Owlet Inc’s Earnings Call Highlights Robust Growth

Owlet Inc ((OWLT)) has held its Q2 earnings call. Read on for the main highlights of the call.

Owlet Inc’s recent earnings call painted a picture of robust financial health, with strong revenue growth and consistent profitability in key metrics. The company celebrated successful product launches and strategic partnerships, which have bolstered its performance. However, challenges such as international revenue declines, increased tariffs, and slow progress in healthcare partnerships were also highlighted.

Record Revenue Growth

Owlet Inc achieved a significant milestone with its revenue reaching $26.1 million in Q2, marking a 25.9% increase year-over-year. This achievement contributed to the largest first-half revenue in the company’s history, showcasing its strong market presence and effective business strategies.

Consistent Gross Margin Expansion

The company reported an impressive ninth consecutive quarter of gross margin expansion, reaching 51.3%, which is an increase of 180 basis points from the previous year. This consistent growth in gross margins underscores Owlet’s operational efficiency and cost management capabilities.

Adjusted EBITDA Profitability

Owlet recorded its fifth consecutive quarter of adjusted EBITDA profitability, amounting to $0.3 million. This consistent profitability highlights the company’s ability to generate positive earnings before interest, taxes, depreciation, and amortization, reinforcing its financial stability.

Strong Domestic Adoption

The domestic market showed strong adoption of Owlet’s Dream Sock, with a 37% year-over-year growth in sell-through in Q2. This indicates a growing consumer base and increasing demand for Owlet’s innovative products in the domestic market.

Successful Owlet360 Subscription Launch

The launch of the Owlet360 subscription service has been a success, with over 66,000 paying subscribers. The service has shown strong growth in metrics such as monthly recurring revenue and retention rate, highlighting its value proposition to customers.

Impressive Amazon Prime Day Performance

Owlet’s performance during Amazon Prime Day was noteworthy, as it ranked as the #1 seller in the baby monitor and safety categories. The unit sell-through increased by 72% year-over-year, demonstrating the brand’s strong appeal and market competitiveness.

Leadership Transition

The company announced a leadership transition, with Kurt Workman moving to the role of Executive Chairman and Jonathan Harris stepping in as CEO. Both leaders have played significant roles in Owlet’s success, and this transition is expected to continue driving the company’s growth.

International Revenue Decline

Despite domestic success, international revenue saw a decline, falling to $1.8 million from $4.8 million in Q2 2024. This decrease was attributed to timing shifts of open orders to Q3, indicating potential for recovery in the upcoming quarter.

Impact of Increased Tariffs

The company faces challenges from increased tariffs in Thailand and Vietnam, which have risen to 19% and 20%, respectively. These tariffs are expected to impact gross margins by approximately 5% in future quarters, posing a challenge to maintaining profitability.

High Net Loss Due to Warrant Liability

Owlet reported a net loss of $37.6 million, primarily due to a $34.8 million non-cash mark-to-market adjustment related to the company’s common stock warrant liability. This highlights the impact of financial instruments on the company’s bottom line.

Slow Progress in Healthcare Partnerships

Revenue from healthcare partnerships remains minimal, with slow integration progress with hospitals. This indicates an area where Owlet needs to focus on accelerating growth and establishing stronger partnerships.

Forward-Looking Guidance

Owlet raised its full-year 2025 revenue guidance to a range of $97 million to $100 million, indicating a 24% to 28% growth year-over-year. The company aims to maintain a gross margin guidance of 46% to 50%, despite the challenges posed by increased tariffs. The growth of the Owlet360 subscription service is expected to continue, further enhancing the company’s revenue streams.

In conclusion, Owlet Inc’s earnings call reflected a positive sentiment with strong revenue growth and profitability. The company is poised for further growth with its strategic initiatives and product launches, although it faces challenges in international markets and tariff impacts. Investors and stakeholders can look forward to Owlet’s continued focus on expanding its market presence and enhancing its financial performance.