Owlet Q3 2026 Earnings Call - Cable Guard Safety Recall Forces Guidance Withdrawal Despite Record Profitability

Operator: Hello, everyone. Thank you for joining us, and welcome to the Owlet Q3 2026 earnings conference call. After today’s prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Jay Gentzkow, Investor Relations. Jay, please go ahead.

Jay Gentzkow, Investor Relations, Owlet: Good morning, everyone, and thank you for joining us. Earlier today, Owlet released financial results for the third quarter ended September 30, 2026. I am pleased to be joined today by Kurt Workman, Owlet’s President, CEO, and Co-Founder, and Amanda Twede Crawford, Owlet’s CFO. Before we begin, please note that our financial results press release and presentation slides referred to on this call are available under the events and presentation section of our Investor Relations website at investors.owletcare.com. This call is also being webcast live with a link at the same website. The webcast and accompanying slides will be available for replay for 12 months following this call. The content of today’s call is the property of Owlet. It cannot be reproduced or transcribed without our prior consent.

Today’s discussion will include a Cable Guard safety update we recently initiated, which also is described in our earnings release and Form 10-Q, which we expect to file after market close today. Before we begin, I would like to refer you to our safe harbor disclaimer on slide three of the presentation and to the forward-looking statements section of the press release that we issued this morning. Today’s discussion will contain forward-looking statements based on the company’s current views and expectations as of today’s date.

These include, among others, statements regarding our Cable Guard safety update, including its timing, cost, expected effectiveness, and any additional steps, retailer returns and replenishment, as well as the impact on demand and our results, including the fourth quarter and holiday season, insurance coverage and liquidity, and Owlet’s long-term opportunities and expectations for future periods, including Owlet360 subscriber growth and the timing and rollout of new products and features such as the Owlet Smart Thermometer, Owlet OnCall, Owlet One, and our AI-enabled features. 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, including that costs may differ from our estimates and that additional steps may be required.

These risks and uncertainties include, but are not limited to, those described in the earnings release and in our most recent filings with the SEC and in the risk factor section of our annual report on Form 10-K, as updated in the company’s quarterly reports on Form 10-Q and other filings with the SEC. 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. During this call, we will discuss both GAAP and non-GAAP financial measures, including adjusted EBITDA. A reconciliation of GAAP to non-GAAP financial measures is included in today’s earnings release, available on our investor relations website. With that, it’s my pleasure to hand it over to Kurt.

Kurt Workman, President, CEO, and Co-Founder, Owlet: Thanks, Jay. Good morning, everyone, and thank you for joining us. Today, I’ll highlight strong third-quarter results and the progress we’re making on our strategies. I will also walk you through an important Cable Guard safety update that we initiated this morning. Let me start with Q3 results on slide five. We made very strong progress in the quarter, delivering on our priority to drive profitable growth. Third quarter 2026 revenue was $30.4 million, in line with our expectations. Gross margin was 53.8%, up 315 basis points versus prior year. Operating income was positive $1.2 million. Adjusted EBITDA was $3.5 million, a company record, excluding Q2 2026 that included a tariff refund. And we were cash flow positive with $2.2 million in operating cash flow.

These are meaningful profitability milestones, and they give us added financial flexibility as we carry out the Cable Guard safety work I’ll discuss in a moment. Finally, Owlet360 subscription momentum continues. We ended Q3 with 142,000 paying subscribers, generating a record $3.6 million in revenue, up $2.1 million year over year. Subscription MRR increased sequentially to $1.3 million to end Q3. And penetration rate for Owlet360 Dream Sock users in the U.S. is 36%. Now to the Cable Guard safety update we announced this morning. Owlet was made aware that a family in our community lost their child after their toddler reached an unsecured camera cable and became tangled in it. As a father of three, there are no words that are adequate, and our hearts are broken for this family.

Cable Guards are a critical safety feature for corded baby products, which is why Owlet’s cameras are one of the few baby monitors in the industry equipped with Cable Guards to keep cords out of a child’s reach. We have reported to the appropriate regulatory agencies as is standard practice, and there may be additional steps we need to take. I want to be clear about scope. This involves only the Cable Guard accessory that ships with our cameras. It does not involve the camera itself or our FDA-cleared Dream Sock. Owlet was founded to help keep babies safe, and that purpose continues to guide our work. We are providing a replacement enclosed Cable Guard system that we believe delivers on our commitment to elevating safety standards in the market.

