Executive Summary

Q2 revenue of $26.1M (+25.9% YoY) and gross margin of 51.3% (+180 bps YoY) exceeded internal expectations; adjusted EBITDA was $0.3M as the company recorded its fifth consecutive quarter of adjusted EBITDA profitability .
Management raised FY25 revenue guidance to $97–$100M (from $91–$95M) and reaffirmed gross margin of 46–50%; now “fully expect” FY25 adjusted EBITDA profitability (prior: “strive”) .
Subscription momentum: Owlet360 surpassed 66,000 paying subscribers with improving MRR, attach and retention; U.S. sell-through +37% YoY; registries +54% YoY; international sell-through +33% despite a timing-driven revenue dip .
Tariffs present a near-term headwind: Q2 gross profit impact ~$0.5M; Vietnam tariffs increased to 20% and Thailand to 19% effective Aug 1, implying ~5% GM impact in Q4; inventory averages ~6 weeks .
Capital structure overhang addressed via warrant exchange (≈96% of Series A and all Series B) for 5,426,429 shares, subject to shareholder approval; management positioned this as simplifying and strengthening the equity profile .

What Went Well and What Went Wrong

What Went Well
- “Revenue exceeded our expectations at $26.1 million… growing 26% year over year, contributing to our largest first half revenue performance in company history” .
- Subscription traction: “Total paying subscribers recently surpassed 66,000 with strong… attach rate, retention rate and consumer satisfaction” .
- U.S. demand and share gains: domestic sell-through +37% YoY; registries +54% YoY; strong Prime Day performance, category leadership and awards for innovation .
What Went Wrong
- International revenue fell to $1.8M vs $4.8M YoY due to order timing, though sell-through rose 33% YoY; near-term revenue cadence impacted .
- Tariffs compressed outlook: Q2 gross profit headwind ~$0.5M; with Vietnam at 20% and Thailand at 19% beginning Aug 1, Q4 gross margin could see ~5% impact .
- Healthcare channel remains nascent: revenue “inconsequential”; DME coverage expanding but ramp is slow; telehealth pilot timing shifted to Q4 .

Financial Results

Headline P&L (YoY and QoQ context)

Metric	Q2 2024	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$20.7	$20.5	$21.1	$26.1
Gross Margin (%)	49.5%	53.5%	53.7%	51.3%
Operating Expenses ($M)	$12.5	$18.4	$14.0	$15.3
Operating Income (Loss) ($M)	$(2.2)	$(7.4)	$(2.7)	$(1.9)
GAAP Net Income (Loss) ($M)	$(1.1)	$(9.1)	$3.0	$(37.6)
Adjusted EBITDA ($M)	$0.1	$0.5	$0.0	$0.3
GAAP EPS (basic/diluted)	$(0.30)	$(0.63)	$0.11	$(2.37)
Adjusted EPS	$0.00	$(0.07)	$(0.07)	$(0.05)

Notes: Q2 GAAP net loss inflated by $34.8M non-cash warrant mark-to-market adjustment .

Revenue Mix (Geography)

Metric	Q2 2024	Q2 2025
Total Revenue ($M)	$20.7	$26.1
International Revenue ($M)	$4.8	$1.8
U.S. Revenue ($M, implied)	$15.9 (20.7−4.8)	$24.3 (26.1−1.8)

KPIs and Operating Indicators

KPI	Q1 2025	Q2 2025
Owlet360 Paying Subscribers	~48,000	>66,000
U.S. Dream Sock Sell-through YoY	—	+37%
Registries (Amazon/Babylist/Target) YoY	—	+54%
International Sell-through YoY	—	+33%
UK Prime Day Sell-through YoY	—	+144%
France/Germany Sell-through YoY	—	>200% / >100%
Dream Sock NPS	—	>73

Guidance Changes

Metric	Period	Previous Guidance (Q1 2025, May 8)	Current Guidance (Q2 2025, Aug 7)	Change
Revenue	FY 2025	$91–$95M	$97–$100M	Raised
Gross Margin	FY 2025	46–50% (incl. expected tariffs)	46–50% (incl. updated 19–20% tariffs)	Maintained (tariff headwinds offset revenue raise)
Adjusted EBITDA	FY 2025	Strive for profitability	Now fully expect profitability	Upgraded
Other items (OpEx, OI&E, tax, dividends)	FY 2025	Not provided	Not provided	—

