PETS - Earnings call transcript Q3 2025

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Operator

Greetings, and welcome to PetMed Express Third Quarter Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Reed Anderson with ICR.

You may begin.

Reed Anderson

Thank you, and welcome to the PetMed Express Fiscal Third Quarter 2025 Earnings Conference Call. Act this the contain Act number Private and Securities during the statements of of included amended the of as meaning Securities Exchange risks information and call involve forward-looking may within XXXX that uncertainties. Certain may XXXX a of Litigation Reform as currently statements us. available These well based used have our on we are to based as beliefs assumptions on information events, assumptions. statements these reflect Because statements and risks, uncertainties views future our involve these concerning current

projected. those be There be results of or operations contained in could a from Actual warranty to results financial should or or materially that business representation assurance occur in or as matter forward-looking respect as any realized can of any relied is differ PetMeds. condition no nothing upon future the be or any this matter, will presentation and including

update authority. obligation except law, forward-looking PetMeds legal competent as to be based events, regulation required may undertakes publicly by applicable on other subsequent these no or statements

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

Now Campos. let our over call President, and me the CEO turn Sandra to

Sandra Campos

and joining this our to you, afternoon. welcome call Thank Reed, everyone

our remarks, lines provide detailed my financial open a Following we'll results, for overview will which of after questions. Robyn the your

X to vision in PetMed PetCareRx our for and as past that our I strategic repositioning to clearly pet focus Pets have outlined consumer the months, Over emphasized care. a the long-term I pivotal remains steadfast health initiatives on position have leader success.

progress taking sustainable drive am we actions we ahead, in confident strategic of transformation much have more have in pleased growth. will early we're direction. our report I the stages We're to still and we're validating that that differentiation the made significant While work this

profitability. highest on we in targeting integrate meet has track the the consolidation this measures milestone. cost-cutting to savings, operations and priority and to remain PetCareRx annualized achieved organization $X strategies company million to been by We this into implementing return Our PetMeds to

million quarter, while to in G&A For by achieved $X.X expenses improvement year-over-year, $X representing a compared this million lowering million we QX, last year. adjusted EBITDA $X.X

continue discipline As remain value operational efficiency. we execute committed and base, through our to shareholder financial our growing strategy, customer we driving to turnaround

X At serve Pets, core we communities.

parents. pet digital access to provide our We're continuously First, experience to the health shopping enhancing pet convenient solutions.

our that portal horses veterinarian for. adoption life and are vet Rx and solutions our Innovation we the Second, workflows. third, our through the optimized categories partners, of and love proven And investments an we driving offer all premium stages. care ensuring heart efficiency increased is approach, in dogs, streamline health pets, approval cats and that at across

experience base shopping share digital our a a seamless increasing grow tech retailer, and top stack evolving that customers customer expectations. modernized and Expanding meets remains market a acquire we customer as a to require priority and

on affordable We now as where executed this have full website implemented checkout, a consumers. We and November meaningful and by a apps. progress option our made area, Android expanding we website choices at in payment our including and and mobile iOS pay mobile in relaunched also new for later accessible enhancements, refresh

improvements shipped Veterinary our new pet with XX,XXX customers veterinary during Advisory or pethealthmd.com, new platform offering the educational launched customers collaboration we had continue in quarter. guidance. and expert portal And to also enhance health our an These that gross to orders Board, backed XX,XXX led

versus $XX $XXX last value, at year-over-year. our order order by average or rose by year, X.X% increased of order AOV AOV, versus $XX gross while X% shipped Our $XXX

We health are product and through wellness committed pet best-in-class differentiation and customer to service.

