Owlet, Inc.

Hello everyone and welcome to the Owlet Q3 2021 earnings call. My name is Nadia and I'll be coordinating the call today. If you would like to ask a question at the end of the presentation, please press star followed by one on your telephone keypad. I will now hand over to your host, Mike Kavanagh from ICR Westwick Investor Relations to begin. So Mike, please go ahead.

Good afternoon and thank you for joining us today. Earlier today, Owlet, Inc. released financial results for the quarter-ended September 30, 2021. The release is currently available on the company's website at 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 related 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 with the U.S. Securities and Exchange Commission, including its prospectus dated August 24, 2021, and other reports filed with the SEC, which can be found on its website at investors.owletcare.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. Outlet 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 note that Outlet will refer to certain non-GAAP financial information on today's call. You can find reconciliations of these 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'll now turn the call over to Kurt.

Thanks, Mike, and thank you all for joining us today. The third quarter of this year was our strongest ever in terms of revenue, delivering $31.5 million in revenue. This represents 48.8% year-over-year growth. and 26.3% sequential growth in the second quarter of this year. International revenue accounted for 10.6% of this, and it's exciting to see the contributions from outside of the U.S. continue to grow and account for even more of the overall pie. We officially launched in both Switzerland and France in July and September, respectively, and in the fourth quarter, we are well on our way to our next launches in Italy, Spain, the Netherlands and Belgium. Kate will go deeper into our Q3 2021 financial results later in this call. I'm incredibly proud of all that we've accomplished at Owlet through the first three quarters of the year. We achieved everything we set out to do at the start of the year. Our domestic penetration and awareness continue to grow organically, and that growth has accelerated with increased investment. Moreover, I'm happy to report that adoption and growth rates internationally have outpaced our expectations, and our progress toward key platform expansion opportunities are on the doorstep. I'd also like to highlight some additional key accomplishments so far in 2021, which include we delivered over $78 million in revenue in the first nine months of 2021. This represents a 44% increase over the same period in the year prior and exceeds our full year 2020 revenue. We delivered over $6 million in revenue from our international business in the first nine months of 2021, representing 8.3% of total revenue and an increase of 159.6% over the same time period in the prior year. We successfully delivered on the global launch of our newest product, the SmartSoc Plus, which gives us the opportunity to extend our relationship with parents and their babies from 18 months up to five years. At the end of September, the global Net Promoter Score, or NPS, for the SmartSoc was 75, which is best in class and which we believe highlights how powerful word of mouth is for our brand. We also completed our business combination, taking the company public and infusing more than $130 million of new capital into the organization to fuel continued innovation and to grow our offerings and international expansion. It's clear from the results we've achieved that giving parents access to the tools and technology they need to better care for their baby is resonating, and we believe we are just beginning to scratch the surface. Parents deal with a lot of challenges, and this market is ready for innovations. I'd like to take a moment to address the recent communication Allett has had with the Food and Drug Administration regarding our SmartSoc product in the U.S. For those who are newer to the Allett story, we launched the SmartSoc in 2015 as a consumer product in the baby monitor category, initially selling direct to consumers from our website, and shortly after expanding to retailers' smart baby monitoring offerings. We believe that the product was not subject to oversight by the FDA as a wellness product, but we knew that our Smart Socks could have broader impact in infant monitoring by pursuing FDA clearance as a medical device to enable us to market it for medical device uses. Over the last few years, we've been in discussions with the FDA regarding our efforts to obtain clearance for a prescription use only version of the Smart Sock for sick babies under the care of a physician and most recently with respect to an over-the-counter medical device Smart Sock for healthy babies. After six years on the market, with four versions launched and over one million babies monitored, on October 1st, Owlet received a warning letter from the FDA. In the letter, the agency stated it believes the SmartSoc is a medical device because of its heart rate and oxygen notification functionality and the marketing of the product around that functionality, which FDA believes requires pre-market authorization. We've cooperated in good faith with the FDA's request to cease distribution of the SmartSoc in the U.S., while we work to obtain marketing authorizations for the Smart Stock with these functionalities and claims. It's important to note that the FDA did not identify any safety issues in this letter. Rather, it focused solely on the regulatory classification of the product in the United States as a result of the heart rate and oxygen notifications and related claims. Since receiving the letter and taking prompt action to address FDA's concerns, We've been in ongoing collaborative discussions with the FDA to discuss the path forward for our medical device application for the version of the SmartSoc we've historically been selling for use in healthy babies with notifications for heart rate and oxygen based on preset values. We have a team of some of the best medical device and regulatory experts working together on our medical device submission. I'm pleased to share that in October, we completed our final audit for ISO 13485 certification. which is a third-party certification for medical device manufacturers as a step toward preparing to become a company marketing medical devices. We expect to have more meetings with the FDA before we officially submit a marketing application. We'll keep you updated and plan to share more on the timing and application status at our next earnings call in February 2022. One thing is for sure, we're not starting from scratch. Allett has been working on the validation of our safety and accuracy for several years, and we feel confident in the technology, the team, and the progress we're making now more than ever. I'm really excited to share more about our newest product, the Allett DreamSock, which we plan to announce in the coming weeks. The average parent loses 44 nights of sleep in the first year. We know sleep is a huge pain point for parents, myself included, as a dad of three kids. We're designing the new Allett DreamSock to be a revolutionary baby sleep monitor that and empower parents to build better sleep routines and habits to improve sleep for baby and the whole family. The Owlet Dream Sock will be designed to teach what to do and when to help little ones up to 18 months old and their parents sleep better. Combining the power of Owlet's award-winning technology and sleep program, the Owlet Dream Sock is meant to empower parents to build better sleep habits from day one. We plan to launch this new product as a duo as well with the Owlet Cam, similar to the Smart Sock Duo we had previously. With the upcoming addition of the Dream Socks to our suite of products, we are doubling down on our focus on infant sleep with our Care Assist services, which we expect will include coaching, courses, and other service integrations. We're building this out to initially focus on wellness offerings, specifically sleep-related services in 2022. If we obtain marketing authorization for the notification features of the Smart Talk that FDA believes rendered in a medical device, we plan to expand into more telehealth-focused integrations and services. Kate will now take us through the financial results for the third quarter of this year.