Owlet, Inc.
For the period ended Jun 30, 2026. Filed Aug 14, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 14, 2026
OWLT$4.17-1.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-11.
0001816708-26-000049
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-14.
0001816708-26-000090
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 70 previous paragraphs and 81 current paragraphs.
42 unchanged; 18 reworded; 19 added; 9 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
In addition, from time to time, our operating expenses include restructuring costs. Restructuring costs in the periods presented primarily related to employee severance in connection with our CEO transition in April 2026 and, to a lesser extent, management-approved plans designed to improve our cost structure and/or operations, such as our previously-announced decision to exit lower-margin, high-burden revenue streams in non-core geographies and new channels. Restructuring expenses consist of employee severance costs, contract termination costs and certain other exit costs to improve our cost structure in the future.
Current report
Loss on debt extinguishment. Excess of the reacquisition price paid to settle debt over its net carrying value.
Current report
The increase in hardware revenue for the three months ended June 30, 2026 was primarily due to approximately $6,800 impact reflecting an increase in consumer demand as compared to the prior year, partially offset by approximately $1,300 increase in discounts and returns associated with higher sales volume.
Current report
The increase in hardware revenue for the six months ended June 30, 2026 was driven by an approximately $4,300 increase attributable to higher consumer demand compared to the prior year period, partially offset by an approximately $200 increase in discounts and returns resulting from the timing of promotional load-in dates and higher sales volume.
Current report
The decrease in hardware cost of revenue for the six months ended June 30, 2026 was primarily due to the impact of tariff refunds, partially offset by an increase in product sales. The increase in hardware gross margin was primarily due to the impact of tariff refunds, favorable product mix, and favorable fixed cost absorption.
Current report
The increase for the three months ended June 30, 2026 was driven primarily by approximately $1,400 of stock-based compensation, a substantial portion of which was associated with the CEO transition in April 2026, approximately $600 in restructuring costs related to our CEO transition in April 2026 and the previously-announced reprioritization of core geographies and revenue channels, approximately $200 in bad debt expense with the remainder attributable to other normal course of business items.
Current report
The increase for the three months ended June 30, 2026 was driven primarily by approximately $1,500 in expanded retail marketing spend due to a shift in timing of large promotional event from the third quarter to the second quarter 2025, and approximately $100 in increased stock-based compensation.
Current report
The increase for the six months ended June 30, 2026 was driven primarily by approximately $1,700 in expanded retail marketing spend due to a shift in timing of large promotional event from the third quarter to the second quarter, and approximately $200 in increased stock-based compensation.
Current report
The increase for the six months ended June 30, 2026 was driven primarily by approximately $1,900 in higher personnel costs, approximately $700 in stock-based compensation, and approximately $100 in restructuring costs related the previously-announced reprioritization of core geographies. These increases were partially offset primarily by approximately $800 decrease due to decreased regulatory testing and geographic expansion costs and an increase in capitalized internally developed software costs.
Current report
*Not meaningful ("NM").
Current report
Fluctuations in our common stock warrant liability adjustment for the three and six months ended June 30, 2026 represents a significantly reduced magnitude of period-over-period fair value remeasurement of liability-classified common stock warrants as a result of the October 2025 warrant exchange.
Current report
Loss on debt extinguishment for the three and six months ended June 30, 2026 was due to the extinguishment of the WTI term loan facility and ABL Line of Credit, of which $1,472 was due to the write-off of unamortized debt financing costs and unamortized loan commitment assets previously capitalized on the unaudited condensed consolidated balance sheets.
Current report
Tariffs announced in 2025 have adversely impacted our cost of goods sold and gross margins and may continue to affect cash flows if elevated tariff rates persist. In February 2026, the U.S. Supreme Court issued a ruling invalidating certain tariffs previously imposed under the International Emergency Economic Powers Act (IEEPA). As a result of this ruling, we were eligible for a refund of tariffs previously paid on imported goods. During the three months ended June 30, 2026, we received $3,960 in IEEPA tariff refunds. Of this amount, $3,526 was recorded as a reduction to cost of goods sold for inventory sold, $205 was recorded as a reduction in the carrying value of inventory, and $229 was recorded as a component of other income (expense), net on the unaudited condensed consolidated statement of operations and comprehensive income (loss). The scope, duration, and impact of future tariff policies remain uncertain and could adversely affect our business, financial condition, results of operations, and cash flows. We will continue to monitor developments in this area and take actions to mitigate potential impacts as appropriate.
