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 financial results for the third quarter ended
September 30, 2024.
Third Quarter
2024 Highlights:
- Revenues decreased
39% to $13.2 million, compared to $21.8 million in the
third quarter of 2023 – comprised of $5.4 million of Services
revenue, $6.5 million of Wellness revenue, and
$1.3 million of Pet Food & Treats revenue.
- Net loss was
$6.3 million, compared to $2.2 million in the third
quarter of 2023.
- Adjusted EBITDA
loss was $1.9 million, compared to positive Adjusted EBITDA of
$1.0 million in the third quarter of 2023.
“Our third quarter results were impacted by a
highly dynamic marketing environment resulting in less efficient
marketing spend in our Wellness and Pet Food & Treats
businesses,” said Garrett Smallwood, CEO and Chairman of Wag!.
“While we are disappointed with these results, we expect these
challenges to be transitory, and believe we are positioned for a
strong rebound in Q4 and into 2025. In fact, we saw growth in our
Wellness revenue stream of 79% month over month in October, and the
first couple weeks of November are continuing this trend.”
“In the third quarter, we paid down
$5 million of our debt balance, and we continue to have
ongoing discussions with banks and private lenders to address our
debt. We will also consider strategic asset sales for select
products with a longer duration payback, and would expect to use
such proceeds to further pay down our debt. We remain focused on
strengthening our balance sheet, delivering strong fourth quarter
results and returning to growth and profitability in 2025.”
Guidance
For the fourth quarter 2024, we expect:
- Revenue in the
range of $15 million to $18 million.
- Adjusted EBITDA1 in
the range of $(0.5) million to $0.5 million.
For the full year 2024, we expect:
- Revenue in the
range of $70 million to $73 million.
- Adjusted EBITDA1 in
the range of $(0.5) million to $0.5 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 2024 results.
- We have factored in
potential risks and opportunities related to macroeconomic trends
related to the 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.
Wag!’s Third
Quarter Results Conference Call
Wag! will host a conference call and live
webcast today, November 13, 2024, at 8:30am ET to discuss
financial results. Investors and analysts interested in
participating in the call are invited to dial 1-800-717-1738
(international callers please dial 1-646-307-1865) 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 approximately three hours after 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 (https://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
(https://investors.wag.co/ir-resources/email-alerts).
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
2015 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, one of the nation’s largest pet insurance comparison
marketplaces; 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 and Other
Operating Metrics
Adjusted EBITDA is a non-GAAP financial measure
defined as net income (loss) adjusted for interest expense, net;
income taxes; depreciation and amortization; and stock-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, loss on extinguishment of debt, and
legal settlements. Adjusted EBITDA margin is calculated by dividing
Adjusted EBITDA by revenues. 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 the most directly comparable GAAP financial measure is
unavailable to the Company without unreasonable effort. The Company
is not able to provide a reconciliation of Adjusted EBITDA to the
most directly comparable GAAP financial measure because certain
items required for such 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 statement of income, 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.
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, product and
wellness offerings and achieve scale; ability to attract and retain
personnel; market opportunity, anticipated growth, ability to
achieve and maintain profitability; intended use of proceeds from
the Company’s underwritten public offering, 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, product and wellness 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 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.