resonate align growth maintaining making with for thresholds. all underperforming products margins also efficiency, across high-value and SKUs, with ensures comprehensive room Our strong we SKU life optimization and X,XXX we offer consumers. while strategy enhance that that solutions To eliminated our health strategy stages

our inventory the compared year. end alongside XX% last turn third has at This quarter versus in of X.X% and our improved reduction totaling X.X% a $XX.X X.X% last $XX.X improvement QX Notably, year. inventory rising to million on to efficiency QX comes in in with million inventory hand total

customer QX, key During to This order us AI-driven orders a and center increase call operations driven increased and in of XX.X% per to center. tool the we as value AOV, average our changing by for improve such by advanced population flex our and adapt management workforce an integrating call scale agent agent sales helped our X.X% volumes. metrics

the operational last our for the During call, that future on laid foundation and retention upgrades I earnings growth. focus highlighted our

encountered to year-end. in between and With less decision marketing ramp we promotional real-time strategic and competitive intended the up a efforts million ending holiday $X.X in performance aggressive made gross prioritize we Black margin insights, the promotions, over Friday we While highly particularly this spend quarter protection quarter, year-over-year. to with environment, advertising

that fell period As expectations. of a sales during and acquisition initial short new result, our customer

profitable in the we was discipline. intentional to for However, reset, necessary refining need strategic ensure to pivot approach marketing our sustainable growth. order a financial this Recognizing maintain are

recently of funnel like team such this partnerships, Care done and quarter. pet local podcasts, is message You long-term includes to awareness. and establish Trust brand which billboards of sports begun radio initiatives, our in all and top events, a as brand we've authority This and promote Our continue things connected that adoption investment and TV we've

strong We indicators rolling branding. our segmentation, be and dynamic rate, per stronger are a across this content month increased e-mail have a and is of future of e-mail increasing e-mail refining content system promise with Early in creating out conversion and revenue relevant stronger through open platforms. personalization by acquisition indicator revenue We January. X% of more paid improvements. inclusive Engagement believe show would rate, strategies click-through per rates that design new the quarter-over-quarter,

core we technology our and privacy. customer-facing for strategic to and systems a investments resilient ecosystem Beyond secure upgrades, data with ensure have strengthened digital customer

previously successfully our mid-November, recurring AutoShip performance that OMS without we program have in AutoShip Over subscription and improvements credit card seen issues rejection continue disruption and tech In our rates. resolved modernize impacted the replatformed past we and sign-ups to X stack. months,

performance early X.X our tracking, year-over-year. was conversion, shows views points new bounce in and are functionality lower website by XX%, age through in challenges declined improvements, promotions. conversion This offset increased X.X% by basis increased still we growth and enhancements Although visits actively search PDP and visits by rate channel rates those PDP addressing visible

the the Looking enhancing placement customer customer this. we landscape increased investments short from while the ahead, disciplined acquisition We the drive executing to customer enhance are anticipate order dynamic, engagement, competitive prioritizes will while to support experience efforts and growth, we loyalty the the underlying last-mile that transformation these increased infrastructure believe simultaneously sustained and delivery a to necessary customer infrastructure term, value. shareholder In needed. remains

remain to optimizing our OTC share strategies. partnerships will We expand refining food with categories. our our health over-the-counter portfolio our of on companion continue strengthen by capturing We Rx and strengthening products, products product our and mix and science-backed the our veterinary customer vendor recommended experience, pharmacy focused across acquisition the market animal customer

our efficient purpose, As pets organization, we build happier and stronger, ensuring healthier, homes a at we core stay true lives. with more to

the and for them. events impacted who our dedication beyond pet our and facilitate we L.A. by welfare to This actively aid wildfires, adoption business care commitment provide pet to reinforcing as the shelters, support extends communities people

for financial call that, a more the I'll over results. of Robyn detailed to With review our turn

Robyn DElia

We year, will welcomed last you, primarily on decline $XX.X was the the an year. by who advertising XXXX. a driven in Thank rebalanced fiscal received XX,XXX for period approximately quarter. sales new million update customers reduction an a million from I Sandra. XXXX in ending year this order Gross gross profit $XX.X million XX, XX% now period as were us million same results versus quarter provide to last $XX third profitability. December for Net compared $XX.X XX% we

basis profit a XX.X% of a mix QX. saw improvement similar year to year this to and prior discount to As the in XX quarter sales, we percent due sales compared activity point favorable was what gross lower an

million expenses a in improvement expense, by was compensation in were credit year, This decrease driven and the decrease driven processing lesser card third extent, a for to a decrease. by year-over-year expense, sales. quarter fees $XX.X payroll-related and million payroll General administrative a XX.X% last in lower decrease $XX.X and a versus stock-based

compared lower gross to for funded Our by proportion were million third expenses the attributed can higher of being spend a quarter million $X.X last to and year. $X advertising media mainly This third-party be spend that partners. decrease

profitability As purposely marketing pulled Sandra foundation our the to our improve for and quarter. reset mentioned, we marketing efforts back