Current report
Wells Fargo Line of Credit
Current report
On June 26, 2026, we entered into a 3-year $25,000 secured asset-based revolving credit agreement with Wells Fargo Bank, National Association (“Revolving Facility”) that includes a $10,000 accordion feature under which the Revolving Facility may be expanded by agreement of the parties from up to $25,000 to up to $35,000 (in minimum increments of at least $5,000). Loans and other obligations under the Revolving Facility bear interest at a rate per annum equal to the daily Secured Overnight Financing Rate plus a margin of 2.00% or 2.25% depending on the monthly average excess availability under the Revolving Facility. The Credit Agreement requires that we comply with certain covenants, including that we (i) maintain at least $7,500 of liquidity at all times, and (ii) achieve certain minimum EBITDA thresholds specified in the Revolving Facility.
Current report
As of June 30, 2026, we had borrowings of $17,063 outstanding under the Revolving Facility. The outstanding borrowings as of June 30, 2026 were repaid to Wells Fargo in July 2026. The remaining borrowing capacity under the Revolving Facility was $7,531 as of June 30, 2026.
Current report
On June 26, 2026, in connection with our entry into the Revolving Facility, we repaid all outstanding borrowings under the WTI Loan Facility using proceeds from borrowings under the Revolving Facility, and terminated the WTI Loan Facility. We recognized a loss on extinguishment of $1,605 in connection with the extinguishment on the unaudited condensed consolidated statement of operations and comprehensive income (loss), of which $1,098 was due to the write-off of unamortized debt financing costs previously capitalized on the unaudited condensed consolidated balance sheets.
Current report
On June 26, 2026, in connection with our entry into the Revolving Facility, we terminated the ABL Line of Credit. We recognized a loss on extinguishment of $604 in connection with the extinguishment on the unaudited condensed consolidated statement of operations and comprehensive income (loss), of which $374 was due to the write-off of unamortized loan commitment assets previously capitalized on the unaudited condensed consolidated balance sheets.
Current report
For the six months ended June 30, 2026, net cash used in operating activities was $5,141 as compared to net cash used in operating activities of $8,170 in the prior year. The positive change in operating cash flows was primarily driven by a significant improvement in net loss that was largely offset by an unfavorable swing in the non-cash fair value adjustment on our common stock warrant liability. The improvement also reflected positive impacts from a $2,209 loss on debt extinguishment related to the June 2026 debt refinancing and $3,589 higher stock-based compensation expense, partially offset by a net unfavorable change in operating assets and liabilities, primarily due to a smaller source of cash from accounts payable and accrued expenses.
Removed paragraphs (9)
Previous report
The decrease in hardware revenue was primarily due to approximately $3,100 impact from a large retail partner tightening weeks of supply on hand as well as timing differences of load-ins to retailers, partially offset by approximately $1,800 decrease in retail discounts due to the timing of promotion load-in dates, and approximately $400 increased direct-to-consumer demand.
Previous report
The increase was driven primarily by approximately $300 in higher marketing personnel and consulting costs, $200 in expanded retail marketing spend, and $100 in increased stock-based compensation, partially offset by $100 in miscellaneous net decreases.
Previous report
Fluctuations in our common stock warrant liability adjustment resulted from a decrease in our common stock price, and the related decrease in the fair value of liability-classified common stock warrants.
Previous report
Tariffs announced in 2025 have adversely impacted our cost of goods sold and gross margins and may continue to affect cash flows if elevated tariff rates persist. On February 20, 2026, the U.S. Supreme Court issued a decision invalidating tariffs imposed under IEEPA. This ruling could result in tariff relief and may allow for the recovery of amounts previously paid, which we believe could be material. We are currently evaluating the potential effects of this decision on our financial condition and liquidity. The process for recovering previously paid duties/tariffs remains subject to ongoing proceedings with the U.S. Court of International Trade and U.S. Customs and Border Protection. We are actively monitoring these developments and are taking steps to preserve our rights with respect to any potential refunds.
Previous report
During the three months ended March 31, 2026, the WTI Funds sold to an unrelated third-party 310,000 shares of Owlet common stock previously classified in mezzanine equity due to the Redemption Option described in Note 4 within the Notes to Condensed Consolidated Financial Statements included elsewhere in this Report. As redemption rights are not transferable, we reclassified $2,439 of the mezzanine equity balance to Stockholders' Equity Additional Paid-In Capital upon sale.
Previous report
As of March 31, 2026 principal outstanding on the loan was $6,259. The net carrying value of the WTI Loan Facility was $5,191, which includes the outstanding principal and accrued PIK interest of $291, net of $1,359 in unamortized debt financing costs.
