Wag! (US:PET)2023-05-13 00:54Financial Data and Key Metrics Changes - The company achieved record revenue of $20.6 million in Q1 2023, representing a 113% year-over-year increase [7][25] - Adjusted EBITDA loss improved to $0.4 million from a loss of $2.6 million in the same period last year, marking significant progress towards profitability [7][30] - Adjusted EBITDA margin improved from minus 21.8% in Q1 2022 to minus 1.9% in Q1 2023, a 20 percentage point improvement [30] Business Line Data and Key Metrics Changes - Revenue from wellness offerings grew from $5.2 million in Q1 2022 to $13.9 million in Q1 2023, indicating strong demand for pet insurance and wellness plans [26] - Service revenue increased from $4.4 million in Q1 2022 to $5.4 million in Q1 2023, driven by a steady increase in workers returning to the office [27] - The newly acquired Dog Food Advisor contributed $1.4 million in revenue through the pet food and treats segment [27] Market Data and Key Metrics Changes - The company reported a total of 611,000 platform participants, an increase of 88% year-over-year [42] - Premium penetration among Wag! users increased to 55%, exceeding expectations even after a price increase to $14.99 per month [42][43] - The pet insurance penetration in the U.S. remains low at less than 4%, compared to over 20% in the UK, indicating significant growth potential [26] Company Strategy and Development Direction - The company aims to capitalize on the growth in pet ownership and expand its product offerings across the pet care market [12][13] - Key strategic elements for 2023 include accelerating growth in existing markets, expanding premium subscription offerings, and opportunistic M&A [46] - The company is focused on achieving positive adjusted EBITDA margins for the remainder of 2023 through efficient marketing and operational excellence [52] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the return to office trend and its potential to drive demand for services as weather conditions normalize [8][19] - The company anticipates continued growth in the pet industry, driven by rising pet ownership and increasing demand for premium products and services [139] - Management acknowledged potential risks to financial performance in 2023, including disruptions to global supply chains and changes in consumer behavior [61] Other Important Information - The company ended Q1 2023 with approximately $33 million in cash and cash equivalents, providing a strong balance sheet to support growth objectives [59] - The company raised its full-year 2023 guidance, projecting revenue growth of over 50% year-over-year and adjusted EBITDA margins of over 1% [32][31] Q&A Session Summary Question: Can you elaborate on the acceleration in platform participants? - Management noted that the increase was driven by strong demand across services, pet food, and wellness segments, with no significant imbalance in supply and demand [34][64] Question: What are the key drivers of wellness revenue this quarter? - Management expects some normalization in Q2 and Q3, with a potential reacceleration in Q4, particularly in pet insurance and wellness plans [65] Question: How is the Dog Food Advisor acquisition performing? - The acquisition is validating the company's thesis about premium pet parents, with strong interest in high-quality products [67] Question: What are the expectations for service revenue trends? - Management indicated that service revenue was affected by severe weather in Q1, but they expect resilience and acceleration moving forward [100] Question: How does the company view the hybrid work environment? - Management believes that a slow return to office will benefit their services, as pet parents will increasingly seek pet care solutions [70][73]