Contact Us
Media: Media@wagwalking.com
Investor Relations
Wag!: IR@wagwalking.com
Gateway for Wag!: PET@gateway-grp.com
Wag! Group Co. |
Condensed Consolidated Balance Sheets |
(unaudited) |
|
|
|
|
|
September 30, |
|
December 31, |
|
2024 |
|
2023 |
|
(in thousands) |
ASSETS |
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
8,445 |
|
|
$ |
18,323 |
|
Accounts receivable, net |
|
6,548 |
|
|
|
10,023 |
|
Prepaid expenses and other current assets |
|
3,258 |
|
|
|
3,428 |
|
Total current assets |
|
18,251 |
|
|
|
31,774 |
|
Property and equipment, net |
|
1,515 |
|
|
|
347 |
|
Operating lease right-of-use assets |
|
816 |
|
|
|
1,045 |
|
Intangible assets, net |
|
7,312 |
|
|
|
8,828 |
|
Goodwill |
|
4,646 |
|
|
|
4,646 |
|
Other assets |
|
52 |
|
|
|
57 |
|
Total assets |
$ |
32,592 |
|
|
$ |
46,697 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
Current liabilities: |
|
|
|
Accounts payable |
$ |
5,252 |
|
|
$ |
9,919 |
|
Accrued expenses and other current liabilities |
|
3,184 |
|
|
|
4,015 |
|
Deferred revenue |
|
1,778 |
|
|
|
1,781 |
|
Deferred purchase consideration – current portion |
|
— |
|
|
|
547 |
|
Operating lease liabilities – current portion |
|
401 |
|
|
|
386 |
|
Notes payable – current portion, net of debt discount and warrant
allocation of $1,730 as of September 30, 2024 |
|
19,015 |
|
|
|
1,751 |
|
Total current liabilities |
|
29,630 |
|
|
|
18,399 |
|
Operating lease liabilities – non-current portion |
|
556 |
|
|
|
816 |
|
Notes payable – non-current portion, net of debt discount and
warrant allocation of $4,563 as of December 31, 2023 |
|
— |
|
|
|
25,664 |
|
Other non-current liabilities |
|
31 |
|
|
|
172 |
|
Total liabilities |
|
30,217 |
|
|
|
45,051 |
|
Commitments and contingencies |
|
|
|
Stockholders’ equity: |
|
|
|
Common stock |
|
4 |
|
|
|
4 |
|
Additional paid-in capital |
|
176,859 |
|
|
|
163,376 |
|
Accumulated deficit |
|
(174,488 |
) |
|
|
(161,734 |
) |
Total stockholders’ equity |
|
2,375 |
|
|
|
1,646 |
|
Total liabilities and stockholders’ equity |
$ |
32,592 |
|
|
$ |
46,697 |
|
Wag! Group Co. |
Condensed Consolidated Statements of
Operations |
(unaudited) |
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
(in thousands, except per share amounts) |
Revenues |
$ |
13,204 |
|
|
$ |
21,800 |
|
|
$ |
55,074 |
|
|
$ |
62,243 |
|
Costs and expenses: |
|
|
|
|
|
|
|
Cost of revenues (exclusive of depreciation and amortization shown
separately below) |
|
1,146 |
|
|
|
1,441 |
|
|
|
3,874 |
|
|
|
3,710 |
|
Platform operations and support |
|
2,798 |
|
|
|
2,968 |
|
|
|
8,472 |
|
|
|
9,630 |
|
Sales and marketing |
|
8,862 |
|
|
|
12,755 |
|
|
|
35,554 |
|
|
|
36,788 |
|
Royalty |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,791 |
|
General and administrative |
|
4,231 |
|
|
|
4,682 |
|
|
|
12,279 |
|
|
|
14,487 |
|
Depreciation and amortization |
|
583 |
|
|
|
414 |
|
|
|
1,741 |
|
|
|
1,170 |
|
Total costs and expenses |
|
17,620 |
|
|
|
22,260 |
|
|
|
61,920 |
|
|
|
67,576 |
|
Interest expense |
|
1,497 |
|
|
|
1,915 |
|
|
|
4,979 |
|
|
|
5,686 |
|
Interest income |
|
(105 |
) |
|
|
(232 |
) |
|
|
(332 |
) |
|
|
(714 |
) |
Loss on extinguishment of debt |
|
454 |
|
|
|
— |
|
|
|
1,180 |
|
|
|
— |
|
Other expense, net |
|
— |
|
|
|
12 |
|
|
|
— |
|
|
|
21 |
|
Loss before income taxes |
|
(6,262 |
) |
|
|
(2,155 |
) |
|
|
(12,673 |
) |
|
|
(10,326 |
) |
Income taxes |
|
— |
|
|
|
41 |
|
|
|
81 |
|
|
|
79 |
|
Equity in net earnings of equity method investments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
553 |
|
Net loss |
$ |
(6,262 |
) |
|
$ |
(2,196 |
) |
|
$ |
(12,754 |
) |
|
$ |
(9,852 |
) |
Loss per share, basic and diluted |
$ |
(0.13 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.30 |
) |
|
$ |
(0.26 |
) |
Weighted-average common shares outstanding used in computing loss
per share, basic and diluted |
|
47,780 |
|
|
|
38,987 |
|
|
|
42,941 |
|
|
|
38,061 |
|
Wag! Group Co. |
Condensed Consolidated Statements of Cash
Flows |
(unaudited) |
|
|
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
2024 |
|
2023 |
|
(in thousands) |
Cash flow from operating activities: |
|
|
|
Net loss |
$ |
(12,754 |
) |
|
$ |
(9,852 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
Stock-based compensation |
|
4,799 |
|
|
|
3,528 |
|
Non-cash interest expense |
