See the “Disclosure Regarding Non-GAAP Financial Measures”
disclosure and the reconciliation tables that accompany this
release for a discussion and reconciliation of certain non-GAAP
financial measures included in this release.
Owlet, Inc. (“Owlet” or the “Company”) (NYSE:OWLT) today
reported financial results for the fourth quarter and fiscal year
ended December 31, 2022. Owlet’s Chief Executive Officer and
President, Kurt Workman, and Chief Financial Officer, Kate
Scolnick, will host a conference call to review the Company’s
results and provide a business update today, March 15, 2023, at
4:30 p.m. ET.
“We have significant conviction in Owlet’s fundamentals and our
vision for the future. I recognize that our confidence in our
business conflicts with our reported 2022 financial results due to
the efforts required to rebuild our business. 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,” said Kurt Workman, Owlet Chief Executive Officer,
President, and Co-Founder.
“A few weeks ago, with Owlet’s underlying business properly
positioned, we completed our private placement and raised $30
million of additional capital from both prior and new investors,
ensuring that we have the balance sheet to execute our plans 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,” Workman continued. “Our plan for 2023
is clear. Positioning Owlet on the pathway to positive cash flow
and 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, including:
- Our brand health has returned to meaningful levels not attained
since 2021. NPS (net promoter score) is at all-time highs and
marketing spend CPA (cost per acquisition) has declined by
approximately 80% since the beginning of 2022.
- Our channel sell-through has grown quarter-over-quarter,
reaching nearly $20 million in gross revenue of sell-through in
fourth quarter 2022.
- Inventory in the channel is normalizing, and we expect
sell-through to match sell-in by the end of second quarter 2023
with improvements in first quarter 2023.
- Our expenses are appropriate, and we expect that our cost
savings measures will shore up our rebased operating expenses in
the first and second quarters of 2023 with a plan to limit our 2023
adjusted operating expenses (excluding stock-based compensation) to
no more than $40 million.
- We are aggressively focused on achieving profitability and
improving working capital. We are targeting break-even EBITDA in
the second half of 2023 and continued working capital improvements
each quarter.”
“Owlet weathered significant change in 2022. Today, Owlet is now
in a position to drive execution of our strategic plans, 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 experience
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.” Workman concluded.
Financial Results for the Fourth Quarter and Fiscal Year
Ended December 31, 2022
Fourth Quarter 2022 Results
Revenues for the fourth quarter of 2022 were approximately $12
million.
Sell-in revenue to retailers and distributors was higher in the
first half of 2022 when the Company introduced the Dream line of
products in the marketplace. Sell-through product demand for the
Dream product line increased with consumers over the course of
2022, and we expect that sell-in revenue will follow in future
periods.
Cost of revenues for the fourth quarter of 2022 was
approximately $8.6 million with a gross margin of 27.5%. The fourth
quarter 2022 gross margins were impacted by inventory obsolescence
and adjustments, purchase price variance costs related to prior
periods and promotional discounts.
Operating expenses were approximately $24.1 million in the
fourth quarter of 2022, compared to $27.3 million for the same
period in 2021. The decrease in year-over-year operating expenses
was primarily attributed to reduced marketing spend and employee
costs. Operating expenses declined sequentially each quarter during
fiscal 2022 as the Company focused on reducing cost across the
business, completing regulatory submissions and achieving EBITDA
margin loss profitability in 2023.
Operating loss and net loss were approximately $20.7 million and
$19.5 million, respectively, for the fourth quarter of 2022,
compared to $33.3 million and $24.1 million, respectively, for the
fourth quarter of 2021.
Adjusted EBITDA loss was approximately $15.2 million in fourth
quarter 2022, compared to $31.3 million for the fourth quarter of
2021.
Net loss per share was $0.17 for the fourth quarter of 2022,
compared to $0.22 for the fourth quarter of 2021. Adjusted net loss
per share was $0.14 for fourth quarter 2022, compared to adjusted
net loss per share of $0.29 for the same period of 2021.
Fiscal Year 2022 Results
For the fiscal year ended December 31, 2022, revenues were
approximately $69.2 million, compared to $75.8 million for the
fiscal year ended December 31, 2021.
Cost of revenues for the fiscal year ended December 31, 2022 was
$45.9 million, compared to $40.8 million for the 2021 fiscal
year.
For fiscal year 2022, gross margin was 33.7%, compared to 46.3%
for fiscal year 2021.
Operating expenses for the fiscal year ended December 31, 2022
were $107.9 million, compared to $90.9 million for the 2021 fiscal
year. The increase in year-over-year operating expenses was
primarily related to spending associated with launching Dream Sock
in the first half of 2022. In the second half of 2022, the Company
reduced marketing spend, employee costs and variable expenses,
which we anticipate will position the Company for future
profitability in 2023.
