Owlet, Inc. ("Owlet" or the "Company") (NYSE: OWLT) today
reported financial results for the third quarter ended September
30, 2021. Owlet’s Chief Executive Officer, Kurt Workman, and Kate
Scolnick, Chief Financial Officer, will host a conference call to
review the Company’s results today at 4:30 pm EDT.
Third Quarter Highlights
- Generated record revenues of $31.5 million in the third
quarter, a 48.8% increase from the third quarter of 2020, and a
26.3% sequential increase from the second quarter of 2021.
- Produced revenues for the first three quarters of 2021 of $78.4
million, exceeding the revenues in the full year 2020.
- Advanced Owlet’s international commercial strategy, officially
launching in France and Switzerland during the third quarter.
- Launched the Smart Sock Plus internationally, which can be used
in children up to five years old, significantly expanding Owlet’s
potential relationship with families.
“We had a strong third quarter at Owlet, with our highest-ever
revenues and continued international expansion, including launching
into Switzerland and France,” said Kurt Workman, Co-Founder and
Chief Executive Officer at Owlet. “In the first three quarters of
the year, we accomplished everything we set out to achieve at the
beginning of 2021. Our domestic penetration and awareness continue
to grow organically and have in fact accelerated with increased
investment. I’m also pleased to report that adoption and growth
rates internationally have outpaced our expectations and our
progress toward key platform expansion opportunities are advancing
in line with our expectations.”
Workman continued, “Since receiving the FDA Warning Letter and
taking prompt action to address its concerns, we have been in
ongoing, collaborative discussions with the FDA on a path forward
for our medical device application for the Smart Sock. We are also
in communication with our ecosystem of partners about what this
means. Additionally, our team is working in parallel with our
partners to announce a new consumer baby sleep monitor in the
fourth quarter of this year. We look forward to sharing more on
that soon.”
Financial Results for the Third Quarter Ended September 30,
2021
Revenues were $31.5 million for the quarter ended September 30,
2021, an increase of 48.8% from the third quarter of 2020, and a
26.3% sequential increase from the second quarter of 2021.
The cost of revenues for the quarter ended September 30, 2021
was $16.6 million compared to $11.3 million for the same period in
2020. The overall gross margin for the quarter ended September 30,
2021 was 47.2%, a sequential decrease from Q2 2021 attributed to
seasonal sales acceleration and macro factors related to supply
chain and increased transportation costs. Year over year, Q3 2021
gross margin increased from 46.4% in Q3 2020.
Operating expenses for the quarter ended September 30, 2021 were
$28.6 million compared to $10.9 million for the same period in
2020, representing an increase of $17.7 million in costs associated
with the scaling of the company to support growth.
Operating loss and net loss for the quarter ended September 30,
2021 were $13.8 million and $34.5 million, respectively, or $0.36
basic and diluted loss per share, as compared with $1.1 million
operating loss and $1.5 million net loss, or $0.07 basic and
diluted loss per share, for the same period in 2020.
EBITDA loss for the third quarter of 2021 was $7.6 million,
compared to EBITDA loss of $0.9 million for the same period in
2020.
Adjusted EBITDA loss for the third quarter of 2021 was $11.4
million compared to Adjusted EBITDA loss of $0.6 million for the
same period in 2020. Net loss margin was 109.4% for the third
quarter in 2021 compared to 7.1% for the same period of 2020.
Adjusted EBITDA margin was (36.3)% for the third quarter of 2021
compared to (2.9)% for the same period in 2020.
Net loss per share for the quarter ended September 30, 2021 was
$0.36, compared to net loss per share of $0.07 for the same period
in 2020. Adjusted net loss per share was $0.13 for the quarter
ended September 30, 2021, compared to adjusted net loss per share
of $0.06 for the same period in 2020.
Financial Outlook
Given the Smart Sock’s near-term regulatory status, the
Company’s previously announced suspension of shipping of the Smart
Sock in the United States in October 2021 and new product launch,
the Company is not providing an update to its full year 2021
financial outlook at this time. The Company anticipates providing
its next financial outlook in February 2022 as part of reporting
its Q4 2021 and Full-Year 2021 results.
Conference Call and Webcast information
Owlet will host a conference call and audio webcast today at
4:30 pm ET to discuss these results.
Domestic:
(844) 200-6205
Domestic Local:
(646) 904-5544
All Other:
(929) 526-1599
Access Code:
771407
Parties wishing to access the call via webcast should use the
link in the Investors section of the Owlet website at
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. Parties wishing to listen to the replay by
phone may do so by dialing (866) 813-9403 or (929) 458-6194 (US),
and +44 204 525-0658 (International) and referencing access code
643671.
About Owlet Inc.
Owlet 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 the regulatory status of Owlet’s products
and its plans for the launch of a wellness product and timing
thereof 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 maintain relationships with
customers, manufacturers 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 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 Form 10-Q for the quarter ended
September 30, 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 loss or net 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 loss
adjusted for income tax provision, interest expense, interest
income, and depreciation and amortization. Adjusted EBITDA is
defined as net 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 non-recurring interest expense, stock-based
compensation, transaction costs, preferred stock and common stock
warrant liability adjustments, loss on extinguishment of debt, and
gain on loan forgiveness. Adjusted loss per share is defined as
Adjusted net loss divided by weighted-average shares of common
stock.