Previous report
We, as guarantor, and our wholly-owned subsidiary, OBCI, as borrower, maintain an asset-based revolving credit facility (the “ABL Line of Credit”) with a maximum principal amount of up to $20,000 (the “Revolving Commitment”). The ABL Line of Credit is collateralized by substantially all of our assets.
Previous report
As of March 31, 2026, there was $13,353 of outstanding borrowings under the ABL Line of Credit, and the remaining borrowing base availability was $3,944 as of March 31, 2026.
Previous report
For the three months ended March 31, 2026, net cash used in operating activities was $5,049 as compared to net cash used in operating activities of $5,925 in the prior year. The positive change in operating cash flows was primarily driven by changes in assets and liabilities, particularly related to accounts receivable, inventory and accounts payable, as well as smaller common stock warrant liability adjustment compared to the prior year. These positive changes were partially offset by the $3,336 net loss recognized for the three months ended March 31, 2026, compared to the $3,025 net income recognized in the comparative prior year period.
Reworded paragraphs (18)
Previous wording
The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Report and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K and Form 10-K/A. Certain statements we make under the following discussion and analysis constitute “forward-looking statements” under the Reform Act. See “Cautionary Note Regarding Forward-Looking Statements” in this Report. You should consider our forward-looking statements in light of the risks discussed in our unaudited condensed consolidated financial statements, related notes and other financial information appearing elsewhere in this Report, the section entitled “Risk Factors” in our Form 10-K, Form 10-K/A and this Report, and our other filings with the SEC. Note that amounts included in the following discussion and analysis are presented in thousands and may not sum due to rounding.
Current wording
The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Report and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K and Form 10-K/A. Certain statements we make under the following discussion and analysis constitute “forward-looking statements” under the Reform Act. See “Cautionary Note Regarding Forward-Looking Statements” in this Report. You should consider our forward-looking statements in light of the risks discussed in our unaudited condensed consolidated financial statements, related notes and other financial information appearing elsewhere in this Report, the section entitled “Risk Factors” in our Form 10-K, Form 10-K/A and this Report, and our other filings with the SEC. Note that amounts included in the following discussion and analysis are presented in thousands and may not sum due to rounding. Also note that reported amounts reflect the revisions discussed in Note 11 to the consolidated financial statements as applicable.
Previous wording
Cost of revenue consists of product costs, including contract manufacturing, shipping and handling, depreciation and amortization relating to tooling and manufacturing equipment and software, warranty replacement, fulfillment costs, warehousing, hosting and platform costs, and reserves for excess and obsolete inventory. Cost of revenue associated with Owlet360 mainly consists of app store distribution fees.
Current wording
Cost of revenue consists of product costs, including contract manufacturing, shipping and handling, depreciation and amortization relating to tooling and manufacturing equipment and capitalized internally developed software, warranty replacement, fulfillment costs, warehousing, hosting and platform costs, and reserves for excess and obsolete inventory. Cost of revenue associated with Owlet360 mainly consists of app store distribution fees and amortization relating to capitalized internally developed software.
Previous wording
General and Administrative. General and administrative expenses consist primarily of salaries, benefits, stock-based compensation, and bonuses for finance and accounting, legal, human resources, operations, quality and administrative executives and employees; third-party legal, accounting, customer service, software, and other professional services; corporate travel and entertainment; depreciation and amortization of property and equipment, asset impairment charges, litigation settlement costs, insurance loss recovery, and facilities rent.
Current wording
General and Administrative. General and administrative expenses consist primarily of salaries, benefits, stock-based compensation, and bonuses for finance and accounting, legal, human resources, operations, quality and administrative executives and employees; third-party legal, accounting, customer service, software, and other professional services; corporate travel and entertainment; depreciation and amortization of property and equipment, litigation settlement costs, insurance loss recovery, and facilities rent.
Previous wording
Research and Development. Research and development expenses consist primarily of salaries, benefits, stock-based compensation, and bonuses for employees and contractors engaged in the design, development, maintenance, and testing of our products, platforms and services, including quality and clinical testing.
Current wording
Research and Development. Research and development expenses consist primarily of salaries, benefits, stock-based compensation, and bonuses for employees and contractors engaged in the design, development, maintenance, and testing of our products, platforms and services, including quality and clinical testing. In addition, research and development expenses that qualify as internal-use software development costs are capitalized, reducing the expenses software development costs incurred in the period, and the amount capitalized may fluctuate significantly from period to period.
Previous wording
Other Income (Expense), Net. Other income (expense), net includes our net gain (loss) on foreign exchange transactions and transaction costs.
Current wording
Other Income (Expense), Net. Other income (expense), net includes our net gain (loss) on foreign exchange transactions, net gain (loss) on insurance claim proceeds, and interest income on tariff refunds.
