Owlet, Inc.

Good afternoon. Thank you for attending the hourly earnings conference call. My name is Matt and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call for an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the conference over to our host, Mike Cavanaugh, Investor Relations. Mike, please go ahead.

Thanks, Matt. Good afternoon and thank you all for joining us today. Earlier today, Owlet Incorporated released financial results for the quarter ended December 31, 2022. The release is currently available on the company's website at investors.owletcare.com. Kurt Workman, Owlet's co-founder, president, and chief executive officer, and Kate Skolnick, chief financial officer, will host this afternoon's calls. 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 US Securities and Exchange Commission, including its quarterly report filed November 14, 2022, and other reports filed with the SEC, which can be found on its website at investors.outletcare.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 release, which is also available on the company's quarterly results page of its website. I will now turn the call over to Curt Workman.

Thanks, Mike. Good afternoon to everyone joining us today. During our call today, you're going to hear a lot of conviction about Owlet's fundamentals and our vision for the future. I recognize that our confidence in our business conflicts with our reported financial results in 2022 due to the efforts required to rebuild our business. I'd like to take a minute up front to address this. Throughout 2022, we made tremendous progress positioning Owlet for sustainable, profitable growth in 2023 and years into the future. We rebuilt our brand health, rebased our operating expenses, focused on rebuilding channel health, and made milestone progress towards regulatory approval for both our medical device and de novo product applications. A few weeks ago, with Owlet's underlying business properly positioned, we raised $30 million of additional capital from both insiders and new investors, ensuring that we have the balance sheet to execute in 2023 from a position of strength. The investors who provided us with this new capital based their confidence on the fundamental improvements and strategy I'm going to discuss with you today. Our plan for 2023 is clear. Positioning Owlet on the pathway to cash flow positive, profitable, and long-term sustainable growth through category-defining products. There are a few underlying trends in our business that give me confidence that Owlet is on track to deliver this. Our brand health has returned to all-time highs, levels not seen since 2021. NPS is at all-time highs and marketing spend, CPA, has declined 80% since the start of 2022. Our channel sell-through growth quarter over quarter, reaching nearly $20 million in gross revenue of sell-through in Q4. Inventory and channel is normalizing, and we expect sell-through to match sell-in by the end of Q2 with improvements in Q1. Our expenses are right-sized, and this will demonstrate our rebased operating expenses in Q1 and Q2 with the plan to spend no more than $40 million in 2023 adjusted operating expenses, excluding stock-based compensation. We are aggressively focused on achieving profitability and improving working capital. We're targeting to be EBITDA breakeven in the back half of the year and to see working capital continue to improve each quarter. Owlet weathered a lot of change in 2022. Today Owlet is now in a position to focus on execution, and we understand the best way to build trust with the market is to deliver results each quarter. As we progress through the year, we expect to deliver results that demonstrate what we see internally. An organization that is on track to be profitable and growing with numerous avenues for future growth, including organic marketplace opportunities, regulatory clearances, and new products for our connected nursery portfolio. Turning to our 2022 business results. After relaunching our flagship stock monitoring product in the US in January and transitioning from our CAM1 to CAM2 in July, we achieved full year product portfolio revenues of 69.2 million within our targeted range. While retaining strong satisfaction, it's notable that since January 2022, we've reduced the cost of our media acquisition spend, CPA, by 80%. Owlet is now the number one selling monitor on Amazon year-to-date in 2023. After effectively marketing and advertising our dream portfolio relaunch in early 2022, we believe consumer satisfaction of our products and trust and belief in the Owlet brand is strong. The MPS of our product continues to improve throughout the course of the year, with successful introduction of DreamSoc and our CAM2 product transition. NPS across our portfolio is now at or above 2021 levels. Our Q4 reported revenue does not represent the current sell-through of our business. That is because the first half of 2022, sell-in was materially greater than sell-through as we re-entered the market and initially stocked all retail and distribution channels with our Dream products. As we rebuilt brand health through 2022, sell-through continued to improve, growing nearly 47% from the first half to the second half of 2022, and giving us confidence that our brand and products resonate with consumers. However, inventory and channel is substantially greater than our targeted 10 to 14 weeks, which resulted in materially less sell-in in Q4. As a result, our reported revenue does not represent the current sell-through across our channels. We expect a similar effect in Q1 2023 as inventory and channel normalizes. Looking to Q2, we expect sell-in to begin to align with sell-through. In partnership with our retailers, we are highly focused on sell-through and recognize managing inventory in the channel is essential to maintaining strong brand health, better margins, and delivering consistent results. 