PET - Earnings call transcript Q1 2024

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Operator

Good morning and welcome to the Wag! First Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I'll now introduce your host, Greg Robles with Investor Relations. Thank you.

You may begin.

Greg Robles

thank first joining quarter and to conference everyone, our discuss XXXX afternoon you Wag's for call Good financial results.

today Storm, Product call and Chief the are Chief Smallwood, On Executive Financial Chairman; Officer. Adam and President Officer; Chief and Alec Davidian, Garrett Officer

statements started, involve forward-looking such factors differ cause results subject we that statements. within get comments materially forward-looking and of these are discussion the uncertainties our to expressed A by note could statements. please Before to or from today's risks that include and These SEC. are and implied in those uncertainties actual risks included filings

today.The not also remind performance. Also, guarantee the the These direct update this Reconciliations of call, We to during call. measures furnished are our not is in be SEC. in release, to GAAP the most both our the and we measures. that available is comparable earnings are financial non-GAAP you measures results. statements financial we should no GAAP These for available the intended a Relations estimates and X-K of a obligation contained Form GAAP and our earnings to Exhibit considered non-GAAP on undertake substitute on included future website release information to Investor page be present are issue which we and only

over turn call our and with website the IR Garrett the find on that, can posted you with I'll presentation Lastly, now earnings our Smallwood. SEC.And to

Garrett Smallwood

the Good quarter today discuss of afternoon to our financial and thank first performance for for you us joining XXXX.

first brief our quarter. for a results of the provide I'll overview First, financial

our achieving excited XXXX Financial beyond. EBITDA, with our of Officer, provide of positive Product In announce to more Officer, strategic detailed first and Then revenue and Alec, another Following priorities for that, in capital our expectations adjusted Wag! expectations our President We're allocation Chief discuss our operating from quarter will results ahead share quarter for activities. Adam, updates line our the analysis addition a priorities. successful cash will our on and for for flows to team. and Chief

and and announced products XX% the by quarter, quarterly During driven quarter fuel needs.Following success grew launch the management wellness pet tools e-prescribing waitlist recently, record. our for insurance, parent Furscription, close veterinary we business, was and for veterinary digital million, of demand U.S. the robust revenue by which the a pet more to the year-over-year veterinary This with new wellness SaaS was clinics. across of staff a of growth prescription $XX.X

'XX brand detail.On the will announced a launches operation compare that consumer be these in has success and within We found with AI to aims marketing the easiest automation, XX starting also achieved to new in side, Adam employees design. WeCompare, way products QX down XX been ending with from in QA, greater X% insurance 'XX. have and discuss This success, customer auto. we QX

with We are than have productive employees more order magnitude of that senior found without. an equipped those AI

employee XX% QX result, in reached a nearly revenue million As in $X.X 'XX, annualized up year-over-year. per we

predictability QX in from a for in treat wholesale the increase 'XX of BXB pet and an and partners business companies, was defined of the platform adjusted as distribution revenue companies, million year. by are as demonstrates value was generated insurance last which same our EBITDA that million, revenue companies, such food period showing which we pet growing creates of revenues.Our pet revenue, Finally, $X.X loss XX% future is partners $X.X

key train year-over-year and and equilibrium which continues to Wag! and the the will profit to sustainable for of be year In households center change half initiatives to customer pet in and overall as trends, reaching out accelerate elevated and end across achieving XX% the and environment We of to consumer growth, platforms.Accordingly, and year. quarter, as to increase products. partners XXX,XXX, competition such we consumer in of a margin. CPMs marketing penetration Furscription, through target. an see the back premium expect XX% CPCs trusted remain result and continue regards more competitive our a between In the ] and proprietary and the marketing continue continue upwards of election, invest around profitable revenue category. U.S. partner service of and in participants focused seen on wellness, the to increased we priorities we hover first as [ platform acquisition this a Our to spend XX% growth in all-encompassing We've sales with WeCompare elevated a

strong secular and this growth will to the summary, sustainable of at execute the operate.In achieve trend service product reinvesting in of in in in year. and deliver and we growth team a growth. our the goals free the continues do premium categories innings expect flow We half we back in believe which which We early the against our wellness, we're by this Wag! cash to

strategic Our #X first and over premium quarter of and Adam ability with that, households.And the U.S. business platform for the strategy will platform for our effectiveness to show to turn scale model I profitably our demonstrate review results priorities call our to to become XXXX. our the

