Owlet (OWLT) Q2 Revenue Jumps 26%

Owlet (OWLT -2.77%), a digital health company specializing in smart infant monitoring, reported its second-quarter 2025 results on August 7, 2025. The main headline was significant outperformance, with GAAP revenue of $26.1 million in Q2 2025 easily beating the analyst estimate of $22.17 million. Adjusted earnings per share (non-GAAP) came in at a loss of $0.05 in Q2 2025, a notably smaller loss than the expected $0.23. Gross margin continued its upward trend, and adjusted EBITDA (non-GAAP) turned positive for another quarter. Overall, the quarter marked continued progress for the company, underpinned by growth in its core Dream Sock and subscription businesses.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Overview of Owlet’s Business and Key Success Factors

Owlet develops and sells wearable digital infant health devices, smart monitoring cameras, and a data-driven infant health subscription service. Its flagship device, the Dream Sock, monitors a baby's sleep and vital signs, while the Dream Duo bundles this sock with a connected camera for comprehensive monitoring at home. The company also offers a software product, Owlet360, as a subscription platform that leverages data from its hardware for deeper insights and recommendations for parents.

The company’s recent focus has been on scaling its subscription business, broadening its international reach, and achieving repeatable operational improvements. Key success factors include securing regulatory approvals for its medical devices, building a large and engaged customer base for its subscription platform, and maintaining a competitive edge through data-driven service innovation and a trusted brand.

Quarter Highlights: Revenue Drivers, Margins, and Operational Milestones

Dream Sock and Dream Duo, both monitoring products for infants, remained the primary drivers of the revenue jump in Q2 2025. Strong demand drove GAAP revenue to $26.1 million in Q2 2025, up 25.9% from the same period a year ago and outpacing both company and analyst expectations. The recently launched Owlet360 subscription surpassed 66,000 paying subscribers as of Q2 2025, contributing to a growing stream of monthly recurring revenue and increased consumer engagement. Management described steady improvement in both customer satisfaction and retention rates for subscribers.

Gross margin (GAAP) rose to 51.3% in Q2 2025, up from 49.5% in the prior-year quarter. The filing attributed this improvement to a better mix of higher-margin Dream Sock sales, efficient cost controls in direct product and fulfillment expenses, and greater absorption of fixed costs. However, gross margin gains were partially offset by higher tariffs, which management flagged as an ongoing area for attention.

Operating loss narrowed to $1.9 million in Q2 2025, compared to a $2.2 million loss in Q2 2024. Adjusted EBITDA, a measure of core operating profit that excludes certain non-cash and one-time items, improved to $0.3 million in Q2 2025. This marks the fourth consecutive quarter of breakeven or better adjusted EBITDA performance, signaling ongoing efforts to move toward operating profitability. However, the reported GAAP net loss in Q2 2025 was $37.6 million, heavily impacted by a noncash warrant liability adjustment of $34.8 million. This type of adjustment reflects changes in the fair value of warrant obligations and does not affect cash flow or operating performance.

Operating expenses increased, with total outlays including stock-based compensation reaching $15.3 million in Q2 2025, up from $12.5 million in Q2 2024. Management attributed this to higher compensation and accrued bonuses. Cash flow from operations (GAAP) remained negative year to date, with the company reporting an $8.2 million outflow for the first half of 2025. On the balance sheet as of June 30, 2025, accounts receivable (GAAP) saw a significant increase, which may warrant close monitoring going forward. Total liabilities continued to exceed assets, and the stockholders’ deficit widened.

Business Model, Product Highlights, and Competitive Landscape

The company’s products combine wearable sensors and cameras with a digital platform, targeting new parents and healthcare providers. The most recent product push centers on Owlet360, a subscription-based platform that builds on the data gathered from hardware like the Dream Sock and Dream Duo. Subscription growth for Owlet360 was strong, rising from 25,000 to more than 66,000 paying subscribers since the start of Q1 2025, contributing to growing monthly recurring revenue. The BabySat monitor, which also received U.S. Food and Drug Administration clearance, supports the company’s entry into healthcare channels, serving higher-risk infants and potentially covered by insurance in several states.

Key focuses remain regulatory approval and global expansion. Both the Dream Sock and BabySat have gained important regulatory marks (such as the U.S. FDA and European CE certifications), which enhance the credibility and differentiation of these devices. As of the end of the period, Owlet’s products were available in over 26 countries through direct-to-consumer, retail, and healthcare channels. Geographic scaling is expected to underpin further revenue diversification. The company’s data-driven approach, leveraging a large and growing set of infant health metrics, informs ongoing product improvements and new features for subscribers as well.

Looking Ahead: Guidance and What to Watch

Following these results, management raised its revenue forecast for full year 2025 to a range of between $97 million and $100 million, up from prior guidance of $91 million to $95 million. Gross margin expectations were maintained in the 46% to 50% range for full year 2025 despite tariff pressures. Leadership also reiterated its expectation of achieving adjusted EBITDA profitability for full year 2025.

Investors should keep an eye on further expansion of recurring revenue from subscriptions, successful tariff mitigation measures, and the transition to new CEO leadership scheduled for October 2025. Continued international growth, monitoring of cash burn, and managing the company’s large stockholders’ deficit will also be important factors for upcoming quarters. Management’s outlook for adjusted EBITDA profitability underscores the company’s current operational trajectory, but near-term GAAP profitability remains a future goal. OWLT does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.