OWLT - NYSE

Good afternoon. Thank you for attending today's Owlet's Q2 2024 Earnings Call. My name is Jayla, and I'll be your moderator for today. [Operator Instructions] I would now like to turn the conference over to our host, Mike Cavanaugh, Investor Relations. Mike, you may proceed.

Thank you, operator. Good afternoon, everyone, and thank you for joining us today for the Owlet Baby Care's Second Quarter 2024 Earnings Call. We appreciate your time and interest in our company. Earlier today, Owlet released financial results for the quarter ended June 30, 2024. The release is currently available on the company's website at www. investors.owletcare.com. Our speakers for today's call are Kurt Workman, Owlet's Co-Founder and Chief Executive Officer; Jonathan Harris, President; and Amanda Twede Crawford, our Chief Financial Officer. Kurt will begin with an overview of our performance and key developments followed by Jonathan, who will provide color on our go-to-market results and then Amanda will provide a detailed review of our financial results. Following their remarks, we will open the call for questions. Before we get started, we would like to remind participants that today's discussion will contain forward-looking statements based on current expectations. These statements are only predictions and are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. These risks and uncertainties include, but are not limited to, those described in our most recent filings with the SEC and in the Risk Factors section of our annual report on Form 10-K for the fiscal year ended December 31, 2023. Please note that the company assumes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise except as required by law. With that, I would now like to turn the call over to our CEO, Kurt Workman. Kurt?

