Owlet, Inc. (OWLT) Q1 2022 Earnings Report, Transcript and Summary

Good afternoon. Thank you for attending today’s Owlet’s Q1 Earnings Call. My name is Tania and I will be your moderator for today’s call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. [Operator Instructions] I’d now like to pass the conference over to your host, Mike Cavanaugh, Investor Relations of ICR Westwicke. Please go ahead.

Good afternoon and thank you for joining us today. Earlier today, Owlet Incorporated released financial results for the quarter ended March 31, 2022. The release is currently available on the company’s website at investors.owletcare.com. Kurt Workman, Owlet’s Co-Founder and Chief Executive Officer; and Kate Scolnick, Chief Financial Officer, will host this afternoon’s call. Before we get started, I would like to remind everyone that certain matters discussed in today’s conference call and/or answers that may be given to questions asked are forward-looking statements that are subject to risks and uncertainties relating to future events and/or the future financial performance of the company. Actual results could differ materially from those anticipated in these forward looking-statements. The risk factors that may affect results are detailed in the company’s most recent public filings in the US Securities and Exchange Commission, including its Annual Report filed March 25, 2022, and other reports filed with the SEC, which can be found on its website at investors.owletcare.com or on the SEC’s website at www.sec.gov. The information provided in this conference call speaks only as of today’s live call. Owlet disclaims any intention or obligation except as required by law to update or revise any information, financial projections or other forward-looking statements, whether because of new information, future events, or otherwise. Please note that Owlet will refer to certain non-GAAP financial information on today’s call. You can find reconciliations of the non-GAAP financial measures to most comparable GAAP measures in the company’s earnings press release, which is also available on the company’s quarter results page of its website. I will now turn the call over to Kurt.

