Owlet(OWLT) - 2025 Q1 - Quarterly Results

Q1 2025 Financial & Business Highlights 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] - 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] - A new distribution partnership with Children's Hospital of The King's Daughters enables babies to leave the hospital with an Owlet device[3] Q1 2025 Financial Performance Analysis 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 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] Operating Expenses and Profitability 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] Earnings Per Share (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 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) 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 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 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 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 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 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] - 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] - Adjusted net income (loss): Net income adjusted for warrant liability adjustments, stock-based compensation, transaction costs, and certain legal charges[18]