Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $21.1 million, representing a 43% increase compared to Q1 2024 [11][27] - Gross margin improved to 53.7%, an increase of 930 basis points year over year, marking the eighth consecutive quarter of year-over-year gross margin expansion [12][27] - Adjusted EBITDA was breakeven, an improvement of $3.1 million year over year, indicating the fourth consecutive quarter of breakeven or better adjusted EBITDA [12][29] - Operating loss decreased to $2.7 million from $5.7 million in the same period last year [28] Business Line Data and Key Metrics Changes - The DreamSoc and Dream Duo products showed strong performance, with domestic sell-through growth of 40% year over year [18] - International revenue growth for DreamSoc was up 104% year over year, with notable increases in France and Germany [19] Market Data and Key Metrics Changes - Baby registries showed a 63% year-over-year increase in DreamSoc, indicating strong market demand [18] - Brand health remains strong with a Net Promoter Score (NPS) of 73 at the end of Q1 [19] Company Strategy and Development Direction - The company is transitioning from a hardware-focused business to a comprehensive pediatric health platform through the Owlet 360 subscription service [13][59] - New distribution partnerships, such as with the Children's Hospital of the King's Daughters, are aimed at expanding market reach and enhancing product visibility [7][22] - The company is focusing on international expansion and healthcare channels to drive durable profitable growth [13][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the dynamic macro environment, despite uncertainties related to tariffs [13][30] - The company raised its 2025 revenue guidance to a range of $91 million to $95 million, reflecting strong Q1 performance and positive outlook for the remainder of the year [31] Other Important Information - The company has minimized its manufacturing exposure to China by transitioning production to Vietnam and Thailand [15][16] - The Owlet 360 subscription service has gained over 48,000 paying subscribers since its launch, indicating strong market acceptance [20] Q&A Session Summary Question: Can you explain the partnership with the Children's Hospital of the King's Daughters? - The partnership allows babies to leave the hospital with an Owlet infant health monitor, integrating Owlet data into remote patient monitoring workflows [35] Question: What is the outlook for the Owlet 360 subscription service? - Customer feedback has been overwhelmingly positive, with subscriber numbers increasing from 25,000 to over 50,000 in a few months [38] Question: How should revenue growth be expected throughout the year? - Sequential growth is expected each quarter, with Q4 anticipated to be the largest due to the holiday season [40] Question: What is the overall marketing strategy for 2025? - The strategy focuses on FDA and CE medical clearances and enhancing communication with parents through various channels [44] Question: Are there any shifts in consumer behavior due to macroeconomic conditions? - Currently, there are no significant shifts observed, and the company remains cautiously optimistic [46] Question: How is the company positioned against competitors affected by tariffs? - The company sees potential opportunities to capture additional market share as many competitors face tariff impacts [54]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $21.1 million, representing a 43% increase year over year compared to Q1 2024 [11][27] - Gross margin improved to 53.7%, an increase of 930 basis points year over year, marking the eighth consecutive quarter of gross margin expansion [12][27] - Adjusted EBITDA was breakeven, an improvement of $3.1 million year over year, indicating the fourth consecutive quarter of breakeven or better adjusted EBITDA [12][29] - Operating loss decreased to $2.7 million from $5.7 million in the same period last year [28] Business Line Data and Key Metrics Changes - The DreamSoc and Dream Duo products showed strong performance, with domestic sell-through growth of 40% year over year [18] - The Owlet three sixty subscription service gained over 48,000 paying subscribers shortly after its launch, indicating strong market adoption [20] Market Data and Key Metrics Changes - International revenue growth was up 104% year over year, with notable performance in France and Germany [19] - Baby registries showed a 63% year over year increase in DreamSoc, reflecting strong consumer interest [18] Company Strategy and Development Direction - The company is transitioning from a hardware-focused business to a comprehensive pediatric health platform, emphasizing the Owlet three sixty subscription service [13][60] - New distribution partnerships, such as with the Children's Hospital of the King's Daughters, are aimed at expanding market reach and enhancing product visibility [7][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic uncertainties, including tariff impacts, and highlighted the company's strong positioning to capture market share [13][15] - The updated 2025 revenue guidance was raised to a range of $91 million to $95 million, reflecting the strong start to the year and ongoing momentum [30][31] Other Important Information - The company has minimized its manufacturing exposure to China by transitioning production to Vietnam and Thailand [15] - The company is actively assessing the impact of new tariffs on its operations and has included these considerations in its financial outlook [31] Q&A Session Summary Question: Can you explain the partnership with the Children's Hospital of the King's Daughters? - The partnership allows babies to leave the hospital with an Owlet infant health monitor, integrating Owlet data into remote patient monitoring workflows [36] Question: What is the feedback on the Owlet three sixty subscription service? - Feedback has been overwhelmingly positive, with parents appreciating access to insights about their baby's health and sleep [38] Question: How should revenue cadence be expected throughout the year? - Sequential growth is expected each quarter, with Q4 anticipated to be the largest due to the holiday season [42] Question: Can you provide insight into the overall marketing strategy for 2025? - The marketing strategy focuses on FDA and CE medical clearances and enhancing communication with parents through various channels [46] Question: Are there any shifts in consumer behavior due to macroeconomic challenges? - Currently, there are no significant shifts observed, and the company remains cautiously optimistic [48] Question: How is the awareness of the Owlet three sixty subscription being raised? - In-app messaging, email, and SMS are being utilized to increase awareness among new parents [50] Question: Do you see any competitive advantages due to tariffs affecting competitors? - Yes, many competitors are exposed to high tariffs, which presents an opportunity for Owlet to capture additional market share [55]

[Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section outlines forward-looking statements, emphasizing their inherent risks and uncertainties, and lists key factors that could materially affect the company's actual results - Forward-looking statements are predictions based on current expectations and projections, subject to significant risks and uncertainties[15](index=15&type=chunk)[16](index=16&type=chunk) - Key risk factors include limited operating history, recurring operating losses and negative cash flows, growth management challenges, potential regulatory requirements, reliance on limited retailers and single manufacturers, intellectual property protection, IT system failures/cyberattacks, legal/regulatory proceedings, product liability claims, international market risks, brand reputation, and the need for additional capital[15](index=15&type=chunk)[19](index=19&type=chunk) [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents Owlet, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, income statements, equity changes, cash flows, and detailed explanatory notes [Condensed Consolidated Balance Sheets (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%28Unaudited%29) Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change ($) | Change (%) | | :----------------------------------- | -------------: | ----------------: | ---------: | ---------: | | Total Assets | $51,397 | $49,515 | $1,882 | 3.80% | | Total Liabilities | $63,397 | $66,329 | $(2,932) | -4.42% | | Total Mezzanine Equity | $13,806 | $12,937 | $869 | 6.72% | | Total Stockholders' Deficit | $(25,806) | $(29,751) | $3,945 | -13.26% | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29%20%28Unaudited%29) Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change ($) | Change (%) | | :------------------------------------------------- | --------------------------------: | --------------------------------: | ---------: | ---------: | | Revenues | $21,104 | $14,750 | $6,354 | 43.08% | | Gross profit | $11,326 | $6,547 | $4,779 | 73.00% | | Operating loss | $(2,671) | $(5,746) | $3,075 | -53.52% | | Net income and comprehensive income | $3,025 | $3,274 | $(249) | -7.61% | | Net income attributable to common stockholders | $1,748 | $1,285 | $463 | 36.03% | | Net income per share attributable to common stockholders, basic | $0.11 | $0.15 | $(0.04) | -26.67% | | Weighted-average shares outstanding, basic | 15,383,287 | 8,740,059 | 6,643,228 | 75.99% | [Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders' Deficit (Unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Mezzanine%20Equity%20and%20Stockholders%27%20Deficit%20%28Unaudited%29) - Mezzanine equity increased from **$12,937 thousand** at December 31, 2024, to **$13,806 thousand** at March 31, 2025, primarily due to accretion on convertible preferred stock and redeemable common stock[26](index=26&type=chunk) - Stockholders' deficit improved from **$(29,751) thousand** to **$(25,806) thousand**, driven by net income of **$3,025 thousand** and stock-based compensation, partially offset by accretion on preferred and redeemable common stock[26](index=26&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%28Unaudited%29) Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change ($) | Change (%) | | :-------------------------------- | --------------------------------: | --------------------------------: | ---------: | ---------: | | Net cash used in operating activities | $(5,925) | $(3,356) | $(2,569) | 76.54% | | Net cash used in investing activities | $(110) | $(37) | $(73) | 197.30% | | Net cash provided by financing activities | $2,014 | $5,233 | $(3,219) | -61.51% | | Net change in cash, cash equivalents, and restricted cash | $(4,021) | $1,840 | $(5,861) | -318.53% | | Cash, cash equivalents, and restricted cash at end of period | $16,610 | $18,397 | $(1,787) | -9.71% | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) These notes provide detailed explanations and disclosures for the condensed consolidated financial statements, covering accounting policies, risks, and specific financial accounts [Note 1. Basis of Presentation](index=12&type=section&id=Note%201.%20Basis%20of%20Presentation) This note details the basis of financial statement preparation, highlights going concern risks from recurring losses, outlines management's mitigation actions, and discusses customer concentration and cash flow revisions - The company has experienced recurring operating losses and negative cash flows from operations since inception, resulting in an accumulated deficit of **$265,170 thousand** as of March 31, 2025, raising substantial doubt about its ability to continue as a going concern[36](index=36&type=chunk)[37](index=37&type=chunk) - Management's actions to address going concern risks include issuing common stock for net proceeds of **$10,590 thousand** (September 2024), selling preferred stock and warrants for **$9,250 thousand** (February 2024), and securing a **$15,000 thousand** WTI Loan Facility and a **$15,000 thousand** ABL Line of Credit (September 2024)[39](index=39&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk) Customer Concentration by Net Accounts Receivable | Customer Group | March 31, 2025 | December 31, 2024 | | :--------------- | -------------: | ----------------: | | Three largest customers | 63 % | 63 % | Customer Concentration by Total Net Revenue (Three Months Ended March 31) | Customer | 2025 | 2024 | | :--------- | ---: | ---: | | Customer 1 | 37 % | 25 % | | Customer 2 | 14 % | 20 % | | Customer 3 | 6 % | 12 % | - The company revised its unaudited condensed consolidated statements of cash flows for the interim period ended March 31, 2024, to correct immaterial overstatements in short-term borrowings and payments, and classification errors between operating and investing activities, with no impact on net income or total cash flow[45](index=45&type=chunk)[46](index=46&type=chunk) [Note 2. Certain Balance Sheet Accounts](index=17&type=section&id=Note%202.%20Certain%20Balance%20Sheet%20Accounts) This note breaks down specific balance sheet accounts, including restricted cash, allowance for losses, inventory, property and equipment, and intangible assets with associated expenses Restricted Cash (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :-------------------------------------------------------------------------------- | -------------: | ----------------: | | Cash and cash equivalents | $16,310 | $18,397 | | Restricted cash | $300 | $0 | | Total cash, cash equivalents, and restricted cash | $16,610 | $18,397 | Allowance for Credit and Other Losses (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------------- | --------------------------------: | --------------------------------: | | Beginning balance | $653 | $3,322 | | Charges to expense | $95 | $(388) | | Charges to revenue | $63 | $56 | | Write-offs | $0 | $(2,490) | | Ending balance | $811 | $500 | Inventory Details (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :----------- | -------------: | ----------------: | | Raw materials | $140 | $100 | | Finished goods | $11,673 | $10,423 | | Total inventory | $11,813 | $10,523 | Intangible Assets, Net (in thousands) | Category | March 31, 2025 (Net) | December 31, 2024 (Net) | | :---------------------- | -------------------: | --------------------: | | Trademarks and patents | $338 | $331 | | Internally developed software | $711 | $644 | | Total intangible assets | $1,049 | $975 | Estimated Future Amortization Expenses of Intangible Assets (in thousands) | Period | Amount | | :------------------------ | -------: | | Remaining nine months of 2025 | $262 | | 2026 | $347 | | 2027 | $255 | | 2028 | $47 | | 2029 | $27 | | Thereafter | $45 | | Total future amortization expenses | $983 | [Note 3. Deferred Revenues](index=20&type=section&id=Note%203.