Owlet, Inc. (“Owlet” or the “Company”) (NYSE:OWLT) today
reported financial results for the third quarter ended September
30, 2023. Owlet’s Chief Executive Officer, Kurt Workman, and Chief
Financial Officer, Kate Scolnick, will host a conference call to
review the Company’s results and provide a business update today,
November 13, 2023, at 4:30 p.m. ET.
Q3 2023 Highlights and Recent Developments
- Achieved de novo FDA- authorization for Dream Sock® – the first
and only over-the-counter, medical grade pulse oximeter classified
by FDA for healthy infants and preparing for launch by December
2023.
- Achieved revenues of $9.2 million as the Company entered into a
new arrangement to start selling products directly to Amazon.com,
Inc. under a first-party seller relationship shifting Amazon
revenues into Q4.
- Operating expenses of $11.2 million compared to operating
expenses of $26.4 million in the same period in 2022.
- Gross margin was 36.3% for the quarter compared to gross margin
of 26.6% in the same period in 2022.
- Began FDA-cleared BabySatTM monitoring system market
introduction to healthcare providers with commercial launch target
by the end of 2023.
“Last week our focus and investments into FDA clearance were
realized with the announcement of the first ever health monitor for
babies at home. This clearance along with the Q2 announcement of
BabySat clearance reposition Owlet for future growth,” said Kurt
Workman, Owlet’s Chief Executive Officer. “Owlet continues to
deliver against our strategic initiatives and our conviction in the
Company mission remains strong.
We’ve grown our sell-through sequentially every quarter this
year and have increased our total year to date sell-through over
last year while reducing our marketing spend by 75%. While a large
portion of our annual Amazon platform sell-in revenue timing
shifted from Q3 into Q4 this year versus last year, demand for our
Dream Sock and Dream Duo products remains strong as we enter Q4 and
our retail partners are looking forward to the holiday season with
the recent announcement of FDA Clearance.”
Financial Results for the Third Quarter Ended September 30,
2023
Revenues for the third quarter of 2023 were approximately $9.2
million. This compares to revenues of $17.4 million in the third
quarter of 2022.
During the third quarter, the Company entered into an
arrangement to start selling products directly to Amazon.com, Inc.
under a first-party seller relationship. Product shipments began in
the first week of October 2023, resulting in a decrease in total
Company revenue recognized in the third quarter year over year, as
no sell-in revenue was recognized related to the former customers
or Amazon.com during the quarter, compared to the prior year.
Cost of revenues for the third quarter of 2023 was approximately
$5.9 million with a gross margin of 36.3%, compared to cost of
revenues of $12.7 million for the third quarter of 2022 with a
gross margin of 26.6%.
Operating expenses were approximately $11.2 million in the third
quarter of 2023, compared to $26.4 million for the same period in
2022. The Company remains focused on controlling costs across the
business, completing regulatory submissions and achieving adjusted
EBITDA margin profitability in 2023.
Operating loss and net loss were approximately $7.9 million and
$5.6 million, respectively, for the third quarter of 2023, compared
to $21.8 million and $19.4 million, respectively, for the third
quarter of 2022.
Adjusted EBITDA loss was approximately $5.5 million in third
quarter 2023, compared to $18.4 million for the third quarter of
2022.
Net loss per share was $(0.84) for the third quarter of 2023,
compared to $(2.42) for the third quarter of 2022. Adjusted net
loss per share was $(0.70) for third quarter 2023, compared to
adjusted net loss per share of $(2.40) for the same period in
2022.
Financial Outlook
The Company will speak to its financial outlook as part of the
business update provided during Owlet’s conference call on November
13, 2023 at 4:30 p.m. ET. Conference call details are provided
below and on the Company’s Investor Relations website at Events
& Presentations.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
(the “Reform Act”). All statements contained in this press release
that do not relate to matters of historical fact should be
considered forward-looking statements, including, without
limitation, statements regarding the Company’s growth prospects,
expanded product offerings and the impacts of new regulatory
clearances or authorizations of the Company’s products. In some
cases, you can identify forward-looking statements by terms such as
“estimate,” “may,” “believes,” “plans,” “expects,” “anticipates,”
“intends,” “goal,” “potential,” “upcoming,” “outlook,” “guidance,”
“the negation thereof”, or similar expressions, although not all
forward-looking statements contain these identifying words.
