Owlet Q1 Earnings Call Highlights

Key Points

• Owlet beat first-quarter revenue expectations with $22.5 million in sales, but it also cut its full-year revenue outlook to $118 million to $122 million as it exits lower-margin non-core channels and delays some international expansion.
• The company raised its full-year adjusted EBITDA forecast to $7 million to $9 million from $3 million to $5 million, signaling a shift toward higher profitability and tighter operating discipline despite slower top-line growth.
• Owlet is leaning harder into a subscription-first strategy, with more than 115,000 paying subscribers, record subscription revenue of $2.7 million in Q1, and plans to expand Owlet360, camera add-ons, and telehealth offerings like OnCall.

Owlet NYSE: OWLT reported first-quarter 2026 revenue above its own guidance while lowering its full-year sales outlook and raising its profitability forecast, as the baby monitoring and pediatric health technology company said it is narrowing its focus to subscriptions, core markets and operational efficiency.

President, CEO and Co-founder Kurt Workman, who returned to the CEO role in April, opened the call by acknowledging the company’s leadership transition and thanking former CEO Jonathan Harris for his role in guiding Owlet after FDA clearances. Workman said Owlet is entering “this next phase of scale and development in pediatric health” with a sharper focus on execution and higher-value opportunities.

Workman outlined three priorities for the company: expanding the Owlet360 subscription and telehealth opportunity, increasing penetration in existing core markets and improving financial discipline.

Owlet Cuts Revenue Outlook, Raises Adjusted EBITDA Forecast

Owlet lowered its full-year 2026 revenue guidance to $118 million to $122 million, representing 12% to 15% year-over-year growth. The company had previously expected revenue of $126 million to $130 million.

Workman said the revised outlook reflects a decision to exit “lower-margin, high-burden revenue streams in non-core geographies and new channels,” along with a more conservative view of sell-through for the rest of the year. As part of that shift, Owlet has deferred planned entries into India, Hong Kong and Singapore for the current year and redirected investment toward existing markets with higher near-term return potential.

At the same time, Owlet raised its full-year adjusted EBITDA forecast to $7 million to $9 million, up from prior guidance of $3 million to $5 million. Workman described the lower revenue outlook and higher profitability target as “a purposeful trade-off designed to improve operating leverage and profitability.”

CFO Amanda Twede Crawford said Owlet expects full-year gross margin of 50% to 52%. She also said the company is now estimating a 15% tariff rate as its baseline for the rest of the year, down from earlier rates attributed to Thailand and Vietnam, while noting that the trade environment remains dynamic.

First-Quarter Revenue Rises 6.4%

For the first quarter ended March 31, 2026, Owlet reported total revenue of $22.5 million, up 6.4% from the prior year and above its guidance range of $20 million to $21 million.

Twede Crawford said Q1 results were affected by a one-time inventory “right sizing” at a large retail partner, which reduced weeks of supply from 8 to 10 weeks to 4 to 6 weeks. She said the action negatively affected sell-in revenue during what is typically Owlet’s lowest seasonal revenue quarter.

Overall gross margin was 54.5%, above Owlet’s guidance range of 50% to 52% and up 80 basis points from the prior year, despite a 480-basis-point impact from tariffs. Twede Crawford said the margin performance was helped by a greater mix of subscription revenue and favorable product mix between Sock and Cam products.

Operating expenses rose to $17.7 million from $14 million a year earlier, driven primarily by higher compensation costs, including stock-based compensation. Operating loss was $5.5 million, compared with $2.7 million in the prior-year period. Net loss was $3.3 million, and adjusted EBITDA was negative $1.5 million, at the high end of the company’s guidance range.

Owlet ended the quarter with $35.5 million in cash and cash equivalents, excluding restricted cash, and total liquidity of $39.4 million, including $3.9 million of undrawn line-of-credit availability.