Thanks, Mike. Good afternoon, everyone, and thank you for joining Owlet's Earnings Call today. As always, we appreciate your ongoing support of Owlet. Throughout the first half of 2024, we have consistently delivered on every key operational milestones. These milestones include the launch of our FDA-cleared devices in both consumer and medical channels and our CE Medical approval and its launch in the U.K. and Europe. We've met all of our key financial goals in the first half, including double-digit sell-through and revenue growth, gross margin expansion and significant operating cost savings resulting in a positive adjusted EBITDA in Q2. As promised, we plan on maintaining at or near breakeven adjusted EBITDA on a go-forward basis. In addition to our significant Q2 operational achievements, our July Amazon Prime event was the strongest in company history and exceeded our expectations with Dream Sock sell-through up 61% year-over-year in units and revenue up 68% year-over-year. We've also crossed a major milestone with the launch of Owlet Care our new subscription service, which was released to a limited number of users. That service will gain the scale to our user base throughout this year and represents a major shift in the LTV potential for Owlet in 2025. Finally, we have now fully integrated our telehealth partnership with Wheel on owletcare.com to accelerate access to insurance reimbursement. When I look back over the past few years, it's clear that Owlet's commercial position today is the strongest it's ever meant. There is a robust, continued and discernible momentum for Owlet in the market that continues to grow on the back of the second of our two FDA approvals in the US last November. We believe this year is the turning point propelling us to our vision of a safe and healthy journey for every baby and a sustainable growth company. I'd like to take some time on today's call to share what success looks like over the next few years as we continue to make progress towards our vision. There are over 140 million babies born every year, and every single parent is worried about their baby safety, health and getting more sleep and yet unexpected mortality, respiratory infections and sleep deprivation are still a major issue for parents. These are universal problems that we firmly believe can be solved with access to personalized information in the home. I say this a lot, but I went through more training to get a driver's license than I did to become a dad, the caregiver of a little baby. Parents are exhausted, worried and have very few tools in the home to assess their baby's health and that leads to one of the highest rates of primary and urgent care utilization. It's time to empower parents in the home with tools and technologies they need to give the best care possible to their baby. Owlet has collected a very large data set of infant health and sleep in the home. We've monitored over 15 trillion heartbeats and millions of hours of infant fleet on over two million babies in the past eight years. We've taken all of that data to build beautiful subscription insights. The launch of subscription, we're calling Owlet Care signals the beginning of Owlet's transformation from a product and hardware company to the platform for pediatric health that helps bridge the gap between the hospital and the home. The rollout of this platform will have three distinct phases. The first phase is focused on unlocking insights and information that helps parents better understand what's normal for their baby and what's not. Parents will be able to get daily updates on how their child health and sleep are trending relative to their own baseline and how it compares to the broader population. Owlet will also help parents store their babies health data, an important moment structured by the camera and SOC and will make it easy for them to share that information with their pediatrician. I remember probably like every parent being surprised the first few weeks of how often their son is waking up and how frequently he was getting sick. There are so many questions that new parents have, but one comment thread among these is the simple question, is this normal? Is my baby okay? The second phase will integrate professional service partners into our app that will provide integrated care 24 hours a day, seven days a week. Parents will be able to chat with pediatricians, nurses, sleep coaches and mental health professionals who have access to Owlet's data to provide personalized care at home. We'll be able to use this data and new AI models to deliver unparalleled insights and proactive detection that will help move pediatrics into preventative care. In our third phase, our strategy is to use our biggest assets, our network of parents, hospitals and data to drive continued value into our platform. As a result, we expect that the price point of our subscription will evolve over time as well as the value and services we are providing. I can't imagine a world where every parent and pediatrician doesn't have access to some sort of information like Owlet about their baby that we will be providing and passionately advancing. As a corollary, 70 million adults in the US alone have a wearable health sensor, and they've come to expect it for their children. We believe that just like every baby leaves the hospital with the thermometer, a breast pump and our car seat, every baby will have access to Owlet Care that could one day be reimbursed by insurance. BabySat and Dream Sock are complementary in this vision, giving access to Owlet's technology to both parents who have a critically ill baby leaving the NICU and to the new parent who's trying to navigate bringing their newborn home for the first time. The opportunity to become the standard of home care in pediatrics is absolutely massive. It's been overload and Owlet is in the best position to build it. We will continue to execute on decision by focusing on three areas in 2024 and into 2025. First is driving continued adoption of Dream Sock. Second is expanding the medical and health care channels to offer an insurance reimburse monitor for babies who are sick or high risk. Third is to transition Owlet into a service that helps parents from infancy into the toddler years and increases LTV. The opportunity these three areas present significantly increases our revenue and margin without increasing the complexity of the business and will help to drive continued growth in top and bottom line. We believe our business in the next few years can be several hundred million in revenue and very profitable. Before turning the call over to Jonathan Harris, our President, to talk about these three pillars of our go-to-market strategy and results for Q2. I'd like to welcome Amanda Twede Crawford to our earnings call today. She will be covering our Q2 financial results. As we announced a few weeks ago, Kate Scolnick is leaving Owlet to pursue other opportunities and will remain at the company in an advisory role for a transition period through September. On behalf of the Board of Directors in Owlet, I want to thank Kate for her executive leadership and significant contributions since joining our management team prior to our initial public listing. Over the last 3.5 years, she has been instrumental in supporting our top-line growth, margin expansion and profitability objectives. And with her help, we are on track to achieve our 2024 operational and financial goals. We wish Kate continued success in her future endeavors. Amanda is a key financial leader and contributor at Owlet and we're excited for her to be moving into the Chief Financial Officer role. She joined us in 2022 with over 15 years of finance and accounting experience from Swire Coca-Cola and Price Waterhouse Coopers with the matters in accounting. Amanda knows our business, our leadership, our community and our vision incredibly well. And as such, we anticipate this will be a smooth transition. Welcome, Amanda. And now I'll turn the call over to Jonathan.

