Owlet, Inc.

Good afternoon. Thank you for attending the Owlet Q325 earnings conference call. My name is Matt, and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call for 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'll now have to pass the conference over to our host, Jay Gensko, Investor Relations. Jay, please go ahead.

Good afternoon, everyone, and thank you for joining us. Earlier today, Owlet released financial results for the third quarter ended September 30th, 2025. I'm pleased to be joined today by Jonathan Harris, Owlet's president and CEO, 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.owletcare.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 of today's call is the property of Owlet. 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 factor section of our annual report on Form 10-K 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 Jonathan Harris, Outlet's President and CEO.

Thanks, Jay, and good afternoon, everyone. Thank you for joining Outlet's third quarter 2025 financial results call. As you saw from our results, Q3 was another exceptional quarter, the best in Outlet history across key metrics. We are firing on all cylinders as a business. Let's get right to the financial highlights and updates. I'll start with the third quarter results at the top of slide five. We drove broad-based growth in Q3, setting company records across the business. Q3 revenue was a record for Owlet at $32 million, increasing 45% versus Q3 2024. Revenue outperformance was driven by the launch of our new DreamSight camera, and ongoing momentum in the core business. Q3 gross profit of 16.2 million was a record, resulting in Q3 gross margins of 50.6% as top line strength was able to offset tariff impacts. Q3 adjusted EBITDA of 1.6 million was also a record for Owlet and our sixth consecutive quarter of adjusted EBITDA profitability. And we're proud to announce Q3 operating income of $1.2 million, our first quarterly operating profit in company history. Before highlighting some key developments in our strategic growth areas, I would like to comment on the FDA's recent safety communication on September 16th regarding unauthorized infant monitors as a critical moment of market clarification and how this can translate into a strong validation of Owlet's strategy. The FDA's warning clearly cautions consumers and caregivers against over-the-counter infant monitors that have not been reviewed for safety and effectiveness and make unsubstantiated claims. This action creates a firm demarcation in the market. On one side, unreviewed, unauthorized devices the FDA is actively cautioning against. On the other side, outlet stream socks. We are proud to stand alone as the first FDA cleared over-the-counter infant monitoring device and the only one on the market today. This clearance confirms the DreamSoc has met the FDA's rigorous standards for safety and accuracy in providing live pulse rate and oxygen saturation readings. For both parents and our retail healthcare partners, this regulatory clarity can help to increase the value proposition of our regulated products reinforces our market leadership and creates a significant competitive advantage. We are strategically positioned to capitalize on this heightened consumer awareness to drive market share gains and greater brand trust as we move into the crucial holiday and Q4 period. The progress in the third quarter on all key fronts has been outstanding as we continue to stack wins across the business, both financially and operationally. I'm incredibly proud of this team as we leverage our leadership in the category and ongoing momentum to deliver key results. Now, turning to our strategic focus areas for growth, we've continued to make outstanding progress on driving continued global adoption of DreamSoc to transitioning Owlet into a service through the Owlet 360 subscription, supporting parents from infancy into the toddler years and increasing customer lifetime value. And lastly, expanding healthcare channels to offer an insurance-reimbursed monitor. Kicking off with our core business, DreamSoc continues to drive adoption, demonstrating what we believe is the most differentiated product in the nursery ecosystem. DreamSoc demand remains robust in the U.S. In Q3, domestic sell-through grew 42% versus prior year. The strong performance was driven by ongoing adoption for DreamSoc, as well as a record-setting Amazon Prime Day in July, where total sell-through units were up 72% versus prior year. Another valuable leading indicator on the momentum of our core business is registry data. Across the registries we track, including Amazon, BabyList, and Target, total DreamSoc additions remain strong with 30% year-over-year growth in Q3. We also continue to solidify our position as the market-leading pediatric health brand. According to Cercana customer research and our own data, Owlet increased our share of total dollars spent on baby monitors to 40% in the third quarter of 2025, a record high for market share since we started tracking Cercana data. Brand health also remains in a very good position with DreamSoc's recent NPS at 77 at the end of the third quarter, an overall blended product NPS at 71. With the differentiation our FDA clearance provides and in light of FDA's recent warning statement, we're confident with our position in the market and ability to drive further share gains. In September, we launched the new DreamSight camera, our third generation video baby monitor. DreamSight represents an important next step in the category for Owlet with this new camera offering the latest in advanced technologies while also delivering greater reliability, deeper security, and a price point that makes sense. Importantly, DreamSight is future ready, including onboard AI capabilities to support our rollout of camera specific subscription features and future build outs. Paired with DreamSock, it can create a connected monitoring experience that gives parents a holistic view of the health