|
1,768 |
|
|
|
2,021 |
|
Depreciation and amortization |
|
1,741 |
|
|
|
1,170 |
|
Reduction in carrying amount of operating lease right-of-use
assets |
|
229 |
|
|
|
256 |
|
Equity in net earnings of equity method investments |
|
— |
|
|
|
(553 |
) |
Loss on extinguishment of debt |
|
1,180 |
|
|
|
— |
|
Other |
|
— |
|
|
|
12 |
|
Changes in operating assets and liabilities, net of effect of
acquired business: |
|
|
|
Accounts receivable |
|
3,475 |
|
|
|
(2,573 |
) |
Prepaid expenses and other current assets |
|
170 |
|
|
|
(463 |
) |
Other assets |
|
5 |
|
|
|
1 |
|
Accounts payable |
|
(4,667 |
) |
|
|
2,762 |
|
Accrued expenses and other current liabilities |
|
(831 |
) |
|
|
(452 |
) |
Deferred revenue |
|
(3 |
) |
|
|
(491 |
) |
Operating lease liabilities |
|
(245 |
) |
|
|
(208 |
) |
Other non-current liabilities |
|
(141 |
) |
|
|
218 |
|
Net cash used in operating activities |
|
(5,274 |
) |
|
|
(4,624 |
) |
Cash flows from investing activities: |
|
|
|
Cash paid for acquisitions, net of cash acquired |
|
(128 |
) |
|
|
(9,152 |
) |
Cash paid for equity method investment |
|
— |
|
|
|
(1,470 |
) |
Purchase of property and equipment |
|
(1,265 |
) |
|
|
(40 |
) |
Net cash used in investing activities |
|
(1,393 |
) |
|
|
(10,662 |
) |
Cash flows from financing activities: |
|
|
|
Repayment of debt |
|
(11,233 |
) |
|
|
(907 |
) |
Debt prepayment penalty |
|
(100 |
) |
|
|
— |
|
Proceeds from exercises of stock options |
|
114 |
|
|
|
100 |
|
Proceeds from registered public offering of common stock, net of
issuance costs |
|
8,570 |
|
|
|
— |
|
Other |
|
(562 |
) |
|
|
(569 |
) |
Net cash used in financing activities |
|
(3,211 |
) |
|
|
(1,376 |
) |
Net change in cash and cash equivalents |
|
(9,878 |
) |
|
|
(16,662 |
) |
Cash and cash equivalents, beginning of period |
|
18,323 |
|
|
|
38,966 |
|
Cash and cash equivalents, end of period |
$ |
8,445 |
|
|
$ |
22,304 |
|
Wag! Group Co. |
Adjusted EBITDA (Loss) Reconciliation |
(unaudited) |
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
(in thousands, except percentages) |
Net loss |
$ |
(6,262 |
) |
|
$ |
(2,196 |
) |
|
$ |
(12,754 |
) |
|
$ |
(9,852 |
) |
Interest expense, net |
|
1,392 |
|
|
|
1,683 |
|
|
|
4,647 |
|
|
|
4,972 |
|
Income taxes |
|
— |
|
|
|
41 |
|
|
|
81 |
|
|
|
79 |
|
Depreciation and amortization |
|
583 |
|
|
|
414 |
|
|
|
1,741 |
|
|
|
1,170 |
|
Stock-based compensation |
|
1,847 |
|
|
|
1,065 |
|
|
|
4,799 |
|
|
|
3,528 |
|
Integration and transaction costs associated with acquired
business |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
189 |
|
Severance costs |
|
33 |
|
|
|
— |
|
|
|
160 |
|
|
|
131 |
|
Loss on extinguishment of debt |
|
454 |
|
|
|
— |
|
|
|
1,180 |
|
|
|
— |
|
Legal settlement |
|
10 |
|
|
|
— |
|
|
|
10 |
|
|
|
500 |
|
Adjusted EBITDA (loss) |
$ |
(1,943 |
) |
|
$ |
1,007 |
|
|
$ |
(136 |
) |
|
$ |
717 |
|
Revenues |
$ |
13,204 |
|
|
$ |
21,800 |
|
|
$ |
55,074 |
|
|
$ |
62,243 |
|
Adjusted EBITDA (loss) margin |
|
(14.7 |
)% |
|
|
4.6 |
% |
|
|
(0.2 |
)% |
|
|
1.2 |
% |
Wag! Group Co. |
Key Operating and Financial Metrics |
(unaudited) |
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
(in thousands, except percentages) |
Platform Participants (as of period end) |
|
367 |
|
|
|
632 |
|
|
|
367 |
|
|
|
632 |
|
Revenues |
$ |
13,204 |
|
|
$ |
21,800 |
|
|
$ |
55,074 |
|
|
$ |
62,243 |
|
Net loss |
$ |
(6,262 |
) |
|
$ |
(2,196 |
) |
|
$ |
(12,754 |
) |
|
$ |
(9,852 |
) |
Net loss margin |
|
(47.4 |
)% |
|
|
(10.1 |
)% |
|
|
(23.2 |
)% |
|
|
(15.8 |
)% |
Net cash used in operating activities |
$ |
(3,253 |
) |
|
$ |
(2,297 |
) |
|
$ |
(5,274 |
) |
|
$ |
(4,624 |
) |
Adjusted EBITDA (loss) |
$ |
(1,943 |
) |
|
$ |
1,007 |
|
|
$ |
(136 |
) |
|
$ |
717 |
|
Adjusted EBITDA (loss) margin |
|
(14.7 |
)% |
|
|
4.6 |
% |
|
|
(0.2 |
)% |
|
|
1.2 |
% |
1 Information reconciling forward-looking
Adjusted EBITDA to the most directly comparable GAAP financial
measure is unavailable to the company without unreasonable effort,
as discussed in our Non-GAAP Financial Measures and Other Operating
Metrics section below.
Wag (NASDAQ:PET)
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De Oct 2024 a Nov 2024
Wag (NASDAQ:PET)
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De Nov 2023 a Nov 2024