%20Deferred%20Revenues) This note explains deferred revenues from mobile applications and subscription services, recognized over 1 to 27 months, and details changes in the deferred revenue balance Changes in Deferred Revenues (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------- | --------------------------------: | --------------------------------: | | Beginning balance | $1,544 | $1,302 | | Deferral of revenues | $743 | $521 | | Recognition of deferred revenues | $(702) | $(543) | | Ending balance | $1,585 | $1,280 | - Revenue recognized from beginning deferred revenue balance was **$574 thousand** in Q1 2025 and **$477 thousand** in Q1 2024[62](index=62&type=chunk) [Note 4. Debt and Other Financing Arrangements](index=21&type=section&id=Note%204.%20Debt%20and%20Other%20Financing%20Arrangements) This note details the company's debt, including WTI Loan Facility and ABL Line of Credit, outlining terms, interest rates, covenants, collateral, and future maturities Total Debt (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :-------------------------- | -------------: | ----------------: | | Term loan facility payable to WTI, net | $5,088 | $4,819 | | Line of credit | $8,498 | $6,263 | | Financed insurance premium | $313 | $615 | | Total debt | $13,899 | $11,697 | | Less: current portion | $(10,053) | $(7,366) | | Total long-term debt, net | $3,846 | $4,331 | - The WTI Loan Facility, initiated in September 2024, provides up to **$15,000 thousand**, with **$7,500 thousand** drawn initially[66](index=66&type=chunk)[67](index=67&type=chunk) - The company elected not to draw the remaining **$2,500 thousand** of the first tranche, resulting in the forfeiture of **62,500** unvested shares of redeemable common stock[68](index=68&type=chunk) - The ABL Line of Credit, also established in September 2024, has a maximum principal of **$15,000 thousand** (increasing to **$20,000 thousand** on September 11, 2025)[79](index=79&type=chunk) - As of March 31, 2025, **$8,498 thousand** was outstanding, with **$46 thousand** remaining borrowing base availability[84](index=84&type=chunk) - The company was in compliance with all covenants under both the WTI Loan Facility and the ABL Line of Credit as of March 31, 2025[73](index=73&type=chunk)[82](index=82&type=chunk) Future Aggregate Maturities (in thousands) | Period | Amount | | :------------------------ | -------: | | Remaining nine months of 2025 | $801 | | 2026 | $3,146 | | 2027 | $3,550 | | 2028 | $420 | | Total | $7,917 | [Note 5. Commitments and Contingencies](index=24&type=section&id=Note%205.%20Commitments%20and%20Contingencies) This note outlines purchase obligations and details ongoing legal proceedings, including class action lawsuits and derivative complaints, reporting on settlement agreements reached - The company has a purchase obligation of **$5,313 thousand** remaining as of March 31, 2025, for cloud platform services, to be paid over a 48-month period starting June 2024[87](index=87&type=chunk) - Settlements in the Butala class action for Section 10(b) Claims (**$3,500 thousand**) and Section 14(a) Claims (**$1,750 thousand**) were agreed upon, totaling **$5,250 thousand**, recognized as general and administrative expense in 2024[93](index=93&type=chunk) - A settlement agreement for the Vargas derivative action resulted in **$675 thousand** of general and administrative expense recognized in Q1 2025[96](index=96&type=chunk) [Note 6. Stock-based Compensation](index=28&type=section&id=Note%206.%20Stock-based%20Compensation) This note describes the company's stock compensation plans (options, RSAs, RSUs, PSUs) and details the recognized stock-based compensation expense across operating categories Total Stock-based Compensation (in thousands) | Category | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------ | --------------------------------: | --------------------------------: | | General and administrative | $779 | $1,283 | | Sales and marketing | $455 | $344 | | Research and development | $423 | $600 | | Total stock-based compensation | $1,657 | $2,227 | - During Q1 2025, **$27 thousand** of stock-based compensation was capitalized for internally developed software, compared to none in Q1 2024[100](index=100&type=chunk) - As of March 31, 2025, unrecognized stock-based compensation costs totaled **$5,815 thousand** for RSUs (weighted-average period of **1.2 years**) and **$101 thousand** for PSUs (weighted-average period of **0.8 years**)[102](index=102&type=chunk) [Note 7. Common Stock Issuance, Redeemable Common Stock, Common Stock Warrants, and Convertible Preferred Stock](index=29&type=section&id=Note%207.%20Common%20Stock%20Issuance%2C%20Redeemable%20Common%20Stock%2C%20Common%20Stock%20Warrants%2C%20and%20Convertible%20Preferred%20Stock) This note details the company's equity and warrant activities, including common stock offerings, preferred stock placements, conversions, and accounting for redeemable common stock - In September 2024, the company issued **3,135,136 shares** of common stock, generating net proceeds of **$10,590 thousand**, and issued Titan Warrants to purchase **125,405 shares** as underwriting compensation[104](index=104&type=chunk)[106](index=106&type=chunk) - In February 2024, the company sold **9,250 shares** of Series B convertible preferred stock and warrants to purchase **1,799,021 shares** of common stock for a gross purchase price of **$9,250 thousand**[110](index=110&type=chunk) - As of March 31, 2025, the redemption value for Series A convertible preferred stock is **$11,479 thousand** and for Series B convertible preferred stock is **$9,250 thousand**[109](index=109&type=chunk)[115](index=115&type=chunk) - **750,000 shares** of redeemable common stock were issued to WTI in September 2024, of which **62,500 shares** were forfeited due to the company not drawing on the remaining first tranche of the WTI Loan Facility[108](index=108&type=chunk)[68](index=68&type=chunk) Common Stock Warrants Activity (Shares Issuable) | Warrant Type | December 31, 2024 | New Warrants | Shares Purchased by Exercise | March 31, 2025 | | :----------------------------- | ----------------: | -----------: | ---------------------------: | -------------: | | SBG Public Warrants | 821,428 | — | — | 821,428 | | SBG Private Placement Warrants | 471,428 | — | — | 471,428 | | Series A Warrants | 7,871,712 | — | — | 7,871,712 | | Series B Warrants | 1,799,021 | — | — | 1,799,021 | | SVB Warrants | 10,714 | — | — | 10,714 | | Titan Warrants | 125,405 | — | — | 125,405 | | Total | 11,099,708 | — | — | 11,099,708 | [Note 8. Fair Value Measurements](index=34&type=section&id=Note%208.