Forward-looking statements are based on the Company’s expectations
at the time such statements are made, speak only as of the dates
they are made and are susceptible to a number of risks,
uncertainties and other factors. For all such forward-looking
statements, the Company claims the protection of the safe harbor
for forward-looking statements contained in the Reform Act. The
Company’s actual results, performance or achievements may differ
materially from any future results, performance or achievements
expressed or implied by our forward-looking statements.
Many important factors could affect the Company’s future results
and cause those results to differ materially from those expressed
in, or implied by, the Company’s forward-looking statements. Such
factors include, but are not limited to: (i) the Company’s ability
to implement processes, procedures and operations necessary to
market and sell medical devices; (ii) the regulatory pathway for
the Company’s products, including submissions to, actions taken by,
and decisions and responses from, regulators such as the U.S. Food
and Drug Administration and similar regulators outside of the
United States, as well as the Company’s ability to obtain and
maintain regulatory approval or certification for its products;
(iii) the Company’s ability to grow and profitably manage growth;
(iv) the Company’s ability to enhance future operating and
financial results to continue as a going concern; (v) the Company’s
ability to obtain additional financing in the future (vi) risks
associated with the Company’s current loan and debt agreements,
including compliance with debt covenants, restrictions on the
Company’s access to capital, the impact of the Company’s overall
debt levels and the Company’s ability to generate sufficient future
cash flows to meet its debt service obligations and operate the
business; (vii) the Company’s ability to maintain its listing on
the New York Stock Exchange, (viii) the Company’s ability to
implement strategic initiatives, reduce costs, grow revenues,
develop and successfully market and launch new products, innovate
and enhance existing products, meet customer demands and adapt to
changes in consumer preferences and retail trends; (ix) the
Company’s ability to acquire, defend and protect its intellectual
property (x) the ability of the Company to satisfy regulatory
requirements, including, but not limited to, those concerning
privacy, data protection, breaches and loss, and any other
requirements applicable to, or stemming from, the Company’s digital
platforms and technologies; (xi) the Company’s ability to maintain
relationships with customers, manufacturers and suppliers, and
retain management and key employees; (xii) the Company’s ability to
upgrade and maintain its information technology systems; (xiii)
changes in applicable laws or regulations; (xiv) the impact of and
disruption to the Company’s business, financial condition,
operations, supply chain and logistics due to economic and other
conditions beyond the Company’s control, such as health epidemics
or pandemics, macro-economic uncertainties, social unrest,
hostilities, natural disasters or other catastrophic events; (xv) t
adverse impacts of other economic, business, regulatory,
competitive or other factors; and (xvi) other risks and
uncertainties set forth in the Company’s other releases, public
statements and filings with the U.S. Securities and Exchange
Commission (“SEC”), including those identified in the “Risk
Factors” section of the Company’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2022, as updated in the
Company’s Quarterly Reports on Form 10-Q, and as any such factors
may be updated from time to time in the Company’s other filings
with the SEC. All such forward-looking statements attributable to
the Company or any person acting on the Company’s behalf are
expressly qualified in their entirety by the cautionary statements
contained or referred to above. Moreover, the Company operates in
an evolving environment. New risk factors and uncertainties may
emerge from time to time, and it is not possible for management to
predict all risk factors and uncertainties, or to predict whether
and how such events may affect the Company. Except as required by
law, the Company assumes no obligation to update any
forward-looking statements after the date of this press release,
whether because of new information, future events or otherwise,
although the Company may do so from time to time. The Company does
not endorse any projections regarding future performance that may
be made by third parties.
Disclosure Regarding Non-GAAP Financial Measures
In addition to the financial measures presented in this release
in accordance with U.S. Generally Accepted Accounting Principles
(“GAAP”), the Company has included certain non-GAAP financial
measures in this release, including EBITDA, adjusted EBITDA,
adjusted net loss and adjusted net loss per share.
The Company uses such non-GAAP financial measures as internal
measures of business operating performance and as performance
measures for benchmarking against the Company’s peers and
competitors. The Company believes its presentation of EBITDA,
adjusted EBITDA, adjusted net loss and adjusted net loss per share
provide a meaningful perspective of the underlying operating
performance of our current business and enables investors to better
understand and evaluate its historical and prospective operating
performance. The Company believes that these non-GAAP financial
measures are important supplemental measures of operating
performance because they exclude items that vary from period to
period without correlation to the Company’s core operating
performance and highlight trends in its business that may not
otherwise be apparent when relying solely on GAAP financial
measures. Due to the nature of the items being excluded, such items
do not reflect future gains, losses, expenses or benefits and are
not indicative of the Company’s future operating performance. The
Company believes investors, analysts and other interested parties
use EBITDA, adjusted EBITDA, adjusted net loss and adjusted net
loss per share in evaluating issuers, and the presentation of these
measures facilitates a comparative assessment of the Company’s
operating performance in addition to the Company’s performance
based on GAAP results.
