Earnings call transcript: Owlet Q2 2025 sees revenue rise, EPS misses target

Owlet Inc. (OWLT) reported its financial results for Q2 2025, revealing a significant revenue increase but a substantial miss on earnings per share (EPS) compared to forecasts. The company’s stock surged by 30.99% following the announcement, as investors reacted to the mixed financial performance and positive revenue surprise. Owlet’s revenue reached $26.1 million, surpassing the forecast of $20.07 million, while EPS fell short at -$2.53 against an expected $0.10. According to InvestingPro analysis, the stock appears slightly undervalued, with analysts setting price targets between $11 and $15.

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Key Takeaways

• Revenue grew by 25.9% year-over-year, reaching $26.1 million.
• EPS was -$2.53, significantly below the forecast of $0.10.
• Stock price increased by 30.99% following the earnings announcement.
• Owlet maintained its profitability streak with adjusted EBITDA of $300,000.
• The company reported a cash increase to $21.8 million from $16.3 million in Q1.

Company Performance

Owlet demonstrated robust revenue growth in Q2 2025, with a 25.9% year-over-year increase. The company’s revenue exceeded forecasts, driven by strong domestic performance and product innovations. Despite the positive revenue figures, EPS fell significantly short of expectations, marking a notable deviation from the forecasted profitability. The company’s gross margins expanded by 180 basis points to 51.3%, indicating improved operational efficiency. InvestingPro data shows impressive revenue growth of 36.8% over the last twelve months, with a Financial Health Score of 2.42, rated as "FAIR."

Financial Highlights

• Revenue: $26.1 million, up 25.9% year-over-year.
• Earnings per share: -$2.53, missing the forecast of $0.10.
• Gross margins: 51.3%, up 180 basis points.
• Adjusted EBITDA: $300,000, marking the fifth consecutive quarter of profitability.
• Cash and cash equivalents: $21.8 million, up from $16.3 million in Q1.

Earnings vs. Forecast

Owlet’s actual EPS of -$2.53 was a significant miss compared to the forecasted $0.10, resulting in a negative surprise of 2630%. The revenue, however, was a positive surprise, exceeding expectations by 30.04%, which contributed to the stock’s positive market reaction.

Market Reaction

Following the earnings announcement, Owlet’s stock price surged by 30.99%, closing at $9.30, up from $7.10. The stock’s movement reflects investor optimism driven by the revenue beat and continued profitability at the adjusted EBITDA level. The stock’s performance is notable given its 52-week range of $2.75 to $10.30. InvestingPro highlights that OWLT has delivered a strong 60.3% return over the past year, though investors should note the stock’s high volatility.

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Outlook & Guidance

Owlet has provided full-year 2025 revenue guidance of $97 million to $100 million, representing a growth rate of 24-28%. The company expects to maintain full-year EBITDA profitability and projects gross margins between 46-50%. Strategic initiatives include expanding Medicaid reimbursement and launching new product features, such as AI-generated sleep insights and a telehealth pilot.

Executive Commentary

Curt Workman, Founder, stated, "We believe we are just scratching the surface of Owlet’s potential." CEO Jonathan Harris added, "We are planning to launch historical data trends, which allow caregivers to track progress and spot patterns over time." These statements underscore Owlet’s focus on innovation and long-term growth.

Risks and Challenges

• Tariff impacts are expected to affect gross margins by approximately 5% in Q4.
• The telehealth offering is still under development, posing potential delays in revenue contribution.
• International revenue declined due to order timing, highlighting potential volatility in global markets.
• The company faces competition in the growing baby monitor category, necessitating continued innovation.
• Supply chain challenges and tariff impacts could pressure margins and operational efficiency.

Q&A

Analysts inquired about the tariff impacts, which are anticipated to reduce gross margins in Q4. Discussions also focused on the development of the telehealth offering and partnerships with children’s hospitals. The company highlighted its growing subscriber base for the Owlet 360 subscription, now at 66,000 subscribers.