Thank you, Mike, and good afternoon to all of those joining us today. First, I want to note the overwhelming support from hundreds of thousands of parents over the past several months. They have been the voice of Owlet’s mission to empower parents with the tools, technology, and information that they need to deliver care at home. It’s clear that new parents want solutions to help them navigate the incredibly challenging and rewarding stage of early parenthood. We cannot imagine a world in the future where every family doesn’t have access to basic health sensing technology to monitor their baby at home. We’re more dedicated than ever to achieving that vision. Our monitoring system will become the foundation for what we call the connected nursery ecosystem, a suite of products and services that will work together to help parents keep their babies safe, healthy, and happy. Owlet is making significant investments towards this vision in 2022 in products like smart crib, our next generation camera, a membership program, and expanded Owlet accessories, which will fundamentally change the opportunity to build a longer-term relationship with each customer and expand our LTV in 2023. Additionally, we believe that investments towards regulatory clearances, where needed, will accelerate market adoption and penetration, helping make Owlet the technology platform for every parent. Owlet was delivered 21.5 million in revenue during the first quarter, primarily driven by loading in and rebuilding our inventory position with our retail partners. While the Dream Sock launched on owletcare.com and in some retailers in January, following CES, the full rollout of Dream Sock happened throughout the quarter, with different retailers stocking their shelves each month of the quarter. Notably, Target did not reset in store and Amazon was not at full capacity until the end of March. Many of our key levers of growth were just starting to build throughout the quarter including baby registries, consumer reviews, and search rankings. As a result, we saw sell-through levels increase throughout the quarter, but we believe we will realize our full sell-through potential, as we continue to build our registries, reviews, and rankings. The best way to characterize Q1 2022 is that we focused on regaining our footing and positioning back in the market and work to reestablish ourselves as the best monitoring solution for parents. While we’re navigating the short-term headwinds of bringing our core products back on line, it’s clear that the long-term potential of our Dream Sock and Dream Duo are strong. We’re seeing consistent increasing satisfaction ratings both in our net promoter surveys and our Amazon listings, signaling that customer satisfaction is coming back on track with previous Smart Sock levels. We’re also expanding our retail footprint and international presence significantly. We have a robust roadmap of new features and products, as we continue to build our green platform. We intend to add medical device regulatory clearances that we believe could dramatically accelerate adoption. I’d like to give an update on these four areas of growth, starting with our Dream Sock and Duo penetration in the US. We’ve seen sell-through of the Dream Sock and Duo grow double-digit month-over-month for the past three months. And the products have already been named best baby monitor and baby gift from the likes of Babylist, Glamour, Spy and Gear Brain. At the end of the quarter, 100% of our retail channels and doors were back online with Dream products. In the second quarter of the year, we’re now focused on growing sell through. Owlet continued its strong organic referral with 56% of customers sharing about the product through word of mouth. In a recent survey, 93% of parents reported peace of mind with the Dream Sock, which is on par with the metrics we saw around Smart Sock. We’ve continued to introduce new Dream product features to parents, improving the baseline Net Promoter Score every month with Amazon reviews for our Dream Sock and Duo climbing to 4.1, 4.3 stars already. Some of the most notable features and enhancements include an even smarter sleep algorithm that’s 10 times more responsive and 11% more accurate than when it was first released. At the end of March, we rolled out an app update that included the display of average oxygen in the Dream app to help give parents a more complete view and understanding of baby sleep. Dream Sock and Dream Duo users will also get access to a brand new feature around predictive sleep in the third quarter. It’s a completely personalized feature that helps parents take the guesswork out of getting their baby the rest they need. Parents will receive personalized prompts when their baby needs to go to sleep based on baby’s age, time slept in their prior nap, and how long it’s been since they slept. This new feature is automated for parents and adapts with baby, as parents build routines and schedules. By continuing to add more features to the Dream platform, Owlet is becoming an ingrained part of the parenting journey. We see consistent app engagement every day and we’re exploring additional revenue opportunities like membership that would further enhance this. The second key growth area we’re focusing on with the business is expanding our ecosystem with our robust product roadmap, and several commercial launches approaching. First, our new sleepwear accessory the Owlet Dream Sleeper and Dream Sleeper with the swaddle will debut viewed later this year. In a survey of Owlet customers, 73% said they would purchase the sleeper from Owlet. In Q3 of this year, the Owlet Cam 2 will launch globally, bolstering the existing 1080P HD video with next generation artificial intelligence and machine learning to accurately decipher sounds from the nursery and detect when baby is crying so parents know when their baby needs them. We’ll also use that data to store important video clips throughout the day so that you never miss a moment. Also, part of our product roadmap for the Owlet connected nursery ecosystem is our Smart Crib. Our team is making phenomenal progress on the development of the Owlet Smart Crib, which will be an anchor for the ecosystem. We recently brought parents into our office and presented Owlet Crib prototypes alongside other infant bed options currently on the market, and 70% of parents there said they prefer the Owlet Crib over the various other smart crib choices we presented. Lastly, we continue in research and development of the Owlet pregnancy band, a wearable monitor for expectant mothers. After a successful beta test last year and following continued conversations with FDA, we have a stronger understanding of the opportunity, consumer fit, and market needs. As a result, we’re working toward an FDA cleared medical device rather than a consumer wellness version, so we can offer a more robust feature set that we believe will provide the best experience for expectant moms. The wearable pregnancy monitor is just one of the medical devices our team is working on as the third key area for our business. In the US, we’re continuing conversations with FDA, as we work toward medical device submissions for both a prescription-only version of the Sock for use with sick babies under the care of a physician and an over-the-counter version of the Sock’s heart rate and oxygen notification features for healthy children. We have a strong healthcare team leading these efforts with experience from top health care companies like Philips, GE, and Kaiser Permanente. We continue to meet with FDA regarding our submissions and we believe we’re on track to submit for the prescription only version of the Sock in the summer and the over-the-counter Sock notifications following that. Outside of the US, we are pleased with our progress towards filing for the UK TA and CU med marks in the UK and Europe, as well as our Health Canada filing. As we recently obtained both our ISO 1345 and MDSAP certifications. Our fourth area of growth is international expansion. 2021 was a banner year for Owlet as we expanded sales of our core products into nearly a dozen countries in Europe. This year we plan to focus on increasing penetration in those markets. Our overall international revenue grew by over 100% year-over-year, accounting for 13% of our total revenue in the first quarter of 2022. Some highlights from our international efforts include significant retail expansion in the UK with Harrods foods and curries and doubling the number of SKUs carried by John Lewis. We’re now in major pharmacies, consumer electronics, and department stores, in addition to baby retailers across Europe. The Smart Sock was rated a top baby monitor by Le Parisien, a top French newspaper, as well as best baby monitor gift in The Independent, a large daily newspaper in the UK. We are very pleased with this international growth and are here to continue expanding and growing in these markets. Nearly every day we hear from parents around the globe sharing their Owlet experience. Our mission is to get Owlet technology to every baby and every family and international expansion is an integral part of our mission. Also, part of this is our advocacy and charitable work where we partner with dozens of parent-led non-profit organizations to provide Owlet products to families in need. In March, in collaboration with many of these non-profit groups, we were able to donate 650 Owlet monitors to Ukrainian refugees that had fled to parts of Europe. I am grateful to work with so many like-minded groups with the same mission of delivering peace of mind. We believe the key four areas are huge opportunities for Owlet both in 2022 and beyond. We’re setting the foundation for an ecosystem this year, which we believe will open up significant long-term opportunities. We recently added several new team members to further support and lead Owlet. Albert Lee joined in April as Chief Legal Officer bringing with him more than two decades of healthcare and FDA regulatory expertise for medical product companies like Abbott and Zimmer. Following his tenure with Mattel and PricewaterhouseCoopers, Nate Yoo came on board in the first quarter as our Senior Vice President and Chief Accounting Officer. Finally, we added Matthias Kosack as general manager for our new APAC region. Matthias has extensive international experience from top brands like Adidas and Maui Jim. Thank you for your continued support of Owlet and our mission. I look forward to sharing more updates in our future calls. I’ll now turn this call over to Kate.

