Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello and welcome to the Owlet Q1, 2023 Earnings Call.. My name is Elliot, and I will be coordinating the call today. [Operator Instructions].

I now like to hand over to Mike Cavanaugh, Investor Relations. Floor is yours. ahead. go Please

Mike Cavanaugh

is Good Chief us Elliot. afternoon's results thank all Chief Workman, will The you the website Officer, the Thank investors.owletcare.com. Financial Officer; at Earlier afternoon, and today, call. joining Kurt release XXXX. XX, today. ended Co-Founder financial this available Owlet for on quarter company's and you Owlet's March and currently Executive Incorporated host for Scolnick, released Kate

this that a operating considered call some plans. on the will As about and future and are statements statements, company's management statements reminder, results including forward-looking make of the financial

company's the Such or And date be statements, forward-looking information, subject as risks statements. materially should obligation any does Please reliance guidance undertake on otherwise. or refer not could expectations such filings that to those future statements company from management's to of are Any revise place update projected. the undue on and performance this uncertainties forward-looking a SEC different new events statements for these matter. achievements today's result to of or further whether represent cause not as to

Chief With to Kurt and call that, the Kurt? Executive over Officer. will cofounder Owlet's I Workman, now turn

Kurt Workman

earnings joining for for Good thank afternoon, and you Owlet's call. QX, us XXXX

a profitability. Before position and sustainable long-term to in focus the from a is on March. cost and we objectives discipline our with details, on update goal clearance dive operational into our pathway Through products growth last let's our revisit FDA category management, Owlet defining to and

a by run has cost health these to QX deliver improvement and and QX. in towards mission by advance improve XX% from to that significant approximately cutting our in made in XX% infant by our rate these operating progress marketing basis, year-over-year, adjusted value on the loss a resulting year-over-year EBITDA focusing expenses goals per acquisition can and we including on significant reducing believe We shareholders. Owlet objectives, wellness to

revenue sell-through was sequential we in up strong see for channel to see cost demand aggressive these we consumer revenue continue to a as a XX% reductions, QX. Despite perspective, year-over-year typically From QX products. from decline our

QX year-over-year in you reflects large the comparisons first As that for so late QX, Dream impact. last had from our selling Sock initial year, we recall load-ins

managed addition, QX to improving reducing sell-in specifically for In in channel XXXX, stock support we certain levels. channel health goal areas in and our of our

We work improvements. are have do here, but to more we making

strong clearances continue create position more implementing health Overall, cost healthy marketing and consumer towards reductions accelerate channel stronger, continuous efficiencies, in achieving to in and work a a be and growth. we long-term as business will improving eventually achieving favorable while demand sustainable to

Sock. was XX, customer monitored Dream our Dream a launch, Sock QX in the launch, achieved anniversary new appropriate look significant over I of Sock to at progress NPS the heartbeats, made minutes over over thought with XX levels satisfaction. take Dream Sock our past Dream trillion X.X year. As a has high Owlet and of it we've demonstrating sold back Since XXX,XXX

products. our to in a parents showing demonstrating health for one row, market. the brand of the added the considered their Owlet monitoring in last registry wellness the strong also strength for Owlet Additionally, brand year, over in demand and in quarters category remains reputation our multiple XXX,XXX number and the

and here We customer further to-date, our on for feel. Baby have number one monitors ranked Smart Amazon highlighting leadership market

products, from to used life who parents our We've families. of our reinforcing the improve have hundreds also changing stories received of mission lives

into improves the We are health future. infant to safety driving committed and technology that

novo our towards and regulatory QX, approval XXX(k) In to results. focus making de QX product health, channel our on to operating we expenses, and continued rebuilding reestablishing baseline for applications. Turning our progress

partners. on normalizing was in due and our retail QX million QX to intentional inventory $XX both from seasonality $XX.X million, for focus Revenue with down sequentially channel

faced we followed sales shortly BABY, with QX addition, its bankruptcy announced January, a in announcement in growth thereafter. and retailer, large financial after headwinds trouble buybuy In

our take sell-in for channels. headwind specialty this the other aggressively XXXX, Target will will largest channels anticipate transition the Amazon the of be in As time we working demand. We space, Owlet retailer revenue ensure from it this balance for such with as BABY buybuy lost a for are demand and of but to recapture other to Babylist, to

since Sock report indicating introducing QX We sell-through QX last demand in continued to year. our XXXX, are the pleased compared our QX, that for strong XX% Dream was consumer up to products