Full transcript - Owlet Inc (OWLT) Q2 2025:

Tamiya, Moderator: Good afternoon. Thank you for attending today’s OWLET Q2 twenty twenty five Earnings Conference Call. My name is Tamiya, and I will be your moderator for today’s call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the conference over to your host, Jay Ginsco, Investor Relations.

You may proceed.

Jay Ginsco, Investor Relations, Owlette: Good afternoon, everyone, and thank you for joining us. Earlier today, Allett released financial results for the second quarter ended 06/30/2025. I’m pleased to be joined today by Curt Workman, Allett’s CEO and Co Founder President, Jonathan Harris and CFO, Amanda Tweed Crawford. Before we begin, please note that our financial results press release and presentation slides referred to on this call are available under the Events and Presentations section of our Investor Relations website at investors. Allotcare dot com.

This call is also being webcast live with a link at the same website. The webcast and accompanying slides will be available for replay for twelve months following this call. The content of today’s call is the property of Owlette. It cannot be reproduced or transcribed without our prior consent. Before we begin, I’d like to refer you to our Safe Harbor disclaimer on Slide three of the presentation.

Today’s discussion will contain forward looking statements based on the company’s current views and expectations as of today’s date. These statements are only predictions and are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. These risks and uncertainties include, but are not limited to, those described in our most recent filings with the SEC and in the Risk Factors section of our annual report on Form 10 ks as updated in the company’s quarterly reports on Form 10 Q and other filings with the SEC. Please note that the company assumes no obligation to update any forward looking statements whether as a result of new information, future events or otherwise, except as required by law. With that, it’s my pleasure to turn the call over to Curt.

Curt Workman, CEO and Co-Founder (Outgoing), Owlette: Thank you very much, Jay. Hello, everyone, and thank you for joining our second quarter twenty twenty five financial results call today. I’m proud to report Q2 was another exceptional quarter for Owlette. Revenue exceeded our expectations at $26,100,000 in the quarter, growing 26% year over year, contributing to our largest first half revenue performance in company history. Strong top line growth led to gross margins expanding year over year for a ninth consecutive quarter, and we recorded our fifth consecutive quarter of adjusted EBITDA profitability.

We’ve continued to make great progress throughout the 2025 and are focused on driving further gains through our strategic focus areas for growth. We’re confident in our continued momentum into the back half of the year and therefore are again raising full year guidance. Underpinning our performance was, again, the unmatched dedication of the Owlette team and our passionate community. We are building on Owlette’s transformation as a comprehensive pediatric health platform, and we believe we are just scratching the surface of Owlette’s potential. I’m extremely proud of our execution to deliver on this opportunity and our mission.

Before we jump into the second quarter results, I want to take a moment to highlight an exciting and important leadership update. As of October 1, I’ll be transitioning out of the CEO role and into a new position as executive chairman of the board. This move will allow me to focus more deeply on the things I’m most passionate about, expanding access to Alec’s mission and helping guide the company’s long term strategy as we continue to grow. Starting October 1, Jonathan will become the new CEO of Owlette. This is a meaningful moment for Owlette and one I’m incredibly excited about.

I founded Owlette over twelve years ago with a simple but powerful belief that every baby deserves access to medical grade health monitors at home. Since then, we’ve created and loved this category, launching the first smart stock in 2016 and establishing it as the gold standard with the first and only FDA cleared health monitor available to parents in The US and abroad. Now we’re closer than ever to making that vision a reality. In my new role, in addition to overseeing the long term strategy and board governance, I’ll be focused on driving broader access to our technology through affordability, insurance coverage, and building on the clinical evidence needed to make health monitors part of the standard of care for families everywhere. This change allows me to focus my time and energy on where I believe I can make the biggest impacts for parents and for the company.