Previous wording
The increase in subscription revenue was due to an increase in subscribers for our Owlet360 service and higher average revenue per user.
Current wording
The increase in subscription revenue for the three months ended June 30, 2026 was due to an increase in subscribers for our Owlet360 service and higher average revenue per user.
Previous wording
The decrease in hardware cost of revenue was primarily due to the decrease in product sales. The decrease in hardware gross margin was primarily due to the impact of tariffs, partially offset by favorable product mix and lower direct product and fulfillment costs.
Current wording
The decrease in hardware cost of revenue for the three months ended June 30, 2026 was primarily due to the impact of tariff refunds, partially offset by an increase in product sales. The increase in hardware gross margin was primarily due to the impact of tariff refunds, favorable product mix, and favorable fixed cost absorption.
Previous wording
The increase in subscription cost of revenue was primarily due to increased subscriptions to our Owlet360 service. The increase in subscription gross margin is attributable to efficiencies gained due to a larger subscription base.
Current wording
The increase in subscription cost of revenue for the three months ended June 30, 2026 was primarily due to increased subscriptions to our Owlet360 service. The decrease in subscription gross margin is attributable to higher app store distribution fees.
Previous wording
The increase was driven primarily by approximately $1,400 of stock-based compensation, and by approximately $800 in increases of headcount related expenses, including salaries and benefits.
Current wording
The increase for the six months ended June 30, 2026 was driven primarily by approximately $2,700 of stock-based compensation, a substantial portion of which was associated with the CEO transition in April 2026, approximately $700 in increases of headcount related expenses, including salaries and benefits, and approximately $600 in restructuring costs related to our CEO transition in April 2026 and previously-announced reprioritization of core geographies and revenue channels with the remainder attributable to other normal course of business items.
Previous wording
The increase was driven primarily by approximately $800 in higher personnel costs, $400 in stock-based compensation, and $200 in regulatory testing and geographic expansion costs. These increases were partially offset primarily by approximately $300 in increased capitalized software costs.
Current wording
The increase for the three months ended June 30, 2026 was driven primarily by approximately $1,100 in higher personnel costs, approximately $300 in stock-based compensation, and approximately $100 in restructuring costs related the previously-announced reprioritization of core geographies. These increases were partially offset primarily by approximately $700 decrease due to decreased regulatory testing and geographic expansion costs and an increase in capitalized internally developed software costs.
Previous wording
The decrease in interest expense was driven primarily by a decrease in loan commitment amortization related to our current term loan facility due to the last loan commitment period ending in November 2025.
Current wording
The decrease in interest expense for the three and six months ended June 30, 2026 was driven primarily by a decrease in loan commitment amortization related to the WTI term loan facility due to the last loan commitment period ending in November 2025.
Previous wording
Changes in other income (expense) were driven primarily by a gain from insurance proceeds.
Current wording
Changes in other income (expense) for the three and six months ended June 30, 2026 were driven primarily by gains from insurance proceeds and interest income related to tariff refunds.
Previous wording
Adjusted EBITDA is defined as net income (loss) adjusted for income tax provision, interest expense, net, depreciation and amortization, impairment of intangible assets, common stock warrant liability adjustment, stock-based compensation, and charges related to certain legal matters.
Current wording
Adjusted EBITDA is defined as net loss adjusted for income tax provision, interest expense, net, depreciation and amortization, impairment of intangible assets, common stock warrant liability adjustment, stock-based compensation, charges related to certain legal matters, restructuring costs, and loss on debt extinguishment.
Previous wording
We fund our operations primarily with proceeds from issuances of our equity securities, borrowings under our loan facilities, and sales of our products and services. As of March 31, 2026, we had cash and cash equivalents of $35,459, and additional availability of $3,944 on our line of credit. We believe our existing cash and cash equivalent balances, cash flows from operations, and committed credit lines will be sufficient to meet our long-term working capital and capital expenditure needs for at least the next 12 months. The accompanying condensed consolidated financial statements have been prepared on a going concern basis and accordingly, do not include any adjustments relating to the recoverability and classification of asset carrying amounts, or the amount and classification of liabilities that might result should we be unable to continue as a going concern. There can be no assurance that we will generate sufficient future cash flows from operations due to potential factors, including but not limited to inflation, recession, or reduced demand for our products. If revenue decreases from current levels, we may be unable to further reduce costs, or such reductions may limit our ability to pursue strategic initiatives and grow revenue in the future. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending on research and development efforts and other business initiatives, our planned sales and marketing activities, the timing of new product introductions, market acceptance of our products, and overall economic conditions. To the extent that current and anticipated sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in increased dilution to our stockholders. If we were to incur additional debt financing, it would result in increased debt service obligations and the instruments governing such debt could require additional operating and financing covenants that would restrict our operations.