Thank you and good afternoon, everyone. Our first quarter results were encouraging and during this period there were four main operational objectives Owlet achieved. Number one, domestic launch of our Dream Sock and Dream Duo products; number two, sell into all of our major retail channels online and in store and relisting with Amazon while growing initial December sales momentum with Owlet online; number three, establish a successful return to vendor process for domestic Smart Sock and Duo product returns to rework the Dream Stock and Dream Duo inventory; and number four, manage our working capital, operating expenses, and existing cash position effectively. Turning to Q1 results, Q1 gross billings before promotions and reserves were approximately 26 million as compared to 25 million from the same period last year. The 5% year-over-year increase in gross billings reflects our continued international growth. Domestically, we work closely with our retailers to launch our Dream line of products throughout the quarter. As of the end of March, we achieved initial strong [Phonetic] shipments with all of our key retail partners. However, some retailers are not fully utilized for online and in-store sell through until the end of March. Q1 product promotions and discounts were 1.4 million, compared to 1.7 million for the same period last year. Return adjustments for Q1 2022 were 3 million, 11.7% of gross billings. This compares to Q1 2021 return adjustments of 1.2 million, 4.8% of gross billings. The increase in return reserves in Q1 2022 relates to the new Dream product launches, where consumer return rates were higher at the beginning of the quarter, at initial launch, and improved dramatically as we move through the quarter. Looking ahead, we expect return rates will stabilize as parents continue to better understand the new value proposition of the Dream product. Q1 net revenues were 21.5 million, including the impact of adjustments such as promotions, discounts, and other allowances. This compares to net revenues of 21.9 million in Q1 2021 or relatively flat. Within this, international revenue was approximately 13% in total revenue, more than double our prior year’s first quarter international revenue. Cost of goods sold in Q1 was 12.8 million and gross profit was 8.8 million. Our gross margin was impacted by macro inflationary pressures, along with several discrete items in the quarter. Q1 gross margin was 40.7%. Our Q1 margin included a significant impact from cost inflation, representing roughly half of the decline in gross margin year-over-year. Other significant drivers included higher adjustment for returns and the rework costs associated was returned to vendors inventory. Operating expenses for the first quarter 2022 were 30.5 million compared to 15.5 million for the same period in 2021. The increase in year-over-year operating expenses was primarily for planned increases in spending associated with the scaling of the business and higher marketing spent. Operating loss and net loss for the first quarter of 2022 were approximately 22 million and 29 million respectively, as compared with 3 million operating loss and 8 million net loss for the same period in 2021. Q1 adjusted EBITDA was 18 million compared to adjusted EBITDA gain of 100,000 for the same period in 2021. Turing to the balance sheet, cash and cash equivalents as of March 31, 2022 were approximately 69 million. To effectively support Dream launch and the inventory repositioning with our retailers during the first quarter, a significant amount of capital was utilized on the balance sheet. Our receivables bounced through both reflected in the timing of solid [Phonetic] shipments in the quarter along with the disruption of return of vendor activity occurring in some cases, simultaneous with initial Dream product selling. Inventory levels grew in the quarter, as the executed our plans to rework inventory received back from retailers into Dream products, particularly as a lot of the rework activity was going on in March. We expect that in future quarters this will decrease the need for working capital usage, until we worked through the inventory on hand. As a significant portion of the inventories now been returned from our retail partners, we’re actively working with them to normalize our receivables position. In summary, Q1 was an important transitional product quarter in the US for Owlet. We achieved our top business priorities and have taken many of the necessary steps towards building a stronger global business for Owlet in 2022 and beyond. Looking ahead, like most companies, we’ve seen increased inflationary cost pressures in our business related to supply chain and transportation, ongoing uncertainty with pandemic concerns, and cost increases for wages and company administration. Within this uncertain macro backdrop, as Kurt discussed, Q2 will be a continued period of repositioning of Owlet’s domestic business, to focus on driving the first full quarter of retail sell-through in the Dream product line, and further reestablishing Owlet’s market presence after being out of the market this last year, due to the FDA warning letter. Inventory levels at retailers were elevated in Q1 compared to last year, primarily reflecting timing of initial sell-in and sell-through of the dream products domestically. Inventory sell-through in second quarter was driven by key promotional days, including Mother’s Day and Father’s Day and online retail ones [Phonetic]. For Q2, we anticipate seeing revenues in the range of 23 million to 25 million. With regards to gross margin and operating margin, we expect the headwinds we saw in the first quarter to continue in the second quarter, including macro inflationary pressures and return inventory rework [indiscernible]. With regards to return inventory, we anticipate that we will be substantially complete with inventory rework by the end of the second quarter. Our long-term core growth objectives remain intact, including growing Owlet’s connected nursery and market penetration domestically and internationally, executing our vision for the future that’s connected nursery market by targeting investments in product innovation to expand the lifetime value of our customers and focusing on developing medical devices and obtaining marketing authorizations in the US and key global markets where required. Thank you. Operators, let’s open it up for questions.

