and it? Is the think smart Crib the non-feedback and about give the accessories we'll are

Kurt Workman

That's right. Yeah.

Jim Suva

we to and or Okay, like as an of more of that of more financial the CFO then for parts you that million, million million shouldn't add moving a of revenues or was it's great. take Katie $X.X And you like of question new a revenues, even adjusted variables still products to so and in that other sell in does know selling reversal it make you QX had abnormal $XX.X negative then $XX.X quarter, new get some such a with even you countries basically products, guidepost. that there's addition probably minus because so in question, I the rely with of sell products use the more

Kate Scolnick

the latter. Yes, it's definitely

stopped we then international as at selling would then product sold US billings a say mentioned, that Smart So of the I see adjustments bit had quarter, in would very of as It like QX. Cam. would said you the right? as is products. also end And we it natural characterize a what well And Dream the take we that place So activity that's we there's in number few that numbers Sock first that if before you the of to be the I of the a QX, gross weeks quarter. had that in have naturally the also

that So the the from made I a more revenue, prior the already had warning that would kind Contra retailers we very activity for reflects lot which that of US of really product the order. adjustment so separate the to keep

is for return watch better say So, place on revenue contra the would to sheet. to, the I balance the

on that in prepaid expenses, some where back in the date returns, it, that of it bit That the of that. accrued So some of for We a and will liabilities. returns material we waiting back is over QX, inventory the back we reworking. set a inventory. most be in to in have we've received We're bit to little of product said got teeny then half receive

we'll cost. so be that that, product be incurring And a of little reworking sold and is bit we'll as

Jim Suva

the about sell of Okay. the sell your through. I view of all my you the but Kate, -- channel is that gross and the through as that is, then okay. think of that's really necessarily channel channel I is it, guess product and new that mentioned number sell to numbers the way on includes should question that product, And upon kind billings we prepared of Kate, have some a number should billings probably is last comments, rely that in kind kind to billings not kind shelves. assume rebuild the just it inventory number, in the or sell it and into Is I and you

Kate Scolnick

would as invoice what it, that we've define we the I customers. consider

And very data. adjustments, it or allowances a discounts, just any doesn't the that's indication. early include promotions, So of through sell any

Jim Suva

of little since little bit a the replenish be Is kind all it than shelves? new to the bit than Would higher have a you normal? on higher product normal Okay. it

Kate Scolnick

characterize point. data it wanted as just it way. wouldn't We to I give either as a

Jim Suva

Thanks Kirk for It's details. the Okay. Kate and appreciated.

Kurt Workman

Thanks Jim.

Operator

is Thank with next Bank you, of from America. Mr. question Babcock Suva. The John

Your line is open.

John Babcock

guys. evening good Hey

that want last question. follow on Just quickly to up

just revenue came that you to able also, all, to, Contra number? figure the if be where margin is the as of gross overall directly that the then for to any products there way might on gross out margin sense the you excluding was a about of talk sold, some want kind provide get First And headed. where quarter directionally, you is could more

Kate Scolnick

John. thanks Yeah,

a number, the billings accounting have came adjustments which negative way that So net was that number. gross out provide a revenue to and the the after versus the as

net I the then billings. out the And you of have activity. the margin, a either also I to provide So in exercise that we separate because can't as don't the gross all terms have

So negative, revenue given gross you. was that margin I have don't a number the for

John Babcock

question bit be And just you one mentioned there. of on the over that? then more a more just actually you Got kind on XXX% on here, international growth clarification specific little sales, you. Could a

Kurt Workman

on comment to want you Chris, that.