We’ve built incredible momentum, and I truly believe this next chapter will accelerate it even further. Alec could not have a better CEO going forward. Jonathan is an extremely accomplished executive with the proven ability to consistently deliver value to a full range of stakeholders. Jonathan’s leadership and commitment to Owlette’s mission has already made an incredible impact on the company over the last two years, with him leading our global go to market directly following FDA and CE mark clearances, spearheading international growth and distribution, standing up our Outlet three sixty subscription offering and driving a more focused streamlined organization. It’s without question that the momentum and performance we’ve delivered in recent quarters are a direct result of Jonathan’s impact on the business and his valuable leadership.

Jonathan has been pivotal in the transformation of Owlette as a comprehensive pediatric health platform, and he is ideally suited to lead as Owlette’s CEO through this next phase of growth. I’m grateful to our board for their support transition and excited to assume the executive chairman role and continue to actively support and collaborate with Jonathan as well. It’s been a pleasure and a privilege to be the CEO of Outlet. With that, I’ll pass it on to Outlet’s new CEO, Jonathan Harris.

Jonathan Harris, Incoming CEO, Owlette: Thanks, Kurt. I could not be more thrilled at this opportunity to lead Owlette in this next chapter. On behalf of Owlette’s board and all of the Owlette’s, we’d like to thank Kurt for his passion and dedication to this company. Simply put, there would not be an Owlette without him. He has been the driving force in our mission to bring safety and peace of mind to new parents, and we are fortunate that he will continue to play a critical role as executive chairman.

We are at an exciting time with the significant opportunity to deliver on the amazing potential of this business to be the leading pediatric health platform in the world, and I’m honored to help drive this mission forward as Outlet CEO. Thank you. Okay. Now on to the financial results from the second quarter. Looking at slide five, it was another outstanding quarter for Outlet, exceeding our expectations across all metrics.

Revenue was $26,100,000 in Q2, up 25.9% compared to the second quarter twenty twenty four. Gross margins expanded 180 basis points to 51.3%, representing our ninth consecutive quarter of year over year gross margin expansion. Gross margins included the impact from tariffs in Q2 which Amanda will go into in more detail. Adjusted EBITDA was $300,000 our fifth consecutive quarter of adjusted EBITDA profitability. Finally, we are raising our full year 2025 guidance to reflect both our outperformance in the second quarter and the confidence in our outlook.

Amanda will provide more detail on our updated guidance. We are excited to maintain the momentum of the business into the back half of the year. Turning to our strategic focus areas for growth, we continue to make really strong progress on driving continued global adoption of DreamSoc, transitioning outlet into a service through the outlet three sixty subscription, supporting parents from infancy into the toddler years, and increasing our customer lifetime value, and expanding health care channels to offer an insurance reimbursed monitor. Starting with our core business, DreamSoc, both domestic and international adoption continues to be very exciting. In The U.

S, DreamSoc demand remains strong. Q2 saw another quarter of domestic sell through growth of 37% versus Q2 twenty twenty four. Sell through strength was driven by ongoing demand for DreamSoc as well as solid execution by the sales and marketing teams. We also continue to see positive trends in our registry data, a valuable leading indicator for our core business. Q2 showed a 54% year over year increase in total DreamSoc additions to the registries we track, which includes Amazon, Babylist and Target.

We also continue to maintain our market leadership in the baby monitor category. In the quarter, outlet again increased our share of total dollars spent on baby monitors versus prior year. Based on consumer research firms, Surcana, and our own data. In addition, the data is showing our overall category is growing within the twelve month trailing time period, supporting the consumer spending on baby monitors is the highest it’s been in five years. We also continue to be a company with innovation at our core as we continue to invest to maintain our lead in the pediatric health space.

Branded Health also remains in a very good position with DreamSox NPS over 73 to end the second quarter. Owlette also had our most successful Amazon event in company history at the Prime Day in July. The record sales of both our DreamSoc and Duo products with total sell through units up 72% versus prior year resulted in Owlette ranking as the number one seller in the baby monitor and baby safety categories. And finally, Howlett was recently recognized with two awards for innovation in baby care. DreamSoft took home baby monitor product of the year in the 2025 baby innovation awards.