Adam Storm

One, priorities in and beyond. the I'm shareholder strategic will create excited growth to technology. Thanks, value profitable best-in-class in Garrett. XXXX that outline

a continue are minds we company, proprietary to and building hearts solutions that capture customers. our excited As technology of the

ready the can parents directly faster to to under real launch research years prescriptions the risk handwritten medications world Furscription, the process, As comes clinics need Furscription tool and for progress experimentation thousands launched and newly of live prescription revolutionary fax independent pharmacies want with clinics, ever beta prescription prescribe to manual to their for join went we with access veterinary through after electronically an fulfill you than to a we're a excited have of channel.Two, calls.Today, which The can orders. who management to platform veterinary in significant is provide Furscription, are early eliminating such ensuring as user the our beta thrilled to pharmacy of before. easier who waitlist and umbrella. and Veterinarians both and channels and on a SaaS the M&A. pet's distributor and designed medication an expansion May pet Furscription streamline example, in LOI veterinary software with we're phone obtain continue clinics updating and our place

expand and our offerings of we'll Advisor, by of evidenced Furmacy, for scope opportunities As our our the Food integrations customers. successful and to Dog acquisitions seamless continue that pursue maxbone

by the comparisons on with aims to will way the As Garrett auto other announced that launch mentioned, of be we compare providing the horizon. insurance a verticals to easiest products. consumer WeCompare start brand recently new WeCompare, insurance

confident the replicate market. category in pet are the our can We we insurance success broader within insurance

a our TAM easy-to-use We with operational $XXX U.S. headcount. in policy revenue customers the technology hallmark For representing a successful some in to increase software.Three, auto context, is delight is the without XXX a efficiency. large ability believe opportunity and corresponding holders a and the with billion million of company pillar to category scale a surprise technology

strategic Wag! on new hit As headcount, firing down the Garrett technology employees progress reduction ended demonstrating QX up, the of cylinders To embracing mentioned, with 'XX. across per we power we pillars revenue in all million QX with in significant of record is reviewed. tools. and $X.X wrap a employee XX the X% annualized X XX Despite from

to updates call of potential they turn now to quarter excited the extremely these provide growth financials will about discuss business new are as lines Alec in scale.I'll our over and detail. XXXX We to forecast first continue the more

Alec Davidian

Adam. Thanks,

of Platform high and time include follows. QX success, we ago. high represents positive results, participants record growth. strong $X.X filing XXX% new EBITDA operating record improvement from continued Wellness $X.X Adjusted from year our year-over-year in consistent our deeper technology for million new was as and capital operating cash year-over-year million wellness year-over-year flows growth which participants of of disciplined $XX.X proprietary a adjusted XX% the XX% million, on specifically which record results flows were engine and revenues profitable year by result vision all growing activities negative treats define driven margin X% revenue tech $X.X was are revenue as platform a a execution achieving consistent of $XX.X and financial was with insurance represents and and from positive year positive deployment, Services Our from to from EBITDA ago. while food XX% million Delving of XX% improvement of results activities and X%. million. a XXX,XXX, ago into pet comparison cash growing plans category a a growth million, represents record $X.X

profitability.Our QX, robust pets As our and be AI as the we year-end totaled opportunistically of quarter. year more tooling of of of year totaled from to losing of a were representing XX% from as mentioned earlier, has significant million public year XX% to ago. our costs million, software to product The ago and of year slight do begin scaling which analyzed the approximately establish drag for a of advantage memory.Public illustrate million, into million, record excellence totaled operating start to expenses, revenue XX% XX% and ago.As public revenue amortization follows. G&A capital EBITDA of depreciation less. costs X% representing advantage allowed at of take which demand aiming of deployment and part up a margin. fiscal take our down are coming of percentage revenue process $XX.X from and excluding we we when to a for this now not $X.X revenue $X.X on muscle of that plateau score, and XX% earning a thoughtfully X% XXXX capital demand while third deployed experienced support various and in automation, representing with profitable revenue is on in mentioned G&A a $X to expense Cost expense demand revenue innovate an during still scale new efficient in $X.X QX costs as to continue representing leverage, company, the as of up by XX% as us while deployed incremental Sales recent company marketing expense total enter through versus highly achieved compared with revenue households.Platform on adjusted we and efficient X% a platform million is trends. building seeing outcome average ago. out year was a we decrease equates processes This the as increase a X% year-over-year for in is The a XXXX and and 'XX line operations driven launches XXXX to operational

