OWLT - Earnings call 3 2023

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Operator

Good afternoon, ladies and gentlemen. Thank you for joining today's Owlet Q3 earnings call. My name is Tia, and I will be your moderator for today's call. [Operator Instructions] I would now like to pass the conference over to your host, Mike Cavanaugh, Investor Relations. Please proceed.

Mike Cavanaugh

you joining thank today. and afternoon, all us for Good for released ended Earlier Incorporated results the today, Owlet financial quarter XXXX. September XX, The the on currently at is company's www.investor.owletcare.com. release website available

Co-Founder this afternoon's Kate Owlet's Kurt Officer; call. Chief Officer, host Financial and Workman, will Scolnick, and Chief Executive

call uncertainties the plans. reminder, this and company's statements to could and results of of and future as statements performance to make some statements are or risks today's forward-looking a management's represent from be statements that operating considered As will cause actual materially including date. Such expectations subject such management those that the on are statements about achievements Any projected. financial different

obligation place these otherwise. forward-looking reliance on revise SEC not result the statements, on forward-looking whether should further as company to matter. new refer undue filings or update undertake events to for information, future guidance a or and You company's any the of Please statements, does not this

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

Kurt Workman

And good afternoon, QX our joining Owlet's XXXX of for I'd a Mike. earnings objectives. with you Thank strategic call. call today to XXXX us like main for reminder start everyone. the Thanks,

provide monitoring announce advanced both access for were that care obtaining through FDA we to for consumer technologies. Owlet monitors; Dream at to Sock driving babies and First, clearances home health FDA their to towards spearheading standards better we our BabySat solutions, clearance In for caregivers medical BabySat thrilled allowing our new and for is breakeven. EBITDA digital device. QX, received consumer and

end under feedback home be this and we year. has a overwhelmingly from available targeting positive, by reminder, babies by BabySat As monitor care for the Early introduction is will market use are been of and pediatricians prescription. doctor's a a with

alert and as display Dream Dream on and for monitor momentum, Health Readings, including for Sock the their Baby's outside lights features will oximetry and solution launching These and infants. we which notifications to if new caregivers oxygen health positive users readings will Sock last alarm announced fall provide pulse Following Sock available be be Dream the level and will sounds existing pulse that and rate soon. with all over-the-counter and first will will new of preset week, medical-grade clearance ranges. Live only infants' saturation

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in growth us Securing catalyze over-the-counter is Owlet X poised to Dream clearance substantial Sock key for dimensions. the for

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with Third care is enhanced health connectivity providers.

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in growth fosters several crucial addition dimensions. innovative This

our distribution BabySat ensuring it First, key and include is Owlet these accessibility readily into we providers institutions, it most. where By to hospitals. DME an solution enhance care. to facilitates network expansion needed of our equipment care is at care critical health medical reaching health technology for channels or available home, broadens durable that distribution needs

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needs honing address high can risk reliability physicians. emphasize challenges. caregivers us mind our on deemed solution infants health solution of of to alike. customer By facing to communicate to presents and allows of a opportunity and medical unique accuracy an to or allows about it BabySat we targeted peace a to This directly. for segment the directly provide of new Third, both in professionals medical technology, precision the offering demographic, and parents this our Owlet

online, about efficient accessible we to our and enable More is to announce information breast similar will to BabySat hospitals working to now website a soon pumps. quick are that partnership access and and

our Additionally, the devices request can is where information Apple on a app additional and physicians on website. available demo

successful the FDA Mark our is with with will on CE remains our believe over non-U.S. to track, translate and submission progressing Internationally, our work and regulators. we relationship

the revenue Revenues I'd at we go-to-market offer Amazon significant some QX like drive quarter color access to signed increased channel. in enable our by an to growth give a approximately announcement will in for Owlet distribution the margin, came significant our with with and and marketing credits $X.X largest the that on strategy gross experienced better in customer, dynamic starting that million. will agreement Owlet drive future to has globally

the as recognized amazon.com the for to impacted arrangement will related in While the recognized end our agreement our QX. timing QX and of be of signed no QX. distributors this began The week was in selling total first transition of revenue amazon.com QX September, the former shipments revenue QX revenue of in October. selling All at was under Amazon

year higher October October were the XXXX. gross For this comparison, in X.Xx gross billings than of in billings