2022 gross margins were 34% and within our targeted range for the year. There were multiple factors that adversely affected gross margins in 2022, which we believe will not be present in 2023. Headwinds for margins last year were primarily related to the return to vendor program we offered to all domestic retailers as a result of the FDA warning letter, the substantial write-off of prior generation inventory deemed obsolete, additional promotions to support the launch of our dream portfolio, elevated PPV costs incurred due to supply chain shortages in 2021, and inventory adjustments and reconciliations cleanup. In retrospect, this was an unprecedented and costly operational challenge for a company of our size to execute, and we did our best under very difficult circumstances. Moving forward, one of our biggest operating priorities is working towards getting back to 40% to 50% gross margin in future periods through tighter management of promotional spend and supply chain costs. It's important to note that the contract cost of manufacturing a product has not increased, which gives us confidence in our ability to return to these prior gross margin levels in the future. For 2022, total operating expenses were $95.1 million, excluding stock-based compensation, sequentially declining each quarter through the year. In the first half of 2022, our focus was getting our dream product portfolio into the market. and we spent heavily in marketing and promotions to build back and reposition effectively in the marketplace. We were able to successfully position our dream portfolio back into the number one position in key retailers by mid-year and have also been able to improve customer experience and satisfaction with our products to previous levels while putting together two FDA submissions and two European submissions for medical device clearance. Over the last two quarters, we've taken multiple steps to significantly reduce our day-to-day operational spending. The effects of these expense run rate improvements, including headcount reductions, variable spend controls, and finishing programs related to regulatory clearances, were somewhat masked in Q3 and Q4 due to cleanup adjustments, such as bad debt reserves and other items incurred in prior periods. And as such, the improvements we've made are not yet fully reflected in the financial statements. We exited the fourth quarter with operating expenses excluding stock-based compensation of $19.6 million. When factoring out bad debt reserves and one-time expenses, such as costs from our financing activities, severance, regulatory clearances, and out-of-period expenses, the underlying spend to operate the company was $15.2 million, marking a significant improvement to prior periods. As we shared in our last call, due to the changing macroeconomic conditions in the market, we adjusted our operating plan to drive the business to break even adjusted EBITDA in 2023. We've streamlined our organizational structure from 227 employees last year to under 100 employees today. We are targeting run rate operational expenses under $13 million in Q1, excluding stock-based compensation and adjustments and financing transaction costs. We will continue to find opportunities to reduce costs in the first half of 2023 to maintain operating expenses under $40 million in 2023, excluding stock-based compensation and Q1 financing transaction costs. For the past 12 months, Allett has shown operational resilience with the vision and commitment to be the long-term leader impacting pediatric health. In February, as I previously mentioned, we raised $30 million in capital to support our balance sheet, and we are working to restructure our lending commitments for access to working capital. Our 2023 planning will be to limit cash burn under $15 million as we strive for profitability and cash flow positives in the back half of the year. As we set the foundation for profitability and gain FTA clearances, we believe Owlet has a very healthy high growth opportunity. The most critical accomplishments towards Owlet's digital healthcare future is the work we've done to pursue regulatory clearances for our products in 2022. As stated in prior calls, we believe in making the highest quality care available to every baby by democratizing access to technology and information that has previously been limited to clinical settings. Our team has completed significant work which enabled us to file FDA submissions for our monitoring platforms, which, if cleared, will unlock further long-term opportunity and growth for Owlet. Over the past year, we've greatly increased our communication with the FDA, maintaining frequent conversations and meetings, and developing two clear, distinct paths forward for our submissions. In October of 2022, we filed a 510 pre-market notification to the FDA for a new prescription monitoring device for infants. The device, which we internally call BabySat, uses pulse oximetry technology and is intended to be prescribed by physicians to assist with the in-home monitoring of babies under a physician's care. The device provides alerts to parents when their baby's heart rate or oxygen saturation level, or SpO2, does not fall within prescribed ranges. BabySat represents significant advantages to the large wired hospital monitoring technologies on the market today with its wireless wearable form factor and cloud-connected data integration designed for home use. In December, we filed a second submission to the FDA for a software as a medical device as an over-the-counter product that offers heart rate and oxygen notifications in conjunction with the existing DreamSoc sleep monitoring capabilities. The de novo application includes both the display of heart rate and oxygen currently in the DreamSoc and additional notification features as software as a medical device. We are currently in the review process with the FDA and are working to respond promptly to any questions or clarifications that come up We've also made substantial progress towards our UK and CE medical applications and continue to maintain our MD SAP and ISO 1345 certifications, passing several audits in 2022. I look forward to sharing more updates on these submissions when we have news to share. We believe the FDA authorizations will position Owlet to better help parents navigate the gap between hospital and the home and increase our ability to use our large and growing data set as a critical tool for pediatric care. We are determined to execute as best we can through this near-term macroeconomic uncertainty and remain focused on the milestones that will best position us for the strongest long-term potential for a healthy, profitable business. Thank you for your continued support of Owlet. Kate, over to you.

