Record First Quarter Results -- Highest
Quarterly Revenue to Date
Raises Previously Announced 2023 Full Year
Guidance
Forecasting Adjusted EBITDA profitability in
2023
Wag! Group Co. (the "Company” or “Wag!”; Nasdaq: PET), which
strives to be the #1 platform for busy Pet Parents, offering
on-demand access to 5-star pet care, pet insurance options, and
expert pet advice, today announced financial results for the first
quarter ended March 31, 2023.
"We are thrilled to report record-breaking revenue for the
quarter, a testament to the hard work and dedication of our team at
Wag!. Our continued focus on expanding our product offerings has
allowed us to better serve our customers and their furry
companions, and we are excited to see what the future holds for our
company," said Garrett Smallwood, CEO and Chairman of Wag!.
“While we are pleased with our performance this quarter, we
recognize the need to balance growth and profitability for the
remainder of the year. We will continue to monitor the macro
environment closely and adjust our strategy to ensure we are well
positioned for long-term success. The team at Wag! is committed to
driving sustainable, profitable growth to create value for our
shareholders,” concluded Smallwood.
First Quarter 2023 Highlights:
- Revenue increased 113% to $20.6 million, compared to
$9.7 million in the first quarter of 2022, a quarterly revenue
milestone - comprising of $5.4 million of Services revenue, $13.8
million of Wellness revenue, and new in Q1, $1.4 million of Pet
Food & Treats revenue via Dog Food Advisor.
- Adjusted EBITDA loss improved to $0.4 million, compared
to $2.1 million in the first quarter of 2022.
Recent Business Highlights:
- Reached a total of 611,000 Platform Participants in Q1 2023 an
increase of 88% from 325,000 in Q1 2022.
- Continued to innovate in the Wellness category. Pet Parents are
increasingly focusing on their pets health and wellbeing and we’ve
continued to lead through innovative, best-in-class products and
services. For example:
- We became the exclusive marketing partner of Paw Protect, the
only pet insurance with instant pay. Paw Protect is the only brand
in America to offer each customer an interest free and fee free
line of credit to pay covered vet bills.
- Integrated Paw Protect into the Petted pet insurance
marketplace, which powers brands such as Forbes and US News, where
Paw Protect has already received an illustrious 5-star rating.
- Continued to innovate the Pet Caregiver and Pet Parent
experience — with new features such as:
- Service Extensions — allows Pet Caregivers to offer 15 and 30
minute extensions on all Walks & Drop-ins. Pet Caregivers can
offer an extension after starting the service and Pet Parents can
accept the offer until 5 minutes before the service end time.
- Wag! Business — allows Pet Caregivers the ability to upgrade to
Wag! Pro for additional features including; priority approval for
all services, priority placement in search, a pro badge, &
priority access to New Pet Parents. This feature is an optional
upgrade for pet-care professionals and is currently only available
during the application process. Pricing for Wag! Pro is $199.
- Closed the Dog Food Advisor acquisition, marking Wag!'s
entrance into the Pet Food and Treats market in January 2023. Dog
Food Advisor contributed $1.4 million in revenue in the quarter as
we expanded partnerships with premium pet food brands such as The
Farmer's Dog, Ollie, and Nom Nom.
- Closed the acquisition of Maxbone in early April 2023, a
top-tier digital platform for modern pet essentials. The
acquisition expanded Wag!’s reach into the Pet Supplies market,
while remaining committed to the needs and standards of the premium
Pet Parent.
Full-Year 2023 Guidance
Wag! is raising its guidance for the year ending December 31,
2023, as previously presented in its Fourth Quarter and Full Year
2022 Financial Results available at investors.wag.co/.
For the full-year of 2023, we now expect:
- Revenue in the range of $80 million to $84 million, an
8% improvement versus our prior forecast at the midpoint of the
range.
- Adjusted EBITDA1 in the range of $0 million to $1
million, a 150% improvement versus our prior forecast at the
midpoint of the range.
Our financial guidance includes the following outlook:
- Severe weather affects Services demand and holidays drive
incremental overnight vs. daytime service demand. Going forward, we
expect a skew to Overnight and Daytime services depending on summer
and holidays, most likely in Q2 and Q4. Pet adoption during the
holidays also affect pet insurance penetration and demand for
wellness plans. Going forward, we expect seasonal strength in Q4
and Q1 for Wellness.
