Wag! Faces Financial Headwinds, Explores Strategic Alternatives

Wag! Group Co., the pet care giant, reported its fourth quarter and full year 2024 financial results on March 24, 2025, revealing a challenging year marked by declining revenues and mounting losses. The company, which pioneered on-demand dog walking in 2015, has seen its market position erode amid stiff competition and economic headwinds. As Wag! grapples with these challenges, its Board of Directors is exploring strategic alternatives to maximize shareholder value, including potential investments, partnerships, and even a sale or merger.

The financial results paint a grim picture. For the full year 2024, Wag! reported a 16% decrease in revenues, from $83.9 million in 2023 to $70.5 million. This decline was driven by a drop in Services revenue, which fell from $27.3 million to $21.6 million, and Wellness revenue, which decreased from $48.2 million to $42.7 million. Pet Food & Treats revenue also saw a slight decline, from $8.4 million to $6.2 million. The company's net loss widened from $13.3 million in 2023 to $17.6 million in 2024, while its Adjusted EBITDA turned from a positive $0.7 million to a loss of $1.1 million.

The fourth quarter results were equally disheartening. Revenues fell 29% year-over-year, from $21.7 million to $15.4 million, with Services revenue dropping from $7.9 million to $5.3 million, Wellness revenue from $12.4 million to $8.9 million, and Pet Food & Treats revenue from $1.4 million to $1.2 million. The net loss for the quarter was $4.8 million, compared to $3.5 million in the same period last year, and the Adjusted EBITDA loss widened from breakeven to $1.0 million.



Faced with these financial headwinds, Wag!'s Board of Directors has launched a review of strategic alternatives to identify opportunities to maximize shareholder value. The company's CEO and Chairman, Garrett Smallwood, emphasized the Board's commitment to a disciplined and deliberate approach, stating, "Our Board and management team continues to believe in the strength of our business, the effectiveness of our strategic plan, and our ability to execute on our strategy to drive value for shareholders. We remain focused on strengthening our balance sheet and reducing our debt."

The strategic alternatives being considered by Wag! could have significant implications for the company's long-term growth and stability. Potential investments and strategic partnerships could enhance Wag!'s market position and expand its service offerings, while a sale or merger could provide immediate financial benefits to shareholders. However, these alternatives also carry risks, such as changes in management, operational restructuring, or even the dissolution of the company.

Wag! has already taken steps to improve its operational efficiency, implementing AI and automation solutions that have streamlined operations and reduced headcount by more than 10% in 2024. The company has also transitioned to a fully remote workforce, which could help it reduce costs and attract talent in a competitive job market.

Despite these challenges, Wag! remains optimistic about its future prospects. The company expects revenues to rebound in 2025, with a projected range of $84 million to $88 million, and Adjusted EBITDA to turn positive, with a range of $2.0 million to $4.0 million. Wag! also highlighted the addition of three major new distribution partners in 2024, which it believes will accelerate demand for Wellness, and the stability in Google search trends, which it is leveraging through high-quality content and strategic partnerships.

In conclusion, Wag! Group Co. faces significant financial challenges as it navigates a competitive and rapidly evolving pet care market. The company's exploration of strategic alternatives is a recognition of these challenges and a commitment to maximizing shareholder value. However, the path forward is uncertain, and the success of these alternatives will depend on Wag!'s ability to execute on its strategic plan and adapt to changing market conditions. Investors and stakeholders will be watching closely as Wag! charts its course for the future.