Owlet (OWLT) Q4 2024: 37% Revenue Growth Excluding Partner Shift Highlights Subscription and Medical Expansion

March 5, 2025 | By EarningsIQ Research

Owlet delivered a strong fourth quarter with 37% underlying revenue growth and continued margin expansion, driven by core product adoption and international gains. The launch of Owlet360 subscription service marks a strategic pivot toward recurring revenue and pediatric telehealth. Management’s 2025 guidance signals confidence in scaled growth and adjusted EBITDA profitability despite early-stage subscription monetization.

Summary

• Subscription Platform Launch: Owlet360 subscription service introduces a new recurring revenue stream leveraging proprietary pediatric health data.
• Medical Channel Expansion: Progress in FDA-cleared BabySat device adoption with growing insurance reimbursement and Medicaid rollout.
• Global Adoption Momentum: International revenue growth accelerated 45% in Q4, supported by CE medical clearance and market expansion.

Business Overview

Owlet, Inc. operates as a pediatric health technology company specializing in smart infant monitoring devices and digital health platforms. The company generates revenue primarily through sales of FDA-cleared hardware products like DreamSock and BabySat, complemented by emerging subscription services such as Owlet360. Its business segments include consumer product sales, medical device distribution, and digital subscription offerings, with a growing international presence.

Performance Analysis

Owlet reported fourth quarter 2024 revenue of $20.5 million, which, after adjusting for a prior year Amazon distribution partner revenue timing shift, reflects a robust 37% year-over-year increase. This growth was largely driven by strong sales of the DreamSock and Duo products and substantial international expansion, where revenue climbed 45% in Q4. The company’s gross margin expanded by 650 basis points to 53.5%, marking the seventh consecutive quarter of margin improvement, attributable to favorable product mix, volume growth, and reduced return rates.

Operating expenses rose to $18.4 million, influenced significantly by $6.2 million in legal settlement charges related to prior litigation, which weighed on operating loss and net loss. Despite this, adjusted EBITDA turned positive at $0.5 million for the quarter, improving by $1.2 million compared to the prior year, reflecting operational leverage from revenue growth and cost control. For the full year, Owlet achieved record revenue of $78.1 million, up 45% from 2023, with gross margin expanding to over 50%. Net loss improved substantially, underscoring progress toward profitability.

• Margin Expansion Sustained: Seven consecutive quarters of gross margin improvement demonstrate operational scalability.
• Legal Charges Impact Costs: Settlement-related expenses materially increased operating costs in Q4 but are non-recurring.
• Adjusted EBITDA Turnaround: Positive adjusted EBITDA in Q4 and improvement for full year signal nearing profitability despite net losses.

The financial results reflect Owlet’s transition from a hardware-centric model toward a broader pediatric health platform, with increasing emphasis on subscription revenue and medical market penetration.

Executive Commentary

Strategic Positioning

1. Driving Global Adoption of DreamSock

Owlet’s flagship DreamSock product continues to gain traction domestically and internationally. Despite a relatively low 10% adoption rate in the U.S., the company sees strong word-of-mouth effects in smaller states and aims to replicate this in larger markets through increased awareness campaigns, partnerships, and digital marketing. Internationally, CE medical approval in Europe and focused efforts in Germany and the UK underpin 45% revenue growth, highlighting a significant runway for expansion.

2. Expanding Medical and Healthcare Channels

BabySat, Owlet’s FDA-cleared prescription device for high-risk infants, is gaining momentum through partnerships with durable medical equipment (DME) providers and insurance reimbursement progress. The company has onboarded six DME partners and is rolling out Medicaid reimbursement in 12 states, with commercial insurance coverage expanding. This channel targets a large market of over 570,000 U.S. babies annually eligible for medical-grade monitoring, positioning Owlet to capitalize on a substantial healthcare opportunity.

3. Launching Owlet360 Subscription Service

Owlet360 represents a strategic shift toward a data-driven pediatric health platform, delivering personalized insights from Owlet’s extensive infant health data. Early adoption is promising, with over 25,000 subscribers and strong retention. The subscription enhances customer lifetime value and provides predictable recurring revenue with accretive margins. Future plans include telehealth integration and international expansion, reinforcing Owlet’s competitive moat through unique data assets.

