Owlet Inc Earnings Call: Growth Momentum vs. Tariffs

Owlet Inc ((OWLT)) has held its Q4 earnings call. Read on for the main highlights of the call.

Owlet Inc’s latest earnings call mixed record annual results with a candid acknowledgment of near-term pressures. Management highlighted all-time highs in revenue, gross margin and adjusted EBITDA, alongside strong subscription traction and market-share gains, but also warned that tariffs, seasonal softness and ongoing external risks will weigh on early 2026 performance.

Record Revenue and Strong Top-Line Growth

Owlet posted Q4 2025 revenue of $26.6 million, up 29.6% year over year, as its smart baby monitoring products continued to gain traction with parents. Full-year 2025 revenue reached $105.7 million, rising 35.4% from 2024 and landing at the high end of management’s guidance range, underscoring solid execution despite a choppy macro backdrop.

Subscription Momentum — Owlet360

The company’s subscription engine, Owlet360, crossed more than 110,000 paying subscribers in early March, marking four straight quarters of growth in paying users, monthly recurring revenue and attach rates. Management expects subscriptions and their recurring revenue to become a larger share of the business through 2026, which could make Owlet’s cash flows more predictable over time.

Record Gross Margin and Adjusted EBITDA

For 2025, Owlet delivered record gross margin of 50.6% even after absorbing tariff headwinds that clipped more than two percentage points from the metric. Full-year adjusted EBITDA hit a record $2.0 million, representing a $3.8 million improvement over 2024 and signaling that the company is moving closer to sustainable profitability on an adjusted basis.

Product Innovation and Commercial Momentum

Owlet’s product lineup continued to evolve with the September launch of Dream Sight, a camera featuring AI capabilities and upcoming camera-specific subscription features. Demand for existing devices remained healthy, with Dream Sock domestic sell-through rising 9% year over year and the Duo climbing 53%, while net promoter scores of 77 for Dream Sock and 72 across the portfolio point to strong customer satisfaction.

Market Share and Channel Strength

The company further solidified its position in baby monitoring, increasing its share of total dollars spent in the category to 41% in Q4 2025, a 24% jump versus the prior year. Registry additions for Dream Sock grew 23% across major platforms such as Amazon, Babylist and Target, suggesting that more expectant parents are choosing Owlet products at the start of their purchasing journey.

International Expansion and Regulatory Wins

International markets added another growth leg, with full-year 2025 international revenue reaching $19.2 million, up 27% from 2024. Q4 sell-through was especially strong in the U.K., France and the Nordics, and new regulatory clearances in India and Israel brought Dream Sock’s footprint to 31 countries with seven regulatory approvals, positioning Owlet for further global expansion.

Improved Operating Efficiency and Unit Economics

Owlet sharpened its cost structure as Q4 operating expenses fell to $17.5 million from $18.4 million a year earlier, shrinking operating costs to 66% of revenue versus 90% in Q4 2024. Revenue per employee is now about $1 million, and a reported lifetime value to customer acquisition cost ratio of 4.4 suggests attractive unit economics with more upside as the subscription mix increases.

Stronger Balance Sheet and Liquidity

The company exited 2025 with improved financial flexibility, holding $35.5 million in cash and cash equivalents, up from $23.8 million at the end of Q3. Owlet also paid down $12 million on its line of credit, leaving a $7 million balance and $10 million in undrawn capacity, for total liquidity of about $45.5 million as of year-end.

Tariff Headwinds Hitting Margins

Tariffs emerged as a major drag on profitability, slicing roughly 510 basis points off Q4 2025 gross margin and about 270 basis points off the full year. Management pointed to these higher import costs as the primary reason Q4 adjusted EBITDA fell short of the prior year, underscoring a key external risk that could persist into 2026.

Q4 EBITDA Pressure and Profitability Challenges

Adjusted EBITDA in Q4 2025 slipped to $0.1 million from $0.5 million a year earlier, as tariff-related margin compression outweighed revenue growth. Looking ahead, the company expects adjusted EBITDA to turn negative in Q1 2026, guiding to a loss of $2.5 million to $1.5 million as seasonal weakness and cost pressures converge.

Seasonality and Light Q1 Revenue Outlook

Owlet’s Q1 2026 revenue guide of $20 million to $21 million landed below some investor expectations, with management citing the quarter’s typical seasonal softness. The company is also lapping an unusually strong Q1 2025 that benefited from RSV and flu trends, while retailers are trimming weeks of supply after a softer holiday season, all of which points to a slower start to the year.

Continuing Net Losses and GAAP Pressure

Despite better adjusted metrics, Owlet remains in the red on a GAAP basis, reporting a Q4 2025 net loss of $9.2 million versus $9.1 million in the prior-year quarter. The modestly wider loss highlights that the path to full profitability will likely require further scaling of revenue, continued cost discipline and relief from external cost headwinds.

International Revenue Timing and Operational Shift

Q4 international revenue declined year over year, but management attributed the drop mainly to a change in logistics for Amazon U.K. that shifted the timing of revenue recognition. Under the new direct import model, significant U.K. sell-in that would have landed in Q4 will instead be recorded in Q1 2026, masking underlying sell-through strength in the reported numbers.

External Uncertainty and Regulatory Complexity

Executives flagged a backdrop of elevated uncertainty, from volatile tariff policy to geopolitical instability in the Middle East, any of which could affect supply chains or consumer demand. They also referenced ongoing regulatory complexity, including prior safety communications and broader agency turmoil, as factors that could shape future product approvals and market access.

2026 Outlook and Forward-Looking Guidance

For 2026, Owlet is targeting revenue of $126 million to $130 million, implying 19% to 23% growth over 2025, with gross margin between 49% and 52% and adjusted EBITDA of $3 million to $5 million, up as much as 150%. Guidance assumes continued tariff pressure and a back-half-weighted year as subscriptions grow, while potential upside from new international markets and telehealth initiatives is excluded from the base case.

Owlet’s earnings call painted a picture of a company gaining scale and sharpening its economics, even as it navigates margin pressure, seasonal swings and regulatory and geopolitical uncertainty. For investors, the story hinges on whether the momentum in subscriptions, international markets and product innovation can more than offset tariffs and near-term profitability headwinds through 2026.