And in combined so volume QX Amazon the this year, already and the we've far QX XX% into year. last we QX in of shipped channel did

head the into finishing with our are we year the believe we holiday addition, the In season. of rest momentum as across channels we strong retail

of sales operating from QX, the and We result adjusted and loss to relatively profitability with flat year. shift QX expenses. objective a remain As loss Amazon focused gross in expected the on exiting sales is adjusted higher QX in optimistic improve our to EBITDA EBITDA

high XX%, customer our every on across grow use brand products. satisfaction usage sell-through reflecting Promoter Scores overall an and reducing Sock of Dream Net maintain our grown health our sock ] with the From focus by strong with our health along continue continues mobile this CAM We've levels. to year ratings channel products. inventory our to [ marketing while multiple CAM and sequentially and quarterly spend perspective, quarter

clearances growing demand efficient for set a Combining Owlet profitable and operating will more FDA business with in in and the with continued growth new future. healthy, base the

and Stoltz From Chief and and impact medical a [ already to have leadership our Jonathan perspective, are Mark working corporate and of insights an expansion in growth to the Mark our ] new President Board excellence Harris Directors, of and [ and QX, operational with drive we the announced closely Owlet's device appointment team and as Jonathan Revenue clearances. with ] strategy Officer. with made

committed to the you BabySat growth Dream move accelerate a we the progress an for continued quarters. I'm of and believe Owlet's, and the efficient profitable will creating foundation and position gap clearances organization. that look through And us the and remain made products Thank the products adoption bridges support we've in as thrilled you and towards of to We home. hospital our your the of the the I between platform continued for FDA forward sustainable our strong we forward. that updating Sock coming about building

On you. that, Kate, over to

Kathryn Scolnick

everyone. highlights his Thank financial number addressed you, good Kurt a our afternoon, overview. and of and

with additional I'll some provide a So color few items and some commentary. repeat financial

as not quarter gross million, third X% selling million include billings of did allowance for and revenue recognized $X.X of October. shipments QX were for distribution the and and $XX XXXX purchasers those in and for returns Product Gross were were discounts XXXX promotions billings. reserves were Amazon $XXX,XXX, any and

of Day inventory recently Prime had support driven X.X% third QX sell-through growth health Dream last Duo. channel offered sales loaded less in sequentially, This Dream were in primarily XXXX. discounting revenues to Dream we year $X.X launched quarter million. a maintain were promotional significant demonstrating revenues of in sell-through to sell-through year, when versus Total had Sock restocking. was consecutive we by up channel QX and July Sock with overall and

gross revenue As selling the year. and a difference QX Kurt timing this basis, QX and both billings Amazon shift year in discussed, of sequentially last a to of from was on in main revenue QX,

macroeconomic have managing lower we with discussed we've the they primarily target revenue inventory reflecting As course across selling retailers year conditions. been the as over balance our of sheet, levels previously,

selling to a revenue ByBy Amazon a We ] [ in and, the with our shift category-leading QX. retailer and Baby as today, discussed October from also had QX bankruptcy in September timing lost

channel We demonstrating again, sequentially anticipate X more efficient and driving XXXX. of efforts focus improvement our parents our for has some of important transition to over X% channels. cost retail an per has total down headwinds been year-to-date. by time, our same the year-to-date across impacted At year XX%. macro business is sell-through improved is quarters held demand we in Sell-through revenue grow reaching QX This in aspect last as Our products. become for sell-through acquisition

in This Cost improvements mix operational million of efficiency, compares price Sequentially, margin XX% year-over-year gross of price improvement lower XX.X% gross to variance QX The improvements revenue, gross prior margin to inventory in outside revenues variance were focus margins purchase was of with were $X.X margins XX.X%. on resulting costs. QX, margin in primarily XXXX. due in and adjustments, in mix. period stable lower the total product costs, in and purchase product and sequentially

committed our our and driving we costs reduction our the warehouse mix, discounts. goal remain through inventory improvement reduce in in optimizations XX% to of to return Moving managing range gross rates of as within with shipping, of and levels, margins margin stabilizing product we XX% and a PPV forward, reducing

$X.X $XX.X million, million, year-over-year. were the stock-based including Operating of representing a quarter decrease $XX.X compensation expenses million in

decrease was Excluding employee-related primarily operating costs expenses stock-based due and operating Year-over-year $X in QX to spend. million. were marketing compensation, expenses