Operating loss and net loss for the fiscal year ended December
31, 2022 were $84.6 million and $79.3 million, respectively,
compared to $55.8 million and $71.7 million, respectively, for the
2021 fiscal year.
EBITDA loss for fiscal year 2022 was $76.8 million, compared to
$42.7 million for fiscal year 2021.
Adjusted EBITDA loss for the fiscal year ended December 31, 2022
was $68.3 million, compared to $45.2 million for the 2021 fiscal
year.
Net loss per share for the fiscal year ended December 31, 2022
was $0.71, compared to $1.13 for fiscal year 2021. Adjusted net
loss per share was $0.64 for fiscal year 2022, compared to $0.76
for fiscal year 2021.
Financial Outlook
The Company will speak to its financial outlook as part of the
business update provided during Owlet’s conference call on March
15, 2023 at 4:30 p.m. ET. Conference call details are provided
below and on the Company’s Investor Relations website at
www.investors.owletcare.com.
Cautionary Note Regarding Forward-Looking Statements and
Projections
This release contains certain statements that are
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995 (the “Reform Act”).
Generally, forward-looking statements include the words “estimate,”
“may,” “believes,” “plans,” “expects,” “anticipates,” “intends,”
“goal,” “potential,” “upcoming,” “outlook,” “guidance,” the
negation thereof, or similar expressions, although not all
forward-looking statements contain these identifying words.
Forward-looking statements are based on the Company’s expectations
at the time such statements are made, speak only as of the dates
they are made and are susceptible to a number of risks,
uncertainties and other factors. For all such forward-looking
statements, the Company claims the protection of the safe harbor
for forward-looking statements contained in the Reform Act. The
Company’s actual results, performance or achievements may differ
materially from any future results, performance or achievements
expressed or implied by our forward-looking statements.
Many important factors could affect the Company’s future results
and cause those results to differ materially from those expressed
in or implied by the Company’s forward-looking statements. Such
factors include, but are not limited to: (i) the regulatory pathway
for Owlet’s products, including submissions to, actions taken by
and decisions and responses from regulators, such as the U.S. Food
and Drug Administration and similar regulators outside of the
United States, as well as Owlet’s ability to obtain and maintain
regulatory approval or certification for our products and other
regulatory requirements and legal proceedings; (ii) Owlet’s
competition and the Company’s ability to profitably grow and manage
growth; (iii) the Company’s ability to enhance future operating and
financial results or obtain additional financing to continue as a
going concern; (iv) Owlet’s ability to obtain additional financing
in the future, as well risks associated with the Company’s current
loan and debt agreements, including compliance with debt covenants,
restrictions on the Company’s access to capital, the impact of the
Company’s overall debt levels and the Company’s ability to generate
sufficient future cash flows to meet Owlet’s debt service
obligations and operate Owlet’s business; (v) the ability of Owlet
to implement strategic initiatives, reduce costs, grow revenues,
develop new products, innovate and enhance existing products, meet
customer demands and adapt to changes in consumer preferences and
retail trends; (vi) Owlet’s ability to acquire, defend and protect
its intellectual property and satisfy regulatory requirements,
including but not limited to requirements concerning privacy and
data protection, breaches and loss, as well as other risks
associated with Owlet’s digital platforms and technologies; (vii)
Owlet’s ability to maintain relationships with customers,
manufacturers and suppliers and retain Owlet’s management and key
employees; (viii) Owlet’s ability to upgrade and maintain its
information technology systems; (ix) changes in applicable laws or
regulations; (x) the impact of and disruption to Owlet’s business,
financial condition, operations, supply chain and logistics due to
economic and other conditions beyond the Company’s control, such as
health epidemics or pandemics, macro-economic uncertainties, social
unrest, hostilities, natural disasters or other catastrophic
events; (xi) the possibility that Owlet may be adversely affected
by other economic, business, regulatory, competitive or other
factors, such as changes in discretionary consumer spending and
consumer preferences; and (xii) other risks and uncertainties set
forth in the Company’s other releases, public statements and
filings with the U.S. Securities and Exchange Commission, including
those identified in the “Risk Factors” sections of the Company’s
Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q.
All future written and oral forward-looking statements
attributable to the Company or any person acting on the Company’s
behalf are expressly qualified in their entirety by the cautionary
statements contained or referred to above. Moreover, Owlet operates
in an evolving environment. In addition to the factors described
above, new risk factors and uncertainties may emerge from time to
time, and factors that the Company currently deems immaterial may
become material, and it is impossible for the Company to predict
such events or how they may affect Owlet.
Except as required by federal securities laws, the Company
assumes no obligation to update any forward-looking statements
after the date of this release, whether as a result of new
information, future events or otherwise, although Owlet may do so
from time to time. The Company does not endorse any projections
regarding future performance that may be made by third parties.
