OWLT - Earnings call transcript Q3 2024

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Operator

Thank you for standing by, and good afternoon. Thank you for attending today's Owlet Q3 '24 Financial Results Conference Call. My name is Regan, and I will be your moderator today. [Operator Instructions] I would now like to pass the conference over to our host, Jay Gentzkow, Vice President of Investor Relations. Jay, you may now proceed.

Jay Gentzkow

thank joining and everyone, afternoon, you us. for Good results third quarter today, Owlet September the financial released Earlier ended for XX, XXXX. be Jonathan Chief I'm Co-Founder Twede to joined Kurt CFO. by pleased Workman, Crawford, and our CEO; Officer; Harris, Revenue and President and Amanda today Owlet's

link slides also slides under prior at It Investor begin, Owlet. call. presentation is replay consent. is the months the and This webcast a Presentations of call same website. our note of our this Events will website for cannot release please this webcast at call on The be following we our The financial accompanying & to today's Before press property live for content with call Relations reproduced of be or investors.owletcare.com. available the without results XX being that and transcribed referred are available section

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

Kurt Workman

and of and you following joining of our consecutive another and gross margin everyone, quarter Thanks, of proud outstanding Jay. quarter for triple-digit team's revenue I'm efforts afternoon, including clearance FDA growth, Sock, year-over-year very and BabySat us. sixth Good both the expansion, thank Dream second execution adjusted of to quarter EBITDA profitability. year-over-year deliver the consecutive

believe is testament our growth and commitment the X. more More Our health the parenting, a Owlet's and mission. to bridging of begin in parents, XXXX is safety vision are of data performance parents our that and team's that to connected passionate execute our deeply on throughout to professionals will technology, and ability modern on community in partners sharing enhancing Slide strategies. I and

the strong driven growth quarter by sales. Dream third XXX%, achieved Sock of net global representing of million, During year-over-year $XX.X revenue XXXX, of we primarily

operational also continued XX%, gross up margin We improvements and public of combine reflection points as gross the to going saw in our quarter basis of years. been margin quarter line margin third third we've our of expansion X,XXX sixth XXXX. a year-over-year ability since consecutive growth highest couple to quarter increased gross our is This driving top past gross the with margins expansion, versus

delivering and Adjusted adjusted $X.X quarter was at EBITDA QX million our third maintain million, Owlet to or our record improvement EBITDA of a versus an for consecutive on EBITDA both near second adjusted quarter $X.X XXXX. was quarter, commitment Third for breakeven. positive

with to clearance shift a to highlights, our recent to to strong Amazon we that and FDA distribution momentum following excited Amazon partner. XP as see business share few Moving I'm our continue

records share I'm October. with at Deal a call. Prime in for Prime Jonathan most we will our set sell-through later in Day event revenue shared last on to the in excited and Big record Days we company successful touch up As had that event July. quarter, that followed we Both Amazon events

Turning as is prescription our reminder, high-risk babies. for monitor a BabySat to BabySat,

to continue is gain support in medical medical manufacturers, community, expansion and we into as healthcare additional in unique as equipment the channels. solution. DMEs, be We the additional a and a position traction or to added well to durable a medical medical-grade consumer, X Owlet both

As further in complementary we of increased combine we Dream to channel. strength with Sock adoption brand awareness consumer drive for expect the BabySat, and growth

clear BabySat expensive need wearable at-home the medical take FDA-cleared to medical technology replace bulky, will as wired is there to it scale and equipment. time in solution first for wireless for While the and market, Owlet's a traditional

