PETS - Earnings call 2 2024 | PetMed Express, Inc.

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Operator

Good afternoon, everyone, and thank you for joining the PetMed Express Second Quarter Earnings Conference Call. My name is [ Shamali ], the operator for today's call.

I would now like to pass the conference over to our host, Mr. Brian Prenoveau, Investor Relations. Sir, the floor is now yours.

Brian Prenoveau

operator. you, Thank welcome Fiscal to today the to I'd Quarter everybody Earnings Express Second Call. PetMed like here I would only also portion like later to remind everyone call. conference session, will will in question-and-answer the of that call be the listen until which be this the first

assumptions. that involve included our Exchange are of Act may certain based amended, available from number statements the call materially as Securities statements forward-looking of statements and during concerning risks, XXXX we may assumptions Actual XXXX, have projected. Because uncertainties. those and these us. that Reform information based on reflect Also, currently the Securities meaning results Litigation this of risks beliefs information could include Act events, as well current within views involve a future of as differ will be the upon our these Private used statements to These and uncertainties

occur operations financial PetMeds. undertakes these applicable that law, condition obligation be competent authority. business There to other realized. PetMeds legal relied except assurance should including warranty can a publicly contained or on be upon or And forward-looking as to no results be of as update subsequent based required by respect no any in statements events, the may future or as regulation or representation or this is any matter, any nothing or be in presentation to will matter forward-looking

filings most Commission. the Exchange We annual have Securities identified various other with in factors risk within recent operations associated report and our our and

non-GAAP we measures be directly financial to will are the non-GAAP the GAAP in more release most issued course measures. or the included financial Also, of these during afternoon. the call, one measures company this today's Reconciliations comparable press of discussing

Hulett. introduce let and CEO Matt? President, Matt Now me our

Matthew Hulett

Thank earnings in Brian. time you to making the call. for to our today you, everyone Thank participate

advancements overall today's would remarks progress. on earnings operational my like I focus our and For call, . to

PetMeds year-over-year, of acquisition XXXX, PetCareRx. to million our million September delivered increase compared sales $XX.X of ending the sales quarter X% XX, recent of reflecting an the For in year, $XX of prior

& revenue Our revenue of year. in Pet platform same will of fiscal during increase XX% for programs making we to the XX% AutoShip operating are grew last that quarter, the the improvements discussing Save program. to a this from Later be time the section, our and substantial and last we Plus significant

customers PetMeds delivered XX% representing new our XX,XXX quarter quarter, contribution year-over-year business in consecutive customers. the customers This customers. addition This fourth increase well of We a quarter as as the core growth from during the PetCareRx's includes new the year-over-year. new growth added new of from

While of excited in of during the we new growth continue million with to growth core year-over-year. for X.X% the sales customers, $XX.X face PetMeds about sequential reflecting customers challenges Returning accounted were returning we quarter, the base. customer stabilizing

However, of PetCareRx business. this growth solely attributable was the to the addition

is have not do rate customer quarter. decline less the PetMeds was achieved we ago, between than break brands, is out approximately a base the not from While still at base. same our And customer while returning year PetMeds and core single-digit previous yet a stabilized declining the the it returning PetCareRx we this sales

key recurring more a priority to customers for consumable We returning the remains top core of platform combination to subscription customer offering our enhancing us. the and challenge. believe Stabilizing base this existing selling our products is

currently our operating adding on to more deeper initiatives immediate focus migrating is additional business Save to create our program and our to basket, expanding our the relationships products base. on repeat AutoShip such, underway with & As our of returning

returning discussions as pet softness customer seen data, the we our active Based XX conditions. our large in prescription the base. have industry pet direct-to-consumer some on is as well in base PetMeds our partners, not have our years immune a pioneered parents with to core of proposition, Lastly, data, based base in on overall ago a supplier pet own terms of space customer value we price-conscious reduced market over the PetMeds and spending.