Kate Scolnick

Do growth you mean international means. percent

Kurt Workman

XXX%, Yeah. XXX%, A Yeah. XXX%. like XXX%? little a over that Is a

Kate Scolnick

for year didn't as We had the just the international But that quarter, 'XX expand the we well activity we for year. overall we gone we strong into QX end say I going very out to break going year. given have really markets. And, that as in for international all momentum the sales or strong this and continue the we of other think momentum have into into would

John Babcock

the one that some as FDA's you just retailers you of And was specific was you just actions broader lose part question, still now of I that the were made? are retailers serving well, before or Okay. serving more kind kind of semi announce any did through all

Kurt Workman

difficult that's good customer We retailers really work I lose out our we not call through great any did for team doors. not would time. Yeah, relationships a those a build the lose question. did any to and they

we'll doors Smart those the of be on have we the of all same in year. Sock, is with retailers doors with team expanding same So this and working the all

John Babcock

and and that's your explaining were I the Italy, Asia Spain, next thought, pretty also that quarter? America, adding talk I overall about the about just How Netherland. Could mentioned, rollout you're Latin you to going press Belgium, the in across was rollout talk you countries remembered release. the like to sounds the during is countries you well. different it expansion, international continuing the on then And Okay. go that

kind that of on just little detail could helpful. be provide that, a bit you would overall more If

Kurt Workman

the We're Yeah. everywhere we've that It's global right is out really this true. rolled countries bright adoption that a of thesis data to this information type been The each last been we moved We Belgium, has on and Germany, of at been Nordics. part Europe. We part the launched good. then into We've results. opening year, surprisingly spot great of for launched we're access has now. Eastern Spain, France. seeing the Netherlands, need Italy, beginning business now in parents and the of working that, And seeing up

things got One kind all that, use group shared I and Owlet the from through is is Nordic. Germany The approval. And the product we're in This of seeing that the UK and group is Germany. gives very recommended stamp sell we in baby the positive. and of midwife XX% of data midwives there certificate that the the their reviews of products

Asia we're we're the working So year. expansion America started the just towards and team proud opening, driving to of up results really opening has in area. We South been this that

John Babcock

quick two Thanks Okay. for And guess just then that. I other questions.

that? the FDA changed just of that all? for approval on Just the stock, you us of remind of at timeline can the kind Has OTC

Kurt Workman

Yeah.

getting is priority Owlet. So that clearance stock on top a for OTC

that wants the think to we submission FDA our to is timelines influence on make information the all has I have biggest the sure see.

we everything calls with numerous our that they working and sure meetings always where agency now had and the that feel focus predict assertions progress. because feel months we any last technology submission right the can't making that that's good good So making now few the phone contains the to the we're on We over timelines not right we do is and make about we're FDA, have like want. but

John Babcock

expect about of new on kind the you lastly, just Okay. to if products, kind of And and out just in be commentary kind then overall. just your market any you crib, the products other when can talk just that on of

Kurt Workman

on now. development I really think on from the response the accessories It surveys and in the see prototypes We've and are some We to was prototypes. exciting. of parents office positive so recently of we're products consumer feedback the products the Crib. on really had some the in Crib great those Yeah, our right working

announced the a to feel going it ecosystem, next to going the of camera haven't take that hours the We do And sleep be with date level. yet, of but to and and integrations strong give to parenting for they're we it's parents. Sock like are going the to part a hours the really

have So We call. the of next more update on we're excited should an about it.

John Babcock

Kurt. you, Thank Thank you, Kate. great. Okay,

Operator

Babcock. questions you. waiting you, closing remarks. no the Thank for Thank now Mr. any this conference to additional time. Kate are I'll There at over turn

Kate Scolnick

Kurt, closing you I'll turn it for over any moments. to

Kurt Workman

I launching Sock four the of of parents. phenomenal the difference areas report parents of We big would getting night. their it's of a team lives. just kind I'm proud Dream Owlet. know for really feedback reiterate from for in Dream XX% growth We've less and Duo. always had making five hours sleep at

ecosystem Crib. more about. the the is Having the foundation feel and going can mission's business next that glue of sleep excited we feel secure, journey taking really That's what about expanding retailers for confident all it's great, for the with some about support in of expansion and product to on ecosystem have back excited the internationally. the that really better our sleep. We're and to the parents together do the is great that having medical We're product parenting level more we and to so the families. clearances then anything from help And market our great

call So and today really the everybody build joining company. excited to appreciate to continue the

Operator

participation. for Owlet earnings you That call. your Thank QX the XXXX concludes

You line. your may now disconnect

Owlet (OWLT) 8 Mar 222021 Q4 Earnings call transcript