Owlet, Inc. ("Owlet" or the "Company") (NYSE: OWLT) today
reported financial results for the second quarter ended June 30,
2021.
Recent Highlights
- Generated revenues of $24.9 million in the second quarter.
- Achieved gross margin of 54.2% in the second quarter, a 600
basis point increase compared to 48.2% gross margin for the same
period in 2020.
- Advanced Owlet’s international commercial strategy, launching
in Germany, Austria, and Sweden during the second quarter.
- Continued to scale the business to support growth with
strategic hiring across the company, accelerated sales and
marketing initiatives and invested in development of the Company’s
connected products and services portfolio.
- Completed the business combination with Sandbridge Acquisition
Corporation in July 2021 adding over $135 million in cash to the
Company’s balance sheet to accelerate the Company’s growth
opportunities.
“We had an incredible quarter, recording strong year-over-year
and sequential revenue growth, with significant year-over-year
margin expansion. These results reflect the growing demand for our
Smart Sock and Monitor Duo products as we expand our connected
nursery solutions and care platform. We also reached an exciting
milestone as we surpassed 1 million babies monitored with the Smart
Sock, an important step toward our mission of every baby and every
parent having access to technology like that offered by Owlet,”
said Kurt Workman, Co-Founder and Chief Executive Officer at
Owlet.
Workman continued, “International expansion is key to our
mission as well, and our second quarter launches throughout Europe
represent great progress. Another important part of our recent, as
well as our projected future successes, is having the right people
to drive it forward. We believe this week’s on-time release of the
brand new Smart Sock Plus product is a testament to the brilliant
leadership and talent we’ve added to our team.”
“We believe parents deserve access to the best technology and
resources to care for their little ones at home, and we have the
capital, the momentum, and the team to deliver on this big vision,”
Workman said.
Financial Results for the Second Quarter Ended June 30,
2021
Revenues were $24.9 million for the quarter ended June 30, 2021,
an increase of 35.8% from revenues of $18.4 million in the second
quarter of 2020 and a 13.8% sequential increase from revenues of
$21.9 million in the first quarter of 2021.
For year-over-year historical revenue comparisons, in the second
quarter of 2020, revenues of $18.4 million included approximately
$2.2 million of initial sell-in of the Company’s newest Smart Sock
3 and Monitor Duo 3 products to prepare for the third quarter 2020
launch. Excluding this, the second quarter of 2021 year-over-year
revenue growth would have been 54%.
The cost of revenues for the quarter ended June 30, 2021 was
$11.4 million compared to $9.5 million for the same period in 2020.
The overall gross margin for the quarter ended June 30, 2021 was
54.2%, a 600 basis point increase compared to 48.2% gross margin
for the same period in 2020. Sequentially gross margins were down,
as the second quarter is a more seasonally promotional quarter than
the first quarter, with Mother’s Day and Father’s Day. In addition,
Owlet participated in Amazon Prime Day in June.
During the quarter, Owlet hired talent strategically across the
Company, accelerated sales and marketing initiatives and invested
in development of its connected products and services portfolio to
further penetrate the market and drive long-term revenue growth. In
addition, the Company incurred approximately $2.2 million of
certain one-time, transaction-related costs.
Operating expenses for the second quarter were $19.4 million
compared to $9.5 million for the same period in 2020, an increase
of $9.9 million, primarily due to investments in scaling the
Company to accelerate growth.
Net loss for the quarter ended June 30, 2021 was $5.3 million
compared to $1.1 million for the same period in 2020. EBITDA loss
for the second quarter of 2021 was $4.6 million, compared to EBITDA
loss of $0.6 million for the same period in 2020.
Adjusted EBITDA loss for the second quarter of 2021 was $2.6
million compared to Adjusted EBITDA loss of $0.1 million for the
same period in 2020. Net loss margin was 21.4% for the second
quarter of 2021 compared to 6.0% for the same period in 2020.