Disclosure Regarding Non-GAAP Financial Measures
In addition to the financial measures presented in this release
in accordance with U.S. Generally Accepted Accounting Principles
(“GAAP”), the Company has included certain non-GAAP financial
measures in this release, including EBITDA, adjusted EBITDA,
adjusted net loss and adjusted net loss per share.
The Company uses such non-GAAP financial measures as internal
measures of business operating performance and as performance
measures for benchmarking against the Company’s peers and
competitors. The Company believes its presentation of EBITDA,
adjusted EBITDA, adjusted net loss and adjusted net loss per share
provide a meaningful perspective of the underlying operating
performance of our current business and enables investors to better
understand and evaluate its historical and prospective operating
performance. The Company believes that these non-GAAP financial
measures are important supplemental measures of operating
performance because they exclude items that vary from period to
period without correlation to the Company’s core operating
performance and highlight trends in its business that may not
otherwise be apparent when relying solely on GAAP financial
measures. Due to the nature of the items being excluded, such items
do not reflect future gains, losses, expenses or benefits and are
not indicative of the Company’s future operating performance. The
Company believes investors, analysts and other interested parties
use EBITDA, adjusted EBITDA, adjusted net loss and adjusted net
loss per share in evaluating issuers, and the presentation of these
measures facilitates a comparative assessment of the Company’s
operating performance in addition to the Company’s performance
based on GAAP results.
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
expense from contingent beneficial conversion feature, interest
income, and depreciation and amortization. Adjusted EBITDA is
defined as net loss adjusted for income tax provision, interest
expense, interest expense from contingent beneficial conversion
feature, interest income, depreciation and amortization,
restructuring costs, warrant liability adjustments, gain on loan
forgiveness, stock-based compensation, transaction costs and loss
on extinguishment of debt. Adjusted net loss is defined as net loss
adjusted for interest expense from contingent beneficial conversion
feature, restructuring costs, warrant liability adjustments, gain
on loan forgiveness, stock-based compensation, transaction costs
and loss on extinguishment of debt. Adjusted net loss per share is
defined as adjusted net loss divided by weighted-average shares of
common stock.
EBITDA, adjusted EBITDA, adjusted net loss and adjusted net loss
per share are not recognized terms under GAAP, and the Company’s
presentation of these non-GAAP financial measures does not replace
the presentation of the Company’s financial results in accordance
with GAAP. Because all companies do not use EBITDA, adjusted
EBITDA, adjusted net loss and adjusted net loss per share (and
similarly titled financial measures) in the same way, those
measures as used by other companies may not be consistent with the
way the Company calculates such measures. The non-GAAP financial
measures included in this release should not be construed as
substitutes for or better indicators of the Company’s performance
than the most directly comparable GAAP financial measures. See the
reconciliation tables that accompany this release for additional
information regarding certain of the non-GAAP financial measures
included herein.
Conference Call and Webcast Information
Owlet will host a conference call and audio webcast today, March
15, 2023, at 4:30 p.m. ET to discuss these results.
To access the conference call by telephone, please dial (833)
470-1428 (domestic) or +1 (929) 526-1599 (international) and
reference Access Code 713225. To listen to the conference call via
live audio webcast, please visit the “Events” section of Owlet’s
Investor Relations website at investors.owletcare.com.
A replay of the conference call will be available by telephone
by dialing (929) 458-6194 (domestic) or +44 (020) 4525-0658
(international) and using Access Code 848305. The archived webcast
will also be available on Owlet’s Investor Relations website
mentioned above.
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. To learn more, visit
www.owletcare.com.
Owlet, Inc.
Condensed Consolidated Balance
Sheets - Preliminary, Unaudited1
(in millions)
Assets December 31,2022 December
31,2021 Current assets: Cash and cash equivalents
$
11.20
$
95.10
Accounts receivable
16.0
10.5
Inventory
18.5
18.0
Prepaid expenses and other current assets
5.6
12.3
Total current assets
51.3
135.8
Property and equipment, net
1.1
1.9
Right of use assets, net
2.3
—
Intangible assets, net
2.3
1.7
Other assets
1.2
0.7
Total assets
$
58.10
$
140.00
Liabilities and Stockholders’ Equity Current liabilities:
Accounts payable
$
30.40
$
27.80
Accrued and other expenses
20.0
31.7
Current portion of deferred revenues
1.1
1.1
Line of credit
4.7
—
Current portion of long-term debt
10.4
8.5
Total current liabilities
66.6
69.1
Long-term debt, net
—
8.0
Noncurrent lease liabilities
1.2
—
Common stock warrant liability
0.7
7.1
Other long-term liabilities
0.3
0.7
Total liabilities
68.7
84.9
Total stockholders’ equity
(10.6)
55.2
Total liabilities and stockholders’ equity
$
58.10
$
140.00
Owlet, Inc.
