Owlet, Inc. reported its financial results for the third quarter ended September 30, 2026, noting a decrease in revenue compared to the prior year but highlighting positive operating income and cash flow. The company also announced a safety update for its camera cable guard accessory and withdrew its previously issued full-year 2026 financial outlook.
For the third quarter of 2026, Owlet recorded total revenue of $30.4 million. This figure represents a 4.9% decrease from the $32.0 million generated in the same period of 2025. The decline was attributed to lower hardware revenue following the prior-year launch of the Dream Sight product and aggressive competitor discounting ahead of the Amazon August 10, 2026, FDA clearance deadline. However, the company noted stronger underlying consumer demand and continued momentum in its subscription service.
Subscription revenue for the quarter reached $3.6 million, a significant increase of $2.1 million compared to the $1.5 million reported in the third quarter of 2025. Owlet stated that its Owlet360 subscription service continued to scale, ending the quarter with over 142,000 paying subscribers. The company reported a gross margin of 53.8% for the quarter, an improvement of approximately 315 basis points year-over-year, driven by the growth in subscription revenue and favorable product mix.
On the income statement, Owlet reported an operating income of $1.2 million for the third quarter of 2026, compared to $1.3 million in the prior year. Net income for the quarter was $1.4 million, or $0.02 per share, compared to $4.2 million, or $0.17 per share, in the third quarter of 2025. The company also reported Adjusted EBITDA of $3.5 million and operating cash inflows of $2.2 million.
In a separate announcement, Owlet initiated a camera cable guard safety update. The company stated it was made aware of a safety incident involving exposed camera cables and is providing a replacement enclosed cable guard system to all camera owners starting November 13, 2026, free of charge upon request. Due to anticipated remediation expenses, interruptions in retail sales, retailer returns, and near-term demand uncertainty resulting from this update, the company is withdrawing its previously issued full year 2026 financial outlook.
The company also disclosed that during the preparation of its financial statements for the six months ended June 30, 2026, management identified errors related to the overstatement of stock-based compensation expense due to valuation miscalculations. Owlet determined these errors were not material to any previously issued financial statements.
