Record Fourth Quarter Results, Highest
Quarterly Revenue to Date
Raises Previously Announced 2023 Full Year
Guidance for Both Revenue and Adjusted EBITDA
Wag! Group Co. (the "Company” or “Wag!”; Nasdaq: PET), which
strives to be the #1 platform for busy Pet Parents, offering
on-demand access to 5-star pet care, pet insurance options, and
expert pet advice, today announced financial results for the fourth
quarter and year ended December 31, 2022.
“In 2022, we delivered all-time record results, significantly
ahead of our expectations. This has been a pivotal period in the
evolution of our company, as we transformed from a services
business to a holistic platform for all of our Pet Parents’ needs,”
said Garrett Smallwood, CEO and Chairman of Wag!.
“We remain extremely confident in the future growth of our
business. In 2023, we are building on our momentum, as we continue
enhancing our trusted platform with additional products and
services. I am incredibly proud of the progress we have made on our
public company journey. We’ve become a trailblazer in the industry
and put in place the building blocks for long-term success ,”
concluded Smallwood.
Fourth Quarter 2022 Highlights:
- Revenue increased 110% to $17.0 million, compared to
$8.1 million in the fourth quarter of 2021, a quarterly revenue
milestone.
- Net income of $5.8 million, compared to a net loss of
$2.7 million in the fourth quarter of 2021.
- Adjusted EBITDA loss improved to $0.4 million, compared
to $2.5 million in the fourth quarter of 2021.
Full-Year 2022 Highlights:
- Revenue increased 173% to $54.9 million, compared to
$20.1 million in 2021.
- Net loss of $38.6 million, inclusive of one-time
transaction costs of $39.5 million, compared to net loss of $6.3
million in 2021, inclusive of one-time PPP loan forgiveness.
- Adjusted EBITDA loss improved to $3.9 million, compared
to $9.9 million in 2021.
Recent Business Highlights:
- Reached a total of 434,000 Platform Participants in Q4
2022.
- Closed the Dog Food Advisor acquisition, marking Wag!'s
entrance into the Pet Food and Treats market in January 2023.
Expected to be immediately accretive to both Revenue and Adjusted
EBITDA in Q1 2023, as well as boosting our customer base.
- Completed the acquisition and integration of Furmacy, Inc. in
the fourth quarter of 2022. Rebuilt the Furmacy.com portal, which
enables Pet Parents in California to purchase over 600 prescription
medications, in addition to custom medications and compounds.
- Active Pet Parent Wag! Premium penetration remained over 50% in
the fourth quarter of 2022. Wag! continues to iterate on Wag!
Premium pricing, including pricing tests and the rollout of the
$14.99 monthly subscription in key markets across the United
States.
- Renewed partnership with Alignment Healthcare, which provides
Alignment Healthcare plan members access to pet care services
through the Wag! platform as part of their healthcare plan with
Alignment.
- Continued to innovate the Pet Caregiver and Pet Parent
experience — with new features such as:
- Browse & Book refined search — helps Pet Parents find the
perfect match based on Pet Caregiver specialties;
- Notes from Pet Caregivers access — allows Pet Caregivers to
view notes before a service so they can make a more informed
decision before requesting that service; and
- Super & Ultimate Endorsements — allows colleagues and
existing Pet Parents to "boost" a Pet Caregiver at the beginning of
their small business journey to show the Pet Parent community how
great the Pet Parent is!
Full-Year 2023 Guidance
Wag! is raising its guidance for the year ending December 31,
2023, as previously presented in its Investor Presentation
available at investors.wag.co/news-events/overview.
For the full-year of 2023, we now expect:
- Revenue in the range of $75 million to $77 million, a 7%
improvement versus our prior forecast at the midpoint of the
range.
- Adjusted EBITDA1 in the range of $0 million to $(2)
million, a 91% improvement versus our prior forecast at the
midpoint of the range.
Our financial guidance includes the following assumptions:
- A continued trend in return-to-office, as measured by the
Kastle back-to-work barometer.
- The accretive impact from the acquisition of Dog Food Advisor
of $3 million in revenue and $1.5 million of adjusted EBITDA
benefit in 2023.