[Operator Instructions] The first question is from the line of Charles Rhyee with Cowen. Your line is open. .

Yeah, thanks for taking the questions, guys. You know, Kurt, just wanted to just clarify, when you when you talk about this inventory rework, that’s the 3 million that’s what you’re referring to the contra revenue account that you talked about last quarter, is that right?

The 3 million that we’re talking about is on the return reserves, so that -- we talked about gross billings, and then we increased the return reserves. So we’ve talked about year-over-year, that’s about a million and a half more than we had in the year prior because there’s a new product launch. So when you talk about that kind of gross to net, it’s a little bit more than we would have had last year if you were doing a year-over-year comparison. We just wanted share that for you.

That’s helpful, but that’s separate from the inventory rework related to the FDA.

Yeah.

Okay. Can you tell me -- can you -- yeah, how much does that impacting the quarter?

The reward activity?

Yeah. Or was there any impact in the quarter from that because you mentioned that you were going to be done with that by the second quarter? Was there any impact on that revenue this quarter?

Right. So what we talked about is that we’re about 80% of the way through of the reworked activity, and really what we’re talking about there is when you look at -- we’ve talked about that, we had made a liability adjustment. And when you look on the balance sheet of what’s moved into inventory, that’s where you can see the adjustment and what we have in inventory. So we’ve said that we brought in approximately 75% to 80% of the return to vendor product that we think is out there and so we probably have a little bit more to go in Q2, but then after that we think that that activity is primarily behind us.

So if I looked at the balance sheet from December, and then the balance sheet here presented, the difference would be what impacted the quarter. Is that a fair approximation?

Yes.

Yep. Okay. And then my last question, you know, maybe, Kurt, can you talk about the competitive landscape, how you’re seeing it right now. You were seeing -- obviously, when you guys introduced the Smart Sock years ago, not a lot of competition, I’d say, in terms of really advanced baby monitoring. We’re starting to see new entrants in the market, particularly not in a wearable per se, but in cameras or monitors that’s using like computer vision and being able to detect motion, temperature, et cetera, without a wearable portion of part two. Can you talk about how this market is developing and you see Owlet’s place in it? Thanks.

