Owlet, Inc. (NYSE: OWLT) delivered record second-quarter revenue of $33.9 million, a 29.9% increase from the same period last year, driven by strong topline growth and expanding subscription services. The smart infant monitoring company also reported adjusted earnings per share (EPS) of $0.20, beating analyst estimates of $(0.05), while achieving record adjusted EBITDA of $6.7 million. This performance underscores Owlet’s successful transition toward a recurring revenue model through its Owlet360 platform, despite a GAAP net loss of $0.6 million primarily due to non-cash adjustments and debt extinguishment costs.

The financial results for the quarter ended June 30, 2026, highlight broad-based growth across hardware and software segments. Subscription revenue surged to $3.2 million, up from $0.9 million in Q2 2025, contributing significantly to margin expansion. Gross margin stood at 64.4%, or 54.0% excluding a one-time $3.5 million tariff refund benefit. Operating income turned positive at $1.7 million, reversing an operating loss of $1.7 million in the prior year period. Management attributed the gains to effective cost management, favorable product mix, and increased fixed cost absorption.

Financial Performance Highlights

What the Numbers Show

The most notable aspect of Owlet’s Q2 results is the dramatic improvement in profitability metrics relative to analyst expectations. While the market anticipated a loss of $(0.05) per share, the company delivered a profit of $0.20, a swing that underscores effective cost management or higher-margin product mix. Concurrently, the 29.9% year-over-year sales growth outpaced the modest 6.91% beat against current quarter estimates, suggesting that recent momentum may be stronger than what short-term models captured. This divergence between the large YoY growth rate and the smaller estimate beat implies that analysts had underestimated the sustainability of Owlet’s recent growth trajectory.

Strategic Outlook and Guidance

President and CEO Kurt Workman emphasized the company’s competitive position as the only provider of FDA-cleared baby monitors on the market. "We are executing across each of our strategic growth areas... strong topline growth, standout international momentum, and continued Owlet360 subscription platform growth," Workman said. The company aims to win approximately one million new customers per year and retain them for at least two years, targeting a recurring base of more than one million subscribers.

Owlet updated its full-year 2026 financial outlook to reflect the one-time IEEPA tariff refund recognized in Q2. Total revenue is expected to be in the range of $118 to $122 million, unchanged from previous guidance. Gross margin guidance was raised to 53%–55% from 50%–52%, and adjusted EBITDA guidance increased to $10.75–$12.75 million from $7–$9 million, with both increases reflecting only the one-time tariff refund benefits. Excluding these refunds, underlying expectations remain essentially unchanged.

In connection with its consolidated financial statements, management identified immaterial errors related to stock-based compensation expense valuation miscalculations. These errors will be corrected in previously issued interim and annual financial statements for periods ending March 31, 2026, and prior years, as detailed in the upcoming Form 10-Q filing expected by August 14, 2026.

Owlet, Inc. has significantly reduced its borrowing costs and enhanced financial flexibility by securing a new $25 million asset-based revolving credit facility with Wells Fargo Bank, National Association. The new agreement, entered into on June 26, 2026, replaces the company’s existing asset-based credit facility and term loan. This refinancing lowers the applicable interest rate margin to SOFR plus 2.00% to 2.25%, a reduction of at least 525 basis points compared to the previous margin of SOFR plus 7.50% to 8.50%. Following the closing, the company's total liquidity, comprising cash and cash equivalents and available borrowing capacity, stood at approximately $33.8 million as of June 26, 2026.

The new credit facility matures three years from closing and provides up to $25 million of borrowing capacity. It includes an option to increase commitments to as much as $35 million, subject to lender approval. The improved terms reflect the company's stronger financial position and continued operational execution, providing increased flexibility to support future operating and strategic initiatives.

Amanda Twede Crawford, Chief Financial Officer of Owlet, stated that the new facility marks an important milestone in the company's financial evolution. She noted that replacing the previous debt structure with a more flexible revolving facility is expected to meaningfully lower annual interest expense while enhancing liquidity. The support from Wells Fargo is intended to help the company continue investing in strategic priorities while maintaining a disciplined approach to capital allocation.

Andy Hay, Executive Director at Wells Fargo, expressed the bank's pleasure in supporting Owlet as it executes on its growth strategy. The new facility underscores the lender's confidence in Owlet's operational progress and financial health.

Key Financial Details