Thanks, Kurt. And as Kurt just mentioned, we have some really strong momentum building in our business, not only in the US but across the globe. First, demand and adoption. The response to our new FDA-cleared Dream Sock here in the US has been outstanding. We've witnessed strong parental engagement with over 66 million organic views of our content across TikTok and Facebook in Q2. And we continue to see great press with almost 1,500 pieces of coverage and publications such as BuzzFeed, Fierce Biotech, PureWow, USA TODAY, CBS and Today's Parent. The response to the FDA clearance of Dream Sock continues to be strong with sell-through achieving over 40% -- 44% growth with our Dream Sock and Duo products year-over-year. Customer satisfaction supports this growth with NPS scores exceeding 70 and Dream Sock hitting an all-time high in this category. We achieved this market enthusiasm while maintaining strong growth trajectory, including net revenue growth of 58% over Q2 of last year. In the US, our partnerships with major wheelers Target and Walmart are growing with expanded merchandising and placements to bring Owlet experience to life. Specifically, we are seeing sell-through of Sock at target increase by almost 50% year-over-year and Duo almost 40%. Our baby list registries grew at almost 60% versus previous year. Proving our messaging and FDA clearance continues to resonate with expecting parents. Owlet is still in the beginning stages of growth for Dream Sock, about 10% of the 3.6 million US births every year coming home with an Owlet Sock. We believe that just like car seats and strollers, every baby will have access to health sensing technology at home. And finally, I'm pleased to share Owlet had our most successful Amazon Prime event in the company's history with record sales of both our Duo and Dream Scok. In fact, Owlet was ranked number one baby monitor as well as number one in baby safety. Secondly, our U.K. CE launch but is extremely well positioned to take advantage of our U.K. and CE Med mark clearance with key retail partnerships across the European market, such as Mama & Papas in the U.K. BabyOne in Germany and into Australia with Baby Bunting we're already seeing sell-through up significantly. With our EU and U.K. medical clearance releases, we were able to generate over 650 million unique media views with coverage in Cosmo U.K., the independent mother and baby and many, many more. Overall, Owlet's saw international revenue grew at over 275% over the previous year, providing the demand for Owlet products is truly global. Third, opening medical dentals, in a similar vein, the response of pediatricians to Owlet's BabySat has also been extremely positive. In Q2, we've seen hundreds of pediatricians prescribing BabySat. The feedback we are receiving from parents and doctors tell us that BabySat is a powerful new tool in the care is at risk inference. We launched our partnership with AdaptHealth in Q2 to expand our distribution in medical channels. Adapt serves as a cornerstone for Owlet successfully entering this vital market. We are integrating with all major insurance plans, including Aetna, Cigna, United and the BlueCross networks removing barriers and ensuring families can access BabySat when they need it most. We're also streamlining BabySat purchase flow through partnerships with providers like Wheel who offer telehealth services directly through owletcare.com for prescription access. Parents can now seamlessly obtain a prescription and submit reimbursement through the Owlet website. We expect this channel to take some time to grow. In 2024, I will continue -- we will continue adding new distribution partners to expand our reach. We see this as a long-term opportunity to provide our innovative technology to infants with medical necessity with insurance reimbursement for the families. And finally, subscription service. In addition to our channel expansion, we're also focused on driving additional value to our customers through a new subscription service. Our unparalleled data set in forced by capturing over 15 trillion baby heartbeats, provides deep insights into infant health and sleep that only Owlet can provide, and we're unlocking its potential. Health and sleep are at the fundamental concerns of every parent. We're navigating these challenges, parents want to know what's normal and when they need to get professional support. Owlet's impressively large set of infant health data can help parents better navigate what is normal for their baby, when to visit the doctor and when to stay home. Additionally, parents with over 44 nights of sleep in the first year alone. Our subscription service will analyze baby sleep data and provide parents with personalized recommendations and support to get the whole family slipping better. Owlet has just released early access to this service to a few highly engaged users and we expect to make this service available to all outlet users by Q4. Apart from offering information and insights to parents during the initial year of their child life. We firmly believe that our products and service cost extend their value well into the toddler years and beyond. By focusing on core parenting pain points in the health and fleet and leveraging our data to drive continued releases of software features, we believe that this can expand our TAM and significantly extend our LTV per customer. Owlet is in a stronger commercial position than ever. We're a growth-oriented company, operating efficient efficiently and bringing innovative solutions that address the fundamental needs of parents around the world with our landmark FDA clearances were establishes a pioneer and infinite health technologies. This unique set of circumstances has a company poised for success as we continue to deliver value from our families and stakeholders alike. We're excited to share this incredible journey with you. Thank you. And now I'm going to turn it over to Amanda for our financials.

