OWLT - Earnings call transcript Q4 2023

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Operator

Hello, everyone. Thank you for attending today's Owlet Fourth quarter 2023 Earnings Call. My name is Sierra, and I will be your moderator for today.

All lines will be muted during the prepared remarks of our management team with an opportunity for questions and answers at the end. [Operator Instructions] I would now like to pass the conference over to our host, Mike Cavanaugh, Investor Relations.

Mike Cavanaugh

good for and Owlet, and joining you operator, today us Inc. you, afternoon, thank everyone, for Thank Fourth Quarter XXXX Earnings Call. We in appreciate our interest company. your time and and XX, Earlier year Owlet released results the today, financial ended XXXX. quarter December for full The www.investors.owletcare.com. at company's currently release available is the website on

and today's will Officer; provide begin and overview our Scolnick, speakers with Chief for Owlet's key and Financial of our review performance by detailed will are an a call Our our Kate, developments Workman, Chief Kurt Co-Founder results. Executive Kate Kurt who followed Officer. of financial

your their will Following we open remarks, the call for questions.

of now and by assumes no from new get the and update like based today's on we December that uncertainties With note company Risk subject only remind whether statements the discussion These expectations. SEC participants are fiscal statements are Before that started, for we'd forward-looking current that predictions any as XX, forward-looking XXXX. annual risks ended will certain contain a and Form to most to but except events our that, Factors limited call are required to obligation and the filings turn year the to These statements or or Kurt as I differ actual by implied to otherwise, our statements. not include, future information, could cause in risks recent results uncertainties Workman. described those the of expressed result and would XX-K over Please with those in materially like section CEO, report to law. to, our such

Kurt Workman

of set FDA achieve our breakeven XXXX transformative that deeply was Owlet's joining health key adjusted all EBITDA earnings I'm community importance accomplishments in and These goals: year revitalize partners secure and everyone, mission XXXX and product clearances, afternoon, dedication, our Good to team's for X you and achieved a health. for believe the pleased We Owlet. with thank incredibly a professionals near that large channel of announce exiting are parents, testament of our Owlet. we out and call. strength portfolio to X. the the

Most XXXX. importantly growth though, for substantial achievements Owlet these in position

me each. talk let Now about

Our Sock BabySat features, consumer a for redesigned medical-grade was the for we by Dream health and clearance recent Owlet. the pivotal launching with monitoring and redefined business FDA and moment market

Let why me explain so this is significant.

around purchasing removes and it the clearance First, and FDA of the regulatory our efficacy concerns addressed customer key obstacles. firmly. products status

protect live health for Specifically comfort as in Dream to during vital we excited QX giving over prior children. responded report that sell-through to their the doubling parents and and period I'm in kind periods. of alarms, features as Sock and holiday recent Dream our maintain to double-digit sell-through continued Sock, displays parents medical-grade added evidenced has such And by monitor to sign growth the wishing our

trusted hospital-grade leadership. our allowing distinguishing in also and category. solidifies now who comparisons is us apart technology. further first category Setting sound FDA-cleared and draw Owlet are it to and its direct video competitors to consumer Second, products the only basic traditional us monitors, market baby from our monitor from

also increase our consumer Third, care our of solutions medical the to monitoring into new traditional pediatricians it monitoring the way our the with for health that strengthen channels distribution, and crib. increase and medical higher-risk margins. brands opened of Owlet These and hospital going to enter These prescribe the for distribution, of the instead improve risk standard us for clunky improved intrusive BabySat market wires babies. pave to clearances allowing expansion. care It product allows

launch operating in costs. eliminating Alongside actions vendors nearly combination our XXXX, and of Sock dramatically unnecessary success, strategic FDA reduced a we consolidating XX%, the improved financial of by we've efficiency. expenses Through including since Dream

able marketing those done by to expenses same still was in behind the frame, marketing this levels clearances. time driving And channels credibility specific a focusing we've spend reduced and targeted initiative our leveraging product sell-through FDA increase been significantly our effectively XXXX. XX% over maintain in and on we Over on satisfaction by partnerships, while media, XX%, social

our million without Our parents. XXX in marketing X.X unique growth team video XXXX significant drove marketing that views over following and increasing spend. demonstrate we media social FDA post improvement and can year-over-year increased sell-through The to million grow clearance significantly

