OWLT - Earnings call transcript Q1 2024

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Operator

Good afternoon. Thank you for attending the Owlet First Quarter 2024 Earnings Call. My name is Cameron and I will be your moderator for today. [Operator Instructions] And I would now like to pass the conference over to your host, Mike Cavanaugh, Investor Relations.

You may proceed.

Mike Cavanaugh

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

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

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

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

call CEO, would over With Workman. our to the to that, I now turn like Kurt

Kurt Workman

earnings is Revenue Harris, Good thank Officer. you joining Thanks, and Mike. joining today's call President Owlet's afternoon, And also today. Chief and on Owlet's Jonathan us everyone, call for

double-digit expansion, and the support improvement cost of and significant sell-through last adjusted year your growth, appreciate with We're Owlet. we margin ongoing starting year. always, over savings EBITDA operating gross off revenue strong As

partnerships integrated go-to-market with we device telehealth now achievements, objectives and sales In owletcare.com. we our have our Wheel launched business our operational business to our significant our to in channels include health QX care met first as addition on medical

announcement a recent and of monitoring in CE infants. leader establishing Europe, clearances to effective authorization endorsement are in our powerful a Medical technology, addition FDA safe for as Our of in health the recent Owlet

and turning year us sustainable vision we robust growth for and a propelling momentum have healthy in XXXX, to believe the of is is discernible every the for baby this main point a We In our market. growth There safe Owlet X objectives. journey company. and

First, with Dream drive the monitor FDA-cleared the first the to now on adoption is Sock. time of market, the significant

the serve of very of insurance we opening who babies approval need and the the to with BabySat, convenience Owlet are reliability directly reimbursement. Second, distribution the medical channels with most

launching sleep and Finally, growing for this newborn. subscription year, we challenges guide and dataset will vast help leveraging when parents be to their they our service through face our new caring health

Officer, Harris, to talk accelerating in first our the medical Jonathan about time I'll and our Chief for over XXXX, areas X the turn sales to adoption Revenue President channels. of new focus

Jonathan Harris

channels. across X.X The our views globe. content witnessed and first XX Sock We've outstanding. passion the And a Thanks, the the we are and building, Kurt. of U.S. enough the of million has but here some start million quarter response Dream I'd the the Kurt companies I'm a some core of of been like GoPro mouth across in as the parental by global engagement strong hypergrowth in have part not just audience. audience social as only FDA-cleared with such our brand momentum storage TikTok the parallels the with for seeing in I've be Jawbone and mentioned, word video sharing and Facebook adoption. organic across new key to to with numerous the their fortunate really and strong to Owlet U.S. strong followers with over over been

with while to Dream early to of satisfaction with exceeding gross QX achieved and this FDA Sock XXXX. and enthusiasm of revenue sell-through growth maintaining growth XX% The billings growth scores trajectory, Customer strong clearance Sock in compared supports this been Dream achieving has response last We growth growth NPS over strong XX XX% including hitting an high category. market XX% year. this over all-time QX the

Here the Owlet and growing Walmart major U.S., in bring expanded life. partnerships with the and our retailers, to merchandising to with experience are Target placements

registries Target grew messaging is the seeing year, increased year-over-year, XX% expecting are versus baby our with we by sell-through over resonating previous at proving at Specifically, XX% our and over list parents.

X% clearance market, Owlet babies is are advantage Sock. home the car announce also CE about of growth Sock health where that significant for positioned We medical way technology the have for will still reach X.X over to beginning very well our at births European significantly. Dream access million I'm in and retail U.K. of year strollers, clearance clearing seats, million just pumps every extremely sell-through it's year, every across to believe breast stages up with and where recently into to born X.X with home. that every Australia, seeing going increase partnerships obtained although baby already we Owlet the European market EU in an Owlet take the of to sensing with the key excited like we're

XXX% retailer, of of over For Bunting, products. we largest year-over-year example, saw baby sell-through Baby increase Owlet Australia's

helping globally Our share partners their story languages. within own markets and in our us are their

continued as regions. device growth on This operating comes Dream Sock discipline. momentum opportunity as a back across of launch expect we the these continuing We medical growth exciting and

operations, acquisition XXX basis We've also lean prior in This CPA gross compensation. XXXX, In excluding per per efficiency to $XX. stock-based XXXX. extends control showing by holding steady disciplined operating roughly margin an improving efficiency quarter, $XX over points over honed we a XX% throughout our our to QX periods, down at million maintained expenses, near impressive compared reduction cost

to this of commitment moving maximizing growth towards All profitability. our demonstrates while decisively

from seen prescribing the BabySat. BabySat Owlet's but effective overwhelmingly babies also care, of also hundreds are to tool, In new a only to that opening similar disease doctor way, been more we've In management pediatricians us Secondly, feedback has we receiving pediatricians positive. BabySat their not remote medical new various under a of informs months, enables powerful The tells is X channels. response which the conditions. monitoring first ongoing