Thank you, and good afternoon, everyone. Turning to our Q4 and fiscal 2022 results. Gross billings for the fourth quarter were $15.4 million, down from $23.4 million in Q3 sequentially. Q4 product promotions and discounts were $2 million, primarily associated with seasonal promotional activity for OLED.com and Q1 retail promotional discounts. This compares to product promotions and discounts of $3.2 million sequentially in Q3. Returns and allowances reserves for Q4 2022 were $1.5 million, 9.7% of gross billings. This compares to reserves sequentially in Q3 of 2.7 million, 11.5% of gross billings. Q4 revenues were 12 million, including the impact of adjustments such as promotions, discounts, returns, and other allowances. Cost of goods sold in Q4 was 8.6 million, and gross profit was 3.3 million. Q4 gross margin was 27.5%, compared to 26.6% gross margin sequentially. Costs and other items impacting our gross margin unfavorably in Q4 were from inventory adjustments and obsolete inventory, PPV and promotions. Year to date 2022, our gross margin was approximately 33.7% within our targeted range. As Kurt detailed, the largest non-recurring cost impacts we experienced in 2022 were related to the return to vendor program, elevated promotional discounts and product costs related to our FDA warning letter, and launching our dream products. One of our highest operational priorities in 2023 is gross margin improvement, and we are actively working to put the volatility of the FDA warning letter impact behind us. In addition to the non-recurring aspects of the cost this past year, we are highly focused on the operational efficiency levers within our control to improve margins with the goal of returning to 40% to 50% gross margins in the future. Q4 operating expenses were $24.1 million compared to $26.4 million sequentially. Excluding stock-based compensation, Q4 operating expenses were $19.6 million. Within our Q4 expenses, we had a few discrete expenses worth noting. Q4 operating expenses included $2.4 million in preliminary bad debt reserves subject to change, $600,000 in fundraising transaction costs, $500,000 in spend toward our regulatory submissions, and approximately $400,000 in partner marketing expenses from prime periods, which we don't expect to see in the future. We also took a $300,000 write-off for retail store displays related to buy-by-baby stores, and we are monitoring their financial situation closely. Excluding stock-based compensation items we believe are one time in nature, operating expenses were 15.2 million in Q4. Operating loss and net loss for Q4 2022 were 20.7 million and 19.5 million. Q4 adjusted EBITDA loss was 15.2 million. Turning to the balance sheet, cash and cash equivalents as of December 31 were approximately $11.2 million. Accounts receivables were $16 million down $4.5 million sequentially from $20.5 million in Q3. Inventory at the end of Q4 was $18.5 million down $5.3 million sequentially from $23.8 million in Q3. Looking ahead over the course of 2022, we actively work to best position our dream portfolio for success in the Connected Nursery category and made two regulatory submissions of our products that are the opportunity to open new markets and empower more parents globally. For the areas that are within our control, we are focused on driving the activities that maximize supporting and achieving sell-through of our core products and therefore driving balance and retail inventory for future selling opportunities. making strides in our medical device clearances, and efficiently managing our operating plan towards breakeven and profitability. We navigated through very difficult circumstances over the last 12 months, and we will continue to find the best ways to adapt to any uncertainty in this macroeconomic environment. Recently, we have successfully raised $30 million in capital to support our balance sheet and meet our operational goals in 2023. We've been customers of Silicon Valley Bank for a long time, and we were impacted along with everyone else given this past week's events. Based upon recent announcements from SVB, they have confirmed their loan agreement and credit facility remain in place. We currently have access to our deposits, and we're in the process of amending our loan agreement and line of credit as previously disclosed. For 2023, given current inventory levels and expectations for our Q2 promotions, We're currently forecasting Q1 revenues to be sequentially down from Q4. As we support continued sell-through inventory momentum with our retailers, we anticipate sell-in revenue will sequentially improve through the year after Q1. We'll provide additional outlook when we report our Q2 earnings call. For the full year, we plan to improve gross margins above 2022 levels. In 2022, Two, we estimate that non-recurring costs from the FDA warning letter activity have impacted our margins by at least 800 to 900 basis points. And we plan to reduce our operating expenses for the full year below $40 million, excluding stock-based compensation. We have the objective of turning the business towards adjusted EBITDA margin break-even between Q3 and Q4 in 2023. Thank you for the time today. Operator, let's open up for questions.

