Wag Group 2025 Q1 Earnings Misses Targets as Net Loss Widens by 15.3%

Wag! Group (PET) reported its fiscal 2025 Q1 earnings on May 12th, 2025. Despite a year-over-year revenue decline, the company began the year slightly ahead of profitability expectations. The results did not meet revenue expectations, with a decrease by 34.7% compared to the previous year. Guidance for 2025 remains in-line with previous forecasts, expecting revenue between $84 million and $88 million. The company remains focused on strategic evaluations to drive shareholder value.

Revenue
In the first quarter of 2025, Wag! Group experienced a significant drop in total revenue, amounting to $15.16 million, which marked a 34.7% decrease from the $23.22 million reported in Q1 2024. The services segment generated $4.89 million, while wellness contributed $9.17 million. Pet food and treats added $1.10 million to the total, underscoring the varied performance across its business segments.

Earnings/Net Income
Wag! Group saw a slight improvement in earnings per share, narrowing losses to $0.10 from $0.11 in the same quarter last year, reflecting a 9.1% improvement. However, the net loss widened to $4.89 million, a 15.3% increase from the previous year's $4.24 million loss. The earnings per share, although improved, still indicate ongoing financial challenges for the company.

Price Action
The stock price of Wag! Group dropped 5.34% during the latest trading day, tumbled 9.47% during the most recent full trading week, and climbed 5.14% month-to-date.

Post Earnings Price Action Review
The post-earnings strategy of purchasing PET stock when revenues exceed expectations and holding for 30 days is popular in backtesting scenarios. Historical performance suggests this method can deliver favorable results, although its effectiveness largely depends on market conditions and investor sentiment. The strategy's resilience is often tested through various market simulations, highlighting the importance of understanding broader market dynamics and potential risks. While fundamentals typically play a significant role in stock performance, backtesting can sometimes reveal unexpected correlations, like the link between revenue surprises and subsequent stock behavior. However, backtesting has its limitations, relying on past data that might not fully predict future outcomes. Consequently, while this strategy has shown promise historically, continuous refinement and adaptation are essential to ensure its relevance amid evolving market landscapes.

CEO Commentary
Garrett Smallwood, Chief Executive Officer and Chairman, highlighted that the company began Q1 2025 slightly ahead of profitability expectations despite a year-over-year revenue decline. He attributed improved adjusted EBITDA to disciplined cost management and operational efficiencies, with a notable 34% reduction in sales and marketing expenses due to efficient customer acquisition strategies. Smallwood expressed optimism about the impact of three major distribution partners going live, which will enhance marketing positioning while the company maintains reduced marketing spend. He emphasized the company's commitment to strategic evaluations and indicated a positive outlook for accelerating growth in Q2 based on strong business trends.

Guidance
Wag! Group expects revenue in the range of $84 million to $88 million for 2025, with adjusted EBITDA projected between $2 million and $4 million. The company remains focused on executing its strategy while assessing opportunities to drive shareholder value, indicating a cautious yet optimistic approach to future growth prospects.

Additional News
Wag! Group Co. announced several strategic moves in recent weeks, including the acquisition of WoofWoofTV, a leading social media brand for pet lovers with over 18 million followers. This acquisition aims to strengthen Wag!'s digital presence and broaden its audience reach. Additionally, Wag! introduced Furscription, a software solution designed to streamline veterinary prescriptions, enhancing service efficiency for pet care professionals. Furthermore, Wag! participated in several investor events, showcasing its strategic priorities and growth potential to stakeholders. These developments underscore the company's commitment to expanding its service offerings and leveraging technology to enhance customer experiences.