we to Additionally, related for $X.X $XXX,XXX to over the a this debt March, XX% in of EBITDA quarter, the had early accounting the XXX% half that $XXX minus XXXX, perspective, initial of the we anticipates to XXXX. results million taking $X in a impact $X representing into $XX $X.XX cash period of of charge free growth million discount 'XX. contributing minus of together the EPS of acceleration our $XXX positive million in to the forecast million includes saving reflects of charge pay second XXXX, in principal also Adjusted down we fees full XXXX achieving over interest XXXX. relates debt a million from on date, our represents $X.X over $X revenues million XXX% $X.XX.From range balance cash debt cash $X.XX X% down executed growth which and This payment. adjusted $X million The an and flow.Moving margin the with charge impact quarter consideration guide pay with debt to balance of our million to P&L flows a prepayment moving related and accounts EPS equivalents to to The annual free for the ended expense immediate path an million to year of down. the The sheet of X% to reiterate approximately This receivable. the has million, $X pay in our EBITDA to year to to guidance completion XXXX. XX%

category to the Furscription are XXXX consumer of illustrates in household and Accordingly, growth as easing We and back be the CPCs the reflected the first environment revenues weighted are we we of results. competitive summary, category premium approaching QX the pet demand WeCompare, strong alongside for in serve. pet to first a and seeing increased QX strong competition post-election.In our the we cautiously our tailwinds as half alongside quarter CPMs within anticipate

Stanley's estimated ahead of Morgan We are X%. of CAGR tracking growth

executed now ability quarters. consistent management's execute Second, for growth, have and drive discipline to we consecutive X which

company Wags beyond XXXX, As journey we integrate e-prescribing customers at welcome our Across into we maintaining and a growth flow technology leading kindly as every of progress we to half to proprietary open Furscription, believe of up our day trajectory. simplify we in confidence create the our AR continue XXXX.We've profitable comparison Q&A. on focused And the are the free shareholder Operator, workflows. and while into stage and up our that growth excited with plans generating third, back shared of next cash our value.And expand started platform, you to technologies wake we're like Wag! getting just WeCompare delight now Q&A? can with

Operator

question from Our Matt first Koranda Instructions] from comes [Operator Roth.

Matt Koranda

verticals with wanted just I is that WeCompare, have as pet your comparison I does that may guidance guys approach the auto? now into for in that guess start you to are full change play strategy? stated this be year guess, the platform off I the built how beyond other sort of and there historically

Garrett Smallwood

it's does of think too thinking XXXX. about fit is first the One, I we're guidance? how to into questions. good X kind early how update Yes, WeCompare

for certainly opportunity. think think it's big more I but it's important a XXXX we probably

how does. question think the proper is changed don't pet Second it I has approach? it

see And auto XX, one WeCompare a going goes. to usually household I it kind on clear we it's since average dogs We what the think or it X pet, dogs, broadly started as them about think I with audience a X ton chief but we target start X.XX worth. the have household opportunity with beginning think kids we premium of XX the speaking, broadly of is officer. there's for but and pretty call that want certainly serve us. for we're and to premium and needs made certainly how household like They're we the to

Matt Koranda

an then more prepared back in on you in the what specifically 'XX acceleration I the the And guess, just the there's growth to of half alluded is have outlook, in guys that remarks year.

gives in on the see in quarter confidence expectations Just a update that, sort kind second what growing then there quarter quarter re-acceleration we so of how maybe we're any set front the going of level back that half date and curious you the just the can to we're around here? to

Garrett Smallwood

think to we shareholders a will and a frequently And as comes investors us This kind frankly. down big this putting cash flow EBITDA of we and maybe generation and the penalty would so holding debt of from year, there's get absolutely. we that prepayment emphasis than quarter kind the we August to more debt free debt, ourselves really achieve and on we free in I pretty otherwise. frankly of expires Yes, we're have from frankly can that's back question when this

April. it having put of or in April context to EBITDA us just into highest So frame it history. of show terms adjusted company kind numbers Preliminary monthly

we're refinance long-term on seeing frees be So or that which EBITDA to cash just then more frankly other the quarter to on in our make for flow free debt, consider profitability, really us path to I how focused and going think options bets. enables to and up adjusted quicker generation enables us this

of deploy than we a now second more we it's kind reason grow. to, dollars think half a the we We could know right if thing. why wanted of for that's So to generally thing