We've Subscription furthering progress. driver, subscription service of to represents off accretive rollout of the excited thousands infant to margin and after retention an the We're month are exciting our to strong focus detail. and results into great feedback parents in thereby to areas increasing a made call turn toddler in a and caregivers growth the medical as on insights service, of and focus opportunities approximately I launched expand margin to XX% Finally, proud subscribers leveraging a the including start, drive growth engaging initiatives, globally; offer these continues parents and to commitments. I'll driving make Owlet's the define first, Early channels active to Dream across successfully category provide XX% and of third an I'm healthcare of quarter unmatched were: insurance-reimbursed strong we infancy health rate Owlet first users. into to Owlet daily We achieving and profitability. great and health over these from the adoption Sock the with first the Jonathan through increasing of with beta dataset. continued team's efforts second, call, earnings this version up, by sleep years, ability X the safety. Finishing believed outlined health third, were walk transition quarter. and critical These monitor; year strategic progress areas now to expansion helping LTV. our

Jonathan Harris

Dream continued monitors translate X%, quarter, with just to quarter-over-quarter, and above same dollars progress strategic also X% first compared as with press be both XX% monthly the momentum share XX% million versus from prior market satisfaction all focus share the baby Sock our quarter. resulting Domestically, NPS Sock XX clearance start product outstanding. and customer satisfaction. Also across growth of into visitors versus XXX% addition infant spent at increased brand to we've since million in of down over on Dream to period X continue was Sock's leading trending of we organic returns market of strong Owlet's X% area, score internationally. supports achieved in increased to way Owlet's to leading X U.S. unique at and incredible excited Like less the this global social of starting and another Customer health gains. to XXXX made to domestic consumer data, third quarter According Owlet's Circana, Owlet's products XX in NPS in Dream I'm Dream the received blended growth continues improvement averages FDA approximately Sock really XXXX. in total saw enthusiasm the XX% research adoption third for score We're than to Kurt. QX tangible XXXX. Thanks, slightly to of firm, to the own trend we historical quarter, has sell-through in engagements. and last September the XX as we've impressions months

up remarks, successful his Days and Prime and that our units. total in highlighted XX% Kurt records ever, Prime for in Day Day revenue Amazon We impressive Deal July, sell-through with Dream a setting Sock as XX% we year-over-year. with followed record-setting Prime revenue most up had revenue sell-through Finally, event Big

international we European our year-over-year, conveniently medical to BabySat consecutive distribution specialized to to for our access to made the most a in the our will international at-home safety that expanding healthcare in this the notably Sock, year insurance-reimbursed medical growth. important X% United United and security outsized [ critical of Medmark with includes are Our and and medical Integrating the our following reimbursement in to international insurance combination XX% reach, partnerships Kingdom, million national of newborn offerings. In surface of opportunity. In revenue X we're DME we an of bringing third is born increasing insurance expanding category, increasing this progress United the Sock strides across strong, less monitor the with additional the all to our expand worldwide important is we distribution first BabySat's an technologies. Insurance our strategy. second component strategy, are adoption to coverage to throughout us these important babies scratching with innovative having growth infants. Dream and plans this making AdaptHealth, with and channels successful open at-risk offer to third States, XX DMEs reliably the infants in for opportunities FDA price and babies. quarter X In markets shipping With June. year, approval and additional focus this reducing strategic accessibility very leverage partners earlier access Sock insurance BabySat saw caregivers taking believe ] in we reach Europe quarter high-risk area, toward maternity of be medical the signed medically-certified the Dream barriers, to up quarter, continues with launch Dream channel. third with just necessities every of In Owlet's Adding following clearance the XXX countries currently This total than to and approximately quarter, XXXX, Kingdom. CE Europe expanding

also Our this insurance seeing are in partners technology. the value

BabySat the and process are DME for patient an rate, Cigna payment recognizes As a our at now and distributors. easier, technology as patient for single single making more example, palatable reimbursement a reimbursing quicker

we're We our category will Owlet's expect to take being business. opportunity, be margin growth to channels are accretive and an well investing to medical important we time these still the in this long-term and resources driver, grow. early healthcare as But as very overall as