The Company’s non-GAAP financial measures should not be
considered as an alternative to net loss or net loss per share as a
measure of financial performance or any other performance measure
derived in accordance with GAAP, and should not be construed as an
inference that the Company’s future results will be unaffected by
unusual or non-recurring items. EBITDA is defined as net loss
adjusted for income tax provision, interest expense, interest
expense from contingent beneficial conversion feature, interest
income, and depreciation and amortization.
Adjusted EBITDA is defined as net loss adjusted for income tax
provision, interest expense, interest expense from contingent
beneficial conversion feature, interest income, depreciation and
amortization, restructuring costs, warrant liability adjustments,
gain on loan forgiveness, stock-based compensation, and transaction
costs. Adjusted net loss is defined as net loss adjusted for
restructuring costs, warrant liability adjustments, stock-based
compensation, and transaction costs. Adjusted net loss per share is
defined as adjusted net loss divided by weighted-average shares of
common stock.
EBITDA, adjusted EBITDA, adjusted net loss and adjusted net loss
per share are not recognized terms under GAAP, and the Company’s
presentation of these non-GAAP financial measures does not replace
the presentation of the Company’s financial results in accordance
with GAAP. Because all companies do not use EBITDA, adjusted
EBITDA, adjusted net loss and adjusted net loss per share (and
similarly titled financial measures) in the same way, those
measures as used by other companies may not be consistent with the
way the Company calculates such measures. The non-GAAP financial
measures included in this release should not be construed as
substitutes for or better indicators of the Company’s performance
than the most directly comparable GAAP financial measures. See the
reconciliation tables that accompany this release for additional
information regarding certain of the non-GAAP financial measures
included herein.
Conference Call and Webcast Information
Owlet will host a conference call and audio webcast today,
November 13, 2023, at 4:30 p.m. ET to discuss these results.
To access the conference call by telephone, please dial (833)
470-1428 (domestic) or +44 208-068-2558 (international) and
reference Access Code 627533. To listen to the conference call via
live audio webcast, please visit the Events section of Owlet’s
Investor Relations website at investors.owletcare.com.
A replay of the conference call will be available by telephone
by dialing (929) 458-6194 (domestic) or + 1 929 458 6194
(international) and using Access Code 145717. The archived webcast
will also be available on Owlet’s Investor Relations website
mentioned above.
About Owlet, Inc.
Owlet was founded by a team of parents in 2012. Owlet’s mission
is to empower parents with the right information at the right time,
to give them more peace of mind and help them find more joy in the
journey of parenting. Owlet’s digital parenting platform aims to
give parents real-time data and insights to help parents feel
calmer and more confident. Owlet believes that every parent
deserves peace of mind and the opportunity to feel their
well-rested best. Owlet also believes that every child deserves to
live a long, happy, and healthy life, and is working to develop
products to help further that belief. To learn more, visit
www.owletcare.com.
Owlet, Inc. Condensed Consolidated Balance Sheets -
Preliminary, Unaudited1 (in millions)
Assets
30-Sep-23 31-Dec-22 Current assets: Cash and cash
equivalents
$
15.2
$
11.2
Accounts receivable
9.4
16
Inventory
11
18.5
Prepaid expenses and other current assets
1.9
5.6
Total current assets
37.5
51.3
Property and equipment, net
0.5
1.1
Right of use assets, net
1.3
2.3
Intangible assets, net
2.2
2.3
Other assets
0.8
1.2
Total assets
$
42.3
$
58.1
Liabilities and Stockholders’ Equity Current liabilities:
Accounts payable
$
18.4
$
30.4
Accrued and other expenses
10.1
20
Current portion of deferred revenues
0.9
1.1
Line of credit
4.9
4.7
Current portion of long-term debt
6.8
10.4
Total current liabilities
41.1
66.6
Long-term debt, net
0.5
—
Noncurrent lease liabilities
0.1
1.2
Common stock warrant liability
24.2
0.7
Other long-term liabilities
1.5
0.3
Total liabilities
67.3
68.7
Total mezzanine equity
6.9
—
Total stockholders’ equity
(32.0
)
(10.6
)
Total liabilities and stockholders’ equity
$
42.3
$
58.1
1 Amounts may not sum due to rounding
Owlet, Inc.
