Owlet(US:OWLT)2022-05-12 00:09Financial Data and Key Metrics Changes - Q1 gross billings before promotions and reserves were approximately $26 million, a 5% year-over-year increase from $25 million [25] - Q1 net revenues were $21.5 million, relatively flat compared to $21.9 million in Q1 2021 [26] - Q1 gross margin was 40.7%, impacted by macro inflationary pressures and higher return adjustments [26][27] - Operating expenses for Q1 2022 were $30.5 million, up from $15.5 million in the same period in 2021 [27] - Q1 operating loss was approximately $22 million, and net loss was $29 million, compared to $3 million operating loss and $8 million net loss in Q1 2021 [27] Business Line Data and Key Metrics Changes - The Dream Sock and Duo products saw double-digit month-over-month sell-through growth for the past three months [12] - Return adjustments for Q1 2022 were $3 million, 11.7% of gross billings, compared to $1.2 million, 4.8% of gross billings in Q1 2021 [25][26] - Customer satisfaction metrics improved, with 93% of parents reporting peace of mind with the Dream Sock [13] Market Data and Key Metrics Changes - International revenue grew over 100% year-over-year, accounting for 13% of total revenue in Q1 2022 [19][26] - The company expanded its retail footprint significantly in the UK, including partnerships with Harrods and John Lewis [19] Company Strategy and Development Direction - The company is focused on building a connected nursery ecosystem, with investments in new products like smart cribs and a membership program [9][11] - Plans to obtain medical device regulatory clearances to accelerate market adoption [11][18] - The company aims to expand its international presence and increase penetration in existing markets [19][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased inflationary cost pressures and ongoing pandemic uncertainties affecting operations [30] - For Q2, the company anticipates revenues in the range of $23 million to $25 million, with continued headwinds from inflation and inventory rework [31][32] Other Important Information - The company is working towards FDA submissions for both prescription and over-the-counter versions of its products [18][58] - The company has made significant charitable contributions, including donating 650 monitors to Ukrainian refugees [20] Q&A Session Summary Question: Clarification on inventory rework - Management confirmed that the $3 million mentioned refers to return reserves related to new product launches, with expectations of stabilization in return rates [36][48] Question: Competitive landscape - Management noted increased competition in the camera segment but emphasized Owlet's leadership in sleep tracking technology [41][42] Question: Impact of return rates on revenue - Management explained that higher return rates were due to initial consumer confusion with new product launches, which have since improved [47][48] Question: Revenue guidance visibility - Management indicated that Q2 revenue expectations are based on sell-through activities correlating with promotional opportunities [52] Question: International market impact from geopolitical events - Management reported strong growth in Europe despite some softness due to the Russia-Ukraine crisis, with overall strong consumer demand [54]