XX% changes, XP. during These basis onboarding our warehouse and We improving improvement of also in a due have delivered operational QX, year to were our of the would margins PPV were positive onetime XX% The out partners and margins not small mix, former our achievements and for impact if team. point significant the operations improvement adjusted channel X,XXX improved to gross EBITDA Amazon reduction the going business. year-over-year in Amazon of for over

An sell-through channel weeks distribution XP. doors on We in additional Amazon a year-over-year. of These Key XXXX, health. channel brought getting and expense improves breakeven Amazon, we sell-through Target reductions fueled on most added hand Stores Buy near and to combined onboarded intensely of efforts and marketing significant reduction, of Duo in start our over Best the Dream the Walmart and focused position. product channels margin At Walmart operating XXX efficiency EBITDA improvement adjusted XXX% to to position all in history. Owlet saw X like our while healthier Sock growth in efficient

improve The channel sell-through needed helps at our fuel combined to sales the retail. effort health

with weeks from on healthy. We on beginning us to weeks sell-through Overall, while hand also weeks up our and XXXX, setting XXXX XXXX. overcoming levels. in second bankruptcy the with over our of the reducing where growth for liquidation navigated in strong on revenue temporarily we channels. this now Baby XX% addressed across imbalanced are manageable international even half, impacted retailers buybuy by hand Owlet hand other the improved strong inventory Overall,

the of clearance. sales best strong operations level inventory, portfolio product healthy we As XXXX, scalable the and Owlet in enter momentum, has channel industry, FDA

our maintaining efficiency and presence, discipline. focused while We're distribution, elevating financial now on operational all and expanding medical rapidly retail our

unlock important market access. to X of eyeing and growth we're addition, In milestones further us ahead

medical XXXX CE momentum focus open for early continued European expansion. and European clearance, new propel a markets. will First,

enable home. to of software new better work with new and care between be in at parents and to empower in that services and will Second, now XXXX. use Owlet insights perseverance XXXX. revenue Providers services. team's theme loop will this data XXXX done story developing And These care the our software and to and proud margin behind introduced health the services and and new I'm be the better our home. began are will close incredibly shape in amazing our able

partners Dream in Sock dedication million $X.X our need. over of the in mission empower This challenging our evident donation worth was during families times. Our parents to our fuels foundation to of

XXX In fundraising support in partners little parents where raised for which Owlet SIDS for addition, Research, over these our [indiscernible] and over and donated parents' precious ones. of memory trees $XXX,XXX greeting

took I'm We most, of that are dedicated to times. the for back and pulling growth the incredibly the to unlocked opportunity Owlet excited need difficult while serving team XXXX we've and about and I'm grateful and very Owlet also the proud give families communities time who through beyond.

this community been years over I've journey XX Owlet for in you, I over has million tell and X market a parents never of on been position. now, better and Owlet can our with

you. financial Thank now. highlights. over for Kate, is time to Our you the

Kathryn Scolnick

platform. and next and today. details. joining key Kurt, financial few financial QX were strong walking some Amazon were metrics to for Owlet Gross through providing thanks Product XXXX, business and spend us minutes were our quarter In million. allowances fourth million related million billings of performance. demonstrated Within $X.X everyone promotions returns transition additional the million. reserved Thank the the on $X.X $XX.X you, and the was $X.X and this, I'll discounts to

the outpaced into discounts million. the returns Excluding and to and $XX.X our year course sales Gross into to and year-end. allowances excludes the billings for was discounts, Amazon XXXX, to sell-in which full Revenue, healthy their excludes within XXXX were the bringing through partners during had gross excess our revenue, a able balance range. were million. inventory, of $XX sell-through $XX were approximately year, by consumers billings, sell-through average sell-in X% QX Entering work sales distributors million. which was our return in returns on platform, of