%20Fair%20Value%20Measurements) This note details fair value measurements of assets and liabilities across the fair value hierarchy, focusing on common stock warrant valuation using the Black-Scholes model Fair Value Measurements (in thousands) - March 31, 2025 | Category | Level 1 | Level 2 | Level 3 | Balance | | :-------------------------- | ------: | ------: | --------: | --------: | | **Assets:** | | | | | | Money market funds | $9,104 | $— | $— | $9,104 | | **Liabilities:** | | | | | | SBG Public Warrants | $— | $— | $1 | $1 | | SBG Private Placement Warrants | $— | $— | $1 | $1 | | Series A Warrants | $— | $— | $15,263 | $15,263 | | Series B Warrants | $— | $— | $3,391 | $3,391 | | Total liabilities | $— | $— | $18,656 | $18,656 | Fair Value Measurements (in thousands) - December 31, 2024 | Category | Level 1 | Level 2 | Level 3 | Balance | | :-------------------------- | ------: | ------: | --------: | --------: | | **Assets:** | | | | | | Money market funds | $8,223 | $— | $— | $8,223 | | **Liabilities:** | | | | | | SBG Public Warrants | $— | $— | $5 | $5 | | SBG Private Placement Warrants | $— | $— | $2 | $2 | | Series A Warrants | $— | $— | $20,750 | $20,750 | | Series B Warrants | $— | $— | $4,586 | $4,586 | | Total liabilities | $— | $— | $25,343 | $25,343 | - The fair value of common stock warrant liabilities decreased by **$6,687 thousand** from December 31, 2024, to March 31, 2025, primarily due to a smaller decrease in the fair value of outstanding warrants[130](index=130&type=chunk) [Note 9. Net Income (Loss) Per Share](index=37&type=section&id=Note%209.%20Net%20Income%20%28Loss%29%20Per%20Share) This note presents basic and diluted net income (loss) per share calculations using the two-class method and identifies anti-dilutive securities excluded from diluted EPS Net Income Per Share Attributable to Common Stockholders (Basic) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------------------------------------------------------- | --------------------------------: | --------------------------------: | | Allocated net income attributable to common stockholders | $1,748 | $1,285 | | Weighted average common shares outstanding, basic | 15,383,287 | 8,740,059 | | Net income per share attributable to common stockholders, basic | $0.11 | $0.15 | Net Income (Loss) Per Share Attributable to Common Stockholders (Diluted) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------------------------------------------------------- | --------------------------------: | --------------------------------: | | Allocated net income (loss) attributable to common stockholders | $1,748 | $(4,863) | | Weighted average common shares outstanding, diluted | 15,383,287 | 9,617,825 | | Net income (loss) per share attributable to common stockholders, diluted | $0.11 | $(0.51) | Common Stock Equivalents Excluded from Diluted EPS (Anti-Dilutive Effect) | Security Type | March 31, 2025 | March 31, 2024 | | :-------------------- | -------------: | -------------: | | Stock options | 377,012 | 463,168 | | RSUs | 1,450,316 | 1,526,327 | | RSAs | 107,636 | — | | PSUs | 56,391 | 71,428 | | ESPP shares committed | 51,073 | 19,388 | | Common stock warrants | 11,099,708 | 3,102,591 | | Preferred stock | 2,872,668 | 5,200,802 | | Total | 16,014,804 | 10,383,704 | [Note 10. Segments](index=39&type=section&id=Note%2010.%20Segments) This note clarifies the company operates as a single segment with the CEO as decision maker, providing revenue and long-lived asset breakdowns by geographic area - The company operates as a single operating segment, with all significant operating decisions based on a consolidated analysis[139](index=139&type=chunk) Revenue by Geographic Area (in thousands) | Geographic Area | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------- | --------------------------------: | --------------------------------: | | United States | $17,333 | $12,901 | | United Kingdom | $1,207 | $856 | | Other | $2,564 | $993 | | Total revenues | $21,104 | $14,750 | Long-Lived Assets by Geographic Area (in thousands) | Geographic Area | March 31, 2025 | December 31, 2024 | | :---------------- | -------------: | ----------------: | | United States | $134 | $167 | | International | $74 | $73 | | Total long-lived assets, net | $208 | $240 | [Note 11. Revision of Previously Issued Quarterly Information (Unaudited)](index=39&type=section&id=Note%2011.%20Revision%20of%20Previously%20Issued%20Quarterly%20Information%20%28Unaudited%29) This note details revisions to the Q1 2024 unaudited condensed consolidated cash flow statements, correcting immaterial errors in borrowings, payments, and activity classifications without impacting net income or total cash flow Revisions to Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31, 2024, in thousands) | Cash Flow Activity | As Reported | Adjustments | As Revised | | :-------------------------------- | ----------: | ----------: | ---------: | | Other, net (Operating Activities) | $(680) | $(17) | $(697) | | Net cash used in operating activities | $(3,339) | $(17) | $(3,356) | | Purchase of intangible assets (Investing Activities) | $(54) | $17 | $(37) | | Net cash used in investing activities | $(54) | $17 | $(37) | | Proceeds from short-term borrowings (Financing Activities) | $28,941 | $(21,688) | $7,253 | | Payments of short-term borrowings (Financing Activities) | $(31,392) | $21,688 | $(9,704) | | Net cash provided by financing activities | $5,233 | $— | $5,233 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial performance, including mission overview, detailed operating results analysis, and a comprehensive discussion of liquidity and capital resources [Overview](index=41&type=section&id=Overview) - Owlet's mission is to empower parents with real-time data and insights through its digital parenting platform, aiming to provide peace of mind and support child health[149](index=149&type=chunk) [Components of Operating Results](index=41&type=section&id=Components%20of%20Operating%20Results) - Revenues are primarily derived from product sales and associated mobile applications, recognized upon transfer of control[150](index=150&type=chunk) - Cost of revenues includes product costs, manufacturing, shipping, depreciation, warranty, fulfillment, warehousing, hosting, and inventory reserves[151](index=151&type=chunk) - Operating expenses are categorized into General and Administrative (salaries, legal, accounting, professional services, facilities, settlements), Sales and Marketing (salaries, commissions, third-party marketing), and Research and Development (salaries, product design, development, testing, clinical testing)[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) This section analyzes the company's Q1 2025 financial performance versus Q1 2024, covering revenues, cost of revenues, gross profit, operating expenses, and other income/expense Key Financial Results (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change ($) | Change (%) | | :-------------------------------- | --------------------------------: | --------------------------------: | ---------: | ---------: | | Revenues | $21,104 | $14,750 | $6,354 | 43.1% | | Cost of revenues | $9,778 | $8,203 | $1,575 | 19.2% | | Gross profit | $11,326 | $6,547 | $4,779 | 73.0% | | Gross margin | 53.7% | 44.4% | 9.3% | 20.95% | | Operating loss | $(2,671) | $(5,746) | $3,075 | -53.5% | | Interest expense, net | $(991) | $(161) | $(830) | 515.5% | | Common stock warrant liability adjustment | $6,687 | $9,179 | $(2,492) | -27.1% | | Net income and comprehensive income | $3,025 | $3,274 | $(249) | -7.6% | | Net income attributable to common stockholders | $1,748 | $1,285 | $463 | 36.0% | - Revenue increase was primarily driven by higher sales of Dream Sock and Dream Duo products, reflecting increased consumer demand[161](index=161&type=chunk) - Gross margin improved due to higher revenue, favorable product mix, lower returns, improved fixed cost absorption, and lower direct product and fulfillment costs[162](index=162&type=chunk) - General and administrative expenses increased due to litigation settlements and higher compensation, partially offset by lower stock-based compensation[163](index=163&type=chunk) - Research and development expenses increased due to higher compensation, increased headcount, and greater investment in R&D[165](index=165&type=chunk) - Interest expense significantly increased due to interest and amortization of issuance costs related to the WTI Loan Facility and ABL Line of Credit, entered into in September 2024[166](index=166&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses funding sources, reiterates going concern warnings, outlines management's mitigation actions, and summarizes cash flow activities from operations, investing, and financing - As of March 31, 2025, the company had cash and cash equivalents of **$16,310 thousand**[168](index=168&type=chunk) - The company continues to face substantial doubt about its ability to continue as a going concern due to recurring operating losses, negative cash flows from operations, and a low cash balance relative to current obligations[206](index=206&type=chunk) - Management's actions to address liquidity include a September 2024 common stock offering (**$10,590 thousand** net proceeds), a February 2024 preferred stock and warrant sale (**$9,250 thousand** gross proceeds), and securing the WTI Loan Facility and ABL Line of Credit in September 2024[204](index=204&type=chunk)[205](index=205&type=chunk) - Failure to secure additional funding on acceptable terms may require modifying or abandoning planned development, or further operating cost reductions, which could materially adversely affect the business[208](index=208&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | --------------------------------: | --------------------------------: | | Net cash used in operating activities | $(5,925) | $(3,356) | | Net cash used in investing activities | $(110) | $(37) | | Net cash provided by financing activities | $2,014 | $5,233 | | Net change in cash, cash equivalents, and restricted cash | $(4,021) | $1,840 | - The increase in net cash used in operating activities was primarily driven by an increase in accounts receivable[211](index=211&type=chunk) - Net cash used in investing activities increased due to investments in various projects, primarily for the development of a new subscription app[212](index=212&type=chunk) - The decrease in net cash provided by financing activities was primarily due to the proceeds raised by the Series B preferred stock offering in February 2024, which occurred in the prior year period[213](index=213&type=chunk) [Critical Accounting Policies and Estimates](index=52&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - There have been no material changes to the critical accounting policies and estimates disclosed in the company's Form 10-K, other than those explicitly disclosed in this report[214](index=214&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Owlet, Inc. is not required to provide quantitative and qualitative disclosures regarding market risk [Item 4. Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of disclosure controls and procedures, concluding they were ineffective due to material weaknesses in internal control over financial reporting, and outlines remediation plans - The company's disclosure controls and procedures were not effective as of March 31, 2025, due to material weaknesses in internal control over financial reporting[218](index=218&type=chunk) - Material weaknesses include an ineffective control environment due to insufficient personnel with appropriate internal controls and accounting knowledge, inadequate segregation of duties for journal entries, ineffective controls over inventory accuracy and existence, completeness and accuracy of accrued liabilities, accounting for debt and equity arrangements (including convertible preferred stock, warrants, and stock-based compensation modifications), sales returns, accrued sales tax, and IT general controls[221](index=221&type=chunk)[223](index=223&type=chunk) - The remediation plan involves hiring additional accounting and financial reporting personnel, implementing new policies, procedures, and controls, and enhancing existing controls related to IT general controls, segregation of duties, inventory, accrued liabilities, and debt/equity arrangements[222](index=222&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk) [PART II. OTHER INFORMATION](index=57&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=57&type=section&id=Item%201.%20Legal%20Proceedings) This section states the company is involved in various legal proceedings and refers to Note 5 for detailed descriptions and potential impacts on financial position [Item 1A. Risk Factors](index=57&type=section&id=Item%201A.%20Risk%20Factors) This section directs readers to the Form 10-K and 10-K/A for comprehensive risk factors that could materially affect the business, financial condition, or results [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=57&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section confirms no unregistered sales of equity securities occurred during the three months ended March 31, 2025 [Item 3. Defaults Upon Senior Securities](index=57&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states no defaults upon senior securities occurred during the reporting period [Item 4. Mine Safety Disclosures](index=57&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates mine safety disclosures are not applicable to the company [Item 5. Other Information](index=57&type=section&id=Item%205.%20Other%20Information) This section reports no other material information to disclose and no Rule 10b5-1 trading arrangement changes by directors, officers, or the company [Item 6. Exhibits](index=58&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report on Form 10-Q, including officer certifications and Inline XBRL documents [Signatures](index=59&type=section&id=Signatures) This section contains the required signatures of the Principal Executive Officer and Principal Financial Officer, certifying the report's submission