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.
Financial Tables
Owlet, Inc. Condensed
Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share amounts) (unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Revenues
$
31,505
$
21,169
$
78,354
$
54,405
Cost of revenues
16,624
11,344
37,272
28,696
Gross profit
$
14,881
$
9,825
$
41,082
$
25,709
Operating expenses:
General and administrative
9,250
3,173
22,516
8,593
Sales and marketing
13,072
5,041
26,759
13,101
Research and development
6,320
2,730
14,269
7,634
Total operating expenses
$
28,642
$
10,944
$
63,544
$
29,328
Operating loss
$
(13,761
)
$
(1,119
)
$
(22,462
)
$
(3,619
)
Other income (expense):
Gain on loan forgiveness
-
-
2,098
-
Interest expense, net
(477
)
(377
)
(1,378
)
(1,010
)
Interest expense from contingent
beneficial conversion feature
(26,061
)
(26,061
)
Preferred stock warrant liability
adjustment
-
1
(5,578
)
9
Common stock warrant liability
adjustment
5,792
-
5,792
-
Loss on extinguishment of debt
-
-
(182
)
(172
)
Other income (expense), net
66
(6
)
146
69
Total other income (expense), net
$
(20,680
)
$
(382
)
$
(25,163
)
$
(1,104
)
Loss before income tax provision
(34,441
)
(1,501
)
(47,625
)
(4,723
)
Income tax provision
(15
)
-
(22
)
-
Net loss and comprehensive loss
$
(34,456
)
$
(1,501
)
$
(47,647
)
$
(4,723
)
Net loss per share attributable to common
stockholders, basic and diluted
$
(0.36
)
$
(0.07
)
$
(1.00
)
$
(0.22
)
Weighted-average number of shares
outstanding used to compute net loss per share attributable to
common stockholders, basic and diluted
96,681,887
22,016,451
47,421,668
21,925,268
Owlet, Inc. Condensed
Consolidated Balance Sheets (In thousands, except share and per
share amounts) (unaudited)
Assets
September 30, 2021
December 31, 2020
Current assets:
Cash and cash equivalents
$
114,896
$
17,009
Accounts receivable, net of allowance for
doubtful accounts of $622 and $201
24,576
10,525
Inventory
10,225
7,912
Capitalized transaction costs
-
522
Prepaid expenses and other current
assets
7,088
1,646
Total current assets
$
156,785
$
37,614
Property and equipment, net
1,889
1,718
Intangible assets, net
588
605
Internally developed software
617
-
Other assets
398
181
Total assets
$
160,277
$
40,118
Liabilities, Redeemable Convertible
Preferred Stock, and Stockholders’ Deficit
Current liabilities:
Accounts payable
$
16,460
$
16,379
Accrued and other expenses
17,431
10,592
Deferred revenues
1,868
1,643
Line of credit
11,125
9,700
Current portion of related party
convertible notes payable
-
6,934
Current portion of long-term debt
9,435
2,024
Total current liabilities
$
56,319
$
47,272
Deferred rent, net of current portion
258
322
Long-term deferred revenues, net of
current portion
206
159
Long-term debt, net
9,492
10,180
Preferred stock warrant liability
-
2,993
Common stock warrant liability
17,014
-
Other long-term liabilities
13
13
Total liabilities
$
83,302
$
60,939
Commitments and contingencies (Note 7)
Redeemable convertible Series A and Series
A-1 preferred stock, $0.0001 par value, 0 and 47,285,694 shares
authorized as of September 30,2021 and December 31, 2020,
respectively; 0 and 46,395,929 shares issued and outstanding as of
September 30,2021 and December 31, 2020, respectively
-
23,652
Redeemable convertible Series B and Series
B-1 preferred stock, $0.0001 par value, 0 and 15,413,494 shares
authorized as of September 30,2021 and December 31, 2020,
respectively; 0 and 15,413,489 shares issued and outstanding as of
September 30,2021 and December 31, 2020, respectively
-
23,536
Stockholders’ deficit:
Common stock, $0.0001 par value,
1,000,000,000 and 52,000,000 shares authorized as of September
30,2021 and December 31, 2020, respectively; 112,818,724 and
22,549,055 shares issued and outstanding as of September 30, 2021
and December 31, 2020, respectively.