Condensed Consolidated
Statements of Cash Flows - Preliminary, Unaudited1
(in millions)
For the Years Ended December 31,
2022
2021
Net cash used in operating activities
(81.4)
(40.6)
Net cash used in investing activities
(1.6)
(2.0)
Net cash provided by financing activities
(0.9)
120.6
Net change in cash and cash equivalents
(83.8)
78.0
1Amounts may not sum due to rounding
Owlet, Inc.
Condensed Consolidated
Statements of Operations and Comprehensive Loss - Preliminary,
Unaudited1
(in millions, except share and
per share amounts)
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
Revenues
$
12.00
($
2.50)
$
69.20
$
75.80
Cost of revenues
8.6
3.5
45.9
40.8
Gross profit
3.3
(6.0)
23.3
35.1
Operating expenses: General and administrative
12.1
9.8
41.5
32.3
Sales and marketing
7.4
10.3
38.5
37.1
Research and development
4.5
7.2
27.9
21.4
Total operating expenses
24.1
27.3
107.9
90.9
Operating loss
(20.7)
(33.3)
(84.6)
(55.8)
Other income (expense): Interest expense, net
(0.3)
(0.4)
(1.1)
(1.8)
Interest expense from contingent beneficial conversion feature
—
—
—
(26.1)
Preferred stock warrant liability
adjustment
—
—
—
(5.6)
Common stock warrant liability
adjustment
1.5
10.0
6.3
15.7
Gain on loan forgiveness
—
—
—
2.1
Other income (expense), net
—
(0.3)
0.1
(0.3)
Total other income (expense), net
1.2
9.3
5.3
(15.9)
Loss before income tax provision
(19.5)
(24.0)
(79.3)
(71.7)
Income tax provision
—
—
—
—
Net loss and comprehensive loss
($
19.50)
($
24.10)
($
79.30)
($
71.70)
Net loss per share attributable to common stockholders, basic and
diluted
($
0.17)
($
0.22)
($
0.71)
($
1.13)
Weighted-average number of shares
outstanding used to compute net loss per share attributable to
common stockholders, basic and diluted
112,245,098
110,087,581
111,310,604
63,216,912
1Amounts may not sum due to rounding
Owlet, Inc.
Reconciliation of GAAP to
Non-GAAP Measures - Preliminary, Unaudited1
(in millions)
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
Net Loss
($ 19.50)
($ 24.10)
($ 79.3)
($ 71.70)
Income tax provision
—
—
—
—
Interest expense, net
0.3
0.4
1.1
1.8
Interest expense from contingent beneficial conversion feature
—
—
—
26.1
Depreciation and amortization
0.4
0.3
1.4
1.1
EBITDA
($ 18.90)
($ 23.30)
($ 76.8)
($42.70)
Restructuring costs
0.2
—
1.4
—
Preferred stock warrant liability
adjustment
—
—
—
5.6
Common stock warrant liability
adjustment
(1.5)
(10.0)
(6.3)
(15.7)
Gain on loan forgiveness
—
—
—
(2.1)
Stock based compensation
4.4
1.9
12.9
4.3
Transaction costs
0.6
—
0.6
5.3
Loss on extinguishment of debt
—
—
—
0.2
Adjusted EBITDA
($15.20)
($31.30)
($68.30)
($45.20)
Owlet, Inc.
Reconciliation of GAAP to
Non-GAAP Measures - Preliminary, Unaudited1
(in millions, except share and
per share amounts)
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
Net Loss
($ 19.50)
($ 24.10)
($ 79.30)
($ 71.70)
Non-GAAP Adjustments: Non-recurring interest expense from
contingent beneficial conversion feature
—
—
—
26.1
Restructuring costs
0.2
—
1.4
—
Preferred stock warrant liability adjustment
—
—
—
5.6
Common stock warrant liability adjustment
(1.5)
(10.0)
(6.3)
(15.7)
Gain on loan forgiveness
—
—
—
(2.1)
Stock based compensation
4.4
1.9
12.9
4.3
Transaction costs
0.6
—
0.6
5.3
Loss on extinguishment of debt
—
—
—
0.2
Adjusted Net Loss
($ 15.80)
($ 32.10)
($ 70.80)
($ 48.20)
Net loss per share
($ 0.17)
($ 0.22)
($ 0.71)
($ 1.13)
Adjusted net loss per share
($ 0.14)
($ 0.29)
($ 0.64)
($ 0.76)
1Amounts may not sum due to rounding
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Investors and Media Mike Cavanaugh
ICR Westwicke Phone: +1.617.877.9641 Email:
mike.cavanaugh@westwicke.com
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