QX sell-through the top XXXX We XX% quarter year-over-year increasing sequentially, units XXXX. consecutive sell-through were ended a overall up demonstrating X retailers. growth at in XX% of sell-through fourth with

the quarter XX.X% was margin was in over from significant a XX.X%, same over XX%, Gross a XX.X% margin XXXX. year last increase from significant period fourth improvement for of year. the gross margins for XXXX Our the full

also Our reduce been mix We've working sold strategy sales is We've to multifaceted. been our where have to year-over-year. been million focused expand better our a $X.X margins diligently gross of with strategy. shipping the including and and possible, stock-based promotional million, XX% goods cost our warehouse including fourth and quarter optimizing improving on $XX of were our Operating in representing improving million, processes. of terms decrease suppliers, $XX.X compensation negotiating expenses product our

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

regarding former Amazon net Within these for accounted distribution our we expense $X.X partners. expenses, bad a million debt

full the million operating For including a $X.X of stock-based million, compensation were year, $XX.X $XX.X million, year-over-year. representing decrease XX% of expenses

stock-based were XXXX Excluding compensation, expenses $XX.X operating million.

employee-related in was operating business. in marketing spend. was to primarily net for million Owlet's XXXX. in quarter, expenses progress $X.X quarter decrease from Fourth the costs shift important million profitability due $XX.X an measurable XX% and year-over-year is loss towards The The operating XXXX financial a decrease for QX

XX% quarter $XX.X net from million, loss year, was million full Adjusted the of fourth year-over-year. a decrease the was $X.X million million, $XX.X EBITDA For down year-over-year. loss $XX.X for approximately

loss was EBITDA million to in $XX.X $XX.X the XXXX. year, compared For adjusted full million

February, of in flexibility XXXX with announced necessary in resources our customer $X to in cash with with demand terms capital we growing million good and ended million equivalents, for working flow, the balance meet financial cash growth initiatives our the to FDA-cleared In and the recent year and $XX.X sheet year coupled products. financing beginning we're cash invest our

believe executing initiatives growth, continue controlled commercial XXXX start. a on expense performance gross XXXX. value. financial focused revenue is drive sustained off and further remain can to management, We strategic strong we With strengthen we shareholder to in margins to our our and

providing we specific ahead, from again quarterly Looking refrain guidance. will

promotions Dream We particularly a continual core balance of a and sell-in seasonal from business QX, anticipate and Amazon followed maximize are on in sell-through Day by commercialization QX linearity Day. sequentially holiday inventory. the XP sell-in perspective, with strong a past focused we will Prime and sell-in with on that QX, supporting in product from QX sales From XXXX activities Mother's executing retail and strong driving the step-down

With holiday we strides DME November-December DME Making the our long-term new XXXX XX% develop sell-in revenue will take in within target ramping place and XXXX. begin driving ramping are targeting that, model we QX. our to I for gross revenue in partnerships, $XX unit profitability, and the questions. to the with please excluding BabySat and usually promotions quarter. million partnerships margins portion. operational BabySat of for Driving and in call half to product compensation the range $XX commercialization important impact aligned XX% Second sustainable ongoing as our Q&A open through turn operating efficiencies volume, operational over between will and mix million towards expenses Operator, call breakeven and planning per stock-based up

Operator

We will the session. now begin Q&A

[Operator Instructions]

comes Our Cowen. Charles TD first question Rhyee with from

Charles Rhyee

or Amazon this a real congratulations, on Amazon. strong importance And end maybe little the selling the you for the step bit guys, why year touch And view direct What's do here. the Kurt, to company? on why we significant of as forward of Obviously, a just that? -- Kate should here.

Kurt Workman

Charles, Thanks, for the Yes. question.

the channel, revenue things to Amazon. something I of that largest is through big of is to our driven XX% think one note our Amazon is close

and to been help for Amazon the some for a And fulfillment is sellers Amazon process. then also with important of manage this compliance with we've third-party they And us. marketing on helped traditionally, So working really logistics on channel the with us. Amazon's

every in kind top top work that of kind in XXXX, the the one was As working of that about Owlet with we worried the top brands progress getting they realized at growing. us, into We're the were the in was every category. partners' time, the And we of healthier that a Amazon baby We with financial approached they And usually weren't category, strength. the Owlet some brands of position. XX sell-through brands through same category.