This replacement system ships with the cord already encased in interlocking segments to address the risk of loose or exposed camera cables. To our knowledge, no other baby monitor ships with an enclosed pre-locked cable system. We are offering it free of charge to all qualified Owlet camera owners. Every new camera will ship with it, along with clear safety and disposal guidance. We have issued a formal stop-ship notice across our retail channels. Retailers will stop selling the affected units, which are Dream Sight and Dream Duo, and will begin selling the new units when they receive replenished inventory containing the replacement Cable Guard. Dream Sock is not impacted at retail or any other channels. Starting today, every Dream Sight and Dream Duo sold on owletcare.com includes the enclosed Cable Guard system.

Because the Cable Guard ships in the box with every camera and Dream Duo, this creates logistical and financial challenges in the fourth quarter. There may also be a potential impact on demand we cannot yet predict. These unknowns create a range of fourth-quarter outcomes that is too wide for us to guide responsibly, so we are withdrawing our 2026 outlook. Apart from the effects of these actions, we were in a position to reaffirm our 2026 guidance. Core sell-through was pacing ahead of plan, subscription was progressing as anticipated, and the fourth quarter was on track. I understand this makes for a difficult period. We believe this is the right decision for the families we serve, and it reflects our commitment to best-in-class safety products, the foundation that our digital platform is built on. Amanda will walk through additional financial details.

I believe the work we are doing at Owlet is extremely important. Over the years, countless parents have told us that because of our technology, they were able to help recognize important health events and seek the help they needed. We believe in our mission, and we are fiercely moving forward with it because it matters for families everywhere. Our products help keep babies safe, and we are proud of that. Let me now turn to an update on our two primary focus areas: driving adoption of Dream Sock and Dream Duo in our core global markets and empowering parents with the health information through the subscription platform. In the U.S., when adjusting for the shift of Prime Day from July 2025 to June 2025, total sell-through units grew 14% year over year, including a 23% increase in Dream Sock and an 11% increase in Duo.

Owlet Dream Sock also remains a registry priority. Year-over-year Babylist registry additions are up 59%. That growth was supported by a surge in registry activity in August when expecting parents shared their registries during the viral Babylist registry gifting movement. Part of that list was a one-time August boost, but it shows how often Dream Sock makes the list when families plan for a new baby. We also had a strong start to the fourth quarter with Amazon’s Prime Big Deal Days in October. U.S. sell-through units grew during the event 15% versus last year’s October event, with the Dream Sock sell-through growing 48%. We view this as a positive signal coming off the first major Amazon event since FDA clearance became required for vital signs baby monitors. Turning to international. Revenue was $8 million during Q3, the second-highest quarter in Owlet history.

On a reported basis, that is down 18% year-over-year, but the comparison is skewed as a result of last year’s Q3 launch of Dream Sight and Dream Duo and the associated distributor load-in. International sell-through units, when adjusting for the shift in Prime Day, grew by 23% versus prior year. Before moving on to our next focus area, I am proud to share a product we are very excited about, the Owlet Smart Thermometer, which we launched this week. It is an FDA-registered, no-touch forehead thermometer that gives a clinically accurate reading in one second without waking a sleeping child. Parents can use it on its own for a quick check or sync it to the Owlet Dream App to track each child’s temperature history. For Dream Sock families, that means pulse rate, oxygen, sleep, and temperature all in one place.

The thermometer is also a new way for Owlet to reach parents. It is an everyday product at an accessible price in a category found in nearly every home with children, and it brings Owlet into one of the most routine moments of childcare. It is available now in the U.S. on owletcare.com with retail partners and international markets to follow. We see it as a way to reach more families more often and to build a connected health platform that grows with the family. Adding temperature expands the information parents can track along with Dream Sock readings, which we believe strengthens the value of our connected platform. Turning to our subscription platform. We ended Q3 with more than 142,000 paying subscribers, up 83% from a year ago, and up 10% from Q2. More families are coming to Owlet360 for the long term.