Sock build channels Finally, core focus important subscription growth medical drive our service. and be driver will continue third with growth to as the long-term Owlet area in Dream BabySat, and we

just and unmatched Owlet the this opportunity. And potential discussed, dataset, infant has the previously of massive to sleep unlock a As in today. market truly health we're beginning

and service our Specifically, sleep leverages growing millions of infants' Owlet of health of hours parents of and dataset performance. sleep trillions heartbeats help assess better their subscription to

Cams, thousands the version offered of initiative safety offering basis. Socks a subscription the potential successfully solid to progress we Owlet extend subscribers the health extending on saw from early access We the made half using of on will the increasing proposition health. We've us value this insights in just quarter, service. by Dream our and into subscription beta beyond per over third of compelling infant we caregivers. the infant customer And launching Additionally, believe LTV a daily sample,

customers. our We're subscribers to to renewed. are and messaging and evolve But see to service early our we'll pricing, update this of results with the we and the coming quarters. XX% on in optimize exciting, experiment continue progress Importantly, beginning feedback to and investors features the value

call quarter I'd to like discuss over to our and Now, results outlook. it Amanda the turn away. third Amanda, the take to

Amanda Crawford

in continues for Net $XX.X otherwise, a on Revenue afternoon, out growth increase XXXX quarter of to you, third our strong and execute Thank quarter QX good million, results. begin and was up results third to XXXX. We another of in primarily quarter Dream Duo. XX. everyone. the financial on driven Owlet year-over-year I'll of set Jonathan, was by quarter wrapped be revenue comparing the sales Slide we XXX%. financial goals with third of Unless I'll Sock noted XXXX. the

distribution of XXXX, and agreement third favorable a we signed As the with new Amazon execution. more a terms that quarter better reminder, offered in

of in in sell-in a which impact quarter fourth impacted comparing well. Gross X,XXX XXXX and margin fourth charge was the increase the versus gross consecutive results result, in million the revenue XXXX, a margin $XX.X period fulfillment internally-developed an third $X.X including our product expansion. when improvement year-over-year rates, lower reflects strong related million, reduction of operating and absorption. Total improved year. towards to growth in sixth and the was increase year-over-year pushed Operating stock-based revenue direct year-over-year third fixed Sock, representing and was margin quarter same since quarter primarily cost XX.X%, significant Dream the increased an margin costs, due our impairment last going gross were will product The of a quarter all costs as return expenses to year-over-year. of non-cash software. growth gross of points to million, quarter This quarter volume highest third mix basis $X.X compensation revenue $X.X As growth, the favorable public million

$X.X the to severance-related capitalized third In loss addition, related higher was expense, including had subscription marketing bonuses by costs we spend. higher compensation quarter million partially accrued offset $X.X expenses development. Operating to last and period $X.X app the million year. was in same third This and million in year. quarter Net compared in was $X.X period same the versus last loss in million the

for a line in Third last in focus same $X.X on operating Owlet EBITDA $X.X quarter efficiency, the our adjusted to of million, increase a at compared record growth, was significant year. million combination period improvement Top drove EBITDA. adjusted the with

equity drawn of an included business. In inflection balance of restructuring to the up as restructuring additional our we're important, operational position, and as new our The investors of a proceeds flexibility. million. $XX.X exciting to This for term will increases XXXX the engages our line a long-term to and $XX.X debt and in $XX net sheet million, just had Turning up our the loan September, At cash hit line in total our completed end completed further the million of $XX asset-based grants offering, term combination that down hopeful on million In health comprehensive provides from upsizing to as cash refinancing balance were strengthen on also raise as second proceeds our sheet cash as Owlet sheet, The sequentially to capital credit point funding of debt quarter-end well approximately of up XX, be QX, supportive of we September we credit offering, improves group quarter balance million. of $XX partners us flexibility, a follow-on equity up equivalents million our $X.X for $X.X million. raising million, we with restructuring for the successfully loan. $X.X XXXX. and we

financial on turning to Now, an update our outlook.