$XX.X year-over-year. the million and was million, in the loss in QX million adjusted net million, quarter was was Adjusted million, loss year-over-year with $X.X compared of QX compared million quarter XXXX. for EBITDA to EBITDA for loss loss $XX.X $XX.X Operating $X.X and $X.X

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

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

we stated move cash remain costs balance to of managing sheet. Turning weeks were use goals approximately We our on focused and our into million. our XXXX. capital the as of of XXXX final equivalents and of Cash $XX.X as September XX,

from the Looking for providing guidance we refrain specific again will ahead, year.

supporting that commercialization, opportunities, our product managing in for and For on activities products focused and areas those therefore, sell-through in towards within and improvement in future Dream and, our the core will in BabySat inventory strides maximize of Sock retail our selling control, making XXXX our plans are are driving achieving we new ramping business that profitability. breakeven operational and efficiently balance core

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

Operator

Charles Instructions] question [Operator Cowen. the The with TD from line first comes of Rhyee

Charles Rhyee

on ask, the Or the progress far. to it? Dream wanted the just shipped, Dream all first, with Sock Congrats with the on that we original was Amazon, packaged then the approval FDA the it is -- quickly that Maybe on so products Sock? new

Kurt Workman

Yes. Great question, Charles.

products The product underlying same app. end FDA-cleared the of is same and the same features year. the that's So The this rolling the has hardware begin cleared will product the between the available out today. towards

So that's FDA-cleared what product current compatible we ship with them was features. the the

a The better margins, main is gross grow reason XP Owlet, for directly more connect our was to like and arrangement to Amazon. that better the shift business provided the for the customers we Amazon felt ability business through with

that really third-party directly. it's sellers to to led So from shift on selling of to kind a transitioning business Amazon Amazon

Charles Rhyee

the Will they been will functionality I kind they Amazon? when to will buy like Or they appreciate to Dream will when look messaging they yes, No, that Sock, was go but curious, Amazon they see they that. purchasing has for what receive this just to so I what approved, go the -- like customers they're see -- additional get and of the looking? that that's differentiator FDA what sock? when when

Kurt Workman

great it's question. Yes, a

already all have of future of that to current their to we've those and our make and customers started will access Sock the it an that message FDA features, all be to around Dream Dream clearance clear customers. So FDA-cleared Sock, and they'll existing

these all and features to on holiday answer Sock compatible year. So the as so out rolling before Dream that question? of FDA-cleared access of that all end into buying same season, the the we're approaching retail channels of working they're that get that we're knows, the with somebody is will Does our messaging, the

Charles Rhyee

Yes, you right? shipped That's and well, the Kurt, can that, I sell-in then maybe volume this You it XX% think, And does. helpful. you you that mentioned as of Kate, said answer and billings I gross year. last in around -- year And from billings QX did think half if last QX back $XX million. back, of you I gross look was the for

that as is think in am to thinking you sold right million that So in $XX way it? right I the of October, of

Kurt Workman

Kate, to one? that you take want

Kathryn Scolnick

Yes.

to of clarification, for Amazon the the where give Just pace that's terms Amazon the an of in business. are regarding just of understanding we

Charles Rhyee

billings gross is the total Not portion. Amazon

Kathryn Scolnick

Yes.

indicate to are pace the of Amazon yes. business, we just where in So

Charles Rhyee

Okay.

kind at going portion, get So kind steeper the normal of should outside that discussed in we sell-in seen the left maybe we'll so that step that is then up So of Amazon in you would sort -- QX? right -- that, fourth QX have of that had instead million of before, kind -- the had look rest of and we're we're the if think $X.X Amazon capturing the piece, it we Amazon quarter? to the we much expect a for it given revenues we more to of

Kathryn Scolnick

think accurate. I that's

Charles Rhyee

Okay.

So then follow up guess I to just that. to

think shift of it? the of year-over-year said you of there of a in to inclusive X% timing, So year, sort sell-in, way increase -- the the when over course was that's is in right that full the is the

Kathryn Scolnick

That's sell-through. The X% was in sell-through.

yes. seen sell-through, So we've

Charles Rhyee

Oh, sell-through.