Thank you, Jonathan, and thanks, everyone, for joining us today. In Q2, 2024, Owlet demonstrated strong financial performance and momentum. We achieved $20.7 million in net revenue, up 58% year-over-year, gross margins of 50% and positive adjusted EBITDA, bringing us closer to our goal of exceeding 50% margins and profitability. I'll spend the next few minutes walking through Owlet's key financial metrics and providing some additional detail. Gross billings for the second quarter were $26.9 million, up 59% year-over-year. Product promotions and discounts were $5 million primarily higher than average as a percentage of gross billings for Amazon Prime Day load-in. Returns and allowance reserves were $1.1 million approximately 4.1% of gross billings and below our average range. Q2 net revenue, which includes promotions, discounts, returns and allowances was $20.7 million versus $13.1 million in the prior year. Revenue growth was primarily driven by higher sales of Dream Sock products, reflecting an increase in consumer demand as compared to the same period in the prior year. Our gross margin for the second quarter was approximately 50%, up over 1,000 basis points from margins in Q2 of the prior year. Gross margin increased primarily due to higher revenue, favorable product mix and lower direct product and fulfillment costs. During the quarter, we experienced some cost of goods sold expense impact from elevated transportation costs related to global disruptions and inventory routing, along with other companies seeking shipping alternatives, we are working to mitigate these factors. Total operating expenses in the second quarter were $12.5 million, an increase of approximately $600,000 year-over-year. Excluding stock-based compensation, Q2 operating expenses were $10.4 million. Second quarter operating loss was $2.2 million for the quarter compared to an operating loss of $6.7 million in Q2 2023 and $5.7 million sequentially. Second quarter net loss was $1.1 million for the quarter compared to a net loss of $8.5 million in Q2 2023. Within net loss, there was a gain of $1 million as compared to a loss of $1.6 million in Q2 2023 as a result of a decrease in the fair value of the common stock warrants outstanding. Adjusted EBITDA for the second quarter was $100,000, improving significantly from adjusted EBITDA loss of $4.3 million in Q2 of last year. Turning to the balance sheet. Q2 ended with $15.6 million in cash and cash equivalents. We remain focused on executing our strategic initiatives to further strengthen our commercial and financial performance in 2024. Looking forward, we are focused on executing on the core business activities in 2024 that will maximize the following initiatives. Supporting Dream Sock product commercialization globally and driving continual balance of sell-in and sell-through of consumer retail inventory. From a sell-in linearity perspective, we anticipate a seasonal revenue increase from Q2 to Q3 for sell-in for the November and December holiday promotions. Q4 is expected to be lower than Q3 sequentially due to less promotional activity following the holidays. We are making effective strides in BabySat commercialization with new DME partnerships and bill integration on owletcare.com. As a reminder, we anticipate BabySat product revenue will be ramping in 2024 as we develop these partnerships and will drive revenue impact in 2025. We plan to launch our subscription product in Q3. Projected revenue will also be ramping in 2024 and drive revenue impact in 2025. We remain focused operationally on driving quarterly gross margins within our target range of 46% to 50% through unit volume, product mix, and operational efficiencies. We will continue to drive leverage in our business operations initially towards breakeven and then towards sustainable profitability. We have reached a level of operational maturity that we are comfortable in providing forward-looking guidance. For the second half of 2024, we are estimating net revenue to be stronger than the first half and in the range of $37 million to $42 million. Gross margins of 46% to 50% and adjusted EBITDA loss of $3 million to breakeven. For the full year, we are estimating net revenue to be in the range of $72.5 million to $77.5 million, gross margins of 47% to 49% and adjusted EBITDA loss of $6 million to $3 million. With that, I will turn the call over to the Q&A portion. Operator, please open up the call to questions.

[Operator Instructions] Our first question Charles Rhyee calls with the company TD Cowen. Your line is now open

Yes, thanks guys for taking the questions and grabs on the quarter. Maybe to start Jonathan, you talked about sort of the exposure that Owlet is gaining across a bunch of media channels, social media as well. How are we tracking that? And how are we tracking in terms of how that is translating into sales? And maybe just sort of how you're looking internally to make sure that you get an effective ROI on that spend?