Context: Tariffs increased to 19% (Thailand) and 20% (Vietnam) as of Aug 1; management embedded these into FY25 GM outlook .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024 & Q1 2025)	Current Period (Q2 2025)	Trend
Subscription & Platform	Launch of Owlet360 in early 2025 as part of evolution to pediatric health platform	>66k subscribers; added Sleep Position feature; plan to launch historical trends and pilot AI-generated sleep insights by year-end	Improving; expanding feature set and monetization
Tariffs/Macro	FY25 guidance included impact of expected tariffs	Q2 gross profit impact ~$0.5M; Vietnam 20%/Thailand 19% from Aug 1; ~5% GM impact expected in Q4	Deteriorating near term (headwind)
Product Performance	Continued momentum and share gains in 2024	U.S. sell-through +37% YoY; strong Prime Day; category leadership; innovation awards	Improving
Regional Trends	International expansion highlighted in 2024	Int’l revenue $1.8M vs $4.8M YoY due to order timing; int’l sell-through +33%; UK/FR/DE strength	Mixed (order timing vs robust sell-through)
Regulatory/Medical	Only FDA-/CE-cleared infant monitors highlighted; CHKD partnership announced in Q1	Owlet Connect integration with CHKD progressing; DME coverage expanding (Medicaid in 29 states)	Gradual progress
Telehealth	Platform direction signaled in 2024/Q1	Telehealth pilot now targeted for Q4; integration taking longer	Slightly delayed
Capital Structure	Warrant liability swings impacted GAAP results in 2024/Q1	Exchange to eliminate ~96% Series A and all Series B warrants for 5,426,429 shares, subject to vote	Improving (reduces overhang)

Management Commentary

“Revenue exceeded our expectations at $26.1 million… contributing to our largest first half revenue performance in company history” – Kurt Workman, CEO .
“Total paying subscribers recently surpassed 66,000 with strong… attach rate, retention rate and consumer satisfaction” – Jonathan Harris, President .
On tariffs: “Q2 saw about a $500,000 impact to gross profit… with Vietnam tariffs… 20% and Thailand… 19%… expecting about a 5% impact on gross margin [in Q4]” – Amanda Crawford, CFO .
On healthcare ramp: “Revenue was inconsequential… Adapt is currently accepting Medicaid plans in 29 states… progress on CHKD with integration into Owlet Connect” – Jonathan Harris .
On capital structure: “We’re very pleased to simplify our capital structure… exchange… represents approximately 96% of… Series A and all… Series B warrants” – Company release .

Q&A Highlights

Tariffs and margin cadence: Q2 gross profit impact ~$0.5M; Q4 GM headwind ~5%; Q3 a blend due to inventory; target ~6 weeks of inventory .
Healthcare revenue minimal near term; DME coverage expanding (Medicaid in 29 states); CHKD integration should catalyze broader adoption; hospital onboarding requires committee approvals, integration via Owlet Connect and DME supply coordination .
Telehealth: pilot targeted by year-end; integration taking longer; pricing not yet set .
Subscription pricing tests: conversion modestly lower at higher price but outweighed by higher ARPU; attach and retention trending positively (no specific metrics disclosed) .
Warrant exchange specifics: ~7.2M Series A and ~1.8M Series B exchanged for 5,426,429 shares; subject to shareholder approval and lockup; reduces warrant-related P&L volatility and perceived overhang .

Estimates Context

Metric	Period	Consensus*	Actual	Surprise
Revenue ($USD)	Q2 2025	$22.169M*	$26.063M	+$3.894M beat*
Primary EPS	Q2 2025	-$0.2325*	-$0.05	+$0.1825 beat*
Revenue ($USD)	FY 2025	$104.632M*	Company guide: $97–$100M	Below consensus guide*
Primary EPS	FY 2025	-$2.085*	N/A	N/A

Estimates coverage: 4 estimates for Q2 and FY25 for both revenue and EPS*.

Values retrieved from S&P Global.*

Implications: Q2 featured material beats on revenue and EPS. Company’s FY25 revenue guidance is below current consensus, suggesting potential downward revisions to sell-side models absent a back-half upside catalyst . Actuals for Q2 revenue/EPS from company releases .

Key Takeaways for Investors

Strong topline and adjusted profitability: Revenue acceleration (+26% YoY) and fifth straight quarter of adjusted EBITDA profitability reinforce demand and operating leverage, despite tariff headwinds .
Tariffs are the key swing factor: ~5% GM pressure in Q4 could cap near-term margin expansion; watch mitigation actions (sourcing diversification, pricing/mix) and cadence through holiday season .
Subscriptions changing the profile: >66k subscribers and planned AI-driven insights increase LTV and recurring revenue; sustained progress here is a medium-term re-rating catalyst .
International is healthy beneath revenue timing: Sell-through +33% with standout UK/FR/DE; order timing suppressed Q2 revenue—monitor order flow normalization in H2 .
Healthcare optionality is intact but slower-burn: CHKD integration and DME coverage expansion broaden TAM, but revenue contribution remains limited near term .
Guidance vs Consensus: Company guide ($97–$100M) trails S&P Global consensus ($104.6M*), implying estimates may tighten lower; however, continued outperformance could narrow the gap* . Values retrieved from S&P Global.*
Capital structure cleanup reduces overhang risk: Exchanging ~96% of Series A and all Series B warrants should lessen P&L volatility and equity overhang pending shareholder approval .

Clear Implications

Near-term stock drivers: magnitude of tariff impact vs. pricing/mix offsets; back-half order cadence (particularly international); subscriber growth and ARPU trajectory; and progress toward FY25 adjusted EBITDA profitability .
Medium-term thesis: Subscription and healthcare channels can expand recurring revenue and diversify beyond hardware, supporting valuation multiple expansion if execution continues and tariff pressures are alleviated .

Owlet, Inc. (OWLT)·Q2 2025 Earnings Summary