Annual signups nearly tripled quarter-over-quarter, and annual plans now make up 13% of subscribers, up from 8% in June. Last quarter, we said we would bring subscription to the point of purchase across more channels. Parents have been able to subscribe at checkout on our website, and this quarter, we extended that to retail with our first subscription bundle on Amazon, which includes three months of Owlet360 with the device. Many families first discover Owlet on Amazon, so building a subscription into that purchase means more parents will start with the full experience from day one. We are continuing to test web pay before rolling it out broadly, and we are working with Babylist to bring upfront subscription to their customers. We are also making Owlet360 more valuable every day.

Our AI-powered Morning Report, one of our most used features, is now live for all subscribers in 13 countries, localized in seven languages. Each morning, it reviews the baby’s prior night and recent sleep history and gives parents what a sleep coach would. What we noticed overnight, trends to watch out for, and tips for tomorrow night. It turns our data into simple, personalized content that gives parents a reason to check in every morning. Beyond the Morning Report, we are working to make Owlet part of every day, not just every night. Parents want more predictability around naps, so we are developing new features to show subscribers the entire day’s nap schedule, to adapt on the fly when baby skips a nap or oversleeps.

Because parents often forget to track naps, we’re building nap reminder notifications and nap timers on the phone’s lock screen for all users, while subscribers will get one-tap logging for predicted sessions in their day schedule. The goal is to give parents a reason to open Owlet every day, not just at night, which we believe makes Owlet360’s sleep guidance more valuable and drives retention through engagement. Camera remains a big subscription opportunity for us, anchored on what parents tell us they need, a camera they can trust every night and gives them guidance every day. Our planned AI features include cry translation, which helps parents understand what their baby needs, and camera-based sleep tracking that requires no wearable. Not available yet, but it’s how we see Owlet staying valuable for families well beyond the first 18 months.

Turning to Owlet OnCall, the next step in our development includes expanding OnCall from only on-demand access to pediatricians into features that support how they care for baby every day, right inside the Owlet Dream App. We’re developing three new features to bring that to life, and we expect to begin rolling them out late this year into next. First, a weekly snapshot of what’s going around, using CDC data on RSV, flu, and COVID for the family zip code. Second, a daily journal that will keep feeds, diapers, medicine, and notes in one timeline, with age-based suggestions from the AAP and CDC. Third, a visit note-taker that will, with everyone’s consent, record a doctor visit and give parents a recap and next steps. We’re also working to make overnight care one tap away. We’re developing a new feature called Night Watch.

Healthcare visit requests run about twice as high between 8:00 P.M. and 8:00 A.M., and that’s the gap we want to fill. Parents will be able to complete the visit intake forms in advance, and will also be able to share a seven-day summary of their baby’s Dream Sock readings with the pediatrician, or save it for their own records. This is how we see OnCall becoming part of a family’s everyday routine and adding value to our subscription platform over time. Finally, an update on Owlet One. As I mentioned, we continue to focus on moving subscription to the point of purchase, and Owlet One takes that a step further. The goal is to give families the best of what Owlet has to offer with a lower cost upfront, paired with the monthly subscription.

That makes Owlet more accessible to families who may not have already been ready to spend more upfront. Our testing has gone really well. Owlet One has been converting at around four times Dream Sock’s non-promotional conversion rate, which tells us we’re reaching families who weren’t buying before. We’re still in the test and learn phase, but see Owlet One as an important long-term driver of our subscription base. Let me close with this. Owlet’s core mission is safety. We’ve had an incredible impact on safety for families around the world, and that’s why this matters so much to us. We anticipate some near-term disruption during the safety update process, but it’s the right thing to do for families to trust us and for the long-term business. The foundation that brought many of you to Owlet is intact.

The competitive differentiation of the first and only FDA-cleared baby monitor, a subscription base that today is more than 142,000 families and growing, one of the largest pediatric health and sleep datasets in the world, multiple growth drivers, and a team that continues to innovate. That is why we remain confident in our long-term opportunity, building the leading pediatric health platform in the world. I will now turn the call over to Amanda.