[Q1 2025 Financial & Business Highlights](index=1&type=section&id=Q1%202025%20Financial%20%26%20Business%20Highlights) Owlet exceeded Q1 2025 expectations with over 43% revenue growth, improved gross margin, and breakeven adjusted EBITDA, driven by core products, international expansion, and new partnerships Q1 2025 Key Financial Highlights | Metric | Q1 2025 (in millions) | Change vs Q1 2024 | | :--- | :--- | :--- | | Revenue | $21.1 | ▲ 43.1% | | Gross Margin | 53.7% | ▲ 930 basis points | | Net Income | $3.0 | ▼ from $3.3 | | Adjusted EBITDA | $0.0 | ▲ $3.1 | - The company achieved its fourth consecutive quarter of **breakeven or better adjusted EBITDA**, demonstrating strong execution[3](index=3&type=chunk) - Growth was primarily driven by strong momentum in **Dream Sock and Dream Duo products**, international expansion, entry into medical channels, and the **Owlet360 subscription service** with over **48,000 paying subscribers**[3](index=3&type=chunk) - A new distribution partnership with Children's Hospital of The King's Daughters enables babies to leave the hospital with an Owlet device[3](index=3&type=chunk) [Q1 2025 Financial Performance Analysis](index=1&type=section&id=Q1%202025%20Financial%20Performance%20Analysis) Owlet achieved significant year-over-year financial improvement in Q1 2025, with revenue growing 43.1% to $21.1 million, gross margin expanding to 53.7%, and adjusted EBITDA reaching breakeven [Revenue and Gross Margin](index=1&type=section&id=Revenue%20and%20Gross%20Margin) Q1 revenue grew 43.1% to $21.1 million, driven by Dream Sock and Dream Duo sales, while gross margin expanded to 53.7% due to favorable product mix and cost reductions Revenue and Gross Margin Performance | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | Revenue | $21.1 | $14.8 | ▲ 43.1% | | Cost of Revenue | $9.8 | $8.2 | ▲ 19.5% | | Gross Margin | 53.7% | 44.4% | ▲ 930 bps | - Gross margin improvement was attributed to higher revenue, a favorable product mix towards **Dream Sock**, decreasing return rates, and lower direct product and fulfillment costs[5](index=5&type=chunk) [Operating Expenses and Profitability](index=1&type=section&id=Operating%20Expenses%20and%20Profitability) Q1 2025 operating expenses increased to $14.0 million, yet operating loss narrowed to $2.7 million, with net income at $3.0 million (including a $6.7 million warrant gain) and adjusted EBITDA reaching breakeven Operating Expenses and Profitability Overview | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | Change (in millions) | | :--- | :--- | :--- | :--- | | Operating Expenses | $14.0 | $12.3 | ▲ $1.7 | | Operating Loss | ($2.7) | ($5.7) | ▲ $3.0 | | Net Income | $3.0 | $3.3 | ▼ $0.3 | | Adjusted EBITDA | $0.0 | ($3.1) | ▲ $3.1 | - The rise in operating expenses was primarily driven by higher compensation, including accrued bonuses, and charges related to certain legal matters[7](index=7&type=chunk) [Earnings Per Share (EPS)](index=2&type=section&id=Earnings%20Per%20Share%20(EPS)) Q1 2025 basic and diluted EPS were $0.11, while adjusted net loss per share significantly improved to $0.07 from $0.39 in the prior year Earnings Per Share Summary | Metric | Q1 2025 (per share) | Q1 2024 (per share) | | :--- | :--- | :--- | | Basic EPS | $0.11 | $0.15 | | Diluted EPS | $0.11 | ($0.51) | | Adjusted Net Loss Per Share | ($0.07) | ($0.39) | [Updated 2025 Financial Outlook](index=2&type=section&id=Updated%202025%20Financial%20Outlook) Owlet updated its 2025 financial guidance, projecting full-year revenue of $91 million to $95 million, gross margins of 46% to 50%, and continued pursuit of adjusted EBITDA profitability Full Year 2025 Financial Guidance | Metric | Full Year 2025 Guidance | | :--- | :--- | | Revenue | $91 million to $95 million | | YoY Revenue Growth | 17% to 22% | | Gross Margins | 46% to 50% | | Adjusted EBITDA | Striving for profitability | [Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Consolidated%20Financial%20Statements%20(Unaudited)) This section provides Owlet's unaudited condensed consolidated financial statements for Q1 2025, including Balance Sheets, Statements of Operations, Cash Flows, and GAAP to Non-GAAP reconciliations [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets increased to $51.4 million, cash decreased to $16.3 million, total liabilities decreased to $63.4 million, and stockholders' deficit improved to ($25.8) million Condensed Consolidated Balance Sheets | Balance Sheet Item | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :--- | :--- | :--- | | Cash and cash equivalents | $16.3 | $20.2 | | Total current assets | $48.4 | $46.1 | | Total assets | $51.4 | $49.5 | | Total current liabilities | $40.7 | $36.4 | | Total liabilities | $63.4 | $66.3 | | Total stockholders' deficit | ($25.8) | ($29.8) | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2025 saw $21.1 million in revenue, $11.3 million gross profit, an operating loss of $2.7 million, and a net income of $3.0 million, boosted by a $6.7 million warrant liability adjustment Condensed Consolidated Statements of Operations | Income Statement Item | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | Revenues | $21.1 | $14.8 | | Gross profit | $11.3 | $6.5 | | Operating loss | ($2.7) | ($5.7) | | Net income | $3.0 | $3.3 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2025 saw net cash used in operating activities increase to $5.9 million, with $2.0 million provided by financing activities, resulting in a net decrease of $4.0 million in cash and equivalents Condensed Consolidated Statements of Cash Flows | Cash Flow Item | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | Net cash used in operating activities | ($5.9) | ($3.4) | | Net cash used in investing activities | ($0.1) | $0.0 | | Net cash provided by financing activities | $2.0 | $5.2 | | Net change in cash | ($4.0) | $1.8 | [Reconciliation of GAAP to Non-GAAP Measures](index=9&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section reconciles Q1 2025 GAAP net income of $3.0 million to Non-GAAP measures, resulting in **Adjusted EBITDA of $0.0 million** and an **adjusted net loss of $1.1 million** after various adjustments Reconciliation to Adjusted EBITDA | Reconciliation to Adjusted EBITDA | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | GAAP net income | $3.0 | $3.3 | | Adjustments (Interest, Tax, D&A) | $1.1 | $0.3 | | Non-GAAP EBITDA | $4.1 | $3.5 | | Other Adjustments (Warrant, SBC, etc.) | ($4.1) | ($6.7) | | **Non-GAAP Adjusted EBITDA** | **$0.0** | **($3.1)** | Reconciliation to Adjusted Net Loss | Reconciliation to Adjusted Net Loss | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | GAAP net income | $3.0 | $3.3 | | Adjustments (Warrant, SBC, Legal, etc.) | ($4.1) | ($6.7) | | **Non-GAAP adjusted net loss** | **($1.1)** | **($3.4)** | [Disclosure Regarding Non-GAAP Financial Measures](index=3&type=section&id=Disclosure%20Regarding%20Non-GAAP%20Financial%20Measures) Owlet uses non-GAAP measures like EBITDA and adjusted net income (loss) for internal performance evaluation and peer benchmarking, providing a clearer view of core operating performance by excluding non-recurring items - Non-GAAP measures are utilized for internal performance assessment, peer benchmarking, and to highlight core business trends not always evident in GAAP figures[14](index=14&type=chunk) - Key non-GAAP definitions include: - **Adjusted EBITDA**: Net income adjusted for taxes, interest, D&A, warrant liability adjustments, stock-based compensation, transaction costs, and certain legal charges[17](index=17&type=chunk) - **Adjusted net income (loss)**: Net income adjusted for warrant liability adjustments, stock-based compensation, transaction costs, and certain legal charges[18](index=18&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-39516 OWLET, INC. (Exact name of Registrant as specified in its Charter) Delaware 85-1615012 (State or other jurisdiction of incorpor ...