Absolutely. If you'd like to ask a question, please press star followed by one on your telephone keypad. If for any reason you'd like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. We'll pause here briefly as questions are registered. The first question is from the line of Charles Reed with TD Cowan. Your line is now open.

Hey, guys. Thanks for taking the question. You know, Kate, I just want to talk through this, the sell-through, you know, and sell-in issue. You know, obviously, the guidance range you gave for 4Q was, you know, fairly wide. You know, it was like roughly 12 to 17. And if we think between the bottom to top end there, you know, that's like call it another $5 million range. You know, and you attribute a lot of it to the first half. The sell-in was huge, and that accounts for that 21 and a half, and let's say the 18 in the second quarter. What was the sell-through then in the first half of the year? Like, you know, can you give us a sense, like, the magnitude? I mean, were we selling through maybe $5 million, $6 million in the first quarter? Because it seems like a lot to right-size here in the back half of this year and into the first quarter. If you can just kind of give us a sense of that.

Yeah, I don't, Kurt, do you want to make any comments on that? I think from a color perspective, if you recall, our initial launch into the market was at the very end, the sell-in was at the very end of Q1 as we talked about loading into retailers and the distribution into Q1. And so really sell-through did not take place until Q2. Kurt, I don't know if you want to make another comment beyond that.

Yeah, I would just say it was substantial, right? So, you know, after the warning letter, we took all the product back to repackage, reprogram those units to position for the DreamSoc launch. And we did that, but it was sort of throughout the first quarter, right? So we didn't get into all of our retailers by the end, but there was significant load in to get back to previous levels of smart stock inventory in retail. But our sell-through did not start off as strongly as our previous smart stock sell-through was moving in Q3 of 2021. And so that created an inventory imbalance. you know, we did everything we could in Q1 and Q2 to push sell through as fast as we could and continue to sell into retailers in Q2. And the sell through just took a little longer to materialize. I think the good news is that, you know, by Q4 and now moving into this year, you know, sell through levels are getting back to those previous levels that we had before.

Okay. So does that mean, right, so if you're saying in the first quarter that You expect it to be sequentially down to support the sell through. Will our inventory levels be back to then 10 to 14 weeks? And then if that's the case, should we expect then a significant step up in revenue in the second quarter or in the rest of the year? I mean, is that or is it still more kind of a slope up?

I think what you'll see is a step function Q1 to Q2. And part of that is that we're reducing inventory levels this quarter and moving forward by 15 to 20%. We're also growing sell-through and as we move into Q2 with Mother's Day and Father's Day, we expect that to grow with Prime Day, heading into Prime Day in July. And so there's inventory needs for Prime Day as well. So there's quite a few catalysts in Q2. based on reducing inventory levels, growing sell-through, and the promotional events that support it. So we do expect a step up, a nice step up from Q1 to Q2.

Okay. And my last question would be, you know, in this $40 million OPEX, excluding stock-based comp, you know, what is your assumption, A, for stock-based compensation, I guess? But secondly, What would you expect for the exit rate? Like, I mean, because you talked about breaking even. So it's kind of like, would we expect fourth quarter to be actually positive? So we're basically front loading the OPEX loss? And is that all coming from gross margin then versus?

Yeah, so the OPEX is higher in the front half and then lower in the back half.

Yes, that is true. And the change is that largely... gross margin improvement then?

No, we have a decrease again sequentially in operating expense from Q4 to Q1 and then again in Q2. So we have additional tapering. We do have some expense, a little bit of expense related to clearances in Q1 and then some additional optimization that we're doing around expenses. So we've had this four-quarter trend of taking on expenses and we still have identified some additional rationalization that we're doing. So that is still around operating expense, but we are also expecting gross margin improvement. So both of the levers we're using together.

And stock-based compensation assumption, should we think about 2022 as the right amount or would you expect that to be more or less?

it's about the right amount.