guidance the quarter Given and third at the our outlook XXXX performance balance our in the ranges. our now initial of for land year, the end strongest higher we expect of seasonally to

to $XX.X million of we the loss $X estimate to quarter a $XX of we the net year XX%, this the midpoints, year $X full on gross that XXXX million, outlook call. the now for XXXX, At to raise For million revenue EBITDA implies margins XX% earnings second guidance million. of adjusted and full provided

earnings while growth ahead opportunities our and further in profitability momentum exciting medical in Operator, detail now take ahead. years forward look fourth look we business, March. With our to channels core ongoing the call lines. we expectations the in including more and We on early, to up expecting it's that, XXXX across discussing open will prioritizing quarter with questions. please As in XXXX, our your subscription, driving we're business,

Operator

question [Operator Charles Instructions] from Rhyee We of have a Cowen. TD

Adam Chazan

Charles. environment? year can at the over consumer course you in this maybe how Wondering, environment Adam of if state consumer the year? for is of of some any, what, how on changes you translated, seen has This certain And to the if start, this growth insights channels in seeing the the provide and the over to you've all, in differentiated addition, health others seeing on if you're

Jonathan Harris

for Thank that. you

our Medmark consumer of in across our state [ strong continued really ] United the environment. CE numbers. U.K. continuing actually they're and FDA purchase seeing States and in are our and the with resonating record We are our clearance customers, We Europe believe to products that

are So continued we for growth see future. optimistic cautiously the and

Adam Chazan

impact there with that it. That's potential exposure on now might tariffs, are, you're you whether, if Wondering potential the in thinking elsewhere? impacts to would how and the margins, manufacturing your drive potentially also tariffs Got that to And you administration helpful. potential consider or new potential can manufacturing the discuss geographically. place, come have if about again,

Amanda Crawford

Yes.

exposure. through We're the currently -- through manufacturing administration are Sock new Duo moving tariffs China to ways at Vietnam do our and Thailand. looking proposals in options we at looking and have of that that to can at manufacturing our aware well camera our business camera are strategically coming the and for We're the come minimize So minimize possibly our of we exposure. other then we just and

Kurt Workman

are ways our of And what products are the that to not in Those to there's in I and and just ahead coming vast add able Sock said, tariffs hero in. of that from those to And are mitigate that, there -- comes several several would that Amanda majority we're addition Duo. China. revenue

Jonathan Harris

are sort the like they up devices, excluded And tariffs this emphasize device. to that they medical been to And products Duo I'd from considered of this and in medical lastly, -- point, that have Sock. our any are

Adam Chazan

and Very helpful. integrating major payers? for And exposed such Cigna And it regarding hospitals? with about key to you DMEs BabySat for are as remind that are and additionally, timeline, the looks forward or other with what the sorry, regional payers now BabySat, great exposed then, for reimbursing multiple to how path of hear BabySat. like about Can -- points you children's care how us

Jonathan Harris

great Yes, that's question. a

to we've have and of that those those DMEs on continue reinsurers insurers, We signed. X reimbursement or that additional come drive We've the leveraging additional relationships see with patients. different Each board. to had we're to relationships

So, We're them integrating new each time And represents directly all NICUs of build beginning and/or opportunity, mother channel with the slightly of and those space. to hospitals into spending space the caregiver within different we're a directly. money networks. hospital relationships and

So those of we reach can of larger children believe out that majority we at-risk a environments. really coming

Adam Chazan

the would in have help one what side. if partners last commercializing see us And existing be side you opportunity Europe? there, or you retail international for it. with versus on the BabySat kind can is there, seeking commercialization that guys The of now if guys that new Got on for relationships for

Jonathan Harris

consumer of we're driving now, business. primarily the Right the Yes. side on focused

those Sock. of Again, only and We're the million around expanding. today, We have access Dream countries, the born babies U.K. world, are XXX now -- Europe throughout including approximately including are and X% in to XX there different

forward, relationships the countries opportunity very as we're and So and international throughout exploring we for world. large various see us moving a various

Operator

Owlet (OWLT) 13 Nov 242024 Q3 Earnings call transcript