and wellness of their children. We're thrilled at the feedback we've received since launch and are excited about DreamSight's potential in the category and as a key part of our platform. Turning to international, DreamSock momentum is surging globally as we drive growth in our current geographies and open up new global sales channels. In the third quarter of 2025, international revenue growth was up 171% year over year. International strength in the quarter was in part driven by the September 9th launch of our new DreamSight video monitor and the associated timing of our load-in to our distributors, as well as ongoing momentum globally. As we recently announced, the Central Drug Standard Control Organization approved DreamSock for distribution in India, opening up a new global sales channel starting in early 2026. This marks an important milestone as Outlook becomes one of the few infant health technology companies to meet India's stringent medical device requirements. In addition to our two FDA clearances, we now have six international regulatory clearances for DreamSoc, including Europe, United Kingdom, Australia, New Zealand, South Africa, and now India, as we look to capture adoption globally and continue to drive the substantial international opportunity. Shifting to Outlet 360 subscription, total paying subscribers has continued to grow, recently surpassing 85,000. The strong trends and overall feedback have been outstanding with another quarter of sequential growth in monthly reoccurring revenue, attach rate, and improved retention. What's particularly exciting is that we're still just getting started. Outlet 360 only launched at the end of January and has so far been available exclusively in the U.S. With more than 650,000 active outlet device users globally, we see tremendous runway ahead to expand our subscriber base. We're beginning to roll out subscriptions in the first international markets in Q4, starting with the UK, Ireland, Australia, New Zealand, and South Africa, with plans to expand our subscription offering to all existing and new markets in 2026. Subscription attach rate for DreamSock passed 25% as of the end of the third quarter as the value of our subscription offering to parents continues to grow. We also see major growth opportunity for the new DreamSight camera. Today, our subscription adoption has primarily come from DreamSoc users, but the new DreamSight and DreamDuo opens an entirely new segment of opportunity. In 2026, we plan to introduce camera-based subscription features that take advantage of the new cameras, advanced capabilities, and onboard AI chipset. Combining the best of our biometric data from the SOC with computer vision technology from the camera to create a uniquely integrated experience that no one else in the market can deliver. Parents' biggest challenges continue to center around sleep patterns and routines. They lose an average of three hours of sleep each night and 61% report feeling exhausted. Our upcoming DreamSight subscription features are designed specifically to help parents better understand and improve their baby's sleep through actionable insights, intelligent guidance, and a smart nursery ecosystem that sees, senses, and responds, taking the guesswork out of parenting. Looking ahead, we're also investing in next-generation AI experiences built on Owlet's proprietary pediatric dataset. In early 2026, we plan to pilot a new generative AI insight feature that will provide parents with personalized sleep coaching and tips tailored to their baby's unique patterns. This is just the beginning. We'll continue to experiment with and integrate AI capabilities to deliver even more meaningful support for parents and caregivers throughout their journey. Also, we began piloting our telehealth platform, which we are calling Owlet OnCall. We're still early here and want to get the experience right before we launch in 2026 and are excited about this opportunity to begin testing a more personalized, actionable, remote care and begin to commercialize and scale this opportunity next year. The momentum we're seeing from Outlet 360 subscription continues to be exciting as this serves as the cornerstone of our transition to a pediatric health platform with data and digital service enabled by our hardware. And finally, turning to our third strategic growth area, we've continued to make steady progress expanding the medical and healthcare channels to provide insurance-reimbursed monitoring for infants who need it the most. We officially launched our new consignment agreement with the Children's Hospital of the King's Daughters, or CHKD, on November 7th, enabling certain babies to be sent home with babysat to monitor their oxygen levels and or heart rate. This is an important milestone for our healthcare opportunity as this is a first for Owlet. Providers prescribing Owlet devices in the hospital, patients being able to obtain insurance prior authorization, prior to hospital discharge, and taking home our medical grade infant monitoring devices. We are also rounding out our RPM integration with Owlet Connect as we finalize infrastructure integration with Rhapsody Health. our digital health platform partner. Outlook Connect will also go live this week with our first customer, and we'll be able to very quickly connect to future hospitals with RPM programs. We continue to have more and more conversations with potential additional hospital partnerships similar to CHKD. The official launch and successful implementation of Outlook Connect are important milestones, and we look forward to updating you on that progress in the coming quarters as this has become an important strategy towards unlocking the large healthcare opportunity for babysat. It's an exciting time to be part of Owlet as we're executing across our strategic growth areas and that progress is translating into strong results. Now, I'd like to turn the call over to Amanda to discuss those results for Q3 and provide an update on our 2025 outlook.