categories contributing seen the products have that specific prescription have softness We in come our the under to and numbers. space also some year-over-year in pressure,

not the positioning our we believe over While the mix an consumable categories them. our long macroeconomic being opportunity provide largely continued current we to PetMeds' that feel is are We health to into pressures, diversification new our more push core that into in value care business prescription resilient to grow term. and certainly immune

our pet strategy from pet slide, Next as to retailer our recognize legacy pet prominent please. parents our progress on the a trusted experts. to PetMeds where strong their evolve medication PetMeds business health as most making is future

revolves strategy a care, broader recurring integrating range X of nutrition acquired care products basis. on PetMeds customer on is and on medication, a our pillars: assets wellness. health pet newly services and Our around PetMeds executing and key to partnerships core base to our focused offer and

pet we're and because are brands be that of overall that attractive to to deeply of well-being proud owners towards pets. products suite their gravitating brand. is And Our and are services the committed increasingly health

products have nutrition the our indicators stabilize medication consumable will our We represent business. the our more, performance other In into significant base. been very for products, milestones key customers expanding providing These help growth-oriented our beyond and bringing are a core returning which transformation food to clear indicators to that customer business. core more particular, into as

Continued gains the growth and entire in customers, year-over-year revenue, exceeding rates meeting in recurring for new market business. PetMeds increases

PetMeds core highlight a service beyond like last achievements prescription to our to would product and expansion the improve quarter. our this support will business, I into well significant ability key Under from dynamic excited multi-category increasingly improvements parents. as of infrastructure competitive to PetMeds' that theme more to our the to poised strategic offerings operational our pet our as is announce now core market. to our core services I'm company, subscription a expand expanding

expand our the customers. new core on business our while e-commerce To add parallel in investing upgrading to management with a and has bit in been relationship capabilities more color, systems working assets

We will PetMeds. for to are enhancements legacy will delight scale enable certain the rolling value to systems that unlock business out customers more quickly, currently and

implementing even provide we orders, system. modern distribution will more allow process inventory, across sales, more platform are us a locations. order to and To multiple This management manage streamline efficiently detail, track new fulfillment

the base investments campaigns prescription-based PetMeds' has wallet the enabling a and during topic mentioned and of ecosystem, earnings on CRM us customer customer promotions personalize implemented primarily and capability based While to last type e-mail our begin technology new now of to thus the large share we upgrades, call, platform. we PetMeds across on expanding within PetMeds that the base.

recommendations subscription parents and wants Save offers upgrades essential revenue role have to a different growth our their and a program. AutoShip enabled types these These to unique with the develop our investments being pivotal in specific and business. strategy, as based pet on For to example, of we target recurring can needs. & infrastructure second us returns play is of PetMeds will Growth generation

enabling let's Now investments recurring move on to have revenue. PetMeds these to for what subscription mean more

greatly Our these duration, an changing experience. Save the control order. customer over to current capability We believe enhance subscription that will changes activities subscription, the more experience, a controlling & new capabilities the a and quantity enhanced their like including pausing of AutoShip result include ordering in strongly will pet parent

we available value-add will soon make addition, an new exciting capability. In

of Specifically, pet on XX/X, all connection firmly parent this veterinarians We our AutoShip real over capabilities connects in health and believe ] expanding differentiation a really with market. will experience services, parents integrated the to pet curated to differentiation this catalog, digital licensed services, means & integrated place. providing vet products product that we all basis. expert believe X pet complementary integrate which available integrated our [ Save and functionality, our one We that wellness a for our be virtual provides to VetLive customers in in materializes access when addition insurance, into

on would include reported area already catalog and into new the limited new growth see address that more to prescription deep is the product share focused on The pet offerings we nutrition future, broader leaning in had that wellness I net and the a continued catalog space. needs. product historically I've growth parents' of like pet highlight Today but customers. a to we customers. are a of specifically greater in very can PetMeds acquisition in has our that

to meeting sales. a attract stabilize broader with expand we the that unique believe firmly more products of differentiation terms ] overall adding new of Live our exceeding of base, form in customers, of rates, combined and us VET catalog pet industry our prescription to growth and retain and parent services In enables outside like [ medication, returning

our customer increases As mentioned, increase over opportunity should of X lead our premium the and food huge in pet represents introducing to value we are This to which extensive to and of a million retention base overall lifetime parents. size, prescription basket base. actively