Financial Data and Key Metrics Changes - In 2024, Owlet, Inc. achieved record revenue of $78.1 million, representing a 45% growth compared to 2023 [14][46] - Fourth quarter revenue was $20.5 million, with a year-over-year growth of 37% after adjusting for a revenue shift from Q3 2023 [16][46] - Gross margins for 2024 were over 50%, marking the best annual gross margin in the company's history, with Q4 gross margins at 53.5%, an increase of 650 basis points year-over-year [14][17][47] - Adjusted EBITDA improved by over $14 million in 2024 compared to 2023, with Q4 adjusted EBITDA at $0.5 million, an improvement of $1.2 million year-over-year [15][50][51] Business Line Data and Key Metrics Changes - The launch of the FDA-cleared devices, Dream Sock and Baby Sat, contributed significantly to revenue growth, with Dream Sock demand in the US showing a robust 34% growth in Q4 2024 compared to Q4 2023 [30][36] - Owlet 360 subscription service was launched, with initial metrics showing a 12% attach rate in January, indicating strong early adoption [22][42] Market Data and Key Metrics Changes - International revenue grew by 45% year-over-year in Q4 2024, with significant growth observed in the UK and Germany [35][36] - The company expanded its global footprint to 26 countries by year-end 2024, contributing to 98% of international revenue growth [9][10] Company Strategy and Development Direction - Owlet, Inc. aims to evolve into a comprehensive pediatric health platform, focusing on the Owlet 360 subscription service to drive predictable recurring revenue and enhance customer lifetime value [24][40] - The strategy includes expanding medical distribution channels for Baby Sat and increasing adoption of Dream Sock in both domestic and international markets [28][30][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning and momentum, highlighting the importance of unlocking care at home to improve infant outcomes and reduce healthcare costs [21][86] - The company expects to generate revenue between $88 million to $92 million in 2025, with a focus on operational efficiency and achieving adjusted EBITDA profitability [53][55] Other Important Information - The company faced legal challenges related to its 2021 SPAC offering, resulting in increased operating expenses in Q4 2024 [48][49] - Cash and cash equivalents at the end of Q4 2024 were $20.2 million, slightly down from $21.5 million in Q3 2024 [52] Q&A Session Summary Question: Guidance on revenue growth and contributions from products - Management indicated that for 2025, they are being cautious with revenue assumptions from Owlet 360 and Baby Sat, not expecting material revenue from these in the upcoming year [58][59] Question: International growth expectations - Management expects growth to come equally from both US and international markets, with international markets representing a larger opportunity for growth [62] Question: Strategies for increasing adoption in populous states - The company plans to drive awareness through partnerships, social media, and product engagement to increase adoption rates in larger states like California and Texas [64][66] Question: Gross margin expectations for 2025 - Management clarified that while Q4 gross margins were high, they expect gross margins for 2025 to be in the range of 50% to 52%, indicating an overall improvement [68] Question: Progress with payers and Medicaid - Management reported solid progress with Medicaid reimbursement and partnerships, indicating a slow but steady advancement in this area [71] Question: Updates on Owlet 360 and user engagement - Early feedback on Owlet 360 has been positive, with high engagement and retention rates, indicating strong potential for future growth [75][78]

Financial Data and Key Metrics Changes - In 2024, the company achieved revenue of $78.1 million, representing a 45% growth compared to 2023 [14][46] - Fourth quarter revenue was $20.5 million, with a year-over-year growth of 37% after adjusting for a revenue shift from Q3 to Q4 2023 [16][46] - Gross margins for 2024 were over 50%, marking the best annual gross margin in the company's history [14][47] - Adjusted EBITDA improved by over $14 million in 2024 compared to 2023, with Q4 adjusted EBITDA at $0.5 million, an improvement of $1.2 million year-over-year [15][50] Business Line Data and Key Metrics Changes - The Dream Sock and Baby Sat were significant contributors to revenue growth, with Dream Sock demand showing robust growth of 34% in Q4 2024 compared to Q4 2023 [30][46] - The company launched the Owlet 360 subscription service, which is expected to drive predictable recurring revenue and enhance customer lifetime value [19][24] Market Data and Key Metrics Changes - International revenue grew by 45% year-over-year in Q4 2024, with strong performance in markets like the UK and Germany [35][36] - The company has expanded its global footprint to 26 countries by year-end 2024, contributing to 98% of international revenue growth [9][10] Company Strategy and Development Direction - The launch of Owlet 360 marks a strategic shift towards becoming a comprehensive pediatric health platform, aiming to empower parents with actionable health insights [19][24] - The company is focused on expanding medical distribution channels and insurance reimbursement opportunities for Baby Sat, targeting higher-risk infants [10][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning and momentum, highlighting that 2024 was a turning point with records in revenue, gross profit, and adjusted EBITDA [12][18] - The company expects to generate revenue between $88 million to $92 million in 2025, with a focus on capitalizing on the momentum from 2024 [53][55] Other Important Information - The company faced legal costs related to its 2021 SPAC offering, impacting operating expenses in Q4 2024 [48][49] - Cash and cash equivalents at the end of Q4 2024 were $20.2 million, slightly down from $21.5 million in Q3 2024 [52] Q&A Session Summary Question: Guidance on revenue growth and contributions from products - Management indicated that they are being cautious in modeling revenue from Owlet 360 and Baby Sat for 2025, not assuming any material revenue from these offerings [58][59] Question: International growth expectations - Management expects growth to come equally from both US and international markets, with international markets representing a larger opportunity for growth [62] Question: Strategies for increasing adoption in populous states - Management emphasized that increasing awareness is key to driving adoption in larger states like California and Texas, leveraging partnerships and marketing efforts [64][66] Question: Gross margin expectations for 2025 - Management clarified that while Q4 gross margins were strong, they expect gross margins for 2025 to be in the range of 50% to 52%, indicating a step up from 2024 [68] Question: Progress with payers and Medicaid reimbursement - Management reported making strides with Medicaid reimbursement and working closely with partners to drive success in this area [71] Question: Updates on Owlet 360 and user engagement - Management noted positive early feedback on Owlet 360, with strong engagement and retention rates among subscribers [42][75] Question: Adoption dynamics in international markets - Management highlighted that while it is still early, they are seeing strong momentum in markets like Germany following CE clearance [80] Question: Progress with NICUs and hospitals - Management reported that pediatricians and neonatologists are increasingly recommending Owlet products, indicating growing acceptance in the medical community [83]

Owlet, Inc. (NYSE: OWLT) Q4 2024 Financial Results March 4, 2025 Owlet, Inc. (NYSE: OWLT) | Q4 2024 Financial Results Conference Call Speakers Webcast Contacts | 2 ● Kurt Workman, CEO and Co-Founder ● Jonathan Harris, President and CRO ● Amanda Twede Crawford, CFO ● Jay Gentzkow, VP Investor Relations ● Domestic Callers: (833) 470-1428 ● International Callers: (404) 975-4839; Access Code: 492081 ● Webcast Archive Available: investors.owletcare.com 1 March 4, 2025 Non-GAAP Financial Measures In addition to t ...

