Owlet, Inc. Q1 FY2026 earnings call

• Leadership transition: Kurt Workman stepping back into CEO role. - Strategic priorities: Prioritizing Owlet360 subscription and telehealth opportunity, sharpening focus on high-value core markets, and heightening focus on operational efficiency and financial discipline. - Q1 business update: Driving adoption of DreamSoc and Duo in core global markets, expanding subscription platform with Owlet360 and OnCall, with subscription engine thriving and telehealth launch in progress. - Financial highlights: Q1 total revenue above guidance, subscription revenue record, gross margin expanded, operating expenses increased, operating losses and net loss increased, adjusted EBITDA in range.

Q1 total revenue was 22.5 million, up 6.4% year over year. Subscription revenue grew sequentially to a record of 2.7 million in Q1 with a subscription gross margin of 67.4%. In the U.S., 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 DreamSoc. International revenue grew 22% year-over-year with sell-through showing strength, ending Q1 with 37% year-over-year growth. Subscription achieved a 34% penetration rate for DreamStock users in the U.S. in Q1.

Full year 2026 revenue expected in range of 118 to 122 million (12-15% Y/Y growth), revised from previous guidance. Adjusted EBITDA expected in range of 7 to 9 million (250-350% Y/Y growth), revised from previous guidance. Revenue expected to trend upward in Q2, slight sequential decline in Q3, annual high in Q4. Tariff rate estimated at 15% baseline for remainder of year.

Q: Gross margin expansion despite tariff headwinds, discuss operational improvements.

A: Higher proportion of subscription revenue and favorable product mix.

Q: OpEx increase, biggest opportunities for operating leverage.

A: Removing headcount additions, deprioritizing new geographies, prioritizing zero to 24 months.

Q: Monetization of on-call initially.

A: Focus on testing and learning, expect meaningful contributor in future years.

Q: Change in latest guidance on top line, subscription growth, marketing strategy.

A: Reflection of sharpened focus, subscription growth optimistic, marketing strategy tied to parent needs.

Q: Cohort data on annual retention, hospital partnerships.

A: Subscription retention in monthly single digit range, hospital partnerships growing with good progress