Okay. I'll jump back in the queue. Thanks.

Thank you for your question. The next question is from the line of Alan Lutz with Bank of America. Your line is now open.

Hi. Good afternoon, and thanks for taking the questions. Kurt, you mentioned the cost per acquisition down 80%. Since the beginning of 2022, that's clearly a really good form of operating leverage here. I guess, what is that due to? And then as you think about sort of the run rate of sales and marketing spend in 4Q, just trying to understand if there's more juice to squeeze on that line or if most of the leverage is going to come from G&A. Yeah, great question.

I would think about that in kind of two ways. First, first, you know, getting the dream stock portfolio launched, we spent aggressively to do that. So we had to reposition, you know, all of our products, we had to get our rankings online, which is a key indicator of sales and sell through backup, we had to, you know, start moving a lot of momentum to get back out there in the marketplace. And then there's a lot of confusion around you know, does Allett sell products or not? What's in the products? And so we did a lot of education. So I think the first half spend was heavy, but then the second half, we did find a lot of, um, efficiencies and optimizations that, you know, areas of spend that we spent for years. And as we tested and optimize and turn things off, we realized they weren't contributing and they weren't efficient. And, um, and, you know, I would say that the other piece of driving that efficiency is the, the product, um, satisfaction improvements. We launched our Camp 2. We launched Predictive Sleep. The second half of the year, we launched a new app submission update almost every week to improve that product experience. 53% of our purchases come from word of mouth. And so really juicing that word of mouth and finding other organic ways to get people to consider the product. We're talking organic on TikTok and social to the tune of tens of millions of views and interactions that we didn't have to pay for. So I think the team got really creative, which is kind of the second piece to this. As we move forward, there will be a decrease Q4 to Q1 with marketing spend, and where we're at today is more efficient than we were in Q4, and I think that will start to stabilize through 2023. I don't know that Q1 to Q2 you'll see a lot more efficiency decrease, but you will Q4 to Q1 from a sales and marketing perspective in terms of variable marketing spend.

Got it. And then one for Kate. On the gross margins, as we think about them over the course of 2023 and versus 2022, you mentioned that non-recurring costs impacted margins by almost 1,000 basis points, 800 to 900. I guess as we think about those non-recurring costs or just the impact over the course of 2023, should we think about where you ended 2022 as sort of the starting point and then you know a step function over the course of the year higher um just trying to get a sense because that's a pretty big range from where you ended 2022 to you know getting back to the 40 45 plus margins before just trying to understand the the timing and then the the size of the margin increase over the course of the year

Yeah, what I would say is that, you know, our goal will be to be back in the range. Some of that that came out was really just a lot of that rework cost that happened. A lot of the, you know, just the back and forth nature of the entire liability that we took in working with the retailers. There's probably a little bit of step function at the very beginning of the year, but we should be able to have that type of range most of the year with that type of cost completely behind us. There is some PPV associated or that cost that's associated depending on when the inventory specific is sold through. So it's not a complete snapback. But what I would say is that the real cost related to the overall warning letter should be overall out and then you just kind of see the opportunity for most of the year.

Great. And then kind of a two-pointed question. So, Kurt, you mentioned the NPS, you know, is at all-time highs here. And if we sort of look at the model from a revenue perspective over the past couple years, it's been, you know, clearly very challenging to kind of understand what type of normal seasonality this business would have in a normal year. But, you know, you talked about Mother's Day, Father's Day, kind of in prime day driving a lot of demand. I'm just curious, you know, as we think about sort of some of the one-time dynamics that are still playing out, how would you think about the seasonality of this business in a more normalized year? And would it be reasonable to assume that 2Q, 3Q should be kind of viewed as a more normalized year? Thanks.

Yeah, that's a really good question because if you go back for the past two years, there's definitely quite a bit of nuance to the story with the warning letter and then getting DreamStock back in the market, so I appreciate the question. I think in a normal year, usually what you see is Q1 is the lightest quarter. It's not as seasonal as your normal consumer electronics companies where it's 70% back, half-weighted. We're a little bit more even than that, but Q1 is generally down 10% to 15% from Q4, and Q2 picks up really nicely because you have the Mother's Day, Father's Day, and then you do a load in for Prime Day. Q3, you have Baby Safety Month in September, and then you load in in Q3 for your holiday promotions for Black Friday, Cyber Monday, Fall Prime Day, any promotions you do in December. Usually that load in happens in Q3. And then you see a little bit of a kind of a tail off in Q4. for us in terms of selling if you're tracking revenue. I think what you'll see, you'll definitely see a step function Q1 to Q2. I think it's, you know, we're still going to be getting healthy, so it's not going to be totally normal in Q3, or sorry, in Q2. I think it starts to normalize in Q3. So, Kate, anything you'd add to that?