We insurance barriers of with ensuring medical many expand our Adapt distribution when serves We've AdaptHealth need to for BlueCross QX integrated launched can BabySat access most. families in as in our partnership they United this networks, major cornerstone Cigna, channels. market. vital entering Aetna, with removing successfully and all and plans, the including a it

seamlessly and BabySat then through integrated BabySat. submit Parents across with over XXX telehealth device hospitals. of insurers the and private AdaptHealth also to website offering providers is with with We're for a Wheel, also all a nearly We've directly educational for can through fulfillment DME. nationwide get Owlet Adapt's partnerships prescription reimbursement large now adoption with teach-ins services of owletcare.com like streamlining prescription through XX% the the begun verification sales relationships handles force access.

to through to every We hospital. continue expect this this leave we'll with as large will very the take we insurance. a distribution mature, help time to the innovative families offer opportunity but channel In medical they baby us partners some to new as reach technology reimbursed XXXX, add our see necessity,

efforts I'll subscription. product now talk about turn development Kurt our back it with to to over

Kurt Workman

Thanks, Jonathan.

through to subscription our we're driving a our service. new channel expansion, addition also on focused additional In customers value to

kids comfort need and navigate parents to trillion sleep they when and for when for insights can infant XX want by to also to want heart Our information the doctor We're ability baby seamlessly lose in feeds, their health of them They provides and care Parents a home. from baby. X health informed the support. doctor X years that normal get what's we're to Parents can that potential. nights want unlocking want information million capturing stay they home, X deep into personalize information challenges, visits over them help the visit to professional to and that help unparalleled their better share of over sleep when coaching access and first over these know year and XX old. alone, sleep dataset its there's to navigating to the

Health of the fundamental every concerns and sleep are parent.

work beta summer we service creating rapidly, additional an will points subscription monthly offer We for parents support. this this this and analyze subscribe fee. progressing to that the parents families, for can the a is and monthly personalized subscription will valuable real Engineering on and believe to Our pain expect launch recommendations compelling data service address offering.

extend Apart firmly on and sleep in company core leveraging the needs life, in from pain is parents. offering during our expand initial well features, beyond services extend our value to and solutions into focusing products data parents customer. their growth-oriented year data by efficiently We're insights and bringing years believe health significantly to and the Owlet and child's and continued per address can of believe their ever. of points stronger can our of that software toddler parenting our a we drive fundamental the TAM and that position than LTV releases this innovative operating a we

our to you. to poised Thank This a success, We're stakeholders excited technology. and unique the set share are in has with health FDA incredible With for of landmark our continue journey we for established infant we families alike. clearances, you. pioneer this as company circumstances deliver and value

going the to turn now for Kate to I'm financials. the over time

Kathryn Scolnick

were for $X.X billings providing walking quarter I'll joining Product Owlet XX% million, Kurt, and QX returns key today. performance. million, Thank range. over discounts financial everyone of were thanks approximately metrics few next promotions allowance $XX.X $X.X were Gross and you, X% Owlet's In million. first our And average some gross the additional through billings approximately detail. minutes XXXX, financial within us strong reserves up year-over-year. to on and demonstrated the spend

and was to up of revenue, same of year. prior increase over consumer demand million, Dream which products, reflecting year-over-year. an discounts the QX period XX% $XX.X in and Revenue by compared sell-through driven as Sock allowances the net returns growth approximately and in sales promotions, primarily higher includes

revenue last first approximately XX.X% quarter margins gross primarily QX from and direct products XX.X% margin of fulfillment for lower costs. was year. higher due Our the margins Gross to increased year-over-year and in

costs with disruptions from of we're the companies other During some to seeking these working routing. global quarter, we related experienced the shipping mitigate inventory cost elevated Along in expense to alternatives, good impact factors. transportation

lower primarily the of in support a decrease and XX% expenses in million, including representing to spend year-over-year the to G&A approximately $X.X costs transaction decreased compensation Operating stock-based expenses business. operating million, Operating year-over-year. in costs quarter first were due $XX.X

