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 second quarter ended June 30,
2023. Owlet’s Chief Executive Officer, 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,
August 14, 2023, at 4:30 p.m. ET.
Recent Q2 2023 Highlights
- Received clearance from the U.S. Food and Drug Administration
(“FDA”) of BabySat™, the first medical pulse-oximetry device
featuring Owlet’s advanced, wire-free sock design, in June. De novo
submission to FDA for the clearance of Owlet’s
software-as-a-medical-device, Health Notifications, for use with
the Dream Sock, remains on track.
- Revenues of $13.1 million increased 22%, as compared with $10.7
million in Q1 2023.
- Operating expenses of $11.9 million declined 21% from $15.1
million in Q1 2023 as management positions Owlet for adjusted
EBITDA margin break even in late 2023. Excluding stock based
compensation, operating expenses of $9.3 million declined 24% from
$12.3 million in Q1 2023.
- Gross margin was 40% for the quarter, increasing significantly
year over year from 36.1% in Q2 2022.
- The Company had its Continued Listing Compliance Plan with NYSE
approved in June and completed a 1:14 reverse stock split in
July.
“Our conviction in Owlet’s future remains steadfast as our
objectives to strengthen our business remain on track. During the
quarter, we sequentially increased gross sales, continued to
stabilize gross margins and further reduced operating expenses,”
said Kurt Workman, Owlet’s Chief Executive Officer.
“And while we are executing well, we continue to look to future
opportunities; to that end, we received FDA clearance for BabySat
in June, intended to monitor babies at home under the direct care
of their physicians. We remain on track progressing our de novo
submission with FDA for our software as a medical device to provide
enhanced Health Notifications that parents want in an
over-the-counter product for our Dream Sock. I’m proud of the Owlet
team’s accomplishments this quarter and look forward to reporting
on additional progress in the second half of the year.”
Financial Results for the Second Quarter Ended June 30,
2023
Revenues for the second quarter of 2023 were approximately $13.1
million. This compares sequentially to revenues of $10.7 million in
the first quarter of 2023 and $18.3 million in the second quarter
of 2022. The second quarter 2023 revenues represented the Company
continuing to manage to healthy inventory levels with retail
partners prioritizing sell-through activation activities.
Cost of revenues for the second quarter of 2023 was
approximately $7.9 million with a gross margin of 40%. The second
quarter 2023 gross margins were improved sequentially primarily by
an increase in mix of higher margin products sold in the
quarter.
Operating expenses were approximately $11.9 million in the
second quarter of 2023, compared to $27.0 million for the same
period in 2022 and $15.1 million sequentially in the first quarter
of 2023. The decrease in year-over-year operating expenses was
primarily attributed to reduced marketing spend and employee costs.
The Company remains focused on reducing costs across the business,
completing regulatory submissions and achieving adjusted EBITDA
margin profitability in 2023.
Operating loss and net loss were approximately $6.7 million and
$8.5 million, respectively, for the second quarter of 2023,
compared to $20.4 million and $11.7 million, respectively, for the
second quarter of 2022.
Adjusted EBITDA loss was approximately $4.3 million in second
quarter 2023, compared to $16.7 million for the second quarter of
2022.
Net loss per share was ($1.19) for the second quarter of 2023,
compared to ($1.48) for the second quarter of 2022. Adjusted net
loss per share was ($0.56) for second quarter 2023, compared to
adjusted net loss per share of ($2.18) for the same period in
2022.
Financial Outlook
The Company will speak to its financial outlook as part of the
business update provided during Owlet’s conference call on August
14, 2023 at 4:30 p.m. ET. Conference call details are provided
below and on the Company’s Investor Relations website at Events
& Presentations.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
(the “Reform Act”). All statements contained in this press release
that do not relate to matters of historical fact should be
considered forward-looking statements, including, without
limitation, statements regarding the Company’s growth prospects,
expanded product offerings and the impacts of new leadership. In
some cases, you can identify forward-looking statements by terms
such as “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 (“SEC”),
including those identified in the “Risk Factors” section of the
Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2022, as updated in the Company’s Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 2023 and as any
such factors may be updated from time to time in the Company’s
other filings with the SEC. All such 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, the Company
operates in an evolving environment. 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 law, the Company assumes no
obligation to update any forward-looking statements after the date
of this press release, whether because 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, and transaction
costs. Adjusted net loss is defined as net loss adjusted for
restructuring costs, warrant liability adjustments, stock-based
compensation, and transaction costs. 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,
August 14, 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 +1 404 975 4839 (international) and
reference Access Code 203796. 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 +1 866 813 9403 (domestic) or +44 204 525 0658
(international) and using Access Code 203796. 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
June 30, 2023 December 31, 2023 Current assets:
Cash and cash equivalents
$
24.70
$
11.20
Accounts receivable
13
16
Inventory
12.4
18.5
Prepaid expenses and other current assets
1.6
5.6
Total current assets
51.7
51.3
Property and equipment, net
0.6
1.1
Right of use assets, net
1.6
2.3
Intangible assets, net
2.3
2.3
Other assets
1
1.2
Total assets
$
57.30
$
58.10
Liabilities and Stockholders’ Equity
Current liabilities: Accounts
payable
$
22.80
$
30.40
Accrued and other expenses
11.2
20
Current portion of deferred revenues
1
1.1
Line of credit
8.2
4.7
Current portion of long-term debt
5.2
10.4
Total current liabilities
48.4
66.6
Long-term debt, net
2
—
Noncurrent lease liabilities
0.3
1.2
Common stock warrant liability
26.6
0.7
Other long-term liabilities
1.8
0.3
Total liabilities
79
68.7
Total mezzanine equity
5.6
—
Total stockholders’ equity
(27.3
)
(10.6
)
Total liabilities and stockholders’ equity
$
57.30
$
58.10
1 Amounts may not sum due to rounding
Owlet, Inc.