Yeah, thanks, Charles. I would actually say that early on, there was a lot more innovation, there was quite a few more competitors coming to market in this space and I think Owlet emerged as the clear leader, in our category. What we are seeing is more kind of connected, cameras coming to market in the baby monitor section, which is obviously competitive for our camera but nothing compared to what we are able to offer with the Dream Sock and the features that we have around Dream Socks that are kind of the next generation of sleep monitoring. So we are seeing more entrance on the camera side, there’s a new wearable mat, but in terms of sort of being on par with our level of sleep tracking, and fleet monitoring, and the quality indicators that we have, I think Owlet is still in a really strong position and is leading the market in terms of technology. So, yeah, does that answer your question, Charles? Anything else you want me to go deeper on?

No, no, that was helpful. I was just curious how you’re seeing sort of the market evolving. That’s great. Thanks a lot. Appreciate it.

I think it’s interesting that -- yeah, this market is, I would say, finally evolving to Wi-Fi where the smart home market has been there for a while and I think that the majority of the innovation that we’re seeing happening right now is video monitors for babies connecting to Wi-Fi.

Great. Appreciate it. Thank you.

Thank you, Mr. Rhyee. The next question is from John Babcock with Bank of America. Your line is open.

Hey. Good afternoon, and thanks for taking my questions. The first question I just had, you talked about higher return rates on the Dream Sock. Much you’d be able to delve into that a little bit more and what you think drove those high requirements?

Yep, sure. So just to clarify that too and Charles’ question, the impact to revenue is the return in allowances, so what you do is in a normal quarter, you just take that as a percentage of revenue. We had a new product launch in Q1, it is a Dream product and we took a higher reserve as a new product launch. We saw a slightly higher return rate when we first launched the product and a little bit with that was, I think, some consumer confusion when we first launched it with the new value prop. At the very beginning of the product launch, we saw that return rate changed very dramatically, as we went through the quarter, downwards. And we’ve seen that actually continue downwards into a more normalized rate that we saw with our prior products. So we think that that will continue, as we mentioned, as the value prop continues to resonate, and our NPS score continues to go up with a new feature set. But as it works, we take an average for the quarter, so the average was a little bit higher in Q1 and our exportation is that it will be at a lower rate in future period.

Okay. Out of curiosity, what feature were most of parents hoping for that, I guess, didn’t exist in the Dream Sock?

It was all different. So when we launched the product, the difference that we had was that as we changed the product from Smart to Dream, some of the feature functionality that’s been rolled out senses, some of the Dream application, some of the look back application for the way that the app works and the some of the new feature that we’ve come out with since then but it’s the overall repositioning of the product in the marketplace.

Okay.

Yeah. I will state, John, just to add to that -- yeah, I would just to add to that, I think anytime we launch a new version of any product, generally those first few months, you see higher return rates. In addition, just to kind of follow up on that feature question, we launched three new features in the Dream Sock in Q1 post launch, one is a real time footage in the app, which is a really cool feature and kind of visually -- it’s pretty prominent in the app and helps parents in real time see what sleep -- kind of state they’re in. We made the fleet tracking feature a lot more responsive. And then we launched average oxygen display at the end of the quarter as well. I think all three of those features, we’ve seen the satisfaction and ratings improved significantly with each new feature rollout in the quarter.

Okay. Thanks for that. And then, last question, I’ll kind of combine this into two questions. I guess, first of all, just with regards to your revenue guidance for the quarter, how much visibility do you have into that? And then, second of all, are you seeing any impact in your EMEA countries from this whole Russia-Ukraine crisis and does that weigh in at all on consumers interest now?

Kate, do you want to take the revenue, and then I’ll take the International?

Yeah, sure. I think, as we’ve talked about, I mean, Q1 was a major repositioning for us and we talked about the initial selling domestically for Dream. That was an important milestone for our retailers, both online and in stores and that selling happened throughout the period. We also re-listed with Amazon very late in Q1, so we were very happy to have all of that activity at the end of Q1. But it all happened in different times, right, so, as a consequence of that, these sell through activities started happening at very different times. So for Q2, what we’re really focused on is the sell through activity with all the different retailers. And what we’re expecting is that a lot of that sell through activity is going to correlate with the promotional opportunities with the different holidays. We have some online events that are already happening, too. And so what we believe is that the demand that we’re seeing out there, as I mentioned, [indiscernible] feature functionality that’s resonating with folks. We anticipate that that range of revenue is where we’ll see things happening as we start correlating that sell-in, sell-through domestically. And now I’ll let Kurt address the overall demand that we’re seeing internationally and then the other areas.