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

quarter net income net the a driven of last fair related $XX.X million gain in $X.X XXXX million operating demonstrating quarter a approximately XXXX. first income Net income stronger QX primarily and to approximately in of year by for First the of was was outstanding. of the loss compared common gain results common over quarter quarter of to value stock in fair in million of approximately company's the $X.X million warrants $X.X stock in approximately a outstanding stock the compared XXXX. first to value warrants decrease the a from This common outstanding warrants of

EBITDA approximately quarter adjusted $X.X from year. XX% loss loss approximately million in first million, QX Adjusted $X.X approximately for was EBITDA of improving of last the

ended financing announced cash equivalents, to QX balance $XX.X Turning with in February. the million million including and sheet. cash $X in the approximately

For year We financial remain on focused our XXXX is being to meet performance working growing here with to to and good commercial the financial initiatives for initiatives strong the XXXX a on growth resources executing to our and strategic on products. customer necessary demand strengthen our the flexibility and further off capital in execute start. FDA-cleared

will from providing specific quarterly revenue guidance. Looking be ahead, refraining we

product the following retail core maximize on activities balance that inventory. globally initiatives. on and and commercialization We business driving sell-through sell-in the executing consumer focused in are Dream continual will Supporting of XXXX

a and perspective, promotions holiday revenue sell-in seasonal linearity Prime QX Day. QX increase From a Mother's for and anticipate to we Day sell from

holiday DME in promotions Following QX, selling retailers in effective with QX. make partnership strides November-December and integration place commercialization on Continuing takes the new seasonal Wheel usually to to for owletcare.com. BabySat

ramping develop reminder, in for in revenue we partnerships will align these XXXX. anticipate we product a and BabySat be will revenue impact as As XXXX

are XX% our in targeting Focusing million operationally operating in $XX business quarter. and between product $XX efficiencies to range towards expenses our XXXX, XX% driving Through compensation excluding gross and to within sustainable million stock-based operations margins profitability. on through target mix operational driving we breakeven per leverage volumes, of unit

that, turn Q&A the call With please I'll open portion. Operator, up the the for questions. to over call

Operator

Thank you.

Instructions] [Operator line session. question question-and-answer Cowen. from is TD Charles with Rhyee the the begin now first will the And of We

Charles Rhyee

Obviously, the wanted strong. gross billings I XX% talk itself. about sounds quarter to very growth the

kind we're obviously, depressed curious, Just sort of coming off levels. of

letter, back warning If compare? you prior levels -- that get how sense FDA to compare were level the to letter I'm a trying to that to -- yet? prewarning would to levels are on just we

Kurt Workman

with on and I QX all question, is but of We're the for levels, closer We're let smart there follow getting really to Kate the that. not to wouldn't growth, we're kind But yes, way back that. thanks we and to this. yet. close. getting I'll Charles, definitely surpass seeing we're say that quite the demand we'll able believe the there. But be seeing we're stock

Kathryn Scolnick

I agree comment and his with Yes, great. to yes,

Kurt Workman

of registry I build of demand updating medical launched that lot hold. seeing We're lot of mouth going just updating to all quarter. of a the say POP at mouth market. we're we of the to registries both word our work doing work take to distribution channels. We're We're word the channels. We're build in the and grow. the doing of beginning and We're seeing devices retail work. QX really ton of building done a programs. And a kind and we're It's have this

first point with direction, right clearance. in of signs quarter the the our kind the FDA the all now and back is in this So market

Charles Rhyee

get able couldn't of why Got sort commentary, and positive really to little kind XXXX event? good you on contribution with fully to product are running -- looking and maybe then? here. on about know you the reason DME BabySat sort it's maybe bit your to a to this the we AdaptHealth side, that a already given of -- physicians that of Kate, guess, benefit Is and expect year. up Any I BabySat a that of of it. talk And a partnership prescribe. more commentary can Are still the Any hear access physicians of see more mentioned sort I

Jonathan Harris

question. Yes, I'll the part, Charles. Yes. the first you for Thank take

integration, we fully QX. prescription. at of Telemed with AdaptHealth launched are our and then we So up Wheel for We with running. the beginning And our launched

insurance we numbers factor. early So see driving the increase stages reimbursement, in we really those that reimbursement, a health seeing dramatically. care of and beginning addition, And are at as are we

as partner, and been So really know, than takes you Adapt medical bit has little a But us the up get community helping care longer fantastic a consumer. and running. health

conservative, so So we're optimistic heading be but going we're definitely and and we're the that, we building feedback far. are to the it direction very where we're we're driving in about hearing