Adjusted EBITDA margin was (10.4)% for the second quarter of 2021
compared to (0.6)% for the same period in 2020.
Net loss per share for the quarter ended June 30, 2021 was
$0.49, compared to $0.10 for the same period in 2020. Adjusted net
loss per share was $0.30 for the quarter ended June 30, 2021,
compared to $0.06 for the same period in 2020. As the business
combination transaction with Sandbridge Acquisition Corporation was
consummated in July 2021, the loss per share amounts for the
quarters ended June 30, 2021 and 2020 reflect Owlet’s
capitalization prior to the business combination transaction.
Financial Outlook
The Company reiterates its full year 2021 guidance:
- Revenues of $107 million.
- Gross margin is expected to be between 54-55%.
- Adjusted EBITDA margin of (24.5%).
Conference Call and Webcast Information
Owlet will host a conference call and audio webcast today at
4:30 p.m. ET to discuss its financial results for the second
quarter of 2021.
Domestic:
1-844-200-6205
International:
1-646-904-5544
Access Code:
817875
Parties wishing to access the call via webcast should use the
link in the Investors section of the Owlet website at
www.investors.owletcare.com. A replay of the webcast will be
available in the Investors section of the website approximately 30
minutes after the conclusion of the call.
About Owlet Inc.
Owlet (NYSE: OWLT) was founded by a team of parents in 2012.
Owlet’s mission is to empower parents with the right information at
the right time, to give them more peace of mind and help them find
more joy in the journey of parenting. Owlet’s digital parenting
platform aims to give parents real-time data and insights to help
parents feel calmer and more confident. Owlet believes that every
parent deserves peace of mind and the opportunity to feel their
well-rested best. Owlet also believes that every child deserves to
live a long, happy, and healthy life, and is working to develop
products to help further that belief. For more information about
Owlet, please visit www.owletcare.com.
Forward-Looking Statement Disclaimer
Certain statements, estimates, targets and projections in this
press release may be considered forward-looking statements.
Forward-looking statements generally relate to future events or
Owlet’s future financial or operating performance. For example,
statements relating to Owlet’s financial outlook for 2021 and
expectations regarding pursuit of growth opportunities are
forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as “may”, “should”,
“expect”, “intend”, “will”, “estimate”, “anticipate”, “believe”,
“predict”, “potential” or “continue”, or the negatives of these
terms or variations of them or similar terminology. Such
forward-looking statements are subject to risks, uncertainties, and
other factors which could cause actual results to differ materially
from those expressed or implied by such forward-looking
statements.
These forward-looking statements are based upon estimates and
assumptions that, while considered reasonable by Owlet and its
management, are inherently uncertain. Factors that may cause actual
results to differ materially from current expectations include, but
are not limited to: Owlet’s competition; the regulatory pathway for
Owlet products and responses from regulators, including the U.S.
Food and Drug Administration and similar regulators outside of the
United States; the ability of Owlet to grow and manage growth
profitably, maintain relationships with customers and suppliers and
retain Owlet’s management and key employees; changes in applicable
laws or regulations; the possibility that Owlet may be adversely
affected by other economic, business, regulatory and/or competitive
factors; the evolution of the markets in which Owlet competes; the
ability of Owlet to implement its strategic initiatives and
continue to innovate its existing products; the ability of Owlet to
defend its intellectual property and satisfy regulatory
requirements; the impact of the COVID-19 pandemic on Owlet’s
business; Owlet’s limited operating history and history of losses;
and other risks and uncertainties set forth in the section entitled
“Risk Factors” and “Cautionary Note Regarding Forward-Looking
Statements” in the Company’s registration statement on Form S-1
filed with the Securities and Exchange Commission (the “SEC”) on
August 5, 2021, and in other reports the Company files with or
furnishes to the SEC. Any such forward-looking statements represent
management’s estimates and beliefs as of the date of this press
release. While Owlet may elect to update such forward-looking
statements at some point in the future, other than as required by
law, it disclaims any obligation to do so, even if subsequent
events cause its views to change.