11
1
Additional paid-in capital
196,330
3,708
Accumulated deficit
(119,366
)
(71,718
)
Total stockholders’ equity / deficit
76,975
(68,009
)
Total liabilities, redeemable convertible
preferred stock, and stockholders’ equity / deficit
$
160,277
$
40,118
Owlet, Inc. Condensed
Consolidated Statements of Cash Flows (In thousands)
(unaudited)
Nine Months Ended September
30,
2021
2020
Cash flows from operating
activities:
Net loss
$
(47,647
)
$
(4,723
)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation and amortization
799
621
Amortization of debt issuance costs
-
19
Amortization of debt discount
19
89
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
2,310
702
Write-down of inventory to net realizable
value
84
-
Provision for losses on accounts
receivable
699
20
Interest expense from contingent
beneficial conversion feature
26,061
-
Change in fair value of common stock
warrant liability
(5,792
)
-
Change in fair value of preferred stock
warrant liability
5,578
(9
)
Changes in operating assets and
liabilities:
Accounts receivable
(14,750
)
(2,060
)
Prepaid expenses and other assets
(5,000
)
(590
)
Inventory
(2,397
)
(2,301
)
Accounts payable
64
8,409
Accrued and other expenses
6,793
3,775
Deferred related party convertible notes
payable interest
186
258
Deferred revenues
272
489
Deferred rent
(64
)
(14
)
Net cash (used in) provided by operating
activities
(34,703
)
4,674
Cash flows from investing
activities
Purchase of property and equipment
(883
)
(884
)
Purchase of intangible assets
(87
)
(56
)
Internally developed software
(590
)
-
Net cash used in investing activities
(1,560
)
(940
)
Cash flows from financing
activities
Proceeds from line of credit
8,182
10,533
Payments on line of credit
(6,757
)
(11,266
)
Proceeds from issuance of long-term
debt
5,000
1,000
Proceeds from financed insurance
premium
5,526
637
Payments on financed insurance premium
(1,910
)
(191
)
Payments for extinguishment of debt
(9
)
-
Payments for cash payout of stock options
as a result of the reverse recapitalization
(9,890
)
-
Proceeds from Paycheck Protection Program
loan
-
2,075
Proceeds from exercise of common stock
options
345
87
Proceeds from reverse recapitalization and
PIPE financing, net of $11,836 of deferred transaction costs
133,663
-
Net cash provided by financing
activities
134,150
2,875
Net change in cash and cash
equivalents
97,887
6,609
Cash and cash equivalents at beginning of
period
17,009
11,736
Cash and cash equivalents at end of
period
$
114,896
$
18,345
Supplemental disclosure of cash flow
information:
Cash paid for interest
$
538
$
337
Supplemental disclosure of non-cash
financing activities:
Conversion of redeemable convertible
preferred stock to common stock
$
47,182
-
Conversion of related party convertible
notes to common stock
$
33,182
-
Warrants received as part of the business
combination
$
22,806
-
Issuance of common stock warrants in
connection with debt amendment and new debt issuance
-
$
226
Unpaid purchases of property and
equipment
$
-
$
36
Unpaid purchases of intangibles
$
38
$
13
Owlet, Inc. Reconciliation of
GAAP to Non-GAAP Financial Measures (In thousands, except share
and per share amounts) (unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Net loss
$
(34,456
)
$
(1,501
)
$
(47,647
)
$
(4,723
)
Income tax provision
15
-
22
-
Interest expense
484
379
1,387
1,047
Interest expense from contingent
beneficial conversion feature
26,061
-
26,061
-
Interest income
(7
)
(2
)
(9
)
(37
)
Depreciation and amortization
290
259
799
621
EBITDA
$
(7,613
)
$
(865
)
$
(19,387
)
$
(3,092
)
Preferred stock warrant liability
adjustment
-
(1
)
5,578
(9)
Common stock warrant liability
adjustment
(5,792
)
-
(5,792
)
-
Stock-based compensation
697
248
2,310
702
Transaction costs
1,279
-
5,306
-
Loss on extinguishment of debt
-
-
182
172
Gain on loan forgiveness
-
-
(2,098
)
-
Adjusted EBITDA
$
(11,429
)
$
(618)
$
(13,901
)
$
(2,227
)
Net loss margin
(109.4
)%
(7.1
)%
(60.8
)%
(8.7
)%
Adjusted EBITDA margin
(36.3
)%
(2.9
)%
(17.7
)%
(4.1
)%
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Net loss
$
(34,456
)
$
(1,501
)
$
(47,647
)
$
(4,723
)
Non-GAAP Adjustments:
Non-recurring interest expense from
contingent beneficial conversion feature
26,061
26,061
Stock-based compensation
697
248
2,310
702
Transaction costs
1,279
-
5,306
-
Preferred stock warrant liability
adjustment
-
(1
)
5,578
(9
)
Common stock warrant liability
adjustment
(5,792
)
-
(5,792
)
-
Loss on extinguishment of debt
-
-
182
172
Gain on loan forgiveness
-
-
(2,098
)
-
Adjusted net loss
$
(12,211
)
$
(1,254
)
$
(16,100
)
$
(3,858
)
Weighted-average common shares
96,681,887
22,016,451
47,421,668
21,925,268
Adjusted weighted-average common
shares
96,681,887
22,016,451
47,421,668
21,925,268
Net loss per share
$
(0.36
)
$
(0.07
)
$
(1.00
)
$
(0.22
)
Adjusted net loss per share
$
(0.13
)
$
(0.06
)
$
(0.34
)
$
(0.18
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211110006345/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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