Thanks, Charles. Yes, we're tracking that. So in Q4 of 2023, we hired a PR agency to actively and aggressively reach out to various press because we saw the clearance of our FDA product. And so we are really leveraging that PR agency to help us continue to grow and expand our reach, not only here in the US but internationally as well. So we're having the PR agency as well as ourselves are monitoring that. We're tracking site traffic as well as relevant sources. Additionally, we're looking at what we're seeing organically and inorganically on TikTok and Facebook and really driving that exposure. We're really seeing strong engagement from our social media channels and continuing to drive that. And we're just finding that it's very, very positive and that customer feedback parental awareness is growing and expanding. So it's great news across the globe.

And are we still partnering -- I know in the past, you've partnered with a lot of nonprofit organizations, particularly groups may be focused on SIDs and other conditions, for instance, how much is that part of the strategy? Or is this more of a general push into sort of the currency market?

Yes, great question. Yes, we absolutely we continue to drive with our partners. That's certainly helping us. But we're not only seeing the awareness from the SIDs partners we have, that the parental community in general, parents are looking for insights. They're looking for how do I get more sleep, what insights can I gain from my baby to help me have a healthier, safer, better sleep for their lives.

Okay. Got it. And maybe I want to ask about -- I think the comment at the beginning, sort of talking about sort of at or near -- Amanda, you talked about sort of at or near adjusted EBITDA breaking for the rest of the year and then moving to sustainable growth. Is it fair to think that we should expect positive adjusted EBITDA to start increasing sequentially as we move through the rest of the year? Or are we looking to sort of reinvest in incremental earnings this year and really moving towards more sustainable profitability next year?

Charles, that's a good question. So when we look at the Q3 and Q4 in terms of profitability. We do expect Q3 to be stronger from a sell-in perspective just due to the holiday load-in like I mentioned. And then from an adjusted EBITDA perspective exiting the year, there's a few things that could impact it, and we will match our operating expenses with our top line. There is potential cost of goods sold headwinds from increasing fee and air transportation costs, and then we could potentially have some sales and marketing investments along with some clinical and regulatory investments towards the second half. So we do expect sequentially, depending on the impact of those items, we may see an increase. However, it's just dependent on those items. That's why we're looking to break even in the second half of this year. Moving into 2025, Q1 is usually sequentially lower than Q4. But overall for the year, we are expecting to move towards a profitable business overall.

And speaking of shipping costs, can you -- I mean, I guess, when I look at the gross margin guidance for the full year, that imply sort of gross margins down sequentially from the second quarter. Is that all related to shipping costs? And related to that, what is sort of your assumptions for freight? Maybe you can talk about what you're seeing in the outlook right now and what the trend is going? Is it sort of continued to tick up here? And what are you assuming in the guide?

Yes. So we are assuming a certain -- to a certain degree, just because we are operating at a very lean level in terms of working capital and inventory and just keeping up with the demand that we've seen in our business. It's highly likely that we will need to air freight in some of our inventory just to get it on time to support the holiday season. So we do have a small level of that in the plan, but just depending on how we continue to perform, we could see higher airfreight costs to support the business. But with that, we are proactively looking at our inventory plan and seeking to get ahead of that. We're placing POs sooner just to make sure that we can get the product in time through the most cost-effective shipping means possible.

Okay. I see. So it's really more of a mix of what type of shipping that you're looking to utilize that's driving sort of the higher cost. Are we seeing long delays in traditional shipping sort by container?

I think the containers are taking a little bit longer than what we typically see historically. But it's really just a matter of us having such an inventory can beat the demand in the second half as this first half was stronger than we expected internally. And we are seeking to build up our inventory, just so we can meet the needs of the business in the second half.

Okay. I see. Okay. That makes sense. Maybe just real quick on the revenue side. Where are we in terms of returns as a percent of gross revenue? Have we got finally gotten back to a normal level? I know last year and before we've been dealing with the sort of returns of the original stock. Just where are we in terms of that at this point?