Non-GAAP Financial Measures
This press release includes references to financial measures
that are not presented in accordance with generally accepted
accounting principles in the United States (“GAAP”), including
EBITDA, Adjusted EBITDA, EBITDA margin, Adjusted EBITDA margin,
Adjusted net loss and Adjusted net loss per share. These non-GAAP
financial measures are not based on any comprehensive set of
accounting rules or principles and should not be considered a
substitute for, or superior to, financial measures calculated in
accordance with GAAP, and may be different from non-GAAP financial
measures used by other companies. In addition, these non-GAAP
financial measures should be read in conjunction with the Company’s
financial statements prepared in accordance with GAAP. The
reconciliations of the Company’s non-GAAP financial measures to the
corresponding GAAP measures should be carefully evaluated.
The Company’s non-GAAP financial measures should not be
considered as an alternative to net income (loss) or net income
(loss) per share as a measure of financial performance or any other
performance measure derived in accordance with GAAP, and should not
be construed as an inference that the Company’s future results will
be unaffected by unusual or non-recurring items. EBITDA is defined
as net income (loss) adjusted for income tax provision, interest
expense, interest income, and depreciation and amortization.
Adjusted EBITDA is defined as net income (loss) adjusted for income
tax provision, interest expense, interest income, depreciation and
amortization, preferred stock mark-to-market adjustments,
stock-based compensation, transaction costs, loss on extinguishment
of debt, and gain on loan forgiveness. EBITDA margin is defined as
EBITDA divided by revenues. Adjusted EBITDA margin is defined as
Adjusted EBITDA divided by revenues. Adjusted net loss is defined
as net loss adjusted for stock-based compensation, transaction
costs, preferred stock mark to market, loss on extinguishment of
debt, and gain on loan forgiveness. Adjusted loss per share is
defined as Adjusted net loss divided by weighted-average common
shares.
The Company presents these non-GAAP financial measures because
management believes that these measures assist investors and
analysts in comparing the Company’s operating performance across
reporting periods on a consistent basis by excluding items that
management does not believe are indicative of the Company’s ongoing
operating performance. Investors are encouraged to evaluate these
adjustments and the reasons the Company considers them appropriate
for supplemental analysis. In evaluating the Company’s non-GAAP
financial measures, investors should be aware that in the future
the Company may incur expenses that are the same as or similar to
some of the adjustments in the Company’s presentation of Company’s
non-GAAP financial measures. The Company’s presentation of
Company’s non-GAAP financial measures should not be construed as an
inference that the Company’s future results will be unaffected by
unusual or non-recurring items. There can be no assurance that the
Company will not modify the presentation of the Company’s non-GAAP
financial measures in future periods, and any such modification may
be material. In addition, the Company’s non-GAAP financial measures
may not be comparable to similarly titled measures used by other
companies in the Company’s industry or across different
industries.