Yeah, I would just add that Europe is really a bright spot for the company right now. We’re seeing incredible growth year-over-year. The team has done a great job of really, not only building a great team there, but working with each country specifically to build good marketing programs for each of the geographies. We mentioned the midwife recommendation, we recently got the expansion into Boots and expansion and John Lewis and expansion into Harrods. So the business is growing really well there and we’re seeing strong consumer demand. I do think there was a little bit of softness, especially kind of at the peak of some of the news around the war in Ukraine but, overall, the business is strong.

Great, thank you.

Thank you, Mr. Babcock. [Operator Instructions] The next question is from Jim Suva with Citigroup. Your line is open.

Thank you. I have a question for Kurt about strategy. You mentioned that you’re launching the pregnancy band with -- working with the FDA as opposed to call it a health device path. What’s the reasoning behind that? Is that you always plan to do that, or did the FDA kind of tell you, hey, we’re going to view this as a health device and not -- I’m sorry, as a medical device and not health device. I’m just kind of curious about that path, because the other devices you’ve taken the other route of going as more of a health device rather than an FDA health approved device.

Yeah, thanks for the question, Jim. I would say that in Q4, as we were having discussions with the FDA around Sock, we were proactive in discussing bandwidth them as well, because it’s in a similar vein. And we were able to get to a point with the agency where we had a clear path for launching a wellness device but there were certain features that we wanted to make sure were included at launch and felt like the best approach and recommendation from the FDA was to seek clearance on those features prior to launch. So, we did change strategy a little bit with that product and have decided to just completely embrace the medical pathway and get clearance prior to launching it.

Okay, that makes sense. And again, you mentioned if I heard right, you’re planning to submit for that in summer time or did I get that mixed up with a different comment?

Yeah, so the Baby Sock, which is the prescription version of the Sock is what we’re anticipating submitting this summer. We haven’t announced the timeline for the submission of band yet.

Okay, gotcha. Are you relatively getting close to that or are these things so complicated we’re looking at kind of beyond this calendar year, if you can give any commentary for that. I just don’t know about the longevity of that that detailed process?

Yeah, I think we’re still in conversations about exactly what we’re going to put into submission with the FDA. So we’ll have more information in future calls.

Okay, gotcha. And a question for Kate, Kate you made a comment about cash flow is impacted by the reworking of the recalled products that you returned to shift over from a medical to more of a health packaging, which makes sense. And you mentioned that was a headwind and challenge for working capital in March quarter? Does that mean that in the June quarter, we should be thinking about cash flow materially changing because it kind of, I want to say, unwrapped itself or reverses itself or can you help us with a little more clarity about what you’re referring to about that working capital comment that you gave on your prepared comments?

So a lot of the activity, Jim, was to staging a process with the retailers of bringing back the inventory that they had in terms of Smart Sock and the Duo product, bringing that back in house to rework for a Dream Sock and Dream Duo and then reworking on that as inventory and then getting product back out to the retailers. And so a lot of that affected not only the process of getting it back into our company, but also then, as you can imagine, accounts receivable and that whole process as far as selling in and selling through, as we work with our customers. So it’s taking a little bit of time to get that all worked through but we think that we’re about 80% of the way done, then we will be able to kind of settle out with those customers. I think, in Q2, we should be mostly done and then I think we’ll have more back to that flow that we’ve usually had where we sell in and then we have that kind of normal payment cycle with them. But it’s just kind of taken a little bit of patience and everybody has been on a little bit of a different cycle, so that’s why you see some of it just a little bit tied up in some of the numbers on the balance sheet and the cash flow. But all expected, in Q1, and to be honest to get through a lot of that in a short period of time has been put a lot of effort in at the retailer side and our side, so we’re really happy where we are, but we also expect to be mostly done by the end of this quarter.

Thank you both for the clarifications. It’s extremely useful. Thank you.

Thank you, Mr. Suva. That is all the time we have for questions. I will now turn the conference over to Kurt for any closing remarks.

Yes, I think thank everybody for joining today. Thank you, Charles and Jim and John for the good questions. Want to thank everybody for supporting Owlet as we’re working to innovate and solve real needs for parents and want to thank our team and our customers for all the support we’ve seen over the last few months. So, thank you have a great day.

That concludes the Owlet Q1 earnings call. Thank you for your participation. You may now disconnect your lines.