we ] the line, growing products [ catalog. now Canine line retail pet quarter, our and product our to to excited Last been introduce have were of food Royal recently added Purina

addition, to In we are announce our now pet offering. I'm insurance with excited live that

valuable our pet As envision introduction you We our permits. by with may be our a company, JAB community that over powered offering our of by by leading expansive Insurance, which is majority as will is offering now insurance million insurance Pumpkin a new partnership insurance Holdings. recall, viewed X of owned product the

progress As substantial can quarter. this made you see, past we've

over like Christine. Now presentation hand I'd to the to

Christine Chambers

for the XX, our XXXX September I Thanks, results report Today, Matt. will QX fiscal quarter XXXX. ending

acquisition the only second PetCareRx this be of compared PetMeds will for QX to reminder, results including as XXXX. combined for quarter As a fiscal results the of

Next slide, please.

of to in growth order PetCareRx, X% legacy declines last offset $XX legacy increased to Second the million compared sales. sales acquisition sales by in sales due the million of of was year, from quarter year-over-year. reorder incremental $XX.X were sales, growth partially the This period same PetMeds' PetMeds new

both the As continued new new inorganically growth of customer with trend Matt customer in combination year-over-year, of sales net legacy and mentioned, with PetMeds' our growth previously PetCareRx. we organically

reorder However, a the in was flat legacy decline we the quarter. sales. prior to in PetMeds' decline continued This single-digit to experience relatively decline

in XX,XXX and both growth. approximately prior customer the this parents growth XX,XXX reflects This new and year-over-year to quarter XX% new year. represents welcomed pet organic of inorganic We compared

million legacy the of $XX.X year. compared of in the period million reorder sales. sales acquisition same reorder last partially In PetMeds' offset in $XX.X addition, reorder the attributed of growth increased to X.X% for can The quarter sales the by be to declines PetCareRx,

we acquisition programs. With million added associated of PetCareRx, also $X.X PetCareRx with our membership revenue of the

sales Save percentage revenue, a We've & and recurring total engagement greater PetCareRx AutoShip recurring including sales continued grow drives strengthens of our as sales to sales. and membership This base. our

quarter, as the recurring XX.X% the mentioned, in sales profit in a quarter and the percentage up for the to quarter the XX% sales was XX% a of period in sales XX% Gross XX.X% total was same same Matt of last year. and year in quarter up as sequentially for percentage from from compared prior As prior XX.X%, quarter. the last

in PetCareRx part by year-over-year, period $X.X million for the due to $X.X second expenses legacy expenses, of third-party G&A as PetMeds' strategic diluted income compared the $X.XX well Net was year. investments same loss net prior G&A $X.XX in increased the share in quarter $XX,XXX per diluted of combination or as offset or per the last year. million for share, to nonrecurring

$X.X third-party by expenses, an increase in Adjusted the expenses for $X.X profit in well EBITDA to net investments PetCareRx, of Increased year. same million due strategic expenses. last gross advertising PetMeds' was in million, the as legacy operating million part compared offset of quarter in $X.X the to and combination as quarter was

Turning quarter no $XX.X million our to the and Slide balance of debt. sheet X, cash with on we ended

policy. allocation As capital we we do quarter, our each evaluate

position commitment that will This quarter, value. PetMeds capital carefully our the growth a sustainable for manner in financial long-term position we financial current enhanced allocate best our needs considered to and and with

the that us that With effective to announcing are the in our ending invest mind, including our we to up will suspension factors ramp September efforts, in dividend payment we suspending those enable core dividend in of allow investing enhance infrastructure to marketing us efforts be the setting balance XX, business, In to a this our capabilities, XXXX. quarter our will technology The our strategically today will focus base. revenue and on and we invest customer build as well drive through up enable catalog will growth. offer competitive to the of customers, organic us continue to And future the in innovative product will turn, year, opportunities. growing recurring solutions growth expanded for as to

and Maximizing over which long term discipline a priority, capital is fiscal the shareholder allocation. key requires prudent value

need the balance to return the growth shareholders. to with opportunity to continue capital to will capital for We opportunities fuel

prior remarks now over will the I to Matt concluding call back to turn some Q&A. for