Additionally, driving on we're through activities. continuing awareness raising and focus to consideration our organic

of with views our over organic content XX In million media. success QX, social saw through video we great

drive We continue expect to this QX. and trend further in growth

anticipated we begin and increase healthier between as to challenges health channel QX, expect QX and we see some unanticipated sequentially to sell-through. in a in balance revenue begin to Following our sell-in and normalize revenue

gross catalysts Specifically in events July. upcoming Prime margin XX.X%. expecting as Day such like Amazon QX, revenue we growth drive QX, Day in are seasonal to was sell-in and In Mother's

margin our and increase hard of gross to it's a and efficiency. continue significant operations dedication team optimize was in the to on Owlet testament and we This sequential as focus work the a

there's to as of work off year. RTV come, stabilizing we efforts we our While towards see the last business the activities more are pleased to following paying

to lowering with shipping XX% forward, warehousing to optimizations and through margins driving returning range, goal our Moving the returns we and inventory improve PPV time discounts. committed of in the remain improvement reduction we XX% our levels to and as our over reduce and in margin gross

committed organization. to expenses, create and a loss million. EBITDA more operating by to from adjusted leaner efficient successfully Our sequentially We adjusted our QX areas $X.X for down more continuing to We than identify efficiency half EBITDA brought loss cutting of our was QX. remain

our an loan in round payback our amended financing and SVB increase QX, closed the March lending eligibility and we to in $XX million in borrowing shared we call, period with our extension we principal to our As agreement asset-based of to base. an include

adjusted forward, late XXXX. support this our FDA EBITDA business position towards the a us cash Combined, the puts get in in ultimately moving will to clearances breakeven enable Owlet and business turning that continue

I'd the like on of received Stock from letter the briefly York noncompliance we New touch Exchange. to

role, We market cure available well continue minimum the options cap $X as as price threshold. the to minimum evaluate to both

to We have cure XX requirement. market the listing capitalization months

be sure to have you updated share. will material to when needs We keep we

to our our submission XXXX, prescription home FDA the We've for through new monitoring made platforms FDA progress who work. that a passport babies device clearances to BabySat be significant regulatory need two towards monitoring. will our in pursuing The for distinct including for Turning available for submissions. is medical

about notification, additional at health health real status baby's receive as the for will enable home. is de to Sock that their notifications medical product to device submission software While Dream a our parents existing novo an time

in and process questions to working promptly FDA review the currently come the or respond that with are We clarifications up. are any to

body a to Additionally, we our filing be in regulatory QX. in European Europe will submission notified

better pleased Owlet. and are long-term to We set Allowing and our tool and us the progress growth the our very critical as parents these clearances home gap here believe and care. a for use opportunities that with data the hospital between growing for achieving navigate unlock further will help large regulatory and pediatric

the include Promoter clearance time fronts. all at with at conclusion, profitability time In remains quarter made brand Score in achievements our highs. Net we and significant FDA towards highs all our health These on our multiple of for goals products progress

stabilized per spend of and and We've reduced cost XX% early acquisition levels. by marketing XXXX

normalizing last and healthier the over QX inventory channel is Our the channel has year, in levels. grown sell-through

track for us business $XX decreased Our on expenses corporate compensation excluding no more spending the has spend putting across year. full on adjusted million than operating to stock-based the

these see a path are products the move organization, believe and agreements forward. pursuing the We've of FDA forward growth towards have the towards that building we're and regulatory and position accelerate gap constant home. profitability. and two clearances. the We And clearances the to critical with we've secured foundation we platform strong path loan profitable have bridges for a creating sustainable submission, us communication been as adoption between confident a We're hospital we capital, our in about will and that FDA and progress that the clear our excited are the be we finally, we efficient on made an renegotiated we