Yes. So returns for this quarter were 4.1% of gross billings, which is well below our average rate. Typically, we were seeing around 10% in the business. This quarter, we did have a little bit of recoveries of some charge backs from some retailers. But overall, our historical rate that we base our reserve upon has decreased. So looking ahead, we're expecting to see a reduction in returns overall. And I think it just speaks to the health of our business and consumers are buying the product and keeping the product and this is a positive thing.

Got it. And maybe a question, Kurt, you talked about maybe babies leave -- or required to leave with a car seat, and that's reimbursed by insurance, if we get to the point where everyone leaves with a Sock, that will suggest that BabySat is the predominant driver of revenue. And is that sort of where we could be heading? And maybe talk about what it takes to sort of increase the insurance coverage. My understanding is that you can get reimbursed under current codes. Maybe give us an update on sort of what it would take to sort of have sort of a mandatory type of -- not maybe the Owlet per se, but that is sort of some type of monitoring device, for instance, leaving the hospital.

Yes, this is my favorite subject of all subjects. So Thanks, Charles. Yes, we -- I think the FDA clearance was probably the biggest milestone we can cross towards that. You can see not only just in the business, but the parental demand, the satisfaction with the product has taken a step function up, and we're taking advantage of that right now. There's so much momentum in the business. I think you can see that in the earnings. We're opening up the medical channel. When I think about every baby, it's going to start with every right today, it's every baby that parents who have that concern, they get an Owlet is the number one choice. We're expanding that to the every baby that leaves the NICU has some sort of health conditions should go home with an Owlet. It's literally tens to size. It's significantly less expensive. There's no wires that go into the crib. There's no reason why baby should leave the hospital with wired technology anymore. And there's about 20% of babies born between those leaving those with serious respiratory conditions or heart conditions. All of those babies should have monitoring at home. And we're making that happen. There's existing insurance reimbursement codes. We're building out the infrastructure for that right now. That's a really exciting piece. And as we continue to show the outcomes and the results from having access to this monitoring at home. We're going to expand this to include healthy babies at home because even healthy babies are at risk. There is the highest rates of unexpected mortality happen from SIDS, babies who have respiratory illnesses at home leads the number one cause for ER visits and doctors visits. Parents are losing hundreds of hours of sleep that first year. So there's no reason why this is a practical solution for every parent. There's no reason why every parent shouldn't have access to this. We think that we'll be able to demonstrate those outcomes over time. And as we do that, the ability to reimburse this by insurance will expand evolve. When we think about that business, that's a massive business. We're at 10% market penetration today. That's 100% market penetration like car seat and breast pumps and thermometers and strollers, we think that's where the category goes here and in Europe, and then that will position us to take this globally. So this is a massive opportunity. We're just getting started and how it's in the very best position in the market from a data perspective, from a clearance perspective. There's a community of over two million parents. That's -- yes, it's the most exciting thing about this business for sure.

And Kurt, who is the main -- like where is the driving into this coming from? Is that working through AdaptHealth and other of your DME partners? Like who is it that is going into the providers to really kind of demonstrate the effectiveness of the Owlet Sock and why it should be the preferred device for inventory? Or is this going to require a build out more of a sales force internally to really push outwards?

I think the incredible thing about Owlet is that we have a community of two million parents. You can ask any parent in the United States. You can show them a picture of the Sock and say, what is this? And 50% of them without any brand recall will say that's the Owlet's Sock. That's pretty incredible brand awareness they're demanding it from their pediatricians. We've also seen more pediatricians reach out to Owlet proactively than we've ever been in our history. We've had children's hospitals reaching out and saying, why are we sending babies home with these big hospital devices. I think the advantages are so obvious to the market right now that we're seeing it come from both sides of the market. There's interest from the providers. There's definite brand awareness and interest from parents. And that's what, I think, is creating the momentum. We're continuing to build out the infrastructure this year, just to be clear, there's going to be -- there's work to be done there for BabySat. But as that comes together, and we're able to take this message to parents to say, hey, look, if your baby is coming on to the NICU and we'll have some sort of condition and they need monitoring, you can get an Owlet reimbursed by insurance. That's a really powerful message that's going to be very sticky in the market, and it's -- you're going to see every parent is going to understand that message very quickly when we get to that point.