$XXX,XXX in year. for the per diluted or same $XXX,XXX improvement prior period compared period. loss diluted $X year third of Adjusted to loss Net or of the meaningful share, $X.XX the million last $X to net per compared a million EBITDA $X.XX for quarter share the was

$XX XX, Our had and and of million as cash and balance equivalents XXXX, of sheet cash strong, remains no December debt. we

to questions. now the provide would open like will for that, after remarks. some Operator? We concluding Sandra And call then

Operator

[Operator And line comes Morgan the our question Instructions] Erin Wright of from first Stanley. with

Erin Wilson Wright

I I before it. get housekeeping into wanted a quick one

do around numbers, just defining comparing customer you on rates sure from want but the growth you those I count new we're a to customer of the customer categories a have basis, -- On or do standpoint? kind how guess I you're year-over-year and make apples-to-apples have of different kind

Robyn DElia

with XX,XXX perspective, shipped shared customer, this what correct? in had customer we new a the on we From that new quarter orders, is customers

Erin Wilson Wright

Okay.

the the about on count rationalization, a we I but overall think Just does that? growth? wanted you then kind mean that. flow-through how mix I to from it's then perspective? meaningfully quantified so your SKU also revenue impact have Or underperforming And SKUs, clarify and that do that of assume

Sandra Campos

happen SKUs drop It the really vendors Yes. those be well. that impact of as A drop-ship SKUs from actually shipped were not lot revenues. did to

it impactful. most not tracking at impact had X X, time the and months the in when they actually It for year. X consistent products so part, sales of very any about over SKU But X, was the And was optimization, that over minimal we to period. were terms look

So were anything beyond that seen not that, sales consistent where we is reducing. had

sales. definitely was So our not it impacting

Erin Wilson Wright

like from kind just and across seeing of you a we've prescriptions about about underlying of sort even are the maybe if Okay. savings how in customer been I perspective and price what's year-to-date in hearing about last market, executed in the pet PetCareRx and sneak lingering market to of responding cost of kind how that on just thinking of Great. could they're how kind backdrop you've would seeing And you one And the increases savings. left trends then transaction? the cost one the Obviously, speaking. then the on the that. there, just you're terms from the of generally outlook And thinking characterize

Sandra Campos

one the Let's start with second first.

just that only the cost working addition continue phase we we've to actually our an which strategies agencies have organization, Phase that were of the the we add into the into in at had includes PetCareRx expenditures technology consolidation and as balance anything, -- outsourced more actually we on it, with terms well now, first Do of more that as go some want folding to are will the our that you to So now we second to But of as technology what that did reduction executed optimization and it on II look in technology part not some reduplicating. and show deliberately still we and improved employed as people, are. do that that is Robyn?

Robyn DElia

right. over take to That's strategy us couple that that's of And execute. right. will it's No, quarters a a

Sandra Campos

Sorry.

Okay.

was that question two. So number

we to to be to that are is pets But we're continues to a more the adoption we're prescriptions. pressured the general. one. seeing some as and There's reduced know, number without visits a it there reduced stabilization It back relates question doubt Going as bit in veterinarian. seeing customer and of still that

UPTs Rx a have We our and from ago. and actually seen year not change pharmacy

it's amount still buying So of on still per frequency -- the times year. same they're

over a coming get and about take about we more based yes, of as spending, season and especially are to So that a of they're it's they're flea fluctuates that price premium relates where are average they're how pressured as they bit a spending, in absolutely X.Xx still more perception again, some opening seeing the prescription we per price talk tick the points. on and seasonality, it year points back But to se. terms

in who is household and spends not not to compliance is has That $XXX,XXX said, we a consumer $XXX,XXX behavior income does that who still household household regards prescription specifically that same exhibiting and to income have a their of products. being income to with and and -- spend the That to are continuing $XXX,XXX-plus customers the relates have $XXX,XXX pharmacy. and over on spend not other higher some on less

Operator

with Meyers Our comes line of next Ryan the Street Lake from Capital question Markets.