stability, financial through we're third-party so the it economics than better going about what distribution. opportunity, unit And margins, better provides through the better Amazon are excited really is

We as placements us our of get advertising better and marketing that agreement elevation. additional part for give

that one better much that And the to see a growth XXXX. the then lot specifically clearances, business combining into as with move And profile is we within channel expect this so all FDA puts for of of in. a we that combined channel margin

Charles Rhyee

us or begin available just an the just [indiscernible] update with you're landscape. -- the maybe in that's there obviously, only seeing bit maybe give and about Yes. market. a of Maybe you're And the product stores. a talk has the in out clearance, little the on I FDA-cleared product rest competitive know what

Kurt Workman

FDA. had would confusion our Yes. with concern the #X was QX around customers the the say heading into I

And Owlet approval parents case only FDA-cleared over-the-counter no that so monitor being to empower directly over-the-counter that's and to and with information. use, retail FDA health first still the has this able monitor is all through to announce the that There's channels for other sell today.

So opened has The Owlet position, up we the result that healthy. it top of of been pretty as and that is the of saw really awareness Owlet around is funnel. that in been what funnel the bottom The good. has a

and period Owlet responded. that that been press this excited this we for really very during with clearly why That's for the to about We're FDA-approved? and And just opportunity. in there's were messaging buy is Should my And sell-through our that that that. I specific mark holiday answer question around QX, doubled year-over-year they around consumers able baby?

been a new into this category. I Owlet's think year, put

only are on shelves. monitor the FDA-cleared We

about Our labeling, are We're the retail more really is differentiating space. really, competition. from which exciting. our giving that. do excited really through Owlet partners shelf They're able marketing that and Owlet They're to

the to increase that Owlet to we was XXXX. in monitor the and distance expect what seeing in #X we're So continue is category,

Charles Rhyee

quickly. great. distributor. a give little one partnered with more an us This switching that? -- to maybe That's medical bit had already give you partnering one, BabySat you've there. direct a over bit there Maybe detail I with equipment talked had you've I selected you or Maybe little where think with a about at you're been think update one, us

Kurt Workman

Yes, insurance the the the nationwide United of announced national is a of the AdaptHealth beginning a we throughout They're of partnered devices. with big January. payer hospitals medical at States. We -- partnership They have course. of Adapt portion with a country. in distributor in every relationships

integrated to partner BabySat experience that our checkout website for with they're a customers. is to and our through our And sell with insurance they've so with to perfect begin all website go the so as integrating market there's Owlet we companies, for seamless the

the They verification. all insurance do all of the verification, prescription

things more group got channel to obviously You've hospitals. really It's that Owlet bit But about that a time takes partnership. that a we're build, are move sales of of sales taking excited a now a little bit reps slowly. to hundreds of little

we're out into medical partnerships You'll every announced medical about distribution, hear really first more as excited building probably that quarter this year this step but we're distribution.

Charles Rhyee

Great.

more questions And sorry, me. maybe X for

you here. on The kind where on into moved first update early give of -- Europe international. before us of That's some you things kind on one the that Maybe of got an distinction delayed are the that when product? over-the-counter Or is get on product? a is you Just And on CE there. prescription the Mark, an for curious the for Mark. CE that

Kurt Workman

of an product. we for for bit over-the-counter It's in -- over-the-counter prescription have their Europe question. a terms oximetry is tier pulse there. Good little different

channels specifically expanded only through the our for same we've retail that funnel. and think distribution sell medical of have bottom it get that we'll to the of but up is going there. to able the And be but it the can a opening over-the-counter not You thing, over-the-counter have all on an working product, we've use, it's distribution also with on, up the been impact huge we part set

worked this a conversion is we We've years going more hard additional and believe drive build to for awareness, to opportunities. partnership few and

clearance. lot a and did of feel we lot getting we close clearances, the to steps of to the FDA in a studies of that like final it. the very We've able we're kind leverage we're and been So work to for

Charles Rhyee

about adjusted particularly and EBITDA you're Kate, profitability the really items per you margins of question, XX% of kind It and out maybe been would look gross Great. thinking would quarter. could but onetime the guidance the through of we margins the to I north to that move margin know us were help like of sort kind at you're forward look here? not you with how progression have And how maybe and think shift of of positive se, for Amazon. of -- last back sort sort giving we if here noted kind my quarter

