Wag! (PET) Q3 Earnings call transcript Nov 13, 2024
1min read In its third quarter 2024 earnings call, Wag!, a leading pet services company, shared insights into its financial performance, strategic priorities, and operational adjustments in response to a challenging marketing environment. Despite a decrease in revenues to $13.2 million and an adjusted EBITDA loss of $1.9 million, the company remains optimistic about its ability to rebound in the upcoming quarters.
Marketing Challenges and Strategic Priorities
CEO Garrett Smallwood attributed the revenue decline to changes in Google's marketing environment, which impacted the company's Wellness and Pet Food & Treats revenue streams. The company faced difficulties in efficiently marketing its products due to changes in Google's search engine and SEM keyword bidding. This resulted in a significant increase in customer acquisition costs, leading to a shift in marketing strategy and a reduction in headcount.
Despite these challenges, Wag! remains committed to its strategic priorities, including expanding its presence in the Wellness ecosystem by signing new distribution partners and focusing on the development of its prescription product for veterinarians. The company's services ecosystem continues to show strong performance, with new user cohorts pushing all-time highs for lifetime value.
Financial Highlights and Debt Management
Chief Financial Officer Alec Davidian provided a detailed analysis of the company's financial performance, highlighting a decline in revenue across all segments. While the marketing dynamic had the biggest impact on the Wellness segment, the company is seeing positive signs of recovery, with a 79% increase in October revenue compared to September. The company has also taken steps to manage its debt, paying down $5 million in the third quarter and exploring asset sales to address outstanding debt.
Looking Ahead
As Wag! looks ahead to Q4 and beyond, the company is focused on achieving free cash flow and setting itself up for a strong rebound in 2025. The strategic partnerships and product enhancements, coupled with a renewed focus on marketing efficiency, position the company for a promising future.
The earnings call provided a glimpse into the challenges and opportunities facing Wag! in a dynamic marketing landscape. The company's ability to adapt and navigate these changes will be crucial in shaping its future growth prospects.