Matthew Hulett

care, Four In health phase summary, brand. evolving We're business an growth in vision: important of single category is and pet comprehensive just and not transformation. this PetMeds and into a medication, pillars nutrition anchor pet a anymore. promising . prescription We're wellness.

the focus base, wider recurring pet assets committed a to reinforcing on and and our newly wellness. customer partnerships services deeply product us us range as Our core allows offer acquired overall that to to brand

infrastructure platform Royal Live our We like like and offer [ added growth. management an unmatched are promises new AutoShip new pet top-tier and catalog to and Canine order program upgraded even with Plus about deploy Save to ] our improvements [ ] Purina more & integrated features and with Vet parent product expanded brands experience. insurance

products are growth. as these a a We PetMeds increasing the well to we More confident to interactions, will recurring services stabilized broader combined as in that equate more and culminate our that overall for set investments customers. business, with of value provide new a frequent platform core offer

isn't our good and transformation about we've for for their fur We're even over the parents pet It's This ahead. X babies. excited strides and made us. for great thrilled million more just what's

remarks we to these questions. we are take prepared conclude With today. statements, Thank our now for you. Operator, prepared

Operator

from with Ryan And our line first Instructions] [Operator Street question Bake the Capital. comes of Meyers

Ryan Meyers

First wonder it. I for to as just one call legacy guys if us new like me. of with commentary what looks little customers on a spend relative provide customer bit could you you

place. understanding want Purina, Canine we're this added talked of Just ]. to Royal take starting some [ just about see if get of know kind an you you cross-selling to I

trying get coming a purchase understanding on be products? a helpful. that there as they to would to try these Are starting get the are good platform. to new adjacent want as to understanding Just far good customers to Just

Matthew Hulett

one, that's that just this question. to really of base One introducing the in and question. go-to-market And food is one. scale includes customized statement things from quarter, that really to our terms packaging, just for Ryan. in our take Yes, e-mails, your of Thanks couple can offers. a food started our awareness at I kind overall campaigns unpack of

offers, introduction Statement opportunity of to those with the food on two, when starting targeted attach to that the for hold food we new are really, first primarily we transaction since AutoShip customers. customers do customers see take those have we have initial

are So seeing new we some customers. traction with

for a get that early returning seen. of time signals take as to brand up it's really start we that as prescription broader we're than awareness health then And expert, something some introduces medication. ourselves the going customers to we've the pet excited that But positioning we're other some a about

Ryan Meyers

here more what's helpful. Got have And the think, it. forward? then guys' do capital as understand allocation with don't your that helpful back It as would And far you That's you that. where put to goes now now gone, dividend you in the some dividend, #X business? money priority be that to pay can

Christine Chambers

Yes. thanks for much so question. Ryan, the

in really believe capital the know, opportunities will e-commerce you in us the as give aggressively pursue growth we financial reallocating pet continued So fundamentally sector flexibility to and this this space. in

that comprehensive advantage product as the to advancements, really term. implementing believe opportunity those diversification, we midst growing growth to e-commerce invest really reinvestment And returns long know, So strategy that will in of and in the this technological the give take of will we're this in market. provide our the you us shareholders

to have the ensure, as ensure help to want that we can grow, and scale run working for also we have CapEx smoothly, that and growth. We the cash we options that fuel will we capital,

Operator

the and now concluding questions company's has back portion Hulett, to his turn would remarks. Matt call to the ended. our I And call like the answers for of CEO,

Matthew Hulett

PetMed's today. innovative will PetMed, opportunity you we've and unique expertise laying, I'm meet the joining lead the that unparalleled. value. will for confident in operating we that are envision to call brand, and future shareholder reputation ways Thank with foundation along and our results for and increased been the market

And with operating to we to our progress map. you our Thank as continued road forward positively have and We and accelerated market pet services we that our for parents . sharing support. products of look your change go lives pets. greatly the

Operator

today's And this concludes conference.

your time. for may lines your disconnect You you this at participation. Thank

PetMed Express (PETS) 30 Oct 232024 Q2 Earnings call transcript