Ryan Meyers

being of across we've And quarters higher last just what the seeing Sandra, as that a on as over double-digit kind kind of impacting household are the your revenue far guys what's of the this of pulling back which X But and spend, you I a about marketing is here declines. little growth. follow-up seen driving then core but you're talk now you revenue far what you're consumer know else you softness? as that kind can as said, mean is from question income, obviously the had seeing I consecutive a bit

Sandra Campos

Well, our about and well. been, this as it we've bit heard relates talk as softness to where a me you've

of consumer. have more a actually not captured we we or is One because that modernized the reasons website Z Gen our younger, millennial

taking are to that millennial spending are not we think pets more on happening essentially children, what's their becoming are Gen-Z children demographic. about they're -- and and/or people on as their those their the from So consumer standpoint, children have pets in their a children only and longer behavior

where modernizing, our been of are our That's actually that we content, over business we can we're all not a customer. as we've capture the fine-tuning messaging, that platforms years. many competing which are So we so in different

may And older, of digital is us, who's heritage had. buying you're we're that. of core bit to XX obviously, Gen and a of seeing the we on we're that away little worth who more to from all is company also for transitioning because years, years as who new been brand X-XXX-PetMeds transition what actually We're spending, a make the consumer that has millennial customer many it, now. accustomed experiences, those but So focused great online, to and sure is capturing that's Z have trying

and understand require to and marketing consumer then going start and our into up, show is brands take which into that touch repositioned know and efforts see channels to goes in is on the we've and actually goes marketing they before points going content, As different the that we engage we the our multiple convert. this that to it

Ryan Meyers

potentially as million I then evaluating sheet. capitalized on guys mean, think balance even investing there would back revenue rest heavily Got marketing, business we Any really I year just new with drive running into the customer into growth back And more are of of and you you how year, to it. the more cash the try into promotions well helpful. about or of growth the next mean business? commentary this $XX kind to into be are

Robyn DElia

to capital definitely Yes. our We think about allocation and, of transformation how drive course, faster.

marketing would front, mentioned, Sandra the marketing I the As on we are say, right foundation. resetting,

want in the that's be beneficial way going in we a So to that's the to terms ROI. smart, do it of most

the kind go. to to ready of have set We and foundation get

of we're assortment, have and get Additionally, It's in have critically our we to customer investing important product faster the ease customer customers that the right we our the use site. experience. can on that

really, and can marketing And heavily And more gates we extent, some then the right, to would to start those continue the in going spending make to so I area. open investments. flood foundational we're say,

Sandra Campos

to just be day to And Ryan, order would said, for is you're competitive consumer next and just to the today's days. what on us X product double environment add this click point I expectations in Robyn that within or to going get same-day, in

us. for another focus just was as so mile last she area target key key delivery And mentioning

this, experience, as and We are focused a sure are so legs many we we basis on make timely delivering has well. that different which that customer to on to need

of as on investments more forward. in to those are to in starting QX this coming. that well go marketing investing as We're quarter So actually increase

Operator

the Sandra remarks. this reached the the question-and-answer have back conclude call I'll the And -- session. closing the we turn for does we Thank to over of Campos now CEO, have end you.

Sandra Campos

profitability this Thank and growth. about on you. And is customer and and prioritizing support questions, are today steady the that a time discussed It thanks of for initiatives the the that PetMeds. the the for understand many transformation we We levels. is key

shareholders. Lastly, the serve their to dedication we to and employees to all for pets customers, our I constant the commitment of just that and our want our thank

our continuing you. to look to next call. update you we during forward our Thank So conference on progress

Operator

Thank Thank lines you conference, your you does at and your may conclude today's time. you. for participation. This disconnect this

PetMed Express (PETS) 10 Feb 252025 Q3 Earnings call transcript