Highest Revenue Quarter in Company History
Highest Adjusted EBITDA in Company History
Company Achieves 5% Adjusted EBITDA Margin,
Increase of 318% YoY
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, premium
pet products, and expert pet advice, today announced financial
results for the third quarter ended September 30, 2023.
Third Quarter 2023 Highlights:
- Revenues increased 42% to $21.8 million, compared to $15.4
million in the third quarter of 2022, a quarterly revenue record –
comprised of $6.6 million of Services revenue, $13.5 million of
Wellness revenue, and $1.7 million of Pet Food & Treats
revenue.
- Net loss was $2.2 million, compared to $40.9 million in the
third quarter of 2022, primarily due to one-time transaction costs
in 2022.
- Adjusted EBITDA improved to $1.0 million, compared to an
Adjusted EBITDA loss of $0.5 million in the third quarter of
2022.
"Q3 marks another record quarter of results for Wag! Group Co.
We achieved both record revenues and Adjusted EBITDA profitability
in the quarter,” said Garrett Smallwood, CEO and Chairman of
Wag!.
“We are continuing to innovate and expand our platform for
premium Pet Parents with the addition of Paw Protect, Wag! Pro, and
the Wag! Store, which continue to surprise and delight,” said
Smallwood. “We have our eye on 2024 and are doubling down on
products and services that differentiate Wag! and allow for
long-term, profitable growth,” concluded Smallwood.
Recent Business Highlights:
- Achieved record 632,000 Platform Participants in Q3 2023, an
increase of 34% from 473,000 in Q3 2022.
- Achieved record revenues driven by strong secular growth across
our key verticals, pet care habits resuming to normal post-summer,
and a pull forward in Wellness offerings and engagement.
- Achieved record Adjusted EBITDA profitability as a result of
fixed-cost operating leverage across a larger revenue base, and an
LTV:CAC ratio of 9:1 that is still well ahead of our target of
3:1.
- Doubling down on product expansion and platform
differentiation, including the growth of Cat Food Advisor
(www.CatFoodAdvisor.com), which has reached 500,000 search
impressions since launch in Q2 2023.
Guidance
“As a result of our strong third quarter and year-to-date
results, we are focusing our investments within brand marketing,
research and development, and proprietary partnerships that will
drive growth in 2024 and beyond,” said Alec Davidian, Wag! CFO.
“While there are some general macro uncertainties, this year of
efficiency has positioned the business to drive profitable growth
in the future.”
For the fourth quarter 2023, we expect:
- Revenue of $20 million at the midpoint of the full year 2023
range.
- Adjusted EBITDA1 of $0.3 million at the midpoint of the full
year 2023 range.
For the full year 2023, we reiterate our guidance of:
- Revenue in the range of $80 million to $84 million, consistent
with our prior forecast.
- Adjusted EBITDA1 in the range of $0 million to $2 million.
Our financial guidance includes the following outlook:
- We expect holidays to drive incremental overnight vs. daytime
service demand, but also expect that severe weather will impact
Services demand. Pet adoption during the holidays also positively
impacts pet insurance penetration and demand for wellness
plans.
- We anticipate that continued growth in the pet industry, driven
by factors such as higher rates of pet ownership, pet insurance
penetration, and increasing demand for premium pet products and
services, will have a positive impact on our full year 2023
results, 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.
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.
Wag!’s Third Quarter Results Conference Call
Wag! will host a conference call and live webcast today,
November 08, 2023, at 4:30 p.m. ET to discuss financial results.
Investors and analysts interested in participating in the call are
invited to dial 877-407-9208 (international callers please dial
1-201-493-6784) approximately 10 minutes prior to the start of the
call. A live audio webcast of the conference call will be available
online at https://investors.wag.co/.
A recorded replay of the conference call will be available
within approximately three hours of the conclusion of the call and
can be accessed online at https://investors.wag.co/ for 90
days.
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 more than 450,000 pet
caregivers nationwide. In addition, Wag! Group Co. operates Petted,
the nation's largest pet insurance comparison marketplace; Dog Food
Advisor, one of the most visited and trusted pet food marketplaces;
maxbone, a digital platform for modern pet essentials; and Furmacy,
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
(unaudited)
September 30,
2023
December 31,
2022
(in thousands, except par value
amounts)
ASSETS
Current assets:
Cash and cash equivalents
$
22,304
$
38,966
Accounts receivable, net
8,485
5,872
Prepaid expenses and other current
assets
3,496
2,585
Total current assets
34,285
47,423
Property and equipment, net
71
88
Operating lease right-of-use assets
1,119
695
Intangible assets, net
8,036
2,590
Goodwill
4,646
1,451
Other assets
63
64
Total assets
$
48,220
$
52,311
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
8,686
$
7,174
Accrued expenses and other current
liabilities
4,404
4,765
Deferred revenue
1,768
2,232
Deferred purchase consideration – current
portion
724
750
Operating lease liabilities – current
portion
300
306
Notes payable – current portion
1,589
1,264
Total current liabilities
17,471
16,491
Operating lease liabilities – non-current
portion
899
435
Notes payable – non-current portion, net
of debt discount and warrant allocation of $5,037 and $7,008 as of
September 30, 2023 and December 31, 2022, respectively
25,709
24,970
Deferred purchase consideration –
non-current portion
—
493
Other non-current liabilities
218
—
Total liabilities
44,297
42,389
Commitments and contingencies
Stockholders’ equity:
Common stock
4
4
Additional paid-in capital
162,188
158,335
Accumulated deficit
(158,269
)
(148,417
)
Total stockholders’ equity
3,923
9,922
Total liabilities and stockholders’
equity
$
48,220
$
52,311
Wag! Group Co.