Kathryn Scolnick

main seeing about of demand what right? really seen Yes. the parents the on and some really the know, from and and really with sell undulation not we've because that's been the that's the it's of focused you we're been, product. in As on retailers. basis, year-over-year And talk -- partnering sell-through indicative the demand, we've as been focus, -- there's the a of To for

other of XXXX this up year into heading both the nicely the next back the of beginning heading sell-through doing sets cost that utilize maybe to while on, what of of rate for of year, getting think decreased it We getting into their -- with than very in also products. half the are out acquisition per other word the really for are seeing, the or industries focused of of terms products, people to customers customers clearances also we've us we amount

with where spending health heading we're that increasing seeing the but back on product fact We that getting our the we sell-through just means we're XXXX. to we're in about into real products were So products. [indiscernible] think less with also that yet prior NPS channel our our

Charles Rhyee

should And that to distribution a Is time. take getting meant because more, announcement talked coverage, giving little working some and getting getting of a the when me. channel think market into Great. an The BabySat, get distribution this explain that all the codes it, of and and kind that way and partner for accelerate that channel. relying devices I would With that time sort on typically takes of stuff, I coming coverage, Or into point those stuff partner we of maybe approvals at tends all question about understand that expect with kind kind and to you to the think about Kurt, last for you? you bit reimbursement maybe for payers.

on accelerate is Just prescribing physicians that what kind the start product. such can that, of to curious the strategy here

Kurt Workman

Yes, great that's a question.

-- how of into challenges market, you Those the are there help the the shipping the fulfilling including kind a do of verification you providers, significant verification, insurance how with One prescription handle to and and for or and are get customers through device all complexities product. prescription medical challenges. several introducing right BabySat

also And kind of seamless will help of complexity feel make of pieces one monitor. take-home Owlet only us partners of We process a reduce help for the those hospitals and it the as us like providers has manage and all faster have help interviewed and space. lots our will distribution back-end that in consumer, the really increase but with that can not significantly different we

excited So it. about we're really

the lot benefits. Owlet's, smartphone, sending expensive, into for are bulky it in The big your the insurance right wireless. intrusive is They're monitors There lives. there new of are wired parents' it's codes in of the already these not less connects monitoring, BabySat sitting opportunity a existing and on it's it's creation we're with so with home that near home code. babies are term that a

helping And the manage all the BabySat insurance so for we of and existing this of United codes that reimbursement -- the the companies is different and gate. eligible partner with across be will States us out carriers

not a the now, So more that. -- new taking excited come, right it's will creating There's that's start. to It's place about but of be we're in market to code. really advantage

Charles Rhyee

Got it.

last one Kate. for sorry, And

Are year? mentioned. end early next early sort kind You on for EBITDA track then -- of breakeven we of year, this of still

Kathryn Scolnick

state can costs profile the we're on it's steady in of operating That's or terms our terms the for in measured operational operations quo over we've running terms of kind been goods, in that. as putting both in margin very optimize terms places of there been but focus we looking how absolutely an business. hurdles We've we've terms We've we're whether been where cost And our as on a regularly we're basis. at still employee expense our the side, there's also is of clearances marketing, within been the in runway, talked of of getting on related things regulatory, additional on based to important status costs. about, focus of the

the to. our piece -- that's to us So next for manage

-- XXXX through going there. continue But to we and want

the next that's like major our in be looks our to business profitably next what So focus earnings talking we call. phase to at and beyond in going XXXX, the start as is growing growing model

Operator

to the turn call e-mail. came to We Mike that will Mike? questions via now over in Cavanaugh

Mike Cavanaugh

that how has into [ play Thank has with care, Buy, purchase mentioned, with go-to-market a we operator. the and received such Kurt health of as List and product, the question DME? now expanding are a into consumer Owlet does Kate, which is, and your Baby you, medical that ] that retailers been Amazon, Best first that strategy

Kurt Workman

Yes. Thanks, Mike.

medical I DME existing channels consumer moving for channels between the the specialty And and big not of our overlap It's new shrink. sites could medical box, all into technologies to e-commerce better think gap timing your kind Owlet baby opportunity. with the and So focus. and with perfect be continues of

opportunities year is recently of one Sock care. into expanding in its roll We're Best acquired exploring that So out BabySat to health next opens conversations addition to new channel up. its capabilities BabySat significantly expand pump and and List each offering, having to [ ] with Baby Dream these breast active Buy DME players a

Mike Cavanaugh

Great.

to clearances of your spend need you revenue And XXXX XXXX? to events? differently what in support Are question. to year the Next expecting from those lift launch are see you products? a FDA this Or they

Kathryn Scolnick

I can take that question.