- We anticipate that continued growth in the pet industry, driven
by factors such as rising pet ownership, pet insurance penetration,
and increasing demand for premium pet products and services, will
have a positive impact on our financial performance in 2023,
including on our entrance to Pet Food & Treats.
- General trends related to state of the economy, interest rates,
and consumer confidence. We have factored in potential risks and
opportunities related to these macroeconomic factors in order to
accurately forecast our financial performance.
- We recognize that there may be potential risks to our financial
performance in 2023, such as disruptions to global supply chains,
changes in consumer behavior due to unexpected events such as a
delayed or imbalanced return-to-office, digital and performance
marketing trends, the potential impact of AI, and our ability to
expand through partnerships.
Wag’s First Quarter Results Conference Call
Wag! will host a conference call and live webcast today, May 09,
2023, at 4:30 p.m. ET to discuss financial results. To access the
live conference call, please pre-register here. Registrants will
receive a confirmation with dial-in instructions. A live webcast of
the call can be accessed by using this link. Following the live
call, an archived webcast of the conference will be available on
the investor relations page of the Company’s website at
investors.wag.co/.
Wag! also provides announcements regarding financial performance
and other matters, including SEC filings, investor events, press
and earnings releases, on our investor relations website
(investors.wag.co/), and/or social media outlets, as a means of
disclosing material information and complying with disclosure
obligations under Regulation FD. The list of social media channels
that Wag! uses may be updated on the investor relations website
from time to time. In addition, you may automatically receive email
alerts and other information about Wag! when you enroll your email
address by visiting the “Email Alerts” section at
(investors.wag.co/ir-resources/email-alerts).
About Wag! – Wag.co
Wag! Group Co. strives to be the #1 platform for busy Pet
Parents. The Wag! app offers access to 5-star dog walking, sitting,
and one-on-one training from its community of 450,000 pet
caregivers nationwide. In addition, Wag! Group Co. operates
Petted.com, the nation's largest pet insurance comparison
marketplace, DogFoodAdvisor.com, one of the most visited and
trusted pet food marketplaces, Maxbone.com, a digital platform for
modern pet essentials, and Furmacy.com, software to simplify pet
prescriptions. For more information, visit Wag.co.
Non-GAAP Financial Measures and Other Operating
Metrics
Adjusted EBITDA is a non-GAAP financial measure defined as net
income (loss) adjusted for interest expense, depreciation and
amortization, share-based compensation, income taxes, as well as
other items to be consistent with definitions typically used by
lenders, including transaction costs. Additionally, we exclude the
impact of certain non-recurring items which are not indicative of
our operating performance as well as other transaction specific
costs that do not represent an ongoing operating expense of the
business, including but not limited to, business combination
transaction and integration costs and PPP loan forgiveness.
Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by
revenue. Adjusted EBITDA and Adjusted EBITDA margin provide a basis
for comparison of our business operations between current, past,
and future periods by excluding items from net income (loss) that
we do not believe are indicative of our core operating
performance.
Platform Participant is defined as a Pet Parent or Pet Caregiver
who transacted on the Wag! platform for a service in the quarter.
Services include dog walking, sitting, boarding, drop-ins,
training, premium telehealth services, wellness plans, and pet
insurance plan comparison.
Information reconciling forward-looking adjusted EBITDA to GAAP
financial measures is unavailable to the company without
unreasonable effort. The company is not able to provide
reconciliations of adjusted EBITDA to GAAP financial measures
because certain items required for such reconciliations are outside
of the company’s control and/or cannot be reasonably predicted,
such as the provision for income taxes. Preparation of such
reconciliations would require a forward-looking balance sheet,
statement of income and statement of cash flow, prepared in
accordance with GAAP, and such forward-looking financial statements
are unavailable to the company without unreasonable effort. The
company provides a range for its adjusted EBITDA forecast that it
believes will be achieved, however it cannot accurately predict all
the components of the adjusted EBITDA calculation. The company
provides an adjusted EBITDA forecast because it believes that
adjusted EBITDA, when viewed with the company’s results under GAAP,
provides useful information for the reasons noted above. However,
adjusted EBITDA is not a measure of financial performance or
liquidity under GAAP and, accordingly, should not be considered as
an alternative to net income or cash flow from operating activities
as an indicator of operating performance or liquidity.