Charles Rhyee

codes apply there's reimbursement for Got to be it. to just that clear, right. BabySat, And existing -- for you're going

You're not the waiting any for new codes of are... creation

Jonathan Harris

insurance that No, totally bringing partners. we're now on What doing correct. is more is just

Charles Rhyee

greater basis, in promotion should going on promotions double me, a about me ahead relative we're And about then, I and sort for XQ, can that revenue think you XQ were Does sort $X.X Day. you promotions Like Mother's how to Kate, remind QX in Awesome. XQ Okay. relative we of about Prime Day perhaps? talked you Obviously, said net in you Can of QX? for level. think million. to have remind of

Kathryn Scolnick

we we on reserve Mother's that Yes. time. have promotions, Usually, when the do usually, what that we've is we talked -- to in it do during is about, a And relates take just timing we just it depends as too, we depending. what get what Day

depending from an can too, standpoint, Prime QX. when swing that sequential the impact also in we is on Day that have a for for load So factor, big

kind I'd -- sequential about to expect to averaged average our say it from we've back see -- or rate the that net, healthy to gross kind the But of we'll growth pretty difference just to have that probably in as QX where So between there. that walk. sequentially, X% on to QX of of being kind run talked on the QX the we've QX. difference we'll a that and But the sorry, that relates just QX

Charles Rhyee

For revenue?

Kathryn Scolnick

for sales. gross Yes,

Charles Rhyee

Yes.

sort any I over-the-counter an relationship shelves? product. work? you FDA something growing, off remind monitoring of just approval Target Masimo product how there thoughts the second a that exclusivity your actually maybe with yourself think, is I talk could right. Could category the you in would you there And a with color Maybe gives market obviously, how Or the Target kind Amazon itself of also sort Is Masimo about sort be Maybe today for because would compare an guys? good if product there then All Okay. maybe us for that? any was and to helpful. would can that of thing perhaps keep against? announcement, the on received of ask, And then be mean

Kurt Workman

year part, the is our We in Charles. products. the jump a you to mentioned Thanks, want in X Europe. -- it this born and leading Yes. announced in million born at then category. just I'll U.S., end. X.X babies We're with it. take We Mark. in built if in first the CE This today, and babies is FDA-cleared market. call Owlet We Jonathan, market created every has the million We're it. there's we're X.X Med expanding the massive

highest of the brand have levels awareness. We

valuable have We set, product. clearance. have an we trusted technology unique We and with FDA believe the most amazing the feature

We're We've footprint with distribution large clearly the also leader category. channel in the partners. developed a

monitors our category validation the in, We every the expect and eventually sensing We Owlet think, need access will technology that sure. will health category I like same health lead category. have the that approvals coming for Masimo other of and is to baby believe that will we in

good So it's a think I sign.

do any addressing parents. also we concerns done, and the going for importantly, category see always Most where we're which driving We're innovation what to leading is we've them. IP

of these across Owlet's placements negotiated one, of with terms other got I'll channels. just and on and Target In of improved distribution we've the -- retailers, Walmart all some finish that these maybe

footprint. largest the have We

any Jonathan, thinking the I brand focus to health the I they're When strongest that's most have and strongest a we'll comments? important awareness reputation. -- we monitor, And thing other definitely on. think in the we buy have Owlet. think about come parents

Jonathan Harris

mouth really our Owlet brand only here the in the on that the relationship of parents word the us. speaking only but are parents, newly and amongst would our and and No. parents partnership in strong, major just not products, driver a strong with using but parents new them and coming also internationally for the U.S. who relationship to driving I retailers, not expand expecting

Charles Rhyee

onetime not through have year the think any guidance. question Great. thoughts of course items, then forward. Kate, you're And trajectories this sort think as you obviously, profitability, of help high-level we in quarter, And move revenue sort formal would terms But one about of of about think this the know giving full I with maybe, you year is just here positive. as and for ex then I you going last really year, been to a maybe folks last

still bucks, couple million sense quarter, we're as profitability This well. be helpful. of down a trajectory a for give maybe us That on would

