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OI

Owlet, Inc. (OWLT)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $20.5M; gross margin expanded to 53.5% (+650 bps YoY). Adjusted EBITDA was positive at $0.5M, while GAAP net loss was $(9.1)M driven by $6.2M in legal charges .
  • Management stated Q4 results “exceeded our guidance across all key metrics” and exited 2024 with three consecutive quarters of positive adjusted EBITDA; Owlet360 subscription launched in late January with encouraging early attach rates and engagement .
  • FY2025 guidance: revenue $88–$92M, gross margin 50–52%, and a goal to achieve adjusted EBITDA profitability; retailers’ inventory patterns likely shift revenue from Q3 to Q4, making Q4 the largest quarter in 2025 .
  • Street consensus (S&P Global) was unavailable at time of retrieval, so quantitative beat/miss versus estimates cannot be determined; model implications include seasonality shift to Q4, gross margin durability, and limited 2025 contribution assumed for Owlet360/BabySat by management .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expansion to 53.5% in Q4, the seventh consecutive quarter of YoY improvement, driven by stronger volume, favorable mix toward Dream Sock, lower return rates, and improved fixed cost absorption .
  • Owlet360 subscription launched with early traction: ~12% attach rate for the January cohort, >25,000 paying subscribers, ~85% month‑one retention, and 60% daily active usage; priced at $5.99/month .
  • International momentum and share gains: Q4 international revenue +45% YoY; Amazon sell‑through up 72% in the UK and 147% in Germany; domestic sell‑through growth +34% YoY; Dream Sock NPS 73; registry additions +72% YoY .

What Went Wrong

  • Q4 GAAP net loss increased to $(9.1)M vs $(6.9)M YoY due largely to $6.2M in legal matter charges; OpEx rose to $18.4M (vs $13.0M YoY) .
  • Reported Q4 revenue declined slightly YoY ($20.5M vs $21.0M), although adjusted for an Amazon distribution timing shift in 2023, underlying YoY revenue would have been up 37% .
  • Reimbursement scaling remains early: 6 DME partners onboarded and 12 Medicaid states targeted to be fully operational by mid‑2025; management is not assuming material revenue from Owlet360 or BabySat in 2025, tempering near‑term contribution expectations .

Financial Results

Quarterly progression vs prior periods

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$20.7 $22.1 $20.5
Gross Margin %≈50% 52.2% 53.5%
GAAP Net Loss ($USD Millions)$(1.1) $(5.6) $(9.1)
GAAP EPS ($USD)$(0.30) $(0.61) $(0.63)
Adjusted EBITDA ($USD Millions)$0.1 $0.6 $0.5

Q4 YoY comparison (reported vs adjusted for Amazon timing)

MetricQ4 2023Q4 2024YoY Note
Revenue ($USD Millions)$21.0 $20.5 Reported slight decline; excluding $6M Amazon shift into Q4’23, Q4’24 revenue +37% YoY
Gross Margin %47.0% (implied from +650 bps) 53.5% +650 bps YoY
GAAP Net Loss ($USD Millions)$(6.9) $(9.1) Higher due to legal charges
Adjusted EBITDA ($USD Millions)$(0.7) $0.5 Improvement of $1.2M YoY

Balance sheet and cash flow (selected)

MetricQ4 2024Q3 2024Q2 2024
Cash & Equivalents ($USD Millions)$20.2 $21.5 $15.4
Inventory ($USD Millions)$10.5 $10.6 $8.1
Line of Credit ($USD Millions)$6.3 $9.9 $9.7
Long-term Debt, net ($USD Millions)$4.0 $4.6 $2.1 current portion; LT debt not specified net
Common Stock Warrant Liabilities ($USD Millions)$25.3 $25.1 $24.4
Stockholders’ Deficit ($USD Millions)$(29.8) $(21.5) $(33.4)
Net Cash Provided by Financing ($USD Millions)$16.6 (FY) $20.6 (9M) $5.6 (6M)

KPIs and operating metrics (Q4 context)

KPIQ4 2024
Domestic sell-through growth vs Q4 2023+34%
International revenue growth YoY+45%
Amazon Black Friday sell-through (UK)+72% YoY
Amazon Black Friday sell-through (Germany)+147% YoY
Dream Sock NPS73
Registry additions YoY+72%
Owlet360 attach rate (Jan cohort)~12%
Owlet360 subscribers>25,000 paying subscribers
Owlet360 retention (month 1)~85%
Owlet360 daily active users~60%
DME partners6 (end of 2024)
Medicaid states (targeted to roll out)12

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net RevenueFY 2024$72.5–$77.5M (Q2 guide) $74–$77.5M (raised on Q3 call) Raised low end; maintained high end
Gross Margin %FY 202447–49% (Q2 guide) 48–49% (Q3 update) Raised/maintained range
Adjusted EBITDA ($USD Millions)FY 2024$(6)–$(3)M (Q2 guide) $(5)–$(3)M (Q3 update) Improved midpoint
Net RevenueFY 2025N/A$88–$92M New
Gross Margin %FY 2025N/A50–52% New
Adjusted EBITDAFY 2025N/AStriving to achieve adjusted EBITDA profitability New
Seasonality commentaryFY 2025N/AShift of retailer orders makes Q4 the highest revenue quarter; some revenue pushed from Q3 to Q4 New qualitative guidance