Forward-Looking Statements
This press release contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Some of the forward-looking statements can be identified
by the use of forward-looking words. Statements that are not
historical in nature, including the words “anticipate,” “expect,”
“suggests,” “plan,” “believe,” “intend,” “estimates,” “targets,”
“projects,” “should,” “could,” “would,” “may,” “will,” “forecast”
and other similar expressions are intended to identify
forward-looking statements. These statements include those related
to the Company’s ability to further develop and advance its pet
service offerings and achieve scale; ability to attract and retain
personnel; market opportunity, anticipated growth, and future
financial performance, including management’s financial outlook for
the future. Forward-looking statements are predictions, projections
and other statements about future events that are based on current
expectations and assumptions and, as a result, are subject to risks
and uncertainties. Many factors could cause actual future events to
differ materially from the forward-looking statements in this press
release, including but not limited to: management’s financial
outlook for the future; market adoption of the Company’s pet
service offerings and solutions; failure to realize the financial
benefits of acquisitions; the ability of the Company to protect its
intellectual property; changes in the competitive industries in
which the Company operates; changes in laws and regulations
affecting the Company’s business; the Company’s ability to
implement its business plans, forecasts and other expectations, and
identify and realize additional partnerships and opportunities; and
the risk of downturns in the market and the technology industry.
The foregoing list of factors is not exhaustive. You should
carefully consider the foregoing factors and the other risks and
uncertainties described in the “Risk Factors” section of the
Company’s filings, including the Annual Report on Form 10-K for the
year ended December 31, 2022. These filings identify and address
other important risks and uncertainties that could cause actual
events and results to differ materially from those contained in the
forward-looking statements. Forward-looking statements speak only
as of the date they are made. Readers are cautioned not to put
undue reliance on forward-looking statements, and the Company
assumes no obligation and does not intend to update or revise these
forward-looking statements, whether as a result of new information,
future events, or otherwise. The Company does not give any
assurance that it will achieve its expectations.
Wag! Group Co.
Condensed Consolidated Balance Sheets
(In thousands, except for share amounts and per share
data)
March 31,
December 31,
2023
2022
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
24,502
$
38,966
Accounts receivable, net
8,223
5,872
Prepaid expenses and other current
assets
2,021
2,585
Total current assets
34,746
47,423
Property and equipment, net
89
88
Operating lease, right of use assets,
net
612
695
Intangible assets, net
8,173
2,590
Goodwill
4,501
1,451
Other assets
1,529
64
Total assets
$
49,650
$
52,311
Liabilities, mezzanine equity and
stockholders’ equity
Current liabilities:
Accounts payable
$
6,715
$
7,174
Accrued expenses and other current
liabilities
4,515
4,765
Deferred revenue
2,554
2,232
Deferred purchase consideration – current
portion
750
750
Operating lease liabilities
268
306
Notes payable – current portion
1,344
1,264
Total current liabilities
16,146
16,491
Operating lease liabilities – non-current
portion
385
435
Notes payable – non-current portion, net
of debt discount and warrant allocation of $6.4 million and $7.0
million, respectively
25,270
24,970
Deferred purchase consideration –
non-current portion
318
493
Total liabilities
42,119
42,389
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.0001 par value,
110,000,000 and 110,000,000 shares authorized, 37,429,251 and
36,849,076 outstanding at March 31, 2023 and December 31, 2022,
respectively
$
4
$
4
Additional paid-in capital
159,731
158,335
Accumulated deficit
(152,204
)
(148,417
)
Total stockholders’ equity
7,531
9,922
Total liabilities and stockholders’
equity
$
49,650
$
52,311
Wag! Group Co.
