Owlet(US:OWLT)2022-08-12 02:06Financial Data and Key Metrics Changes - Owlet generated net revenues of $18.3 million for Q2 2022, which fell short of previous guidance and was impacted by lower gross billings of $22.7 million [8][28] - Gross margin for Q2 2022 was 36.1%, a significant decrease from 54.2% in the prior year, primarily due to macro inflationary pressures and product costs [30] - Operating loss for Q2 2022 was $20.4 million, compared to a loss of $5.9 million in the same period in 2021 [33] Business Line Data and Key Metrics Changes - The sell-through rate for Owlet's Dream products grew over 40% from Q1 to Q2 2022, but was slower than expected, leading to lower gross billings [10][11] - Product promotions and discounts in Q2 amounted to $2.5 million, consistent with the prior year, including $2.3 million related to Amazon Prime Day [29] Market Data and Key Metrics Changes - International gross billings increased over 60% year-to-date, with significant progress in launching products in Asia, particularly South Korea [16] - Retailers began to reduce inventory levels in response to macroeconomic headwinds, impacting Owlet's sell-in and sell-through dynamics [11][36] Company Strategy and Development Direction - The company is focusing on three primary areas: achieving strong sell-through of core products, advancing medical device submissions, and managing expenses to reach breakeven adjusted EBITDA by 2023 [12][36] - A restructuring program was implemented to streamline operations and reduce costs, including a workforce reduction of approximately 74 employees [31][32] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding consumer spending and retailer inventory management in the current macroeconomic environment, while remaining optimistic about the product portfolio [43][36] - The company is not providing revenue guidance for Q3 due to reduced forecasting visibility but expects lower operating expenses sequentially [37] Other Important Information - The company plans to submit its 510(k) application to the FDA for the BabySat device, aimed at providing care for sick babies [18] - The resignation of Mike Abbott, President and Board member, was announced, marking a significant change in leadership [25] Q&A Session Summary Question: Guidance on the back half of the year - Management acknowledged caution on consumer spending and macro conditions affecting retailer inventory management [40][43] Question: Demand trends and inventory management - Management noted that while sell-through improved from Q1 to Q2, retailers began pulling back on inventory forecasts in June [46][48] Question: Breakeven timeline and impact on growth - Management indicated a target for breakeven adjusted EBITDA by the end of 2023, with a focus on reducing operating expenses in the second half of the year [52][61]