Secondly, we earned top honors at the 2025 mother and baby awards, winning silver for best baby monitor and bronze for overall innovation of the year with mother and baby naming it a game changing device. We’re proud to be recognized as an innovation leader in our efforts to advance health and safety in the pediatric industry. Turning to international, we continue to execute on our addressable global market opportunities. In Q2 twenty twenty five, international revenue was $1,800,000 versus $4,800,000 in Q2 twenty twenty four. It is important to note that revenue was down compared to last year given the timing shift of open orders to Q3.

However, with q two sell through up 33% year over year, we’re confident in the continued growth in the international business through the back half of the year. In the quarter, outlet UK had a record Amazon Prime Day showing sell through units up a 144% compared to prior year, and outlet achieved the number one seller in the baby monitor category. France and Germany were again global standouts with sell through up over 200% and up over a 100% year over year respectively. Shifting to outlet three sixty subscription, we are now full six months since launch. In q two, we made meaningful progress expanding the value of our subscription offering while driving continued growth.

Total paying subscribers recently surpassed 66,000 with strong second quarter growth across monthly reoccurring revenue, attach rate, retention rate and consumer satisfaction compared to the first quarter. The strong trends and overall feedback have really been outstanding. Improving and enhancing subscription also continues. In q two, we launched Sleep Position, one of our most requested features, which gives caregivers visibility into how much time their baby spends on their back, side, or tummy. This insight directly supports safer sleep practices and peace of mind.

We also invested in scalable growth infrastructure, building out in app and email marketing automation tools to continue driving adoption. Looking ahead to the second half of the year, our focus is on bringing even more value to subscribers through deeper insights and expanded capabilities. We are planning to launch historical data trends, which allow caregivers to track progress and spot patterns over time. By the end of the year, we will also begin piloting AI generated sleep insights built from outlet proprietary pediatric dataset, offering caregivers personalized data backed guidance that only outlet can provide. We’re now targeting a fourth quarter telehealth pilot launch to better align with our broader ecosystem of caregiver partners.

This timing also gives us the opportunity to deliver a more connected and valuable experience for our users. These innovations will continue to strengthen our relationship with caregivers, enhance the daily utility of our platform, and drive long term subscriber growth as Outlet three sixty enables our evolution from a consumer device company to a comprehensive pediatric health platform while unlocking the value of what we believe is the largest and most scaled database of pediatric health data in the world. Finally, we’re excited about the opportunity to roll out PuTTLET three sixty internationally, and we’re in a strong position from a software development perspective. However, this year, we are prioritizing our DreamSoc and camera feature set as well as the telehealth pilot, and we’ll be rolling out Owlette three sixty internationally next year. Finishing up on our third strategic area of focus, we continue to progress our mission to expand medical and healthcare channels to offer insurance reimbursed monitor.

In the quarter, we continued development of a key component of our health care strategy, Outlet Connect, our enterprise data integration platform and service. Through Outlet Connect, for the first time ever, outlet families will be able to share their baby’s health data via baby sat with health care providers in real time. Outlet Connect is critical to our holistic health care solution as it enables integration of outlet’s unique pediatric data into clinical workflows, electronic health records, and research databases. Our new alliance with Children’s Hospital, the King’s Daughters or CHKD is progressing as planned. This includes beginning to integrate with CHKD via Outlook Connect to expand the servable baby population with BabySat.

There’s still a lot of progress to make in the health care side of the business given the size of the opportunity, but each of these steps from development of AllaConnect to partnering with our first children’s hospital are important milestones to unlocking BabySouth’s long term opportunity in healthcare. Now I’d like to turn the call over to Amanda to discuss Q2 results and our updated 2025 outlook.

