Owlet, Inc.

Hello, and welcome to Owlet's second quarter 2021 earnings call. My name is Lauren, and I'll be coordinating your call today. If you would like to ask a question during the presentation, you may do so by pressing star followed by 1 on your telephone keypad. I will now hand you over to your host, Mike Cavanaugh, for relations to begin. Mike, please go ahead.

Good afternoon and thank you for joining us today. Earlier today, Owlet Incorporated released financial results for the quarter ended June 30, 2021. The release is currently available on the company's website at www.investors.owletcare.com. Kurt Workman, Owlet's co-founder and chief executive officer, and Kate Skolnick, chief financial officer, will host this afternoon's call. Before we get started, I would like to remind everyone that certain matters discussed in today's conference call and or answers that may be given to questions asked are forward-looking statements that are subject to risks and uncertainties relating to future events and or the future financial performance of the company. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are detailed in the company's most recent public filings from the U.S. Securities and Exchange Commission, including its registration statement on Form S-1, filed with the SEC on August 5, 2021, which can be found on its website at investors.alacare.com or on the SEC's website at www.sec.gov. The information provided in this conference call speaks only as of today's live call. OWLET disclaims any intention or obligation, except as required by law, to update or revise any information, financial projections, or other forward-looking statements, whether because of new information, future events, or otherwise. Please also note that OWLET will refer to certain non-GAAP financial information on today's call. You can find reconciliations of the non-GAAP financial measures to the most comparable GAAP measures in the company's earnings press release, which is also available on the company's investor page of its website. I will now turn the call over to Kurt.

Thanks, Mike, and thank you to everyone for joining the call today. As always, we appreciate your continued support of Owlet, and I'm excited to be hosting Owlet's first earnings call as a public company. The theme of our listing announcement at the New York Stock Exchange last month was, this one is for the babies. We couldn't be more excited about the future of parenting and the opportunity for the outlet ecosystem. On today's call, I'll provide an overview of our second quarter performance and the momentum that we've built in 2021. We'll also discuss our plans for the remainder of the year and beyond. Kate will then review our financial results and we'll conclude with the question and answer session. The second quarter of this year was a record one for Owlet. We generated $24.9 million in revenue, a 14% sequential increase over the first quarter of this year. Gross margins were 54%, representing an increase of over 600 basis points from the second quarter of 2020. We're happy to announce that over 1 million babies have now used Owlet, which continues to be the number one brand in our category. In the few weeks since becoming a public company, we've already seen great coverage and received strong interest from top banks and investors. This is a pivotal moment for Owlet, and we're leaning into all of this incredible momentum to deliver key results. Some of you may be new to the Owlet story and our mission to solve fundamental problems through innovative technology tools and resources for parents. There are over 24 million caregivers in the U.S. alone between conception and kindergarten. The average U.S. parent is spending $12,000 per child each year, and beyond that, the startling reality in health care is that primary urgent care and ER visits just for ages 0 to 4 total over $30 billion annually in the U.S. I'm going to add myself to three kids, and for any parent who might be listening on this call, you also know firsthand that parents literally become caregivers overnight with little training, poor tools, and limited support. Outlet is working to solve these challenges by moving the center of care to the home, empowering parents and caregivers with the best technology and resources to help them keep their babies healthy and happy at home. We're striving to democratize access to hospital technology and bring the nursery into the 21st century with integrated telehealth services. We call this platform Outlet Care, and it represents up to an $81 billion market opportunity. We believe we have the team of experts in technology, brand, and healthcare to lead this category and strive over a billion dollars in revenue by 2025. With the recent infusion of over $135 million in net cash to fund our vision, we're primarily focused on a few key areas. First, deepening Owlet's market penetration here in the U.S. Second, growing our global footprint through strategic market expansion. And finally, leveraging our unique market leader position to increase LTV by expanding our connected nursery ecosystem with integrated services. helping to close the care loop at home. First, let's dive into some of the highlights around market penetration here in the United States. Four states have over 20% penetration with the smart stuff. These states are in the Midwest, which is great to see our products adoption not just limited to early adopter tech-centric areas like California or New York, signaling a large opportunity for growth as awareness increases. As the market leader, we have a significant opportunity to get more aggressive in building more awareness domestically. In 2021, we've greatly increased marketing spend to fuel this. Traffic to our website in July was up over 50% year-over-year. As a mission-driven company, we're extremely proud to work with parent-led, non-profit organizations, which donate Outlet smart stocks to families in need and advocate for increased access to technology like Outlet. We have relationships with nearly 30 of these types of organizations across 20 states. We're also actively working on our application for FDA clearance on both RX version of the sock called BabySat designed for sick babies as well as an over-the-counter version called OTC sock designed for healthy babies. If we receive FDA clearance, we intend to seek insurance reimbursement, which we believe would increase accessibility to more families and more babies. The next steps for Allett are focusing on awareness creation and advocacy work and continuing to make progress toward medical device authorization and clearance. Next, I'm pleased to share our international market expansion progress. This is so important to our mission of getting every baby and every parent access to health-sensing technology in the home. In the second quarter of this year, international sales accounted for 7% of our revenue, our highest ever percentage. We also officially launched in Sweden, Germany, and Austria in the second quarter, with a fast follow in July into Switzerland. With the first few weeks of our German launch, we garnered 64 million impressions in press articles with coverage across top tier outlets, equivalent to the Wall Street Journal. ALIS next steps are to continue our EU expansion in 2021 with additional geographies expected in 2022. The final theory of focus is increasing our LTV through expansion of ALIS ecosystem of innovative products and services. I'm excited to announce that we officially launched Smart Stock Plus this week in North America. with international launches expected next month. The SmartStock Plus extends the age range and usage of SmartStock from 18 months to five years, a huge expansion in the length of time we would be able to maintain a relationship with our customers. Our core products remain strong and extremely healthy with an aggregate NPS at 69. Our aggregate product rating on Amazon is over four and a half stars. We are progressing with the beta testing rollout of the wellness version of the Owlet pregnancy bands. a wearable pregnancy monitor for at-home use that extends Allett's relationship with parents into pregnancy, truly achieving our conception to kindergarten vision. I'm also pleased to share that we continue to move the ball forward in our connected nursery and telehealth solutions. Together, this would combine to over $3,000 in LTV per customer, extending our potential relationship up to six years per household. Allett's next steps in this key focus area are growing the SmartStock Plus, and many more. We have a full commercial release of the wellness version of the band and continued progress toward the launch of our new telehealth service. Overall, we believe Owlet is poised to win the category, as we're perfectly positioned to achieve a parent-centered, tech-enabled healthcare platform at all. The OwletCare ecosystem creates true value, as well as a high switching cost for customers. We've built a large competitive moat capped off by our massive dataset of infant health. and our full stack integration bridges across hardware, software and services. Allett also has a big advantage as the first mover, and we're working to deepen our penetration in all geographies, fueled in part by the additional funding from our public company business combination. In Q2, we announced the exciting additions of Kate Skolnick, the CFO, as well as new members of our board of directors, including former Livongo CEO, Zane Burke, former EVP and CFO of Polycom, Laura Durer, Expedia President of Platform and Marketplaces, John Kim, and following the transaction with Sandbridge, CEO of Sandbridge, Kim Sesla. We believe we have the capital, the momentum, and the team to deliver on this exciting plan, focused on deepening our penetration, expanding our global presence, and building out the outlet care ecosystem. I'll now turn it over to Kate to review our financials.