Condensed Consolidated Statements of
Operations (Unaudited) (In thousands, except for
share amounts and per share data)
Three Months Ended
March 31,
2023
2022
Revenues
$
20,623
$
9,666
Costs and expenses:
Cost of revenues (exclusive of
depreciation and amortization shown separately below)
1,026
806
Platform operations and support
3,170
2,577
Sales and marketing
13,275
6,082
General and administrative
4,984
2,367
Depreciation and amortization
381
152
Total costs and expenses
22,836
11,984
Other income
56
—
Interest expense, net
(1,630
)
(32
)
Loss before income taxes
(3,787
)
(2,350
)
Income taxes
—
—
Net loss
$
(3,787
)
$
(2,350
)
Net loss per share
Basic and diluted
$
(0.10
)
$
(0.38
)
Weighted average common shares outstanding
(basic and diluted)
37,065,450
6,121,253
Wag! Group Co.
Condensed Consolidated Statement of Cash
Flows (In thousands) (Unaudited)
Three Months Ended March
31,
2023
2022
Cash flows from operating
activities
Net loss
$
(3,787
)
$
(2,350
)
Adjustments to reconcile net loss to
net cash used in operating activities:
Stock-based compensation
1,342
54
Amortization of debt discount on debt
financing
657
—
Depreciation and amortization
381
152
Noncash interest – deferred purchase
consideration
28
30
Changes in operating assets and
liabilities:
Accounts receivable
(2,351
)
(861
)
Prepaid expenses and other current
assets
537
117
Accounts payable
(459
)
1,719
Operating lease liabilities
—
47
Accrued expenses and other current
liabilities
(250
)
(1,288
)
Deferred revenue
322
135
Net cash used in operating
activities
(3,580
)
(2,245
)
Cash flows from investing
activities
Purchases of short-term investments
—
(10,079
)
Proceeds from sale and maturity of
short-term investments
—
3,551
Payment of deferred purchase
consideration
(175
)
(187
)
Cash paid for acquisition
(9,000
)
—
Cash paid for equity method investment
(1,470
)
—
Purchase of property and equipment
(16
)
(5
)
Net cash used in investing
activities
(10,661
)
(6,720
)
Cash flows from financing
activities
Proceeds from exercises of stock
options
54
—
Payments on PPP loan and Blue Torch
Financing Agreement
(277
)
(110
)
Proceeds from the issuance of Series P
preferred stock, net of issuance costs
—
10,925
Payment of offering costs
—
(1,151
)
Net cash (used in) provided by
financing activities
(223
)
9,664
Net change in cash and cash
equivalents
(14,464
)
699
Cash and cash equivalents at beginning of
period
38,966
2,628
Cash and cash equivalents at end of
period
$
24,502
$
3,327
Supplemental disclosures of cash flow
information:
Cash paid for interest
1,203
4
Cash paid income taxes
—
—
Wag! Group Co.
Adjusted EBITDA Reconciliation (In
thousands) (Unaudited)
Three Months Ended
March 31,
2023
2022
Revenues
$
20,623
$
9,666
Adjusted EBITDA reconciliation:
Net loss
(3,787
)
(2,350
)
Add:
Interest expense, net
1,630
32
Depreciation and amortization
381
152
Share based compensation
1,342
54
Integration and transaction costs
associated with acquired business
37
—
Tax expense
—
—
Adjusted EBITDA
$
(397
)
$
(2,112
)
Wag! Group Co.
Non-GAAP Measures ($ in thousands,
except percentages) (Unaudited)
Three Months Ended
March 31,
2023
2022
U.S. GAAP Measures:
Revenues
$
20,623
$
9,666
Net loss
$
(3,787
)
$
(2,350
)
Net loss %
(18.4
) %
(24.3
) %
Net cash flows used in operating
activities
$
(3,580
)
$
(2,245
)
Non-GAAP Measures:
Adjusted EBITDA
$
(397
)
$
(2,112
)
Adjusted EBITDA Margin
(1.9
) %
(21.8
) %
_______________________________ 1 Information reconciling
forward-looking adjusted EBITDA to the comparable GAAP financial
measures is unavailable to the company without unreasonable effort,
as discussed in our Non-GAAP Financial Measures and Other Operating
Metrics section below.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230509005883/en/
Media: Wag!: Media@wagwalking.com
Investor Relations: Wag!: IR@wagwalking.com ICR for Wag!:
WagIR@icrinc.com
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