We to journey, while through services confident shareholders. make operational and we our your strategy that look updating parent's products hands lives. our and hold our customers meaningful our focused to executing coming we a As continued forward you their to deliver value quarters. remain Kate, achieving are will and impact long-term on this and over time Thank support. on continuing you. the in you for We to goals, progress on our

Kate Scolnick

discounts. I financial commentary. Thank under everyone. provide items Gross you, Kurt in financial color repeat of good overview. will billings his few promotional a associated with for our and additional million and with for from XXXX some covered sequentially. some $XX.X owlet.com highlights the number were afternoon, quarter first $XXX,XXX, discounts QX down were million, activity promotional primarily QX $XX.X and product retail promotions and of

QX million, for of QX allowances of of quarter in $X.X This quarter to the X.X% gross sequentially revenues $XX.X $X.X and billings. Returns from in Total fourth million, were million, compares of gross a of first billings. in the reserves decrease sequential XXXX $XX XX.X% million were XXXX reserve XXXX.

of inventory promotional XX.X% driven improvement Dream QX, margin in and quarter.The primarily were in declines of gross Sock XX.X% the period margin revenues compared gross resulting activity. in were costs, gross to was price due Total sales and in purchase to primarily Dream improvements revenues Cost prior $X.X of variance by substantial in Duo. in million margin fourth adjustments

stock-based including of of in in of $X.X from expenses compensation Operating million, million which $XX.X million fourth $X.X $XX.X XX% and a million, costs quarter the was quarter. sequential decline transaction were the

costs, Excluding transaction operating stock-based million. were compensation and expenses $XX.X QX

reserves million expense. million compared first Operating loss was expenses of $XX.X debt the operating operating in the in quarter, fourth in due $XX costs, decrease sequential was marketing to $XX.X loss and the with of and quarter bad employee-related The in primarily XXXX. million quarter

Net million EBITDA first for Adjusted to QX sequentially and of QX million, million compared compared XXXX. $XX.X quarter adjusted $XX $XX.X and $X.X $XX.X EBITDA was QX quarter, the million quarter last in with in $XX.X loss million loss XXXX. million for loss of was in the

in delivered Our efficiency our focus improvements management. has expense on operating multi-quarter

later identify to work leverage we We adjusted breakeven as areas will this towards year. continue to EBITDA

and of balance $XX cash as equivalents million. were our to March XXXX, Turning approximately XX, sheet, cash

time, the structure cash and February, continue capital to while to extend brand cost execute raised overall our same initiatives, growth build can the With our reducing our additional at runway. our in on we

more and providing visibility Looking to both we ahead, the as around to selling year for retailers revenue a refrain software parents, healthy again approaching believe from is we which balance. will guidance specific

to Day are QX said, Prime sell-through than Kurt As prior to a improve more cautious anticipate due approach years to ensure holiday QX inventories. we sequentially revenues channel and promotional although a sell-in, from we balance with taking

to expense continuing on are controls. focus We operating

be stock-based compensation. expenses including to million, or forecasting are flat in relatively to $XX.X We QX million $XX approximately

the determination Owlet's leadership parents our in globally. -- empower more to

business and core in our the that are will medical and in selling opportunities, areas achieving activities control, we for the are on therefore, sell-through breakeven For retail our inventory and efficiently our core and device in strides balance clearances, making of supporting our XXXX within plan managing operational towards products, that focused future maximize profitability. driving

Thank questions. open you for up the please Operator, for today. call time let's your

Operator

from first with Our Instructions] [Operator TD you. question Thank comes Charles Cowen. Rhyee

open. is line Your

Charles Rhyee

Yes. give bit give what take us a to Is the still dynamics the the with Thanks just still then that to time the impact sales And of materialize. on. channel inventory are that some -- for there? said questions. will sort bankruptcy. they're your specifically? you for wanted little that you on buybuy stores the sense us the start retailer this -- for of going Maybe color of and you impact because I Baby could percent go taking through more if or operating the a Can that it