Amanda Twede Crawford, CFO, Owlet: Thanks, Kurt. Turning to our third quarter 2026 results on slide 13. Unless noted otherwise, I will be comparing Q3 2026 to Q3 2025. Q3 total revenue was $30.4 million, down 4.9% versus $32 million in the prior year. As we detailed on the Q2 financial results call in August, two factors were expected to impact Q3 results. The first was lapping last year’s Q3 Dream Sight camera launch and the associated distributor load-in, making for a challenging year-over-year comparable. The second factor was aggressive competitor discounting ahead of Amazon’s August 10th FDA clearance deadline. Although non-compliant third-party products remained on the platform past the deadline, which impacted our Q3 sales, Amazon had removed all of them by the end of September. As a result, Owlet Dream Sock is now the only baby monitor on Amazon that tracks instant vital signs, giving us a durable long-term advantage.

Subscription revenue grew to a record $3.6 million, up $2.1 million year-over-year. Q3 overall gross margin was 53.8%, up approximately 315 basis points versus the prior year. Subscription gross margin was 68.4%. Total operating expenses for Q3 were $15.2 million compared to $14.9 million in the prior period. Operating expenses as a percentage of revenue were 49.9%. Q3 operating income was positive $1.2 million. Q3 adjusted EBITDA was $3.5 million, up $1.9 million from the prior year. Excluding last quarter that included the one-time tariff refund, adjusted EBITDA was a record quarter. As Kurt noted, we were cash flow positive in Q3 with a record $2.2 million in operating cash flow as we made continued steps to prioritize operational efficiency and grow profitably.

Turning to our balance sheet, cash and cash equivalents, excluding restricted cash, were $31.6 million as of September 30th, 2026, versus $30.9 million in the prior quarter, June 30th, 2026. Combined with $7.9 million of availability under our Wells Fargo credit facility, total available liquidity was approximately $39.5 million to end Q3. Turning to the financial impact of the camera Cable Guard safety update. I want to reiterate the scope of this work. This update is related only to the Cable Guard accessory for our cameras and does not involve our core Dream Sock product or our monitoring capabilities. We have initiated a voluntary safety update and a temporary stop sale regarding our Dream Sight camera and Dream Duo products. This update will provide replacement Cable Guards to all qualified Owlet camera owners.

The majority of direct financial impacts will be recorded in the fourth quarter of 2026 across areas, direct program costs and retailer returns. First, on direct program costs, we estimate the expense for producing and shipping replacement Cable Guards, logistics, customer support, legal, and consulting fees at approximately $7 million-$10 million, depending primarily on the number of customers who request a replacement. Second, on retailer returns, in connection with the stop sale, we will accept returns of existing inventory that does not include the replacement Cable Guard. We estimate retailer returns of $9 million-$12 million, which will be recorded as a reduction of revenue in the fourth quarter. We expect to recognize an asset for the estimated value of $3 million-$4 million for returned inventory that can be resold in the future. Our return estimate cost does not reflect potential inventory replenishment.

However, as retailers restock products with the replacement Cable Guard, we estimate an initial load-in of $2 million-$5 million as a partial offset to the retail returns we just discussed. Any replenishment will be recorded as revenue when it occurs based on retailer demand and the availability of the replacement Cable Guard. We are working closely with our retail partners who have been supportive through this. Dream Sock, which represents 70% of revenue to date, will remain in all channels during Black Friday. Additionally, because Dream Sock drives much of the demand for Dream Duo, some of these lost sales may shift to Dream Sock. Finally, Dream Sight and Dream Duo, including the replacement Cable Guard system, will be available on owletcare.com throughout the Black Friday promotion. Lastly, we maintain an insurance policy with a limit of $10 million, which may help offset certain costs of the program.

Any recovery is subject to the policy’s terms, conditions, and retention. We have not recognized any insurance recovery to date, and the timing and amount of any recovery are uncertain. Turning to our outlook. As Kurt said, outside of these actions, we were in a position to reaffirm full-year outlook. The fundamentals of our business are strong. However, due to the safety update, we are withdrawing our full-year 2026 outlook, which was revenue of $118 million-$122 million, gross margin of 53%-55%, and adjusted EBITDA of $10.75 million-$12.75 million. I want to walk through why. The safety update affects our fourth quarter in a number of ways. Three of them we can reasonably estimate today. First, the $9 million-$12 million in retailer returns, which reduces fourth quarter revenue.