Revenue and Growth - Q4 2024 revenue was $20.5 million, a 37% increase compared to Q4 2023 when excluding the revenue impact from the prior year Amazon distribution partner transition[6] - FY 2024 revenue reached $78.1 million, representing a 45% increase from FY 2023[6] - Revenues for the year ended December 31, 2024, were $78.1 million, a significant increase of 44.7% compared to $54.0 million in 2023[38] Gross Margin and Profitability - Q4 2024 gross margin improved to 53.5%, up 650 basis points from Q4 2023[6] - FY 2024 gross margin was 50.4%, an increase of 850 basis points compared to FY 2023[12] - Gross profit for the year ended December 31, 2024, was $39.3 million, up from $22.6 million in 2023, reflecting an increase of 74.5%[38] EBITDA and Operational Efficiency - Q4 2024 adjusted EBITDA was $0.5 million, improving by $1.2 million compared to Q4 2023[8] - The company aims to achieve adjusted EBITDA profitability for FY 2025[17] - Operating loss for the year ended December 31, 2024, improved to $(20.2) million from $(28.6) million in 2023, a reduction of 29.8%[38] - Net cash used in operating activities decreased to $(11.7) million in 2024 from $(23.5) million in 2023, indicating improved operational efficiency[36] Net Loss and Financial Position - FY 2024 net loss was $(12.5) million, significantly reduced from $(32.9) million in FY 2023[13] - The company reported a net loss attributable to common stockholders of $(17.2) million for the year ended December 31, 2024, an improvement from $(37.5) million in 2023[38] - Non-GAAP adjusted net income (loss) for the year ended December 31, 2024, was $(4.0) million, compared to $(20.3) million in 2023, showing a significant improvement[40] Assets and Liabilities - Total assets increased to $49.5 million as of December 31, 2024, up from $44.1 million in 2023, representing a growth of 8.9%[35] - Total current liabilities decreased to $36.8 million in 2024 from $45.1 million in 2023, a reduction of 18.3%[35] Cash Position - Cash and cash equivalents increased to $20.2 million as of December 31, 2024, compared to $16.6 million in 2023, an increase of 21.7%[35] Future Outlook - The company expects FY 2025 revenue to be in the range of $88 million to $92 million[17] - Owlet continues to focus on scaling its core business and expanding its market share in pediatric health[4] - Owlet360, a new subscription service, was launched to provide personalized insights to parents[4] Shareholder Information - The weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders increased to 10,951,270 in 2024 from 8,276,481 in 2023[40]

Financial Performance - Total revenues for the three months ended September 30, 2024, were $22,122 thousand, a significant increase from $9,182 thousand in the same period of 2023, representing a growth of 141%[19] - Gross profit for the three months ended September 30, 2024, was $11,546 thousand, compared to $3,329 thousand in the same period of 2023, indicating a gross margin improvement[19] - The net loss attributable to common stockholders for the three months ended September 30, 2024, was $(6,756) thousand, compared to $(6,960) thousand in the same period of 2023, showing a slight improvement[19] - Operating expenses for the three months ended September 30, 2024, totaled $16,368 thousand, up from $11,209 thousand in the same period of 2023, representing a 46% increase[19] - Revenues for the nine months ended September 30, 2024, increased by $24.6 million, or 74.4%, from $33.0 million in the same period of 2023 to $57.6 million[155] - The Company recorded an operating loss of $12.8 million for the nine months ended September 30, 2024, compared to an operating loss of $25.6 million for the same period in the prior year[198] Assets and Liabilities - Total current assets increased to $52,281 thousand as of September 30, 2024, from $39,944 thousand as of December 31, 2023, reflecting a growth of 31%[16] - Total liabilities decreased to $65,520 thousand as of September 30, 2024, down from $73,799 thousand as of December 31, 2023, a reduction of approximately 11%[16] - Cash and cash equivalents increased to $21,502 thousand as of September 30, 2024, from $16,557 thousand as of December 31, 2023, an increase of 30%[16] - The company reported a total stockholders' deficit of $(21,459) thousand as of September 30, 2024, an improvement from $(37,531) thousand as of December 31, 2023[16] - The total stockholders' deficit as of September 30, 2024, was $259,143,000[26] - Cash and cash equivalents at the end of the period were $21,882,000, up from $15,165,000 at the end of September 30, 2023[24] Stock and Financing Activities - Proceeds from the issuance of preferred stock and warrants were $8,856,000 for the nine months ended September 30, 2024[24] - The Company issued common stock for restricted stock units vesting totaling 439,659 shares during the reporting period[26] - The Company issued 3,135,136 shares of common stock in September 2024, generating net proceeds of $9,843, and completed a sale of preferred stock and warrants for net proceeds of $8,856 in February 2024[35] - The Company entered into a loan facility agreement for a term loan of up to $15,000 and an asset-based revolving credit facility with a maximum commitment of $15,000, with an additional $5,000 available in September 2025[36] - The Company issued 750,000 shares of redeemable common stock to WTI as part of the Loan Facility Agreement, with an initial value of $4,308 million[75][76] Expenses and Costs - Research and development expenses for the three months ended September 30, 2024, were $2,559 thousand, slightly up from $2,426 thousand in the same period of 2023[19] - General and administrative expenses increased by $4.3 million, or 79.6%, from $5.4 million for the three months ended September 30, 2023, to $9.8 million for the same period in 2024[159] - Sales and marketing expenses increased by $0.7 million, or 20.6%, from $3.3 million for the three months ended September 30, 2023, to $4.0 million for the same period in 2024[161] - Interest expense decreased by $2.7 million, from $3.0 million for the nine months ended September 30, 2023, to $0.3 million for the same period in 2024[167] Cash Flow and Operating Activities - Cash used in operating activities for the nine months ended September 30, 2024, was $14,530,000, a decrease from $21,951,000 in the prior year[24] - Net cash provided by financing activities was $20.6 million for the nine months ended September 30, 2024, down from $25.9 million in the same period in 2023, primarily due to lower proceeds from stock offerings[200] - The company has not generated sufficient cash flows from operations to meet capital requirements, raising substantial doubt about its ability to continue as a going concern[178][181] Legal and Compliance Issues - The Company has experienced recurring operating losses and negative cash flows from operations since inception, raising substantial doubt about its ability to continue as a going concern[39] - As of September 30, 2024, the company concluded that its disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting[204] - The company identified deficiencies in maintaining an effective control environment, including insufficient personnel with appropriate accounting knowledge[207] - Material weaknesses included ineffective controls over the segregation of duties related to journal entries, which did not result in adjustments to the consolidated financial statements[207] Shareholder and Stockholder Information - The weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders increased to 11,042,602 for the three months ended September 30, 2024, compared to 8,310,965 for the same period in 2023[19] - The Company reported a basic and diluted net loss per share attributable to common stockholders of $(0.57) for the three months ended September 30, 2024, compared to $(0.61) for the same period in 2023[134] - The total number of common stock warrants increased to 11,099,708 as of September 30, 2024, from 9,175,282 as of September 30, 2023[137]