Amanda Tweed Crawford, CFO, Owlette: Thanks, Jonathan, and good afternoon, everyone. I’ll begin on slide 10. Unless noted otherwise, I will be comparing second quarter twenty twenty five results to the 2024. We delivered another strong quarter in Q2, exceeding expectations across all key metrics. Revenue in the second quarter was $26,100,000 an increase of 25.9% compared to prior year.

Revenue strength was primarily driven by stronger than expected sales of DreamSoc and Dream Duo. Gross margin in the second quarter was 51.3%, an increase of 180 basis points versus prior year, our ninth consecutive quarter of year over year gross margin expansion. Gross margin improvement primarily reflects strong product mix, improved fixed cost absorption, lower direct product and fulfillment costs, partially offset by the tariff impacts. The tariff situation remains fluid, and we are adapting and evaluating in real time. In the second quarter, gross margins were impacted by the 10% tariffs assessed in Thailand and Vietnam.

With Vietnam tariffs now confirmed to increase to 20% and Thailand to 19%, we are modeling these impacts into the forecast. Total operating expenses in the second quarter were $15,300,000 versus $12,500,000 in the same period last year. As a percentage of revenue, Q2 operating expenses were 58.7% compared to 60.4% in Q2 twenty twenty four as we continue to drive strong operating leverage as we scale the business. Operating loss in the second quarter was 1,900,000 compared to $2,200,000 in the same period last year. Net loss in the second quarter was $37,600,000 versus $1,100,000 in the same period last year.

The increase was primarily driven by a 34,800,000 non cash mark to market adjustment related to our common stock warrant liability. Excluding this adjustment, our net loss would have been 2,800,000.0. We announced earlier today that we’ve come to an agreement with various holders of our Series A and Series B warrants to exchange their warrants for shares of common stock, which will result in the elimination of over 90% of the Series A warrants and all of the Series B warrants. We’re very pleased to simplify our capital structure and eliminate the uncertainty the warrants have presented for current and prospective investors. The exchange will be subject to stockholder approval at our upcoming annual meeting and other customary closing conditions.

I’d refer those on this call interested in further information to refer to our Form eight ks and press release, both issued earlier today. Q2 adjusted EBITDA was 300,000 an improvement of $200,000 compared to the same period last year. Strong revenue growth despite tariff costs drove the increase, our fifth consecutive quarter of adjusted EBITDA profitability. Cash and cash equivalents as of quarter end June 30 were $21,800,000 versus $16,300,000 at the end of the first quarter twenty twenty five. In the quarter, we drew down on our line of credit increasing to $14,900,000 at the end of Q2 versus $8,500,000 at the end of Q1, the primary driver of our cash balance increase.

Turning to our financial outlook. We are updating our 2025 guidance to reflect our strong first half twenty twenty five performance and confidence in expectations for the balance of year, as well as incorporating recent tariff cost increases. As was our message in the last quarter’s guidance update, the fluidity of the macro backdrop creates some uncertainty, specifically tariff policies that have potential to change. As a result, today’s updated 2025 guidance includes our best estimate based on the data we have available to us today. Outlook continues to execute at a high level.

And as a result of our first half twenty twenty five revenue strength and outlook for the second half of the year, we are raising our revenue guidance. For full year 2025, we now expect revenue in the range of 97,000,000 to 100,000,000 representing 24% to 28% growth year over year. Turning to our gross margin guidance, we are reflecting the new increased tariff expectations of 20% on imports from Vietnam and 19% on imports from Thailand in the product cost of goods sold for our updated outlook. As a result, we are reaffirming our 2025 gross margin guidance range of 46% to 50%. We expect our raised revenue guidance will be offset by the increased tariff costs.

And finally, with Q2 adjusted EBITDA outperforming expectations and given our confidence in our outlook, we now fully expect to be adjusted EBITDA profitable for full year 2025. With that, we will now take your questions.