Second, the offset of $3 million-$4 million for returned inventory that can be reworked and resold in the future. And third, $7 million-$10 million in direct program costs, which is a total net impact of $13 million-$18 million. There are three impacts we can’t yet fully quantify. First, the timing of retailer replenishment as product with the replacement Cable Guards reaches shelves. We anticipate approximately $2 million-$5 million of initial load-in revenue. The timing and amount will depend on retailers’ acceptance, order timing, and inventory availability. Second, the potential impact on demand, especially during the Black Friday and holiday sales periods. And third, any potential insurance recovery, which could be up to $10 million. Coverage is not guaranteed, but we are working closely with our insurance carriers to quantify reimbursement.

Together, these unknowns create a range of fourth quarter outcomes that is too wide for us to guide responsibly. Before we open the line, I want to reiterate Kurt’s confidence. While we anticipate some near-term disruption during this process, it is the right decision for the business, and we are confident in the foundation and long-term opportunity for Owlet to remain intact. With that, we will now take your questions.

Operator: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Owen Rickert with Northland Capital Markets. Owen, your line is open. Please go ahead.

Owen Rickert, Analyst, Northland Capital Markets: Hey, Amanda. Hey, Kurt. Thanks for taking my questions here. First one for me, just want to clarify, is the safety issue specific solely to the camera line, or does it have any bearing on Dream Sock or the Owlet One bundling?

Kurt Workman, President, CEO, and Co-Founder, Owlet: Hey, Owen. Thanks for the question. Yeah, so just to be clear, the Cable Guard is an accessory that ships with all of our camera and Duo products. It does not have anything to do with the camera itself or the functionality of the camera, or especially the Dream Sock or the Dream Sock monitoring capabilities. This is really focused on that. The impact, though, because it ships in the boxes with Dream Duo and with camera, that is the retail switch that we are working on right now to get new inventory in and to take the old inventory back. That is the main impact. All of the camera customers or Duo customers that have those Cable Guards will be offered a free replacement. I will just add, it does not impact Dream Sock sales, which is roughly 70% of the business.

And if you think about Dream Duo, which makes up the majority of the remainder of our revenue, that business is driven by Sock primarily. While we do expect a transition period where we’re getting new inventory into our retailers, we do believe that a good portion of that demand moves to Sock in the interim, because that’s what drives the demand for Duo.

Owen Rickert, Analyst, Northland Capital Markets: Okay, got it. Thank you. Secondly for me, where does Owlet One testing stand today, and does the Cable Guard safety update change the rollout timeline or messaging for the bundle?

Kurt Workman, President, CEO, and Co-Founder, Owlet: Yeah, that’s a great question. We’re really excited about the progress we’ve made with Owlet One. Not only are we seeing significantly increased conversion rates, we’re also reaching into a new customer segment that Owlet has not been able to reach before, and we’re getting everybody who buys Owlet One into a higher-tier subscription flow with all the best that Owlet has to offer. We’re live today with the new Cable Guard system on our website, so this won’t impact Owlet One timelines. We’re still in the test and learn phase. So far, the retention looks positive. It looks even better than what we see with Sock or Cam. We’re seeing just success in all the metrics we want to see, so that will likely begin to roll out in a more prominent way on our website over the coming months. It won’t be slowed down by this.

Owen Rickert, Analyst, Northland Capital Markets: Got it. Thanks, Kurt.

Kurt Workman, President, CEO, and Co-Founder, Owlet: Thanks, Owen.

Operator: Your next question comes from the line of Ben Haynor with Lake Street Capital Markets. Ben, your line is open. Please go ahead.

Ben Haynor, Analyst, Lake Street Capital Markets: Good morning, folks. Thanks for taking the questions. First, following up on Owlet One and the economics there, I would imagine that you not only draw more people into purchasing from your website, and save the retailer margin on that, but potentially you are also avoiding app store fees. Can you talk about how these bundles kind of track relative to what might be as it is sold through a traditional retailer?