Kathryn Scolnick

business. out both Yes. starting with see the obviously, And of really with strong -- we to We'd a very for X is like just for we're products. very internationally, core this domestic as like then we feel CE-Mark announced clearances year our our start, which the important well

think I are opportunities important those very So us. to

mentioned, with and in Kurt As going product a be layering new we're subscription. to

we'd I outside year. had of So think We were ahead ahead of headwinds for like specific of last where clearances. those well to waiting be we

some We with that had this repeating do year year anticipate not customers headwinds we last specific well. as

we the where strong more XXXX we and the those in mentioned we're setting with subscription of momentum benefit So summer for for will launch is up revenue the with partnerships opportunities. what setting see and importantly, the But QX be for. XXXX. very in QX double-digit this get what here is growth that up Jonathan beyond BabySat striving telling to

about puts getting EBITDA the of side opportunity, of the in on that us terms adjusted on the the to further going other into excited side. really -- very even profitability focused kind what So we're we're of out

anything the million than it on operating items. There's relates spend, other to some bit around kind trying employee have costs we're costs just We and actual discrete But that this compensation. discretionary. spending maintained the $XX we're a really $XX that, very little and excluding million hiring of control to stock-based to as that's

the that's revenue, where think kicks opportunities move So into the as in. leverage we model of these around that I

revenue. the So we're move through the growth get be and for as into year, really that getting trying ranges there these level we to higher will

Charles Rhyee

the Appreciate everyone. comments. Great. Thanks, all

Operator

Thank you, Charles.

to questions e-mail. received now via Cavanaugh, Mike will hand share some will back We who the over call

Mike Cavanaugh

Thanks, operator.

First stock? question the investor an Kate. is give engaging outreach on please you your how you're investors Owlet Can us in efforts for update and

Kathryn Scolnick

Yes, sure.

growth delivering just about on that talking and results, around as objectives internationally, our channels, results about, and So accomplishments been communicating regulatory we've around that both and talking foremost, operational domestically first execution. our then growing and products, our strong been We've our engagement. is and financial our clearances investor

virtually number both presence, We've QX our and that growing in and conferences here. of been had QX announced we've we've person. in So a

So more head year. opportunities as through look we for the

Mike Cavanaugh

Thanks. Great.

the Can you team. pipeline, question efforts. please plan new growth Next marketing and product discuss terms for new channels in the new of

Jonathan Harris

take that Jonathan. I'll one. Yes, is This

today. of in throughout retailers I answered we a parents. Owlet lot stores over merchandising and reiterating think and our Walmart of in-store parents experience to process we the the newly focus Target to We're this, expecting really expanding X,XXX life but really the on have bring that for

helped Additionally, sharing marketing mind. with provide peace and insights Owlet customers efforts increasing showcasing our parenting focused we're from -- of how on better new parent parents working stories our

really So our of the -- customers. story storytelling and parents the existing sharing

bit AdaptHealth, that medical and, we've full National will to clearance talked for important a continuing parents. and BabySat presently grow BabySat CE We're provide product DME to us direct channels, international, about channels. with in is sales reimbursement partnered with and cases, international which the insurance many our critically well to and strengthen to access as Growing little

their Lastly, extend We life. well into lengthening service products believe the LTV, offering the of subscription our can year their our during toddler parents and child's service, that insight initial and to years firmly beyond. data and value

services. subscription we have distribution partnership a believe here So to on expand we internationally, platform build out and strong channels really continue medical and that our

Mike Cavanaugh

for question And Great. the last team.

are BabySat? with for tell you secure of insurance terms you health where -- working insurer to us providers can in So reimbursement

Jonathan Harris

Yes.

with BabySat and with AdaptHealth Aetna, major United, Cigna, integrated mentioned, networks. product, plans, insurance previously including we our many we've As many BlueCross of through the

to to needs and baby as the expand for focused every integrating ability on DME provider expanding partnerships -- Medicare we're as have the have Medicaid Owlet it. on who So with well our to expanding opportunity and

Mike Cavanaugh

the That is Jonathan. have. we Thanks, Great. all questions

turn to think I final back that, with Workman remarks. for we can over Kurt it

Kurt Workman

Owlet, Thanks, our Mike. exciting been talented team opportunity this and Thanks the like to I'd an are for for we grateful for joining to journey continued thank us support. today. It's take dedication achieved this your just inspiring. commitment is for quarter, milestones and We've strong incredible mission drive significant their demonstrating financial work, to and innovation and our hard continued growth. for performance

As our focused will forward, and partnership. on to you we're again drive performance, we commercial strengthen unwavering we trust innovative quality for to and executing move strategic remain our our solutions, Thank commitment confident to financial that further initiatives and Owlet. team for continue and success your passionate

Operator

That Quarter concludes your Earnings you First XXXX Owlet's Thank the Call. for participation.

Owlet (OWLT) 6 May 242024 Q1 Earnings call transcript