4. Operational Efficiency and Profitability Focus

Owlet achieved three consecutive quarters of positive adjusted EBITDA in 2024, reflecting improved operational leverage. Despite increased legal-related expenses in Q4, management is focused on scaling revenue and controlling costs to drive toward adjusted EBITDA profitability in 2025. The company anticipates gross margin expansion to 50-52% in 2025, supported by product mix and fixed cost absorption improvements.

5. Data-Enabled Pediatric Telehealth Vision

Owlet is positioning itself at the forefront of pediatric telehealth by leveraging its large dataset and subscription platform to bridge hospital and home care. The planned rollout of in-app telehealth visits in 2025 aims to address significant pediatric healthcare costs and improve early detection and outcomes, potentially transforming infant healthcare delivery.

Key Considerations

Owlet’s 2024 results and strategic initiatives underscore a transition from single-product sales to a multi-pronged pediatric health platform with hardware, subscription, and medical reimbursement components. The company’s ability to scale international markets and medical channels will be critical to sustaining revenue growth and margin expansion.

• Subscription Growth Early but Promising: Owlet360’s initial attach rates and retention exceed expectations but monetization remains nascent.
• Medical Reimbursement Scaling Takes Time: Medicaid rollouts and insurance partnerships are progressing but require patient capital and operational focus.
• Legal Settlement Impact Temporary: Q4 operating expense spike from legal charges is non-recurring, but highlights prior regulatory challenges.
• International Expansion Key Growth Driver: CE medical approval and market penetration in Europe offer significant upside beyond U.S. saturation.
• Gross Margin Seasonality and Guidance: Management expects margin growth over full year 2025 despite quarterly fluctuations from promotional activity.

Risks

Owlet faces execution risks in scaling its subscription service and medical reimbursement channels, both requiring sustained investment and customer adoption. Regulatory uncertainties and competitive pressures remain, especially given the company’s recent legal settlements and evolving FDA oversight. Supply chain constraints and retailer inventory shifts may also influence near-term revenue timing and margins.

Forward Outlook

For 2025, Owlet guided to revenue between $88 million and $92 million, representing approximately 13 to 18% growth over 2024. Management expects gross margins to improve to 50-52%, reflecting continued operational leverage and product mix benefits. The company aims to achieve adjusted EBITDA profitability for the full year, marking a key inflection point. Notably, Owlet does not include material revenue contributions from Owlet360 or BabySat in its 2025 guidance, indicating conservative modeling of early-stage initiatives.

Takeaways

Owlet’s fourth quarter and full year 2024 results demonstrate a company in transition, leveraging FDA clearance, international expansion, and data-driven subscription services to build a comprehensive pediatric health platform. The strong revenue growth and margin expansion underpin operational execution, while legal settlement costs highlight past challenges now largely behind the company.

• Financial Momentum Supports Strategic Shift: Positive adjusted EBITDA and record revenue provide a foundation for Owlet’s pivot toward subscription and medical markets.
• Subscription Platform Offers Long-Term Value: Owlet360’s early traction and high retention rates validate the potential to extend customer lifetime value and create recurring revenue streams.
• Execution in Medical Channels Will Define Growth Trajectory: Scaling Medicaid and insurance reimbursement is complex but essential for accessing a large, accretive healthcare market.

Conclusion

Owlet’s Q4 2024 results confirm its leadership in smart infant monitoring and the successful launch of a new subscription platform that could redefine pediatric health engagement. Management’s cautious yet confident 2025 outlook reflects a company balancing early-stage innovation with operational discipline, positioning Owlet for sustainable growth and profitability.

Industry Read-Through

Owlet’s progress highlights broader trends in digital health where device manufacturers are evolving into data-driven platform providers. The integration of FDA-cleared medical devices with subscription services and telehealth capabilities exemplifies a shift in pediatric care toward home-based monitoring and personalized health insights. Other players in connected health should note the importance of regulatory clearance, payer engagement, and data monetization in building defensible long-term business models. The growing emphasis on pediatric telehealth and insurance reimbursement pathways suggests increasing convergence between consumer health technology and traditional medical markets.

OWLT Healthcare Medical Devices Subscription Telehealth FDA Clearance International Expansion