Owlet Baby Care Inc. Condensed
Consolidated Balance Sheets (In thousands, except share and per
share amounts) (unaudited)
Assets
June 30, 2021
December 31, 2020
Current assets:
Cash and cash equivalents
$
12,218
$
17,009
Accounts receivable, net of allowance for
doubtful accounts of $622 and $201
17,394
10,525
Inventory
11,051
7,912
Capitalized transaction costs
4,019
522
Prepaid expenses and other current
assets
1,327
1,646
Total current assets
$
46,009
$
37,614
Property and equipment, net
1,823
1,718
Intangible assets, net
609
605
Internally developed software
204
-
Other assets
183
181
Total assets
$
48,828
$
40,118
Liabilities, Redeemable Convertible
Preferred Stock, and Stockholders’ Deficit
Current liabilities:
Accounts payable
19,434
16,379
Accrued and other expenses
12,449
10,592
Deferred revenues
1,663
1,643
Line of credit
16,287
9,700
Current portion of related party
convertible notes payable
7,104
6,934
Current portion of long-term debt
4,000
2,024
Total current liabilities
$
60,937
$
47,272
Deferred rent, net of current portion
280
322
Long-term deferred revenues, net of
current portion
168
159
Long-term debt, net
10,991
10,180
Preferred stock warrant liabilities
8,571
2,993
Other long-term liabilities
13
13
Total liabilities
$
80,960
$
60,939
Commitments and contingencies (Note 6)
Redeemable convertible Series A and Series
A-1 preferred stock, $0.0001 par value, 23,030,285 shares
authorized; 22,596,929 shares issued and outstanding (liquidation
preference of $9,702 and $14,245 for Series A and Series A-1,
respectively)
23,652
23,652
Redeemable convertible Series B and Series
B-1 preferred stock, $0.0001 par value, 7,507,073 shares
authorized; 7,507,071 shares issued and outstanding (liquidation
preference of $19,000 and $3,745 for Series B and Series B-1,
respectively)
23,536
23,536
Stockholders’ deficit:
Common stock, $0.0001 par value,
52,000,000 shares authorized; 10,982,416 and 10,772,774 shares
issued and outstanding as of June 30, 2021 and December 31, 2020,
respectively.
1
1
Additional paid-in capital
5,589
3,708
Accumulated deficit
(84,910
)
(71,718
)
Total stockholders’ deficit
(79,320
)
(68,009
)
Total liabilities, redeemable convertible
preferred stock, and stockholders’ deficit
$
48,828
$
40,118
Owlet Baby Care Inc. Condensed
Consolidated Statements of Operations (In thousands, except
share and per share amounts) (unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Revenues
$
24,938
$
18,365
$
46,849
$
33,236
Cost of revenues
11,420
9,521
20,648
17,352
Gross profit
13,518
8,844
26,201
15,884
Operating expenses:
General and administrative
7,285
2,748
13,266
5,420
Sales and marketing
7,568
4,248
13,687
8,060
Research and development
4,518
2,471
7,949
4,904
Total operating expenses
19,371
9,467
34,902
18,384
Operating loss
(5,853
)
(623
)
(8,701
)
(2,500
)
Other income (expense):
Gain on loan forgiveness
2,098
-
2,098
-
Interest expense, net
(484
)
(344
)
(901
)
(633
)
Preferred stock mark to market
adjustment
(970
)
8
(5,578
)
8
Loss on extinguishment of debt
(182
)
(172
)
(182
)
(172
)
Other income, net
58
37
79
75
Total other income (expense), net
520
(471
)
(4,484
)
(722
)
Loss before income tax provision
(5,333
)
(1,094
)
(13,185
)
(3,222
)
Income tax provision
(2
)
-
(7
)
-
Net loss
$
(5,335
)
$
(1,094
)
$
(13,192
)
$
(3,222
)
Net loss per share attributable to common
stockholders, basic and diluted
(0.49
)
(0.10
)
(1.21
)
(0.30
)
Weighted-average number of shares
outstanding used to compute net loss per share attributable to
common stockholders, basic and diluted
10,973,713
10,699,022
10,901,698
10,656,154
Owlet Baby Care Inc. Condensed
Consolidated Statements of Cash Flows (In thousands)
(unaudited)
Six Months Ended June
30,
2021
2020
Cash flows from operating
activities:
Net loss
$
(13,192
)
$
(3,222
)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation and amortization