Subscription Strategy Takes Center Stage

Workman said Owlet is increasingly operating with a “subscription-first approach,” with its product roadmap, marketing and channel partnerships aligned around increasing subscription penetration. The company said it now has more than 115,000 paying subscribers and ended Q1 with $1 million in monthly recurring revenue.

Subscription revenue reached a record $2.7 million in Q1, with subscription gross margin of 67.4%. Owlet360 achieved a 34% penetration rate among U.S. Dream Sock users during the quarter.

Workman said Owlet’s goal is to extend its relationship with families beyond a single hardware purchase, potentially covering the first two years of a child’s life and multiple children in a family. He said the average family grows to just over two children, creating what Owlet views as a possible four-year subscription window.

The company’s subscription priorities for the year include adding new Dream Sock features and AI integrations, launching camera subscription features for Dream Sight users and expanding subscription access outside the United States.

Owlet recently launched extended camera clips for Dream Sight, including AI-assisted event detection and subscriber benefits such as a 14-day cloud archive and longer 60-second recordings. Workman said Owlet also plans to launch built-in white noise as a Dream Sight subscription feature in the coming weeks.

Core Markets and Product Demand

In the U.S., Workman said Q1 domestic sell-through units for Sock and Duo grew 10.5% year over year, led by a 45% increase in Duo and a 3% increase in Dream Sock. He said Owlet was the only brand in its category to grow during a period of broader decline, with the baby monitoring category down 19% in dollars excluding Owlet, while Owlet dollars grew 11%.

Workman said Q1 had low promotional activity following the holidays and that some customers may be delaying purchases ahead of events such as Mother’s Day and Prime Day. He said Q2 quarter-to-date sell-through had increased to more than 30% for both Duo and Dream Sock versus the prior year, though the company has not incorporated that performance into its full-year outlook.

Owlet reported strong brand metrics, including a Dream Sock Net Promoter Score of 77% and a blended product NPS of 71% at the end of Q1. Workman also said customer service contact volumes for the Dream Sight camera have declined 74% compared with Owlet’s second-generation camera.

International revenue grew 22% year over year in Q1, while international sell-through grew 37%. Workman pointed to the Czech Republic, where he said nearly 9% of babies born are using an Owlet, and said markets including the U.K., Germany, France and Australia are following a similar market penetration trajectory to the U.S.

Telehealth and BabySat Remain Longer-Term Opportunities

Owlet OnCall, the company’s telehealth offering, is now live in the app for select participants, Workman said. The feature allows parents to communicate directly with a pediatrician inside the Owlet app. He said the company will expand access gradually while testing and learning, and expects the initiative to inform future platform expansion and revenue opportunities.

During the Q&A session, Workman said monetization of OnCall this year will focus on testing and improving the customer experience rather than near-term revenue contribution. He said Owlet expects OnCall to become a “meaningful contributor in future years.”

Asked about subscription retention, Workman said churn has improved sequentially since launch and is in a “monthly single-digit range.” He said Owlet’s product roadmap is designed to support multi-year engagement, including telehealth and new camera features.

Workman also said BabySat revenue grew nearly 100% year over year in Q1, though it remains a small part of the business. He said hospital partnerships are progressing but take time to develop, and Owlet will provide more detail when the business reaches a scale more relevant to earnings calls.

About Owlet NYSE: OWLT

Owlet Baby Care, Inc is a consumer health technology company specializing in the design and manufacture of smart baby monitoring products. The company’s flagship device, the Owlet Smart Sock, is a wearable monitor that tracks a newborn’s heart rate and oxygen saturation levels and transmits real-time data to a mobile app. Owlet has since expanded its product suite to include the Owlet Cam, an HD video monitor with audio and motion alerts, and the Dream Sock, a non-wearable device that collects sleep metrics to help parents understand and improve their baby’s rest patterns.

Founded in 2013 by engineer and father Kurt Workman, Owlet is headquartered in Lehi, Utah.

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