Preliminary Net Loss in Range of $2.2 million
to $2.4 million
Generates Record Quarterly Adjusted EBITDA
Wag! Group Co. (the “Company” or “Wag!”; Nasdaq: PET), which
strives to be the number one platform to solve the service,
product, and wellness needs of the modern U.S. pet household, today
announced selected preliminary unaudited second quarter 2024
results and updated financial guidance for the full year 2024.
“Based on market and shareholder feedback, we have prioritized
free cash flow growth in order to strengthen our balance sheet in
the near and mid-term,” said Alec Davidian, Wag! CFO. “Accordingly,
we are finding efficiencies in SG&A, diversifying our customer
acquisition channels to focus on the highest ROI partners,
publishers, and brands, and tightening our marketing payback
windows. As a result of these efforts, our preliminary second
quarter 2024 Adjusted EBITDA is strong, and we look forward to
further updating our shareholders on our second quarter 2024
earnings call in early August,” concluded Davidian.
Preliminary Second Quarter 2024 Highlights:
- Revenues in the range of $18.5 million to $19 million.
- Net loss in the range of $2.2 million to $2.4 million.
- Adjusted EBITDA in the range of $1.5 million to $1.7 million.
This equates to 8% adjusted EBITDA margin at the midpoint of the
range.
- Cash and accounts receivable balance of greater than $16
million.
“With our debt prepayment penalty expiring in August 2024, and
the full debt becoming due in August 2025, we are intensely focused
on strengthening our balance sheet,” said Garrett Smallwood, CEO
and Chairman of Wag!. “Our ability to demonstrate consistent free
cash flow growth is our top priority in the near- and mid-term in
order to provide high-quality solutions to the existing debt
obligations.”
Recent Business Highlights:
- Through the implementation of AI and automation solutions,
including the launch of Forethought.ai for customer success, Wag!
has streamlined its operations and reduced its headcount by more
than 10% in 2024.
- The Rule 10b5-1 trading plans of CEO Garrett Smallwood and
President and Chief Product Officer Adam Storm were canceled in Q2
2024.
- Sales & Marketing as a percentage of Revenue decreased from
67% in the first quarter of 2024 to an estimated 59% in the second
quarter of 2024.
- Wag! transitioned to a fully remote workforce.
Guidance
For the full year ending December 31, 2024, the Company has
provided the following updated guidance:
- Revenue in the range of $92 million - $102 million, a decrease
of 12% from the midpoint of the guidance range the Company
previously communicated on May 9, 2024.
- Adjusted EBITDA in the range of $4 million - $8 million, an
increase of 50% from the midpoint of the guidance range the Company
previously communicated on May 9, 2024.
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 2024
results.
- We have factored in potential risks and opportunities related
to macroeconomic trends related to state of the economy, interest
rates, and consumer confidence in order to forecast our financial
performance.
- We expect Sales & Marketing efficiency within the Pet
category, our ability to manage CPCs and CPMs across key partners
and advertising platforms, and our ability to manage search engine
results and search engine optimization (SEO) within competitive
keywords.
- We recognize that there may be potential risks to our financial
performance in 2024, 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.
About Wag! Group Co.
Wag! Group Co. strives to be the number one platform to solve
the service, product, and wellness needs of the modern U.S. pet
household. Wag! pioneered on-demand dog walking in 2016 with the
Wag! app, which offers access to 5-star dog walking, sitting, and
one-on-one training from a community of over 500,000 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 review
platforms; WoofWoofTV, a multi-media company bringing delightful
pet content to over 18 million followers across social media;
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
Adjusted EBITDA is a non-GAAP financial measure defined as net
income (loss) adjusted for interest expense, net income taxes,
depreciation and amortization, and share-based compensation, 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,
integration and transaction costs associated with acquired
businesses, severance costs, and legal settlements. Adjusted EBITDA
provides 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.
Information reconciling forward-looking Adjusted EBITDA for the
full year ending December 31, 2024 to GAAP financial measures is
unavailable to the Company without unreasonable effort. The Company
is not able to provide a reconciliation of Adjusted EBITDA to GAAP
financial measures because certain items required for such a
reconciliation are outside of the Company’s control and/or cannot
be reasonably predicted, such as the provision for income taxes.
Preparation of such a reconciliation 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 (loss) 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, but are not
limited to those related to: the Company’s preliminary second
quarter 2024 financial results, the Company’s future expected
growth strategy and operating performance, and the Company’s
financial outlook regarding revenue and adjusted EBITDA for the
full year ending December 31, 2024. 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: the Company’s financial closing procedures for the
quarterly period ended June 30, 2024; the Company’s market
opportunity, anticipated growth, and future financial performance,
including 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
Company’s ability 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 with the Securities
and Exchange Commission, including the most recent Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q. 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.
The unaudited financial information for the second quarter of
2024 presented above is preliminary, based upon management’s good
faith estimates, and subject to the completion of financial closing
procedures. This summary is not a comprehensive statement of the
Company’s financial results for the quarterly period ended June 30,
2024. The Company has provided ranges for its expectations
described above because the financial closing procedures are not
yet complete. While the Company expects that its final financial
results for the quarterly period ended June 30, 2024, following the
completion of the financial closing procedures, will be within the
ranges described above, actual results may differ materially from
these estimates as a result of the completion of the financial
closing procedures as well as final adjustments and other
developments that may arise between now and the time that the
financial results for the quarterly period are finalized.
The preliminary financial data included in this press release
has been prepared by, and is the responsibility of, Wag!
management. PricewaterhouseCoopers LLP has not audited, reviewed,
examined, compiled, nor applied agreed-upon procedures with respect
to the preliminary financial data. Accordingly,
PricewaterhouseCoopers LLP does not express an opinion or any other
form of assurance with respect thereto.
Wag! Group Co.
Preliminary Adjusted EBITDA
(Loss) Reconciliation
(unaudited)
Three Months Ended
June 30,
2024
June 30,
2023
(in thousands, except
percentages)
Net income (loss)
$(2,400) to $(2,192)
$(3,869)
Interest expense, net
1,523
1,659
Income taxes
82
38
Depreciation and amortization
580
375
Stock-based compensation
1,656
1,121
Integration and transaction costs
associated with acquired business
—
152
Severance costs
51
131
Legal settlement
—
500
Adjusted EBITDA (loss)
$1,492 to $1,700
$107
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version on businesswire.com: https://www.businesswire.com/news/home/20240710450903/en/
Media: Wag!: Media@wagwalking.com
Investor Relations: Wag!: IR@wagwalking.com Gateway for
Wag!: PET@gateway-grp.com
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