Kurt Workman

question. Great

buybuy Baby is largest retailer. fourth our I think

-- has said, Owlet so the largest our customer channel, of assisted independent much of because the awareness Baby terms fantastic They were awareness category. considered, in larger there contributions retailer So not not in product a customer it. in in is insignificant, one That and of retailer our was Buybuy that specialty also the education the specialty revenue. but highly I space. is key so around think

outside research of parents will quite deciding in. of So do actually then most channel purchase a which before of channels to the time, bit

to will liquidating think the Target, new to demand effect and channels. channels so, Baby going QX, very that long-term be into Amazon, to QX will I take in have will shift I time do with from And think buybuy in Babylist, be specifically it And as other some opportunities. changes channel inventory, demand resilient channels, will pull-in we through to mix. then bring some other aggressively that channel that QX, back we're other for work get to like so

partner. liquidation inventory with headwinds new their some finding are and there short-term, consumers So shopping

continue about will as doing play category this continues well. Amazon Babylist to specifically Target, a with demand. long-term, grow, a new capture to role to think and And big what great excited I and a experience this is we'll we're will partners. shopping we're channel, reinforce as hoping grow

Charles Rhyee

When not the a retailer Is that situation, retailer as of headwind going that rest with your the just get in businesses right to it? inventory -- of they're to think and the kind liquidates the that's way this to down. revenue winding So into the sell-in year. XQ of we're

Kurt Workman

Yeah. That's right.

So sell-in balanced the sell-through revenue. balanced QX with be in in terms -- won't won't sell-in be the of

year, that As on change I move hand calculation demand start we'll think we some to based channels. will we the and start for to shift other the other throughout rest that of see of as inventory retailers,

pick we that their to with buybuy of some move as And hope -- Baby so, other sell-in going business? revenue we as to be starts into channels able up sell-through to out of

Charles Rhyee

impact all ability adjusted view? Okay. breakeven your to year-end reach by in at this Does your EBITDA

Kurt Workman

on we pass to do but still it that question. Kate answer think I over are that, to track to I'll

Kate Scolnick

Yeah. year, I with maximize it's successful. obviously the but think I QX with have presence owlet.com. a mean, We've we we signal an our some that in have what headwind here additional We one opportunity very prime the own been May. have lot likes with additional accomplish coming see in Amazon with we're with to experimenting to holidays ways been opportunity that's a to up. we And online trying have of this that no

lot a successful half the as with be starting especially that's the we back the see to we to is this So, as year, opportunity into of head momentum sell-through. there of improve

that a headwind try now that not understand signal overcome. least that So a we'll but we at wanted, it's we to

Charles Rhyee

of And sounds Can being me. The here. Great. a the -- really basis, sequentially, pretty right what a up get revenue now? us that we inventory, maybe terms on once impressive is sense on kind give brand last a what XX% we question sense selling sell-through of of of you for looks like what -- to power could on give balance kind real us the the the in

Kurt Workman

that want that? to you do to me do want or take Kate, take you

Kate Scolnick

ahead, Go Kurt.

Kurt Workman

Yeah. Okay.

into track. sell-in that, our sell-through of I booked we the QX is levels. So is what healthy say inventory would in cost that held efficiency in that the significantly that we've continue across and QX, to a again we per business, Overall as sell-through, rebalance we'll and mind our this year. maintain outpaced keeping believe acquisition And kind we reduced on from QX

XX% healthy promotional really to Generally, a in that. feel on we with So QX sees based XX% activity. sell-through decline

QX, of So then then and as and holidays in as from move we'll we then into in QX QX. were an we QX, sort increase have reported in that and QX you we see the finding ballpark

revenue we baseline So like got year. feel the profitability to to we've get this

Charles Rhyee

Thanks. Okay. Great. I there. will stop

Operator

thank This like for is all to the you We'd questions participation. time we today. your have for

You may now your lines. disconnect

Owlet (OWLT) 11 May 232023 Q1 Earnings call transcript