Tamiya, Moderator: Thank you. We will now begin the question and answer session. The first question comes from Charles Rhyee with TD Cowen. You may proceed.

Charles Rhyee, Analyst, TD Cowen: Yes. Thanks for taking the questions and congrats on the quarter here. And also, obviously, John and Kirk congrats on the new roles. A lot of hard work done here, so congrats. Maybe if I could start Amanda on guidance here, just trying to understand a little bit if you could help maybe quantify roughly what you think the tariff cost will be to cost of goods sold in particular.

And I guess with 51% gross margins here in the second quarter guiding 46% to 50 maybe you can give us a sense on what that implies for the back half. I guess it would imply something more in the mid-40s. Is that the right way to think of it?

Amanda Tweed Crawford, CFO, Owlette: Yes. So when it comes to tariffs this quarter, the impact was less significant than we’re expecting in q three and q four just because the tariffs were temporarily set at 10% and then increased to 19% for Thailand and 20% for Vietnam on August 1. So during q two, we saw about a $500,000 impact to gross profit. When we push that forward looking ahead to q four, we’re expecting about a 5% impact on gross margin. And then q three will be kind of a blend between the two quarters just because we’ll continue to have the 10% rate, which is in our inventory right now.

And then as the cost, we will see a little bit of an increase in q three as well.

Charles Rhyee, Analyst, TD Cowen: Okay. That makes sense. And just remind me, like, how many days inventory are you are you typically carrying?

Amanda Tweed Crawford, CFO, Owlette: We we target about six weeks.

Charles Rhyee, Analyst, TD Cowen: Six weeks? Okay. Depends on the That’s helpful.

Amanda Tweed Crawford, CFO, Owlette: Yeah.

Charles Rhyee, Analyst, TD Cowen: Yep. Okay. And then maybe, know, Kurt or Jonathan, maybe maybe a progress on on the health care side with DME vendors and just if there’s a if you can give us an estimate on how much maybe health care revenue contribute in the quarter?

Jonathan Harris, Incoming CEO, Owlette: Yes. Health care continues to be a slow progress for us, so we’re continuing to drive on that. The revenue was inconsequential, but we have expanded. Adapt is currently accepting Medicaid plans in 29 states. So we are seeing an increase in our adoption of reimbursement, and we are making great progress on CHKD with the integration into Outlet Connect.

So I think once that’s fully up and stood up, I think we’re gonna continue to see additional hospitals, health care systems join on board and and continue to grow. So it’s a it’s a it’s a slower slow process, but we’re we’re continuing to gain momentum.

Charles Rhyee, Analyst, TD Cowen: Great. And maybe one last question for me then. The warrant exchange, you know, I saw the announcement that it just that it has been that you announced this. What does that turn into for common shares if they’re all exchanged?

Jay Ginsco, Investor Relations, Owlette: Love to get back to you on that, Charles.

Charles Rhyee, Analyst, TD Cowen: Okay. All right. Okay. Well, anyways, that’s all I had. Thanks a lot and congrats on strong performance.

Jonathan Harris, Incoming CEO, Owlette: Thanks, Charles.

Tamiya, Moderator: Thank you. The following comes from Ben Haynor with Lake Street Capital Markets. You may proceed.

Ben Haynor, Analyst, Lake Street Capital Markets: Hi. Good afternoon, guys. Thanks for taking the question.

Curt Workman, CEO and Co-Founder (Outgoing), Owlette: So let’s just answer me just just

Charles Rhyee, Analyst, TD Cowen: can you hear me okay?

Amanda Tweed Crawford, CFO, Owlette: Yeah. We can hear you.

Jonathan Harris, Incoming CEO, Owlette: Oh, okay. Great. Can you hear us? Yeah. I can I can hear

Ben Haynor, Analyst, Lake Street Capital Markets: you fine? Sorry about that.

