Wag! (PET) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q3 2024 decreased to $13.2 million, down 39% year-over-year [6][13] - Adjusted EBITDA loss was$ 1.9 million, representing a $2.9 million decline year-over-year [14] - The company paid down$ 5 million in debt during Q3, reducing interest payments by $0.5 million in Q4 [8][16] - Cash, cash equivalents, and accounts receivable at the end of the quarter totaled$ 15 million [16] Business Line Data and Key Metrics Changes - Wellness revenue was $6.5 million, significantly impacted by marketing dynamics [13] - Services revenue was$ 5.4 million, while Pet Food & Treats revenue was $1.3 million [13] - Wellness revenue showed a recovery with a 79% month-over-month growth in October [7][13] Market Data and Key Metrics Changes - The company faced challenges due to changes in Google’s search engine algorithms, affecting visibility and traffic [6][20] - The marketing environment became less efficient, leading to increased customer acquisition costs [7] Company Strategy and Development Direction - The company is focusing on consolidating headcount and increasing profitability on social media campaigns [9] - Plans to explore asset sales for select products to address debt issues [8][9] - Emphasis on signing new distribution partners in the Wellness ecosystem to enhance performance [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a rebound for Q4 and 2025, despite Q3 challenges [7][12] - The company is adapting to changes in the marketing landscape and expects to return to positive adjusted EBITDA [8][14] - Management is cautious about future guidance due to ongoing uncertainties with Google [23] Other Important Information - The company expects Q4 revenue to range from$ 15 million to $18 million, with adjusted EBITDA projected between a$ 0.5 million loss and a $0.5 million profit [17] - The total annual revenue for 2024 is expected to be between$ 70 million and $73 million [17] Q&A Session Summary Question: What changed regarding marketing efficiency? - Management noted unexpected changes in Google’s algorithms significantly impacted marketing efficiency [20] Question: When did the marketing dynamics start affecting the business? - The impact was felt throughout Q3, with management being cautious in their Q4 outlook [23] Question: What is the current quarterly cash burn rate? - The company finished the quarter with$ 8.5 million in cash, with a net change of just over $9 million [25] Question: Can you provide details on Q4 revenue expectations by segment? - Wellness is expected to bounce back significantly, while services and pet food revenues will align with previous trends [28] Question: What assets are being considered for sale? - The Dog Food Advisor and Cat Food Advisor websites are potential assets for sale to address debt [33] Question: What is the timeline for potential asset sales? - Discussions regarding asset sales have been ongoing for several weeks, with potential developments expected by early Q1 2025 [35] Question: How does the company plan to adapt to Google changes? - The company is diversifying its partners and marketing channels to improve resilience against search engine changes [45] Question: Why is the refinancing delayed until Q1? - The delay is due to the need to assess the rebound in adjusted EBITDA and finalize cash balances [46]