Current wording
We fund our operations primarily with proceeds from issuances of our equity securities, borrowings under our loan facility, and sales of our products and services. As of June 30, 2026, we had cash and cash equivalents of $30,948, and additional availability of $7,531 on our line of credit. We believe our existing cash and cash equivalent balances, cash flows from operations, and borrowing capacity under our asset-based revolving credit agreement will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months. The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis and accordingly, do not include any adjustments relating to the recoverability and classification of asset carrying amounts, or the amount and classification of liabilities that might result should we be unable to continue as a going concern. There can be no assurance that we will generate sufficient future cash flows from operations due to potential factors, including but not limited to inflation, recession, or reduced demand for our products. If revenue decreases from current levels, we may be unable to further reduce costs, or such reductions may limit our ability to pursue strategic initiatives and grow revenue in the future. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending on research and development efforts and other business initiatives, our planned sales and marketing activities, the timing of new product introductions, market acceptance of our products, and overall economic conditions. To the extent that current and anticipated sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in increased dilution to our stockholders. If we were to incur additional debt financing, it would result in increased debt service obligations and the instruments governing such debt could require additional operating and financing covenants that would restrict our operations.
Previous wording
In 2025, we renewed a number of our insurance policies and entered into several new short-term commercial premium finance agreements with premium finance companies totaling $739 to be paid within one year, accruing interest at a weighted average rate of 8.0%. As of March 31, 2026, the remaining principal balance on the combined financed insurance premiums was $224.
Current wording
In 2025, the Company renewed a number of its insurance policies and entered into several new short-term commercial premium finance agreements with premium finance companies to be paid within one year. As of June 30, 2026, there was no remaining balance outstanding related to these agreements.
Previous wording
For both the three months ended March 31, 2026 and March 31, 2025, we used $415 and $110 respectively, to invest in various projects, primarily for the development and enhancement of our new subscription app.
Current wording
For both the six months ended June 30, 2026 and June 30, 2025, we used $1,356 and $199 respectively, to invest in various projects, primarily for the development and enhancement of our subscription app.
Previous wording
For the three months ended March 31, 2026 and March 31, 2025, net cash provided by financing activities was $5,462 and $2,014, respectively. The increase is primarily driven by higher net proceeds from short-term borrowings in the current period compared to the prior period.
Current wording
For the six months ended June 30, 2026 and June 30, 2025, net cash provided by financing activities was $2,034 and $9,865, respectively. The decrease is primarily driven by the repayment of long-term borrowings, related to the June 2026 debt refinancing.
Previous wording
The One Big Beautiful Bill Act of 2025 (the “OBBBA”) was signed into law on July 4, 2025. The OBBBA makes changes to the U.S. corporate income tax, including reinstating the option to claim 100% accelerated depreciation deductions on qualified property, with retroactive application beginning January 20, 2025, and immediate expensing of domestic research and development costs, with retroactive application beginning January 1, 2025. The Company determined that the OBBBA did not have a material impact on the unaudited condensed consolidated financial statements for the three months ended March 31, 2026. The Act includes multiple effective dates, with certain provisions effective in 2026 and 2027. The Company will continue to evaluate the impact of these provisions on our 2026 and subsequent financial statements.
Current wording
The One Big Beautiful Bill Act of 2025 (the “OBBBA”) was signed into law on July 4, 2025. The OBBBA makes changes to the U.S. corporate income tax, including reinstating the option to claim 100% accelerated depreciation deductions on qualified property, with retroactive application beginning January 20, 2025, and immediate expensing of domestic research and development costs, with retroactive application beginning January 1, 2025. The Company determined that the OBBBA did not have a material impact on the unaudited condensed consolidated financial statements for the three and six months ended June 30, 2026. The Act includes multiple effective dates, with certain provisions effective in 2026 and 2027. The Company will continue to evaluate the impact of these provisions on our 2026 and subsequent financial statements.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
The increase in subscription revenue for the six months ended June 30, 2026 was due to an increase in subscribers for our Owlet360 service and higher average revenue per user.
Current report — wording carried from elsewhere
The increase in subscription cost of revenue for the six months ended June 30, 2026 was primarily due to increased subscriptions to our Owlet360 service. The decrease in subscription gross margin is attributable to higher app store distribution fees.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
As of March 31, 2026, we were in compliance with all covenants under the WTI Loan Facility.