Charles Rhyee, Analyst, TD Cowen: On you just kinda wanted

Ben Haynor, Analyst, Lake Street Capital Markets: to touch on telehealth, and I apologize. I’m jumping between a couple calls here. Any update to the the plans there? Is that something that you expect to kinda roll out similarly to the subscription offering where initially offer it to a subset of of folks on the on the platform, and then they expand it later and have you set pricing or any other details there?

Jonathan Harris, Incoming CEO, Owlette: Yeah. So we’re we’re super excited about the opportunity to roll in the telehealth. It’s still under development. Integration is taking a little bit longer than expected. So we will roll it out by the end of this year, and we have not set or structured pricing on that at this time.

Ben Haynor, Analyst, Lake Street Capital Markets: Okay. Fair enough. And then any more color on kind of the interest level from from other children’s hospitals or other entities after seeing the CHKD?

Jonathan Harris, Incoming CEO, Owlette: Yeah. The dialogue with our hospitals has really picked up since that announcement, and we’re we’re we’re lining them up. You know, nobody wants to be first, but, you know, they sure don’t wanna be last. So we’re really standing up to our Outlook connect. Once we get CHKD set up with that, then we’re gonna begin rolling out to other hospital groups.

But we are in conversations with a few as we speak.

Ben Haynor, Analyst, Lake Street Capital Markets: Okay. Got it. And and then I think lastly for me, just just following up on on on the prior question on on BabySet and, you know, 29 states. Are you seeing any trends that are similar to to what you’ve seen as you kinda get adoption to a certain level in a given geography amongst these these sort of Medicaid populations, or is it or is it too early for that?

Jonathan Harris, Incoming CEO, Owlette: Yeah. It’s I’d say it’s still too early for that. We’re we’re we’re building momentum, but it is a it’s a slower process than than the consumer side.

Amanda Tweed Crawford, CFO, Owlette: Fair

Ben Haynor, Analyst, Lake Street Capital Markets: enough. Congrats on the quarterly guidance and the new roles, Jonathan and Kurt. Thank you.

Tamiya, Moderator: You. The next question comes from Owen Rickard with Northland Capital Markets. You may proceed.

Owen Rickard, Analyst, Northland Capital Markets: Hi, guys. Thank you for taking my question and congrats on a great quarter. Can you dive a bit deeper into this outlet connect offering? Maybe just provide us with a little bit more color there. What are

Boris Peaker, Analyst, Titan Partners: you excited about with this one?

Jonathan Harris, Incoming CEO, Owlette: Yeah. Great question. We’re excited because this is gonna provide real time monitoring back from our our babies that are discharged from the hospital from the NICUs into their homes. This will give real time information back to the neonatologist through through the through the connect. So this is not changing the workflow on the neonatologist side.

But for the first time ever, babies at home will be able to share information with their doctors back at their offices or back at the hospital in real time. So we’re super excited about this opportunity. You know, it’s taking a little bit longer to get the full integration, but we believe once this is live, this will be groundbreaking technology for discharges in children at home.

Owen Rickard, Analyst, Northland Capital Markets: Great. Thank you.

Tamiya, Moderator: Thank you. The following question comes from Alex Fuhrman with Lucid Capital Markets. You may proceed.

Owen Rickard, Analyst, Northland Capital Markets: Hi, guys. Thanks very much

Alex Fuhrman, Analyst, Lucid Capital Markets: for taking my question. I wanted to ask about the outlet three sixty subscription offering. That’s pretty big growth from last quarter getting to Citi’s 66,000 subscribers. Can you talk a little bit about what you’ve learned over the past couple of months? It looks like you you’ve kinda changed the price a couple of times as you’ve tested things like that.

Has there been any sensitivity to price? And what what is your onboarding, you know, as you’ve been selling new devices? What what kind of attach rate have you gotten on the subscription to to activators of the new devices?

