Wag! (US:PET)2024-08-08 01:49Financial Data and Key Metrics Changes - Revenues decreased by 6% to $18.7 million, while adjusted EBITDA increased to a record $1.6 million, driven by reduced marketing spend [5][10] - Adjusted EBITDA margin improved to 8.8%, significantly up from 0.5% a year ago and 0.7% from the first quarter of this year [6][10] - Platform participants decreased by 15% year-over-year to 467,000, but revenue per user increased [7][11] Business Line Data and Key Metrics Changes - Revenue from wellness was $11.5 million, while services revenue was $5.6 million, with a notable increase of $1.5 million in services [10] - Sales and marketing expenses totaled $11 million, representing 59% of revenue, up from 54% a year ago but down from 67% in Q1 [11][12] - General and administrative expenses were $3.8 million, representing 20% of revenue, down from 24% a year ago due to cost optimizations [12] Market Data and Key Metrics Changes - The company is seeing increased demand for premium pet care services despite a shaky macroeconomic backdrop, particularly in wellness categories [21] - The competitive landscape in the pet category remains healthy, with an improved consumer environment for premium households compared to the previous quarter [14] Company Strategy and Development Direction - The company is focused on building best-in-class software solutions for premium pet households, with an emphasis on wellness, insurance, and prescription medications [8] - Plans for product expansion, proprietary partnerships, and opportunistic M&A are in place, with successful integrations of Dog Food Advisor, Maxbone, and Furmacy [8] - The company aims to balance growth and profitability, with a target of 8% to 12% EBITDA margins in the future [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth prospects of the prescription B2B SaaS platform and the veterinary channel [8] - The focus remains on debt refinancing and generating free cash flow, with expectations to return to growth in the latter half of the year [17][18] - The company anticipates a revenue guidance of $92 million to $102 million for 2024, representing a growth of 10% to 22% over 2023 [14] Other Important Information - The company completed a $10 million public offering to pay down a significant portion of its debt, which is expected to generate approximately $340,000 in quarterly interest cost savings starting in Q3 [5][13] - The company ended the quarter with $17 million in cash and equivalents, positioning itself for a debt refinancing that could significantly reduce interest expenses [12][13] Q&A Session Summary Question: How is the company thinking about leaning back into marketing after the financing? - Management indicated that the priority is to refinance the remaining debt before leaning back into growth and marketing investments [17] Question: Can you elaborate on the demand for premium pet care services? - Management noted that premium pet care, particularly wellness categories, has shown durability despite a shaky macro backdrop [21] Question: What improvements in ARPU have been observed? - The company has seen a double-digit increase in ARPU due to a higher mix of returning customers and internal actions focused on cross-selling and up-selling [22][23] Question: What is the expected timeline for debt refinancing? - Management expects to close the refinancing in the second half of the year, aiming for a reduction in interest rates from 15.8% to around 10% [24][25] Question: How will G&A costs scale with revenue growth? - G&A costs are expected to increase slightly but will not scale proportionally with revenue, thanks to efficiencies achieved through headcount and technology [25] Question: What support is needed for launching WeCompare next year? - The company has done significant preparatory work for WeCompare and expects to add some headcount and marketing support, but not at a significant investment level [27]