Operator

Stein next And question Jason from our comes Oppenheimer. from

Jason Helfstein

point the of you highlight being start So will resonate so that certain you and with kind to products just themselves if of areas the efficient you in growth of other going than some of that customers, doing so cetera, out you category into in some in wanted kind short-term to how of and then flexibility while have keep prioritize because can more maximum be right could that the there to, did high lean to these of then to where Is that, your your EBITDA you're kind and CPCs competitors is decisions, you point that to with you the be others. you lean think of about may those on is lean balance that to may but pet see focused once factors the way outlook into now? be want bail right et newer again, kind

Adam Storm

generally is certainly thing we and myself. have pet to summary. great is in any of of people The in year-over-year a there I couldn't decline more think spend into adoptions pet better I'd a the only leaning category said their maybe terms trend That's manage a business. add are other

little generally generally just that competition so more a I in And dependent think you're we're seeing and bit that categories you're on. petland. in not super seeing

that's So a great summary.

Jason Helfstein

the kind And to other I walking, top just more whatever, we then obviously is as mean but like a like with like about know, boarding a since got what came look it's to of a things. think just as and you've and the thinking, to boarding and higher going mix and XX are say you whole how to funnel XX mix follow months up, the on you then originally sitting guys kind don't strategy of lot now going I using like walking, public? to has broadly guys wellness, strategy's expanded from started of as be of that Like sell you shifted sitting, that business like evolved of just

Garrett Smallwood

been premium new bets, the demand household. frankly what Yes, took jumped dog and business we about think which we're is, to every audience primarily serving, think we've over I kind a we on-demand And the which make XXXX, before. this when it the walking matters And you almost into where fast for is look, year on, we frankly consumer that year if working exclusively every of a we've an couple water moving year mean of business. in was

tackling. the about other set WeCompare, is problems we're And which of right products insurance. e-prescribing that's And that's for vets, now so really it's comparing for expanding

that. do to continue we'll think I

distribution officer's do have a think proprietary really way we we a that's chief to is technology. and needs that household in advantage address or which or just plan Our the

Operator

Davidson. White D.A. from And from question next comes our Tom

Wyatt Swanson

Hey, this on you then Could some balance participants, Wyatt record a maybe quarter. of had bit participants of what about that drove you achieved platform for I one for is and this talk the expectations on Tom. the little year? your

Garrett Smallwood

I products a a grow. it to mean of It that in the us terms in are right really it breadth services platform they and about quarter a and is acquiring of other think is this the we growth. Advisor. There's upsell certainly of have One Headed think we're well particularly getting services WoofWoofTV and upsell. between XXX,XXX allows cross-sell very we for Yes, at spider nimble think, well the is and call offer. number things point, Dog good every we we're customers Food each efficiently. at Two, looking I to be and products we mean, web we and of cross-sell that to better X kind and how unique, working I and And better really

I the we'll second kind cross-sell of our product A think lean any so or things. are; ability to our what category and tailwinds upsell to depending and continue those And both ability do is of to kind on given into the is and

Wyatt Swanson

on it of launch next or you just to you like and year now some decided up to could Furscription, kind expect why XX follow on then give contribute color it to And the just months? how over you

Garrett Smallwood

let Yes, step well back. take a me just first,

for advice been they holy it's pet as individual about advice take in We time. think if trust research like vet the about anybody the clinic XX understand office for percent have you parents is parents, that pet else. the grail our the they we their veterinarian from worth what everything talking the and Like veterinary the specifically will plus the vet, of get and above

Furmacy. bought about like We for vet business been is thing. this thinking And We've so us, for really a not office a small called the frankly. years, new

like life. months to vet plan I software I something parent's think, XX with me, mean our was that office correct pet beautiful business and Alec think ago. with simplified the figure out sticky it's And that I whole can really the

incredible. acquire be product. if be we recurring, structure office, going the And so And to pretty the the of the that through these revenue's it's as vet sticky, best, out can you all cross-sell should SaaS figure to how customers it's that's

e-prescribing the And as actually ready.If the Think excited we it, you We to Furscription pretty so reason a the enter to of clinics rock, to is answer like to launched really it's is mentioned, couldn't like of your we software in vet to it's be and quickly it's go our yes, clinic. about the awesome kind believe pharmacy, its And Adam going question, of hands product. ready channel. vet this more software almost. first be it's share for kind scrips of

really we're of another just moving revenue a flight. kind and durable fast with surprise So excited that with to water sticky,

