Owlet, Inc.

Good afternoon. Thank you for attending the Outlet fourth quarter 2024 earnings conference call. My name is Cameron, and I'll be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, press star 1 on your telephone keypad, and I would now like to pass the conference over to our host, Jay Gensko, Investor Relations. You may proceed.

Good afternoon, everyone, and thank you for joining us. Earlier today, Allett released financial results for the fourth quarter and full year ended December 31st, 2024. I'm pleased to be joined today by Curt Workman, Allett's co-founder and CEO, Jonathan Harris, President and Chief Revenue Officer, and Amanda Tweed Crawford, our CFO. 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 presentation section of our investor relations website. at investors.allettcare.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 12 months following this call. The content on today's call is the property of Allett. 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-K. 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 our CEO, Curt Workman. Curt?

Thanks, Jay, and good afternoon, everyone. Thank you for joining Owlet's fourth quarter and full year 2024 financial results call today. As always, we sincerely appreciate your continued support. I will begin on slide five. 2024 was a pivotal year for Owlet. Building off momentum from creating the first and only FDA-cleared baby monitor, we kicked off 2024 by launching both of our FDA-cleared devices. DreamSoc and BabySap, defining a new category of medical grade infant health monitors. We leverage these powerful endorsements of our technologies to expand our global footprint throughout 2024 with CE medical approval in Europe, taking us to 26 total countries by year end, contributing to 98% of international revenue growth in 2024 versus 2023. Capitalizing on BabySats FDA clearance, we began to lay the groundwork in 2024 to open up the large, long-term opportunity for insurance reimbursement in the medical market. Owlet expanded our medical distribution channels throughout the year, ending 2024 with six DMEs and began rolling out to 12 Medicaid states. Finally, we crossed a significant milestone with the development and deployment of our new Owlet 360 subscription service last year, with the full marketing launch at the end of January. Outlet 360 is the beginning of our vision of moving the center of care to the home, enabling parents to better navigate health and sleep challenges without needing to travel to the doctor. Alongside our 2024 product sales and partnership successes, we significantly improved our financial performance, capping off the year with exceptional fourth quarter results. 2024 was truly a breakout financial year for Outlet, the best in company history. We established financial guidance for the first time in three years on the second quarter 2024 earnings call. Including strong Q4 results released today, we exceeded the high end of all guidance ranges for revenue, gross profit, gross margin, and adjusted EBITDA. This coincided with company records for revenue, gross profit, gross margin, and adjusted EBITDA for full year 2024. 2024 revenue was $78.1 million, representing 45% growth compared to 2023. We continued to improve our cost profile throughout the year, and in combination with strong top-line growth, significantly expanded gross margins to over 50% for the full year of 2024, the best annual gross margin in Owlet history. Finally, we turned the corner on profitability with the final three quarters of 2024 at positive adjusted EBITDA. This included significantly improving adjusted EBITDA by over 14 million in 2024 versus 2023. It's clear 2024 was a turning point for Owlet, and I could not be prouder of the incredible amount this team has accomplished and a huge step forward as a company. Now, zooming into our fourth quarter 2024 performance on slide six, Owlet delivered an exceptional quarter, exceeding expectations across all key metrics. We achieved revenue of 20.5 million in the fourth quarter of 2024. Adjusting for revenue associated with the new Amazon distribution partner agreement we signed last year that shifted 6 million in revenue from Q3 to Q4 in 2023, year over year revenue growth was 37%. Fourth quarter 2024 gross margins were 53.5%, increasing 650 basis points versus prior year. Q4 2024 represents our seventh consecutive quarter of year-over-year gross margin expansion. Adjusted EBITDA was 0.5 million in Q4, an improvement of 1.2 million versus fourth quarter 2023. We completed the year with three consecutive quarters of positive adjusted EBITDA as we look toward expanding profitability going forward. Our strong Q4 results underscore the significant momentum we have in the business. Owlet has never been better positioned as a company. We kicked off 2025 by announcing a major milestone in our evolution into a comprehensive pediatric health platform, the official launch of our new subscription service, Owlet 360. Owlet 360 puts the value from Owlet's massive data set of pediatric health and sleep information directly into the hands of parents and caregivers. A reminder that the cost of healthcare in the first five years of life is quite staggering. In the United States alone, there are 12 million annual pediatric ER visits, 80 million pediatric office visits, and hundreds of thousands of babies who stay in the NICU. This adds up to over $30 billion in pediatric healthcare costs every single year, just in the US. Outlet 360 is aimed to empower parents at home with information that can help them better manage care for their children. We believe that unlocking care at home is the key to improving overall infant health outcomes and reducing costs. The launch of Owlet 360 also positions us closer to delivering on the potential of telehealth than we've ever been. Leveraging the information from Owlet 360, parents will be able to chat with their pediatricians, nurses, sleep coaches, and maternal health professionals while sharing their infant's data from the app. in order to provide more personalized, actionable remote care. We'll begin testing our first in-app telehealth visits in the second quarter of this year before releasing more broadly throughout 2025 as we refine the opportunity. Initial subscription metrics are trending very positive, exceeding our expectations with attach rates for the January cohort at approximately 12% in just the first month. We expect this cohort's attach rate will continue to increase. And note that attach rate is before official launch on January 28 without any real marketing spend supporting our confidence in the adoption potential. Jonathan will dive into more details of this innovative service we're so proud of from a strategic standpoint outlet 360 launch marks a significant step in Alice evolution into a comprehensive pediatric health platform that i'd like to unpack. First, this is an additional growth lever driving more predictable recurring revenue for Owlet. We already have an established loyal customer base to initially roll Owlet360 out to with over half a million OwletCare monthly app users and growing. We believe we've aggregated the largest pediatric health population on the planet. Second, Owlet360 supports our goal of growing long-term profitability. Subscription margins are accretive to current margins, and the service does not require substantial ongoing costs or capital expenditures. Third, Owlet 360 represents a major shift in LTV potential for Owlet. Owlet has been very focused on infants and will continue to be, but the pains of parenthood don't stop at 18 months, as healthcare utilization remains very high in the early childhood years. Owlet wants to be an important part of the parent-child journey and a compelling subscription service extends the longevity of Owlet's potential relationship with families. Finally, Owlet360 enhances our competitive differentiation as the category leader in pediatric health and safety. Our massive and growing data set is unique in the market today. Unlocking these tools for parents and caregivers through subscription makes it harder for competitors to match our value, which increases the value proposition for our full product suite. which in turn increases our scale to drive more data to deliver better solutions. In addition, as we begin to add features to the Owleth360 platform, such as integrating professional service partners, telehealth capabilities, and other enhancements in the works, the value proposition will continue to strengthen. We could not be more excited about this next phase for Owleth. I'd now like to turn the call over to Jonathan to walk through recent progress against our strategic focus areas.