Owlet Q2 FY26 earnings call OWLT

Owlet is evolving into a data and services platform for early childhood, moving beyond a hardware-centric model to a multi-year subscription relationship. The company aims to achieve a recurring base of over 1 million subscribers by winning approximately 1 million new customers annually and retaining them for at least two years. This strategy leverages the intensity of parenting, which lasts for years, not just months.

Subscription is central to Owlet's positioning, with over 30% of new U.S. customers subscribing to Owlet 360 in their first year. The company is expanding enrollment options beyond in-app sign-ups to point-of-sale and bundles, and continuously adding features to Owlet 360 to extend customer lifetime value. New initiatives like Web Pay and upfront subscription aim to improve margins and conversion rates.

Owlet maintains a dominant position as the first and only FDA-cleared baby monitor. A recent Amazon policy, effective August 10, 2026, requires FDA clearance for vital-sign monitoring products sold on its platform. This is expected to provide a significant long-term competitive benefit for Owlet, as competitors lacking such clearance will be deactivated, despite aggressive discounting observed prior to the deadline.

International markets were a standout in Q2, with revenue growing 214% year-over-year to $5.7 million, marking the highest international revenue quarter in Owlet's history. This growth was broad-based, with strong momentum in Europe, particularly Germany and France, and Eastern Europe. International sell-through units grew 38% year-over-year, and Prime Day sell-through outside the U.S. grew over 100%.

Owlet is building an AI parenting copilot by leveraging its comprehensive and contextualized dataset of infant health, which includes biometrics, telehealth interactions, and parent logging. Early features, such as the AI morning report that provides personalized sleep summaries and recommendations, have shown high engagement, with 85% of users engaging daily. This AI integration is expected to enhance the value and stickiness of the Owlet 360 subscription.

Owlet OnCall is in a test-and-learn phase to explore its potential in pediatric telehealth. Access is being carefully expanded in Q3, with the goal of creating a seamless and proactive experience that connects parents with clinical resources. By integrating FDA-cleared data, Owlet aims to transform at-home care, enabling doctors to make informed decisions and potentially creating a meaningful new revenue stream in the coming year.

The company entered into a new $25 million asset-based revolving credit facility with Wells Fargo, which significantly reduces its cost of capital by lowering the interest rate margin from SOFR plus 7.5%-8.5% to SOFR plus 2%-2.25%. This provides additional financial flexibility to invest in strategic priorities while maintaining a disciplined approach to capital allocation.