Operator

from Greg question our Pendy next Chardan. And from comes

Gregory Pendy

all? Xx with you any services seeing more that be are per share Has changing might to you adding Can on had platform? terms as people in monthly been at the that metrics engagement engaging you of the app. think month you're maybe I average

Garrett Smallwood

to one. as this speaking, suite. get cross-sell take add can yes. The product to we tends I better our products Broadly more

pet looked that's additional think premium of I treat this our driven does what's any or we entire of announcement more usage internal the of might the products any products. we has announcement given something do spider the where we the incremental kind you membership think products offer that at with our at. of the you I not platform how need seeing need but It's and given all is becomes. Furscription, wellness usage has like And WeCompare, stickier the of that deal metrics time, the offer additional food how of product web

is So think working. that I approach platform the yes,

Gregory Pendy

in Have view that return more macro just fourth side. Has we same changes? one impacted things just to the from stalled seen any then And office your like on last or it the It for follow heard quarter? have stayed up. has you the seems when wise services

Adam Storm

take I one. Matt, such let here. opinions jump just in first. strong have I'll this Yes,

even think don't change. year, If people the of upside. we really go Ubers expect that's of for all much to love taking there's be change love office. to Dara for to last back said, people the he'd I think at We He'd year, I said, to this and early Uber more beginning even from.

work out the And for great, Otherwise, kind and castle and to in fast with have other of a would of, of the we is great accelerate, does Like we so certainly if that's business. back stalled that and certainly but we're water be services okay. out think frankly tailwind it kind moving like the that back you going lean we and people be It in business. place of services time anything for it. just into is like more to mobile We're wait and want. until to people you office frankly, are add can kind won't more are

Operator

[Operator Dipollino next from question Instructions] our And comes C.J. from Craig-Hallum.

C.J. Dipollino

on moving of Hamlin know wanted sort Curious to kind morning. We call there? I I'm you that kind highlighted calling the tornadoes Maybe out guidance. in of what weather just what weather you're the seeing of the Midwest in Jeremy this for out in it's severe you're forward. or lingered severe QX.

Adam Storm

important of QX Yes, geo like significant given weather just got materially said, weather Coast, Miami so West it's you seasonal not the the number kind about. expect. normal patterns. it of there's thing that might the is on read numbers. something They're into cities affect concerned much West the the overall Coast can in whole we're move having they that business. that But kind That diversification going weather events about to of and any overly hit, wouldn't nice like I cities But not too like the affect does a

be into baked to think a guidance. that more I factor needs it is risk something than like

Garrett Smallwood

important like, awkward of are in points, might you're of not I'd a Adam's points. QX percentage few difference like is a seeing, cities but thing point, see you talking weather, bunch there an QX, only if example, if little in really services. make add incremental or XX let's to a But percentage or bit a The even

C.J. Dipollino

really you're lingering any And in QX? effects seeing so, like sounds it not

Adam Storm

No, small I have nothing I've it's been yes, raining a to been seem crazy look, luck quarter, there. but want to yet, weather. the I've bad it's I jinx don't in California, ton, start mean, of so so but nothing far. start, a part overall,

C.J. Dipollino

said I WeCompare, not XXXX really don't if one into Understood. you it's And mind. baked then you more guidance. know

curious to showing P&L? Just that's on up kind when of going the start

Adam Storm

whether and on plan comment think to of partnerships, frankly whether to our own Yes, we this I it, be I on earlier, how is There's cross-sell growing terms But business. work it's ways bunch dollars made it's a it depends a going to upsell. channels, want really we really through profitability. that through quickly its all growing demand quarter in about of put whether

function repayment. expires our And of path the to and think our really be to just debt accelerate being a August this debt's cash getting big prepayment free Just penalty our for I with flow. a for company going out enabler

learning, really it's We be having in So put all important. like soon our feel that with pedal we're it, think we're experimenting it, as fun that we would really I to good about but we as want to business profitability.

come next to more So I think, in the quarter.

Operator

Garrett back At closing this time, it over this turn Smallwood concludes for our question-and-answer now remarks. session. I'll to

Garrett Smallwood

busy time the very you all have I today. for schedules. Thanks know everyone

we the presentation, so the as products on and products wag.co reflect find management launched, service management update Thanks the You'll well recent on most as new which additional our to presentation. portfolio much. we've

Operator

Ladies today's teleconference. and gentlemen, this concludes

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

Wag! (PET) 9 May 242024 Q1 Earnings call transcript