Condensed Consolidated Statements of Cash Flows - Preliminary,
Unaudited1 (in millions)
For the Three Months Ended
June 30,
2023
2022
Net cash used in operating activities
$
(16.8
)
$
(55.7
)
Net cash used in investing activities
—
(1.2
)
Net cash provided by financing activities
30.3
(0.9
)
Net change in cash and cash equivalents
$
13.5
$
(57.8
)
1 Amounts 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
June 30, Six Months Ended June 30,
2023
2022
2023
2022
Revenues
$
13.10
$
18.30
$
23.80
$
39.90
Cost of revenues
7.9
11.7
14.4
24.5
Gross profit
5.2
6.6
9.4
15.4
Operating expenses:
General and administrative
6.1
9.5
15
19.8
Sales and marketing
3.1
9.7
6.4
21.4
Research and development
2.7
7.8
5.6
16.3
Total operating expenses
11.9
27.0
27.1
57.4
Operating loss
(6.7
)
(20.4
)
(17.7
)
(42.1
)
Other income (expense):
Interest expense, net
(0.1
)
(0.2
)
(2.9
)
(0.4
)
Common stock warrant liability adjustment
(1.6
)
8.8
0.3
1.9
Other income (expense), net
(0.1
)
0.1
(0.1
)
0.1
Total other income (expense), net
(1.7
)
8.7
(2.7
)
1.6
Loss before income tax provision
(8.5
)
(11.7
)
(20.3
)
(40.4
)
Income tax provision
—
—
—
—
Net loss and comprehensive loss
(8.5
)
(11.7
)
(20.3
)
(40.5
)
Accretion on Series A convertible preferred stock
(1.3
)
—
(2.0
)
—
Net loss attributable to common stockholders
$
(9.8
)
$
(11.7
)
$
(22.3
)
$
(40.5
)
Net loss per share attributable to common stockholders, basic and
diluted
$
(1.19
)
$
(1.48
)
$
(2.73
)
$
(5.12
)
Weighted-average number of shares outstanding used to compute net
loss per share attributable to common stockholders, basic and
diluted
8,213,247
7,915,156
8,162,102
7,899,959
1 Amounts may not sum due to rounding
Owlet, Inc.
Reconciliation of GAAP to Non-GAAP Measures - Preliminary,
Unaudited1 (in millions)
Three Months Ended June
30, Six Months Ended June 30,
2023
2022
2023
2022
Net loss
$
(8.5
)
$
(11.7
)
$
(20.3
)
$
(40.5
)
Income tax provision
—
—
—
—
Interest expense, net
0.1
0.2
2.9
0.4
Depreciation and amortization
0.2
0.4
0.5
0.7
EBITDA
$
(8.2
)
$
(11.1
)
$
(16.9
)
$
(39.3
)
Common stock warrant liability adjustment
1.6
(8.8
)
(0.3
)
(1.9
)
Stock-based compensation
2.6
3.3
5.4
6.6
Transaction costs
(0.4
)
—
1.7
—
Adjusted EBITDA
$
(4.3
)
$
(16.7
)
$
(10.1
)
$
(34.7
)
Three Months Ended June 30, Six
Months Ended June 30,
2023
2022
2023
2022
Net loss
$
(8.5
)
$
(11.7
)
$
(20.3
)
$
(40.5
)
Non-GAAP adjustments:
Common stock warrant liability adjustment
1.6
(8.8
)
(0.3
)
(1.9
)
Stock-based compensation
2.6
3.3
5.4
6.6
Transaction costs
(0.4
)
—
1.7
—
Adjusted net loss
$
(4.6
)
$
(17.3
)
$
(13.5
)
$
(35.8
)
Net loss per share attributable to common stockholders
$
(1.19
)
$
(1.48
)
$
(2.73
)
$
(5.12
)
Adjusted net loss per share attributable to common
stockholders
$
(0.56
)
$
(2.18
)
$
(1.65
)
$
(4.54
)
Weighted average number of shares outstanding
8,213,247
7,915,156
8,162,102
7,899,959
1 Amounts may not sum due to rounding
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230814641799/en/
Investors and Media Mike Cavanaugh
ICR Westwicke Phone: +1.617.877.9641 Email:
mike.cavanaugh@westwicke.com
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