Owlet Q2 Earnings Call Highlights

Key Points

• Record Q2 performance: Revenue rose 29.9% year over year to $33.9 million, while subscription revenue reached $3.2 million and Owlet360 subscribers totaled 130,000. Excluding a one-time $4 million tariff refund, adjusted EBITDA still increased to a record $2.9 million.
• Subscription and international growth remain priorities: Dream Sock subscription penetration reached 36% in the U.S., and international revenue surged 214% year over year to $5.7 million. Owlet is expanding web-based enrollment, retail subscription bundles and its Owlet OnCall telehealth service.
• Outlook was reaffirmed but near-term sales face pressure: The company maintained full-year revenue guidance of $118 million to $122 million and raised margin and adjusted EBITDA guidance largely because of the tariff refund. Management expects third-quarter revenue to decline sequentially and year over year amid competitor discounting and tough comparisons.

Owlet NYSE: OWLT reported record second-quarter revenue as growth in its connected baby-monitoring products, international markets and subscription business helped offset promotional pressure in the category.

Revenue for the quarter ended June 30 rose 29.9% year over year to $33.9 million, according to CFO Amanda Twede Crawford. Subscription revenue reached $3.2 million, up $2.4 million from a year earlier, while the company ended the quarter with 130,000 paying Owlet360 subscribers. Monthly recurring revenue exceeded $1.1 million at quarter-end.

The company said it received about $4 million in tariff refunds during the quarter following a U.S. Supreme Court decision in February that invalidated tariffs imposed under the International Emergency Economic Powers Act. Owlet recognized a one-time $3.5 million benefit to cost of goods sold and a $3.75 million benefit to adjusted EBITDA, with the remaining amount reflected in inventory.

Excluding the tariff refund, gross margin was 54%, up about 270 basis points from the prior-year quarter, while adjusted EBITDA was a record $2.9 million, compared with $0.5 million a year earlier. Including the refund, gross margin was 64.4% and adjusted EBITDA was $6.7 million. The company reported an operating loss of $1.8 million excluding the refund and operating income of $1.7 million including it.

Subscription strategy and customer growth

President, CEO and Co-Founder Kurt Workman said Owlet is seeking to evolve from a hardware-focused company into a data and services platform spanning sleep, health monitoring, cameras and telehealth. The company’s long-term objectives are to attract roughly 1 million new customers annually, increase subscription adoption and retain families for at least two years, ultimately building a recurring base of more than 1 million subscribers.

More than 30% of new U.S. customers subscribe to Owlet360 in their first year, Workman said. Dream Sock subscription penetration in the U.S. increased to 36% during the second quarter. The average subscriber currently uses the service for about 12 months, although management said the subscription offering launched about 18 months ago and customer cohorts are still maturing.

Workman said nearly 30% of new users in the trial period are choosing an annual plan, and the company is seeing what he described as “decent renewal rates.” Owlet plans to expand subscription enrollment from in-app purchases to the point of sale, including through product bundles and retail partners.

The company began testing web-based payment and enrollment during the quarter and expects a broader rollout in the third quarter. Crawford said app-store fees represent about 30% of subscription revenue during a subscriber’s first 12 months, while web payments would carry much lower credit-card processing costs. She said the financial benefit will emerge over time as more subscribers enroll through Owlet’s own payment channel.

Owlet360 upfront enrollment is already available on Owlet’s website and is expected to launch with Babylist. Workman said the company also expects to offer subscription bundles through retail partners during the second half of the year.

Prime Day pressure and Amazon enforcement

Workman said Amazon notified sellers in June that baby-monitoring products measuring and monitoring vital signs without FDA clearance would be deactivated from the platform effective Aug. 10. Owlet’s Dream Sock is FDA cleared, and no additional action was required by the company, he said.

Management said it believes Amazon enforcement could become a longer-term competitive benefit, since companies seeking to sell vital-sign monitoring products on Amazon would need to obtain similar FDA clearance. However, Owlet said several competitors discounted aggressively before the deadline, including during Prime Day.

Owlet’s Prime Day units sold were down 8% from the prior year and below its expectations, although the company remained the top seller in baby monitoring and the baby-safety category, according to Workman. The company said it does not yet have full visibility into competitors’ pricing actions following the Aug. 10 deadline.

Adjusted for the shift of Prime Day from the third quarter last year to the second quarter this year, U.S. sell-through unit growth was 12%, including gains of 16.5% for Dream Sock and 16% for Dream Duo. Excluding Prime Day, total sell-through increased 20%, with Dream Sock up 21% and Dream Duo up 29%. Dream Sock registry additions rose 40% year over year.

International expansion and telehealth

International revenue increased 214% year over year. Owlet noted that the comparison benefited from a timing shift in distributor orders during the prior year, but said second-quarter international revenue of $5.7 million was its highest international revenue quarter excluding the third quarter of 2025, which benefited from camera and Duo product load-in.

International sell-through units rose 38%, while Prime Day sell-through outside the U.S. grew more than 100%. Workman cited growth in Germany, France, Eastern Europe, the U.K., Australia and Nordic markets. The company also expanded Owlet360 into additional non-English-speaking markets, making subscriptions available to an additional 5% to 10% of its user base.

Owlet is continuing a test-and-learn approach with its Owlet OnCall pediatric telehealth service. Workman said access initially covered about 5% of users and has begun expanding more broadly in the third quarter. He said the company expects telehealth to evolve into multiple service tiers, including a potential offering that combines Owlet360 with physician access.

Guidance and liquidity

Owlet reaffirmed its full-year revenue outlook of $118 million to $122 million. The company expects third-quarter revenue to decline both sequentially and year over year, citing competitor discounting and a difficult comparison with the prior year’s Dream Sight camera and Dream Duo launch.

The company raised its full-year gross-margin outlook to 53% to 55% from 50% to 52% and increased adjusted EBITDA guidance to $10.75 million to $12.75 million from $7 million to $9 million. Crawford said both increases reflect the one-time tariff refund; excluding that item, the company’s underlying full-year expectations were essentially unchanged.

Owlet ended the quarter with $30.9 million in cash and cash equivalents, excluding restricted cash. It also entered a new $25 million asset-based revolving credit facility with Wells Fargo, replacing its prior asset-based facility and term loan. The new borrowing rate is SOFR plus 2% to 2.25%, compared with SOFR plus 7.5% to 8.5% under the prior asset-based facility. Including $7.5 million of available borrowing capacity, total liquidity was approximately $38.5 million at quarter-end.

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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