Kathryn Scolnick

Yes.

trajectory looking long-term have the we we're the that model said, our at between we're and to margins XX%. through to year. I is What for get really trying XX% As

just Some being year, with as just with talked kind given up the about we undulation holidays from volumes Prime a pace the the of of the and it QX ramps the then Days. in through comes QX QX, step-down QX the different as promotions in and

towards gravitation we we're is product. what to more that the That have margins. think Sock I obviously it that product So seeing [indiscernible] as our relates is

a there mix benefit. is towards So moving

will the further mentioned, be out further to margin well. into that as ramps Looking out, XXXX, BabySat I as as model benefit

adjusted relates not changing In to we're expense. it of EBITDA, as our terms profile

So between million the see at on per revenue of being we'll expense lands the excluding looking way, to where model stock-based quarter, $XX compensation, improving, in we're that $XX operating leverage quarter, depending that too. million kind each

is sustainably expense taking we goal be to did as that made profitable XXXX benefits in of much Our we company and as in [indiscernible] a out.

momentum lose want don't We that to we have. that

So profitability to company that the focused if sustainable towards on products that independent get beyond the a will, this lens. year capital over really the to in make growth, growth revenue is have opportunities that this being you to having XXXX us put and we working company line, that our with that a FDA-cleared will

improvement what go So some we still XXXX, in through but as you'll to see the do work I that is continues think year.

Charles Rhyee

one here. more That's sorry, great. maybe I'm

quarter opening fourth you give of like and we far? so sense talked a you the trend what the that saw the Can still the first double here at on looks on us funnel, that in You of quarter. kind seeing... about bottom the sell-through Are in

Kurt Workman

a for first growth definitely Dream the really of that's mix but part is is quarter starting the say of and hasn't that. in been Sock, double-digit would of double Duo year-over-year outperform I close which XXXX, it to we've to Yes, seen sales kind

sell-through really lift So we promising. seen have sustained that's

can on into and we significant. we As build XXXX, it's go

Operator

There are no further questions in queue.

conference now e-mail. So the via over I back in to questions will Mike came for pass that further Cavanaugh

Mike Cavanaugh

Yes, much, we during some today. investors of very from Thanks investors share retail -- questions we Q&A received session the to that operator. particularly have we wanted some and did our

the us congratulations conditions one, correlation identify medical various Are the So quality? the heartbeats. extensive compared for product tell the efforts of can XX set competitors trillion what and potential be map first FDA about data should considering to to that an your some and team between and clearances you heartbeats road And both [indiscernible] sleep there products other you? like or on advantage

Kurt Workman

being I'll this a of sets and Yes, for potential one. of a We've infant one largest take our data technology in Yes, fantastic We've the Owlet from team. consumer been limitations health time home and we of has that the drive science data at limited is the the device data just really known can long space. and and immense. being consumer those around insights years a value our for device

we technology this That's part So parents to really for now data of with FDA providers. clearance, a and and unleash can start our year. big

software little I services. about and talked bit a

is X area momentum So to things. we're in to our and and really and It's focus software medical that XXXX data. in of the leverage drive Owlet's launching devices, seeing services adoption our

here focusing margin Owlet's do just on really So and babies those the growth believe globally. born long-term scratching revenue surface potential. about We're significant as of million areas XXX we with by we X specific that there's progress

be more more. about. more sharing for tuned stay that area and is a exciting This we'll So really

Mike Cavanaugh

offering. the the Okay. Thanks, participation in clearly That forward. Owlet the as of as as Eclipse the active question, from next strong The an appreciate confidence recent well investor, support and demonstrates going Board Kurt. I

on current XX% push And total value? have public Owlet you to float best build environment, the and any then the With of thoughts shares, stick way the from the forward macro does do in only out others? how shareholder about at

Kathryn Scolnick

can take that Yes, I question.