Condensed Consolidated
Statements of Operations
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
2023
September 30,
2022
September 30,
2023
September 30,
2022
(in thousands, except per share
amounts)
Revenues
$
21,800
$
15,379
$
62,243
$
37,829
Costs and expenses:
Cost of revenues (exclusive of
depreciation and amortization shown separately below)
1,441
1,021
3,710
3,027
Platform operations and support
2,968
5,641
9,630
11,035
Sales and marketing
12,755
11,290
36,788
24,656
Royalty
—
—
1,791
—
General and administrative
4,682
23,781
14,487
28,546
Depreciation and amortization
414
134
1,170
431
Total costs and expenses
22,260
41,867
67,576
67,695
Interest expense, net
1,683
735
4,972
784
Other expense, net
12
13,708
21
13,708
Loss before income taxes and equity in net
earnings of affiliate
(2,155
)
(40,931
)
(10,326
)
(44,358
)
Income taxes
41
—
79
13
Equity in net earnings of equity method
investments
—
—
553
—
Net loss
$
(2,196
)
$
(40,931
)
$
(9,852
)
$
(44,371
)
Loss per share, basic and diluted
$
(0.06
)
$
(1.67
)
$
(0.26
)
$
(3.60
)
Weighted-average common shares outstanding
used in computing loss per share, basic and diluted
38,987
24,534
38,061
12,322
Wag! Group Co.
Condensed Consolidated
Statements of Cash Flows
(unaudited)
Nine Months Ended
September 30,
2023
September 30,
2022
(in thousands)
Cash flow from operating activities:
Net loss
$
(9,852
)
$
(44,371
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation
3,528
24,016
Non-cash interest expense
2,021
224
Depreciation and amortization
1,170
431
Change in fair value of derivative
liability
—
13,708
Issuance of Community Shares
—
1,971
Equity in net earnings of equity method
investments
(553
)
—
Other
12
—
Changes in operating assets and
liabilities, net of effect of acquired business:
Accounts receivable
(2,573
)
(3,698
)
Prepaid expenses and other current
assets
(463
)
(512
)
Operating lease right-of-use assets and
liabilities
48
19
Other assets
1
—
Accounts payable
2,762
2,662
Accrued expenses and other current
liabilities
(452
)
1,674
Deferred revenue
(491
)
298
Other non-current liabilities
218
—
Net cash used in operating activities
(4,624
)
(3,578
)
Cash flows from investing activities:
Proceeds from sale and maturity of
short-term investments
—
2,550
Cash paid for acquisitions, net of cash
acquired
(9,152
)
—
Cash paid for equity method investment
(1,470
)
—
Purchase of property and equipment
(40
)
(36
)
Other
—
(562
)
Net cash provided by (used in) investing
activities
(10,662
)
1,952
Cash flows from financing activities:
Proceeds from exercises of stock
options
100
—
Proceeds from debt, net of discount
—
29,445
Repayment of debt
(907
)
(331
)
Proceeds from issuance of Series P
preferred stock, net of issuance costs
—
10,925
Proceeds from Business Combination with
CHW, net of transaction costs
—
11,485
Other
(569
)
—
Net cash provided by (used in) financing
activities
(1,376
)
51,524
Net change in cash, cash equivalents, and
restricted cash
(16,662
)
49,898
Cash, cash equivalents, and restricted
cash, beginning of period
38,966
2,845
Cash, cash equivalents, and restricted
cash, end of period
$
22,304
$
52,743
Wag! Group Co.
Adjusted EBITDA (Loss)
Reconciliation
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
2023
September 30,
2022
September 30,
2023
September 30,
2022
(in thousands, except
percentages)
Net loss
$
(2,196
)
$
(40,931
)
$
(9,852
)
$
(44,371
)
Interest expense, net
1,683
735
4,972
784
Income taxes
41
—
79
13
Depreciation and amortization
414
134
1,170
431
Stock-based compensation
1,065
23,922
3,528
24,016
Integration and transaction costs
associated with acquired business
—
—
189
—
Severance costs
—
—
131
—
Legal settlement
—
—
500
—
Change in fair value of derivative
liability
—
13,708
—
13,708
Issuance of Community Shares
—
1,971
—
1,971
Adjusted EBITDA (loss)
$
1,007
$
(461
)
$
717
$
(3,448
)
Revenues
$
21,800
$
15,379
$
62,243
$
37,829
Adjusted EBITDA (loss) margin
4.6
%
(3.0
)%
1.2
%
(9.1
)%
Wag! Group Co.
Key Financial Metrics
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
2023
September 30,
2022
September 30,
2023
September 30,
2022
(in thousands, except
percentages)
U.S. GAAP measures:
Revenues
$
21,800
$
15,379
$
62,243
$
37,829
Net loss
$
(2,196
)
$
(40,931
)
$
(9,852
)
$
(44,371
)
Net loss margin
(10.1
)%
(266.1
)%
(15.8
)%
(117.3
)%
Net cash provided by (used in) operating
activities
$
(2,297
)
$
568
$
(4,624
)
$
(3,578
)
Non-GAAP measures:
Adjusted EBITDA (loss)
$
1,007
$
(461
)
$
717
$
(3,448
)
Adjusted EBITDA (loss) margin
4.6
%
(3.0
)%
1.2
%
(9.1
)%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231108831507/en/
Contacts Media: Wag!: Media@wagwalking.com
Investor Relations: Wag!: IR@wagwalking.com
Gateway for Wag!: PET@gateway-grp.com
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