Amanda Twede Crawford, CFO, Owlet: Yeah. Thanks for the question, Ben. With Owlet One, we have been testing many different price points just to understand the impact to volume and list when we sell at the lower price point. We are gathering really interesting information that is helping us inform future pricing decisions. But what I can say about Owlet One is it is converting at a much higher rate than a traditional Dream Sock or Dream Duo, so we see a lot of promise. With the recurring membership that we have been testing at $19 a month, the break-even versus a status quo model is, right now, just a few months. So, we feel like this is a really big opportunity to get more users and build up that subscriber base. Ultimately, the goal is to have more recurring revenue.

We are still in early stages, just testing and learning, but this is something that we would like to see eventually rolled out more broadly.

Kurt Workman, President, CEO, and Co-Founder, Owlet: I would just add, Ben, that we have just built up such a strong funnel over the last 10 years that there are millions of parents that are aware of Owlet every year and consider Owlet, and this widens the funnel significantly. Then to Amanda’s point, it also extends LTV and increases margin, and it is something that allows more families to get access, and it, long term, drives more opportunity for Owlet too.

Ben Haynor, Analyst, Lake Street Capital Markets: Helpful color. Then on the cable issues, I would imagine that you automatically notify everyone via the app and would have kind of a good idea of how much exposure you would have relatively quickly. First off, is that the case? Then, is it possible to quantify the amount of inventory that you do have in the channel? I am sorry if I missed that number.

Kurt Workman, President, CEO, and Co-Founder, Owlet: Yeah. So, there is an in-app safety update, so 100% of our users will be able to walk through that. It is a really intelligent system that helps understand how they are using the camera today, gives them the right safety recommendations, and makes it really easy to order the Cable Guards for free. We will know fairly quickly how that is trending and where that will land, and so we can track that closely. In terms of what is in the channel, I believe there is about 40,000 units in the channel today between Cam and Duo. Amanda, is that split about half and half?

Amanda Twede Crawford, CFO, Owlet: It is more Dream Duo than Dream Sight, just because Dream Duo represents a larger relative proportion of units versus the camera. But that amount in channel, the $9 million-$12 million in anticipated retailer returns, that would include those units that Kurt is discussing.

Ben Haynor, Analyst, Lake Street Capital Markets: Okay. Thank you for the update there. I will jump back in queue.

Kurt Workman, President, CEO, and Co-Founder, Owlet: Thanks, Ben.

Operator: Your next question comes from the line of Jonna Kim with TD Cowen. Jonna, your line is open. Please go ahead.

Jonna Kim, Analyst, TD Cowen: Thank you for taking my question. I know this doesn’t affect the Sock side of the brand, but just wanted to get your take on if there will be any potential broader impact to the brand itself, just given the noise around the camera. If so, how are you trying to sort of alleviate any pressure on the brand going forward? On the Amazon side, now the competitors are off. Are you seeing any sort of improvement in your trend, just given the competitive pressure is less? Thank you.

Kurt Workman, President, CEO, and Co-Founder, Owlet: Yeah, that’s a great question. Thanks, Jonna. Look, first and foremost, Owlet’s whole brand is built on providing the safest solutions to families and helping make sure that their kids are safe and healthy and sleeping well. That matters to us as parents. It’s what Owlet stands for. We’ve always taken that into account. From day one of shipping cameras, we included Cable Guards as an added safety measure. We’ve gone above and beyond with this new design. There’s nothing like it in the market. It’s very innovative, it’s very easy to use, and it keeps these cables very secure. We’re going to continue to innovate. We’re going to continue to be the brand that leads the category. We’re the only FDA-cleared health monitor on the market.

We will now be the only truly safe camera solution on the market with actual protective solutions for families, and we’re going to continue to just make sure our customers know that we will go above and beyond for them. It’s the foundation that our whole platform is built on. While there may be some short-term headwinds with that, but long term, I really believe that the company that does the most for its customers will continue to build trust with parents, and we have a large community. We’re making sure we’re engaging with them closely. We are talking to every customer through our app and making sure that they get the message directly from us. That matters to us. I believe Owlet will get through this, and long-term, the world will be safer because of the innovation that we’re bringing.