banking to As drawn by and they've We've markets, cap and been seems our company, time. the support what partners. our be period trade along micro had I since like over capital impacted of think of out financial others, the a largest especially investors of conditions a long continued with we've these

execute been our against we've able vision. and to So mission to also continue

been business even against these today think in in has I really and accomplishments support ability deliver us plans set XXXX. to helpful up spent just this more time for our and discussing success operational we've XXXX in our that

that the about XXXX the we for also value build position So us shareholder execution is believe right the last to in what year now. continue executional and that talked of puts best plans to we

Mike Cavanaugh

And question, Owlet is Next India launch what in the plan that? time potential countries? does to if or so, Asian for line other

Kurt Workman

mentioned work across it them year, single the child's clearance. But and proud very born, that the I that's really there their been parents safety needs. parenting good XXX babies baby a near-term we're doesn't and about focus. your to million there, -- has the every and I'm of close Yes, team's world born There's [indiscernible] on sleep. universal being where night's their really health able matter care get is and are

technology really really the this. our opportunities so We're to impact And have globe. across has excited an big about

Europe. There's In specific up on device Owlet's is we'll coming XXXX, of geographies open focus of for and room there, growth in in lot our then a years. medical other expansion

Mike Cavanaugh

Thanks, Kurt. Great.

Next influencer in type the future? and important [indiscernible] target of marketing? is question, the given we of social market, expect celebrity media can Owlet's Owlet the And marketing how demographic

Kurt Workman

able their intervene the had impact. stories big emotional have a oxygen about time, parents, getting communities. really messages child to and story, they that Owlet a those resonate And journey large parenting, the put content us creative meet that with spend Owlet to detecting with in the baby we've very hard shining emphasis include really or example one work stories for on really and around strategy their that and TikTok is place, where parents the at they're or those health parent stories And in we put fun recently low out So being content time. into that channels serious them in the

in and stories user-generated We've even included of and lot about Owlet a partner Owlet had a about story, their they and song it. somebody wrote child

meaningful on engagement work with views a hit stories XXX connection And a to want very of video authentic lot year. obvious million real we And parents. social, it's last parents and and be able that And so we examples telling do over products behind to do cutting awareness our to real-life big our brand growing our also It's while a always that Owlet. been and the and is part being word of marketing mouth expenses. of and

opportunities of are lot and And who love Owlet a with of that. absolutely lot share celebrities there because a So they use product. organically Owlet the about

And resonates so we best like with that feel approach that's the the parents.

Mike Cavanaugh

Great. that have right. All the the received. year. to I noticed relations we it? we speak Can public final was is that strategy one there question of firm And a the PR end that firm towards and you hired behind

Kurt Workman

Yes. I only a say again, would just simply first in Owlet really, and position. that we're

FDA a We the that's by articles to today engaging the and at message, cleaning only why PR reason fantastic a market we're and that we're few had of sell-through. thanks taking this lift market the that's existed. our hundreds And written parents team and driving distribution for organic that We've any up that's Owlet months. in awareness approved in social are Millions first in of advantage in monitor last confusion with doing over-the-counter the big job. just of seeing

available know now is option. we're and position Owlet that the People in that best

is this for us. a So year massive

Mike Cavanaugh

right. All

supplemental for questions. Operator? think I that's it our

Operator

Kurt closing Thank the you. conference I will remarks. for now Workman to over pass

Kurt Workman

Thank you. Yes.

and further achieving that We're opportunities our the footprint, about profitability. excited operating we're ahead, leverage driving look focused expanding product ahead of on us. growth, revenue we are improving As

this deliver to to to to to regulatory and I and employees you. has in continue Thank our instrumental designed vision value to in commitment to and our our and sincere our gratitude and introductions strategies dedicated for are successes unwavering recent and their product our capitalize loyalty mission want clients your our been our belief year. initiatives achievements shareholders. In to my our support on past express shareholders, and Our conclusion,

of momentum XXXX, are with once and journey our progress look again lives. on call energized we're support continue As you live children this for our and to We're to long, Thank your and built, all helping and forward of the we joining by committed that we've our healthy today. happy excited to you. we us for continued mission

Operator

today's conference you conclude for your all participation. will That Thank call.

now disconnect lines. may You your

Owlet (OWLT) 7 Mar 242023 Q4 Earnings call transcript