Great. And maybe one last one for me in terms of the international market, given that we're -- when we go outside the US, we're talking about single payer health systems, particularly in Europe and in Canada and Australia, what is the potential here that this could -- we could see this more of a mandated covered item at a national level? And maybe you can talk about any kind of discussions you've had now that you have the CE Mark in place.

Charles, this is Jonathan. I'll grab that one. Yes, getting the CE Med mark in EU and U.K. We've seen the demand. Our international business is up over 275% year-over-year. So we're really seeing demand. We're starting to have conversations with Alder Hey, which is one of the leading pediatric research hospitals in the U.K. So again, getting those clearances are opening the door and we're actually getting inbound calls from these markets as well. So again, these are early days, and we're just starting these conversations. But having these clearances are really -- it's not us dialing up looking for help. We're actually getting inbound as well. So it's super exciting, not only here in the US but internationally as well. And we're answering every call, and we're going to continue to keep driving forward.

Great. I'll stop there. Congrats again. Thanks.

Thanks, Charles. I think we're going to have Mike go through some of the written-in questions, right?

Yes. We -- that's right, Kurt. We've received some questions from investors in the retail community and wanted to share them during the Q&A. First one is for Jonathan. How should we think about this year's progress with the FDA and other clearances combined with BabySat and subscription translating into revenue growth in 2025.

Great, yes. So we haven't provided specific guidance for 2025. But based on our current market share, global footprint and beginning stages of BabySat and soon to be our subscription service we believe that there is considerable runway for sustainable growth in 2025 and beyond. We will provide additional commentary on our November call.

Great. Next question is to the management team. Is the focus going forward going to be on top line or bottom line growth?

Thanks, Mike. I'll take this one. The short answer is both. But the longer answer is, our top priority is building a sustainable and profitable business. So to achieve this, we'll focus on accelerating revenue growth. We've just talked about it. The opportunity is massive for us. We're at about 10% penetration in the United States. We have a key opportunity internationally. So the opportunity to grow our revenue is there. As we've shown, we're expanding our margins. With the addition of subscription and accelerating BabySat and the overall volume increase, that will help us expand our margins. We intend to invest strategically utilize our operating leverage that we have currently. And then overall, just maintain the operational efficiency. So we really believe we have momentum in the business, and we'll continue to build upon it and become the sustainable profitable business we are seeking to be.

Thanks, Amanda. And final question we've got today for the team. What is your plan to get people to notice the Sock going forward on the back of these strong results?

I'll take that one. First and foremost, it's business results. We've achieved every one of our key financial milestones and our operational milestones this year. I think if you look at the company over the last three years, gaining the FDA clearances driving significant adoption, opening up the health care channels, launching our subscription with limited access. Those are all the key milestones that are going to continue to propel the business towards sustainable growth, profitability like Amanda talked about, and I think that's going to be hard to ignore. We're also spending more time and energy and building awareness among investors through our IR efforts and through online and social channels. And we'll continue those efforts and continue to deliver the business execution and just keep that drum beat going. And I think it will be a story that a lot of people are really excited about.

Great. And that's all the time we have for questions today. And we'll turn it back over to Kurt for final remarks.

Well, thank you, everybody, for joining us today. I think it's clear there's a lot of momentum in the business. It's been an exciting journey for Owlet, and we're grateful for everybody's continued support I'd like to take this opportunity to thank our talented team for the incredible dedication and hard work that they put in Owlet. Your commitment to our mission and drive for innovation is absolutely inspiring. It's what makes this all work. We have achieved significant milestones this quarter We're demonstrating strong financial performance and continued growth. And as we move forward, we remain focused on executing our strategic initiatives to further strengthen our commercial and financial performance. And we're confident that our innovative solutions, data, our unwavering commitment to quality and the passionate team that delivers all this will continue to drive success for Owlet. So thank you again for your trust and your partnership.