509
362
Amortization of debt issuance costs
-
18
Amortization of debt discount
19
75
Non-cash gain on forgiveness of debt
(2,098
)
-
Non-cash loss on extinguishment of
debt
173
-
Loss (gain) on disposal of intangibles
7
(11
)
Stock-based compensation
1,613
454
Write-down of inventory to net realizable
value
74
-
Provision for losses (recoveries) on
accounts receivable
420
(25
)
Change in fair value of preferred stock
warrant liability
5,578
(8
)
Changes in operating assets and
liabilities:
Accounts receivable
(7,289
)
(1,712
)
Prepaid expenses and other assets
(3,181
)
217
Inventory
(3,213
)
1,685
Accounts payable
2,935
2,036
Accrued and other expenses
1,881
1,530
Deferred related party convertible notes
payable interest
170
171
Deferred revenues
29
306
Deferred rent
(43
)
(18
)
Net cash (used in) provided by operating
activities
(15,608
)
1,858
Cash flows from investing
activities
Purchase of property and equipment
(475
)
(411
)
Purchase of intangible assets
(46
)
(8
)
Internally developed software
(188
)
-
Net cash used in investing activities
(709
)
(419
)
Cash flows from financing
activities
Proceeds from line of credit
8,182
9,917
Payments on line of credit
(1,595
)
(11,021
)
Proceeds from issuance of long-term
debt
5,000
1,000
Payments on financed insurance premium
(320
)
(110
)
Payments for extinguishment of debt
(9
)
-
Proceeds from Paycheck Protection Program
loan
-
2,075
Proceeds from exercise of common stock
options
268
69
Net cash provided by financing
activities
11,526
1,930
Net change in cash and cash
equivalents
(4,791
)
3,369
Cash and cash equivalents at beginning of
period
17,009
11,736
Cash and cash equivalents at end of
period
$
12,218
$
15,105
Supplemental disclosure of cash flow
information:
Cash paid for interest
$
330
$
223
Supplemental disclosure of non-cash
financing activities:
Issuance of common stock warrants in
connection with debt amendment and new debt issuance
-
$
226
Unpaid purchases of property and
equipment
$
68
$
432
Unpaid purchases of intangibles
$
52
$
25
Owlet Baby Care Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures (In
thousands, except share and per share amounts) (unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Net loss
$
(5,335
)
$
(1,094
)
$
(13,192
)
$
(3,222
)
Income tax provision
2
-
7
-
Interest expense
485
348
903
668
Interest income
(1
)
(4
)
(2
)
(35
)
Depreciation and amortization
259
199
509
362
EBITDA
$
(4,590
)
$
(551
)
$
(11,775
)
$
(2,227
)
Preferred stock mark to market
adjustment
970
(8
)
5,578
(8
)
Stock based compensation
785
273
1,613
454
Transaction costs
2,152
-
4,027
-
Loss on extinguishment of debt
182
172
182
172
Gain on loan forgiveness
(2,098
)
-
(2,098
)
-
Adjusted EBITDA
$
(2,599
)
$
(114
)
$
(2,473
)
$
(1,609
)
Net loss margin
(21.4
)%
(6.0
)%
(28.2
)%
(9.7
)%
Adjusted EBITDA margin
(10.4
)%
(0.6
)%
(5.3
)%
(4.8
)%
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Net loss
$
(5,335
)
$
(1,094
)
$
(13,192
)
$
(3,222
)
Non-GAAP Adjustments:
Stock based compensation
785
273
1,613
454
Transaction costs
2,152
-
4,027
-
Preferred stock mark to market
970
(8
)
5,578
(8
)
Loss on extinguishment of debt
182
172
182
172
Gain on loan forgiveness
(2,098
)
-
(2,098
)
-
Adjusted net loss
$
(3,344
)
$
(657
)
$
(3,890
)
$
(2,604
)
Weighted-average common shares
10,973,713
10,699,022
10,901,698
10,656,154
Adjusted weighted-average common
shares
10,973,713
10,699,022
10,901,698
10,656,154
Net loss per share
$
(0.49
)
$
(0.10
)
$
(1.21
)
$
(0.30
)
Adjusted net loss per share
$
(0.30
)
$
(0.06
)
$
(0.36
)
$
(0.24
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210812005801/en/
Investors Mike Cavanaugh
Westwicke/ICR Phone: +1.617.877.9641
mike.cavanaugh@westwicke.com
Media Jane Putnam Owlet,
Inc. Phone: +1.801.647.0025 jputnam@owletcare.com
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