Kurt Workman

that take to want one? you do Kate,

Kathryn Scolnick

available Yes, sure. product planning BabySat We were year. end the both and the of before making FDA on the the features clearance

are, point, in this minor at improvements I this modest and of we'll think or where come the beyond. year, majority see are benefits revenue but the to we really, yet XXXX

opportunities, available so support support in supporting -- of in see the software those Dream And be we'll readily a that as But within primarily will the the terms the with -- really Sock, end be opportunity XXXX. it will will really will come of those and year. be of it's before

Mike Cavanaugh

question you is, are any Great. competitor Thanks, select your retailers? consumer Kate. The a product launching experiencing impact next at monitoring from

Kurt Workman

Yes.

of establishing is category, Owlet availability category. this our into terms clear in new to. to to novo So this This and Owlet We've monitors forward. dollars have a market category. in going FDA is leader standard are adhere millions benefit leadership, for that our clear and the other invested moving health to a oximeters sets of clearance pulse Owlet's de And

Mike Cavanaugh

is, changed Owlet? monitoring, at And all? the question and long-term for given vision into has next entry remote The patient current that what recent FDA future is your clearances Great.

Kurt Workman

will access a access we baby from we've I home. hospital breast it to pump, goes this but have now Owlet think that the reimbursed monitor just or believe FDA we've a home shared established believe like really recent has clearance. every insurance, this we created car baby before, with health every by seat, to And the to category,

over opportunity drive Our that coming point see is to we'll as both and globally, a tipping that the the years. U.S. in vision significant and

year the in first of of group, this tens And children the spend care the dollars we center U.S., We a in that's think of just years I every of move billions few primary that life. to age triage opportunity can on also become Owlet's know in the for speaks data the provider. set, care believe And that our services to we the parents we platform. data well both clinic create health the the platform into and with positioned and the with home to in our and the home, tremendous from

we much with and right data there's So that's distribution expanding, that's our our growth. regulatory to do approvals, and drive right current can our so our focus now our community, now

Mike Cavanaugh

Great. is do think for eventually -- Sock, a probably Okay. that then be of Or but that this telehealth Kurt, kind the you And you that the next I would to component? do think limited have monitor, question, envision BabySat? would Dream over-the-counter feature

Kurt Workman

interesting and babies. I with With primary life, think to opportunities. have known monitoring the who the will both years it babies So care conditions. BabySat, physicians Dream visits more products health have They'll having is few be and opportunity in first would on million health a to in distinct. With them little home, better bit for at expose the sickness to clinic. focused could help on home Sock, without understand of parents health healthy There's telehealth baby's focus XX triage be partnerships

Mike Cavanaugh

few example? compared has question. map And the product Okay. Band what road previously Crib [ was years one How for with past ] over Great. last to the changed the and shared

Kurt Workman

Yes.

like that mentioned, to opportunity health just monitoring platform their believe a we So well-known patient become companies similar markets. other kind in to of significant the pediatrics, I in there's

expansion with our with to and now U.S. and well the home increase services. for data dramatically monitoring, and Our babies BabySat at-risk in and focus right is for both Sock LTV baby of [indiscernible] both position and Dream Owlet adoption

that providers then extended adoption improving grow CAM strength. want our margins us we for growth healthy that are consumers of from our our And sock LTV. customer lengthening our willing and means gross to and [indiscernible] to so to for And relationship pay allows see increasing for, and us, with

Mike Cavanaugh

received. And questions Thanks, Great. that's Kurt. we all the

back operator, So you. to

Operator

have time Handing closing questions. call for remarks. for over the That the is Kurt all to we

Kurt Workman

Yes.

we you want wrap express today. as every and Just thanks things to each joined who of up, and one us gratitude to I my

milestone Your this most means a news the obviously the lot presence along a probably this exciting milestone, FDA a overcome clearance journey. as is on journey of recent Owlet's business. exciting an And lot.

the better And progress, making the when that pediatric closer one. we're vision our is for strides comes bring promising. it little care, incredibly to of future world of that us our looks driving Owlet and to meaningful care

So your thanks again for once belief Owlet. in and time your

Operator

That concludes call. you. conference today's Thank

now your may lines. disconnect You

Owlet (OWLT) 13 Nov 232023 Q3 Earnings call transcript