Nope. Nope. That's great.

Very helpful. Thank you very much.

Thank you for your question. That is all the questions that we have registered in the queue.

Thank you, Matt. We'd also like to take this time to answer a few questions that we've been getting from investors during recent conversations that are probably on everybody's mind. So I'd like to hand a couple over to Kurt and Kate right now. So the first one, this is for Kate, and you did address this a little bit, but maybe for everybody's refreshing everybody's memory. What is Owlet's exposure to Silicon Valley Bank? Do you have access to all of your cash? What happens to the latest LSA?

Yeah, sure. So as I mentioned in the prepared remarks, we were impacted along with everybody else given this week's past events. We have been customers of Silicon Valley Bank for a long time. So we do have access to our deposits. And we are confirming that our loan agreement and credit facility do remain in place. And we are in the process of amending our loan agreement and line the credit with them as previously disclosed.

Okay, great. And then a couple for Kurt. Kurt, regarding the FDA submissions, you previously mentioned on earlier calls a 90-day FDA window. That starts after submission and pauses as questions come in with the average decision coming around the six-month mark. Since we're coming up on five, we're coming up now on five months since submission, can you share any personal thoughts on how you feel the process is going and potentially some of the color around some of the questions that the FDA is asking during the The process, and then finally regarding the de novo submission, can you share what the FDA timeline typically looks like, and would that be similar to the 510 submission?

Yeah, so just kind of as a quick refresher, we have the two submissions with the FDA. The first is our prescription device called BabySat, which is a 510 that will address babies who are sick and need a prescribed medical monitor. That submission is subject to the typical 510K rules, which is a 90-day clock that stops when FDA asks questions. The company then has 180 days to gather information and provide a response. So we are currently working through our response to questions from the FDA. I'm not going to comment on the specific details of that submission. We are really confident in our products. In December, we filed a second submission to the FDA for a software as a medical device as an over-the-counter product that offers the heart rate and oxygen notifications in conjunction with the existing DreamSoc fleet monitoring capabilities. The de novo application includes both the display of heart rate and oxygen currently in the DreamSoc and the additional notification features as software as a medical device. So de novo applications with FDA, FDA has 150 days to review. And then the company has 180 days to respond. So I'm just, you know, just comment. I'm really proud of our team for getting both submissions in during 2022 while launching DreamStock, CAM2, and our new predictive sleep features and passing the two audits, the MD-SAP audit and ISO 1345. So it's a very busy year and I'm really proud of everything they've accomplished. I'm also very confident in our products and their ability to meet FDA standards.

okay great and then one final uh one final question um on international regulatory clearances uh how many in international regulatory current submissions is alec currently working on and when can we expect to see each of those uh submitted yeah we've made substantial progress towards our international applications there's two there's the uk

application and the CE applications, which are similar in nature, but one will allow us to gain clearance in the UK and the other will allow us to gain EU medical device certification. Both submissions will be filed with the notified body in the second quarter of this year. And we also continue to maintain our MBSAP and ISO 1345 certifications for that international compliance. And so our vision is to have medical device status globally which we believe will better empower parents in every region to deliver the best care possible for their baby.

Great, thanks. And, Operator, I think we may have another question in the queue.

Yes, we have a follow-up from Charles Rhee. Your line is now open.

Oh, thanks. You know, I was going to ask about the submission, so you guys answered it, so I appreciate it. Thanks, guys.

Thanks, Charles. Thank you for your question. There are no additional questions waiting at this time, so I'll turn it back to Kurt for any closing remarks.

Yeah, I just want to take a minute to thank everybody who has been so supportive of the business through the past year and getting back online with DreamSoc, getting our FDA submissions in. Really grateful for the team that has you know, dug in to accomplish a lot of work in a very short period of time to get Alla in a position to, you know, be focusing on getting to profitability this year and getting FDA clearances, which we believe are going to provide a lot of future growth for the business and also will help, you know, improve the safety and health of a lot of babies and help a lot of families. So thank you so much for your time today and we'll continue to work hard.

That concludes the conference call. Thank you for your participation. You may now disconnect your line.