Condensed Consolidated Statements of Cash Flows - Preliminary,
Unaudited1 (in millions)
For the Nine Months
Ended
September 30,
2023
2022
Net cash used in operating activities
(22.0
)
(71.6
)
Net cash used in investing activities
—
(1.4
)
Net cash provided by financing activities
25.9
1.1
Net change in cash and cash equivalents
$
3.9
$
(71.9
)
1 Amounts may not sum due to rounding
Owlet, Inc.
Condensed Consolidated Statements of Operations and
Comprehensive Loss - Preliminary, Unaudited1 (in millions,
except share and per share amounts)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Revenues
$
9.2
$
17.4
$
33.0
$
57.2
Cost of revenues
5.9
12.7
20.3
37.3
Gross profit
3.3
4.6
12.7
20.0
Operating expenses: General and administrative
5.4
9.7
20.4
29.4
Sales and marketing
3.3
9.7
9.8
31
Research and development
2.4
7.1
8.1
23.4
Total operating expenses
11.2
26.4
38.3
83.9
Operating loss
(7.9
)
(21.8
)
(25.6
)
(63.9
)
Other income (expense): Interest expense, net
(0.1
)
(0.4
)
(3.0
)
(0.8
)
Common stock warrant liability adjustment
2.4
2.9
2.7
4.8
Other income (expense), net
—
—
(0.1
)
0.1
Total other income (expense), net
2.2
2.5
(0.4
)
4.1
Loss before income tax provision
(5.6
)
(19.4
)
(26.0
)
(59.8
)
Income tax provision
—
—
—
—
Net loss and comprehensive loss
(5.6
)
(19.4
)
(26.0
)
(59.8
)
Accretion on Series A convertible preferred stock
(1.3
)
—
(3.3
)
—
Net loss attributable to common stockholders
$
(7.0
)
$
(19.4
)
$
(29.3
)
$
(59.8
)
Net loss per share attributable to common stockholders, basic and
diluted
$
(0.84
)
$
(2.42
)
$
(3.56
)
$
(7.55
)
Weighted-average number of shares outstanding used to compute net
loss per share attributable to common stockholders, basic and
diluted
8,310,965
7,983,948
8,212,268
7,928,263
1 Amounts may not sum due to rounding
Owlet, Inc.
Reconciliation of GAAP to Non-GAAP Measures - Preliminary,
Unaudited1 (in millions)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Net loss
$
(5.6
)
$
(19.4
)
$
(26.0
)
$
(59.8
)
Income tax provision
—
—
—
—
Interest expense, net
0.1
0.4
3
0.8
Depreciation and amortization
0.2
0.4
0.7
1.1
EBITDA
$
(5.3
)
$
(18.6
)
$
(22.3
)
$
(57.9
)
Restructuring costs
—
1.2
—
1.2
Common stock warrant liability adjustment
(2.4
)
(2.9
)
(2.7
)
(4.8
)
Stock-based compensation
2.2
1.8
7.6
8.4
Transaction costs
—
—
1.7
—
Adjusted EBITDA
$
(5.5
)
$
(18.4
)
$
(15.6
)
$
(53.1
)
1 Amounts may not sum due to rounding
Owlet, Inc.
Reconciliation of GAAP to Non-GAAP Measures - Preliminary,
Unaudited1 (in millions)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Net loss
$
(5.6
)
$
(19.4
)
$
(26.0
)
$
(59.8
)
Non-GAAP adjustments: Restructuring costs
—
1.2
1.2
Common stock warrant liability adjustment
(2.4
)
(2.9
)
(2.7
)
(4.8
)
Stock-based compensation
2.2
1.8
7.6
8.4
Transaction costs
—
—
1.7
—
Adjusted net loss
$
(5.8
)
$
(19.2
)
$
(19.3
)
$
(55.0
)
Net loss per share attributable to common stockholders
$
(0.84
)
$
(2.42
)
$
(3.56
)
$
(7.55
)
Adjusted net loss per share attributable to common
stockholders
$
(0.70
)
$
(2.40
)
$
(2.35
)
$
(6.94
)
Weighted average number of shares outstanding
8,310,965
7,983,948
8,212,268
7,928,263
1 Amounts may not sum due to rounding
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Investors and Media Mike Cavanaugh ICR Westwicke Phone:
+1.617.877.9641 Email: mike.cavanaugh@westwicke.com
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