Obviously, our hearts are broken for this family, and we’re being very proactive to try to make sure that this doesn’t happen. Can’t measure the short-term impacts, but long-term, Owlet’s going to be the company that continues to set the standard.

Jonna Kim, Analyst, TD Cowen: Got it. Thank you. Amanda, any colors on the Amazon side that you are seeing?

Amanda Twede Crawford, CFO, Owlet: Yeah. As far as Amazon goes, so far we have seen really strong sell-through for Dream Sock specifically. It came in ahead of our expectations during Prime Big Deal Days. It was actually up 48%. It is looking good. We are pacing ahead of plan. Not specifically Amazon, but Babylist registries are up 59%, which is also a really strong indicator for consumer demand.

Jonna Kim, Analyst, TD Cowen: Got it. Thank you.

Operator: As a reminder, if you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. Your next question comes from the line of Steven Lichtman with William Blair. Steven, your line is open. Please go ahead.

Steven Lichtman, Analyst, William Blair: Thank you. Good morning. Kurt, what are the factors that need to happen in order to lift the manufacturing hold on the camera with the new pre-loaded cables now?

Kurt Workman, President, CEO, and Co-Founder, Owlet: Yeah. Can you help me understand that a little bit better? Yeah, help me understand what you mean by that question.

Steven Lichtman, Analyst, William Blair: Sure. I think you said you put a manufacturing hold on the camera. It sounds like you do have the pre-loaded cables available. So, what are you going to look for? What needs to happen in order for manufacturing to restart of the camera with the pre-loaded cables now?

Kurt Workman, President, CEO, and Co-Founder, Owlet: Yeah. Okay, that’s a great question. Just to clarify, the camera itself, there’s not a safety issue with the camera. It’s specifically the Cable Guards. The Cable Guards are in production. We’re live on our website right now, so manufacturing is moving. We will, with the returned inventory from retailers, we’ll pull out the old Cable Guards, and we’ll be able to repack those cameras into boxes with the new Cable Guard solution. So, what I would say is, the manufacturing is not on hold because we are actively producing high quantities of the new Cable Guard solution. We’re making them available to our customers. We’re offering them to our retailers. The biggest thing is just that period where the retailers have stopped sale of the Dream Duo and the Cam. We’re setting up new SKUs with them, and then we’ll load in the new inventory.

I would say that’s all happening right now. The pace and timing and inventory availability as we’re ramping up production is all the work to be done, but it’s all moving forward and happening right now. There’s no stop in production. There was a pause in sales with our retailers for the old cameras with the old Cable Guard units.

Steven Lichtman, Analyst, William Blair: Understood. Thanks for the clarification. Just a follow-up. On the $9 million to $12 million in retail returns estimate, does that amount estimate solely camera returns, or does that include customers who may return their Dream Sock in combination with the camera because they bought it through Duo?

Amanda Twede Crawford, CFO, Owlet: Yeah, so it includes the Dream Sight camera and the Dream Duo, which is the bundle sold with the Dream Sock and camera.

Steven Lichtman, Analyst, William Blair: Okay. Thank you.

Operator: There are no further questions at this time. I will now turn the call back to Kurt for closing remarks.

Kurt Workman, President, CEO, and Co-Founder, Owlet: Thanks again to everyone for joining us today. Before we close, I want to leave you with the bigger picture. We expect the camera Cable Guard safety update will create some near-term disruption. We have a clear plan that we’ve already put into action, and we’re confident it’s the right decision for families we serve and for our long-term business. What hasn’t changed is the foundation of Owlet. Dream Sock is still the only baby monitor with FDA clearance. Our Owlet360 subscription base keeps growing. We delivered positive operating income and cash flow in the quarter, and we have multiple paths to growth for reaching new families and expanding internationally to Owlet OnCall, Owlet One, and our Smart Thermometer. Our commitment to our mission is stronger than ever, and we’re confident in the opportunity ahead. Thank you for your continued partnership.

Operator: This concludes today’s call. Thank you for attending. You may now disconnect.