Earnings Call Themes & Trends

TopicQ2 2024 (prior)Q3 2024 (prior)Q4 2024 (current)Trend
Margin expansionGross margin ≈50%; focus on lower product/fulfillment costs Gross margin 52.2%; +1,590 bps YoY; mix, returns, cost absorption Gross margin 53.5%; seventh consecutive YoY expansion; mix and returns Sustained expansion
International/CE expansionCE medical certification; EU/UK launch Continued adoption; framing Amazon timing impact International +45% YoY; strong UK/Germany Black Friday Strengthening
Subscription/Services (Owlet360)Not discussedEarly planning; subscription vision emergingLaunch Jan 28; 12% attach, >25k subs, 85% retention; $5.99 pricing; telehealth testing in Q2 2025 New growth lever
Medical channel (BabySat)FDA clearances referenced; groundwork for medical market Commercialization ramp began; opportunity highlighted 6 DMEs; 12 Medicaid states targeted; payor progress ongoing Early scaling
Retailer inventory/seasonalityNot addressedNot addressedRetailers holding fewer weeks of inventory; BF orders shift to Q4; Q4 likely largest quarter in 2025 New dynamic
Market share/brand healthNot addressedNot addressedLargest share in baby monitors; NPS 73; registry additions +72% YoY Strengthening
Legal/regulatoryNot addressedIntangible asset impairment noted $6.2M legal charges related to SPAC‑era cases; expect partial insurance recovery (not in 2024 results) One‑time headwind

Management Commentary

  • “We finished the year strong with fourth quarter results that exceeded our guidance across all key metrics.” — Kurt Workman, CEO .
  • “Owlet360 represents a major step in our evolution into a comprehensive pediatric health platform.” — Kurt Workman .
  • “Q4 2024 represents our seventh consecutive quarter of year-over-year gross margin expansion.” — Prepared remarks .
  • “Operating costs increased in Q4, primarily due to $6.2 million of charges related to certain legal matters… we expect insurance will cover a portion… however, any potential insurance recovery has not been included in our 2024 results.” — Amanda Crawford, CFO .
  • “We’re not assuming any material revenue in 2025” from Owlet360 or BabySat. — Amanda Crawford, CFO (guidance conservatism) .

Q&A Highlights

  • Guidance composition: 2025 revenue growth primarily from Dream Sock/Duo; Owlet360 and BabySat modeled as non‑material for 2025, indicating conservative treatment of new initiatives in near‑term guidance .
  • Geographic growth mix: 2025 growth expected roughly half US/half international in dollar terms, with international growing faster off a lower base .
  • Gross margin outlook: 2025 full‑year margins guided up vs 2024 (50–52% vs 50.4% actual), with intra‑year seasonality driven by promotions .
  • Reimbursement progress: Medicaid rollout across 12 states and ongoing payor engagement with DME partner AdaptHealth; pace acknowledged to be gradual .
  • Retailer pattern shifts: Fewer weeks of inventory and pushing Black Friday orders into Q4 expected to make Q4 the highest revenue quarter in 2025 .

Estimates Context

  • Wall Street consensus for Q4 2024 EPS, revenue, and EBITDA via S&P Global was unavailable at time of retrieval due to access limits, so beat/miss versus Street cannot be quantified. Consider that management:
    • Expects 2025 revenue $88–$92M and gross margin 50–52% with Q4 seasonality peak .
    • Does not assume material 2025 revenue from Owlet360/BabySat; models should avoid over‑crediting new lines before reimbursement and subscription scale are proven .

Key Takeaways for Investors

  • Gross margin durability and operational discipline are visible: 53.5% in Q4 and a seventh straight YoY expansion; mix shift to Dream Sock and lower return rates were key drivers .
  • Subscription optionality: Owlet360 shows early traction with attach, retention, and engagement; priced at $5.99/month; a potential recurring revenue and LTV enhancer over time .
  • Reimbursement commercialization: BabySat’s DME/Medicaid progress (6 DMEs; 12 states) supports medium‑term medical channel monetization, though scaling is gradual .
  • 2025 setup: Revenue $88–$92M and margin 50–52% guided; retailer inventory dynamics likely concentrate revenue in Q4, relevant for quarterly trading setups and expectations .
  • Legal noise: $6.2M legal charges weighed on Q4 GAAP results; partial insurance recovery is expected but not included in FY2024 results, suggesting clean‑up of legacy issues .
  • International acceleration: Strong UK/Germany performance and CE credentials underpin broader adoption; momentum appears additive to US growth .
  • Near‑term modeling: With Street estimates unavailable, incorporate management’s conservatism (limited 2025 Owlet360/BabySat revenue) and seasonality shift to Q4 to avoid mis‑timed revenue recognition and margin assumptions .

Additional Context

  • Owlet regained compliance with NYSE continued listing standards in October 2024, removing the “BC” indicator and stabilizing listing status ahead of year‑end .