Amanda Tweed Crawford, CFO, Owlette: Alright. Thanks for thanks for the question, and thanks for calling in. We’ve seen really strong progress on subscription. We’re seeing everything that we want to see. Growth in total paying subscribers, the MRR, attach rate, retention rate, and overall satisfaction and feedback.

We’re not ready to share those specific metrics yet, as this is still emerging. But currently, we’ve got 66,000 paying subscribers. They are at different pricing levels as somewhere in an introductory period versus the the more recent pricing structures. But something we are seeing, since we’ve increased the the price, the conversion rate real was slightly less, but not to the extent that it was it was worth having the higher price, if that makes sense. So we’re seeing really, really good, strong momentum given our current price point.

So we do expect to scale throughout the year. It’s still early, but we are excited for the long term impact that we expect, subscription to have on the business, just from a financial standpoint, but as well as we are in our transition to become a pediatric health platform.

Alex Fuhrman, Analyst, Lucid Capital Markets: The

Tamiya, Moderator: next question comes from Boris Peaker with Titan Partners.

Boris Peaker, Analyst, Titan Partners: Great. I’d want to add my congratulations to the great quarter. Just a few questions here. Maybe on the hospital side of things, what is the actual process or at least from the contract that you signed already, what is the process of bringing another hospital on board? Is there some kind of an internal committee that needs to make a decision?

Do they do a little pilot trial? Or just help us understand how that works and what that can imply about kind of future hospital contracts.

Jonathan Harris, Incoming CEO, Owlette: Yeah. Great great question, Morris. So, yeah, it definitely comes through the through the committee, working through that, and then it’s getting the integration, through our Outlet Connect integrated into whatever their remote patient monitoring platform that they’re used. So there there is an integration cycle. And then it’s also partnered through our one of our DME partners to make sure that they’re supplying the baby SATs into the hospital itself.

So sort of two components. One is the hardware itself, and then the second is the integration into the service on the backside. So, it it’s a little bit of a process. And as you know, know, hospital contracts can take a while to negotiate.

Boris Peaker, Analyst, Titan Partners: Got it. And maybe just a question on tariffs. Assuming that these higher tariffs remain, is there a strategy to bring manufacturing to The US, maybe to another country with a lower tariff, or is that kind of strategy to just continue paying them as that’s the most optimal path forward?

Amanda Tweed Crawford, CFO, Owlette: Yeah. We are looking into other options for other manufacturing sites. At this point in our journey, we are hitting up against capacity and had a planned expansion anyway. So this is a really good opportunity for us to diversify our sourcing and look at other possible locations. So it’s something that we’re actively looking into and seeking to minimize the overall impact of the tariffs.

Owen Rickard, Analyst, Northland Capital Markets: Great. Thank you very much for taking my questions.

Tamiya, Moderator: Thank you. Thanks for dialing in. There are currently no other questions queued up.

Amanda Tweed Crawford, CFO, Owlette: So just a reminder Thank you. Just wanted to address the question that Charles had just regarding the exchange agreement with the warrants. So we are exchanging about 7,200,000.0 of series a and 1,800,000.0 of series b for an aggregate amount of 5,000,426 429 newly issued shares. So that is disclosed in our press release and eight k. So just wanted to make sure that we answered that question.

Tamiya, Moderator: No more questions have queued at this time. I’ll now turn it back over to Jonathan Harris for closing remarks.

Jonathan Harris, Incoming CEO, Owlette: Thank you for joining us today. We’re incredibly proud of the progress we’ve made this quarter from our strong financial performance to the continued expansion of our global footprint. Our commitment to empowering parents with the information they need to care for their babies remains at the heart of everything we do. We believe that our FDA cleared products, combined with our strategic partnerships and growing subscription service, position us for sustained growth and profitability. We are confident in our vision for the future and look forward to updating you on our progress.

Thank you again for your time and continued support.

Tamiya, Moderator: This concludes today’s conference call. Thank you for your participation. You may now disconnect your line.

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