- Continued acceleration in Wellness including new ventures,
expansion into additional markets, testing and bundling of Wag!
Premium offers, and improved marketing efficiency.
Wag’s Fourth Quarter Results Conference Call
Wag! will host a conference call and live webcast today,
February 21, 2023, at 4:30 p.m. ET to discuss financial results. To
access the live conference call, please pre-register here.
Registrants will receive a confirmation with dial-in instructions.
A live webcast of the call can be accessed by using this link.
Following the live call, an archived webcast of the conference will
be available on the investor relations page of the Company’s
website at investors.wag.co/.
Wag! also provides announcements regarding financial performance
and other matters, including SEC filings, investor events, press
and earnings releases, on our investor relations website
(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
(investors.wag.co/ir-resources/email-alerts).
About Wag! – Wag.co
Wag! strives to be the #1 platform for busy Pet Parents by
offering access to 5-star dog walking, sitting, and one-on-one
training from Wag!'s community of 450,000 pet caregivers
nationwide. In addition, Wag! operates Petted.com, the nation's
largest pet insurance comparison marketplace, Furmacy.com, a
concierge prescription and compounding service, and
DogFoodAdvisor.com, one of the most visited and trusted pet food
marketplaces. 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, depreciation and
amortization, share-based compensation, income taxes, 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, business combination
transaction and integration costs and PPP loan forgiveness.
Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by
revenue. 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 GAAP
financial measures is unavailable to the company without
unreasonable effort. The company is not able to provide
reconciliations of adjusted EBITDA to GAAP financial measures
because certain items required for such reconciliations are outside
of the company’s control and/or cannot be reasonably predicted,
such as the provision for income taxes. Preparation of such
reconciliations 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 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 those related
to the Company’s ability to further develop and advance its pet
service offerings and achieve scale; ability to attract personnel;
market opportunity, anticipated growth, 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 offerings and solutions; 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 Quarterly Report on Form 10-Q for the quarter ended
September 30, 2022. 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.
_________________________________
1 Information reconciling forward-looking
adjusted EBITDA to the comparable GAAP financial measures is
unavailable to the company without unreasonable effort, as
discussed in our Non-GAAP Financial Measures and Other Operating
Metrics section below.
Wag! Group Co.
(f/k/a CHW Acquisition
Corporation)
Consolidated Balance
Sheets
(In thousands, except for
share amounts and per share data)
As of December 31,
2022
2021
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
38,966
$
2,845
Short-term investments available for
sale
—
2,554
Accounts receivable, net
5,872
2,638
Prepaid expenses and other current
assets
2,585
3,043
Deferred offering costs
—
930
Total current assets
$
47,423
$
12,010
Property and equipment, net
88
90
Operating lease, right of use assets,
net
695
—
Intangible assets, net
2,590
2,888
Goodwill
1,451
1,427
Other assets
64
47
Total assets
$
52,311
$
16,462
Liabilities, mezzanine equity and
stockholders’ equity
Current liabilities:
Accounts payable
$
7,174
$
2,299
Accrued expenses and other current
liabilities
5,006
4,601
Deferred revenue
2,232
1,888
Deferred purchase consideration – current
portion
750
750
Operating lease liabilities
306
—
Notes Payable – current portion
1,264
442
Total current liabilities
16,732
9,980
Operating lease liabilities – non-current
portion
435
—
Notes Payable – non-current portion, net
of debt discount of $7.0 million
24,970
1,200
Deferred purchase consideration –
non-current portion
493
1,130
Total liabilities
$
42,630
$
12,310
Commitments and contingencies
Mezzanine equity:
Redeemable convertible preferred stock par
value $0.0001, 1,000,000 shares and 24,545,386 shares authorized
and nil and 23,858,824 shares issued and outstanding as of December
31, 2022 and December 31, 2021, respectively; aggregate liquidation
preference of $67,417 as of December 31, 2021
—
110,265
Total mezzanine equity
$
—
$
110,265
Stockholders’ deficit:
Common stock, $0.0001 par value,
110,000,000 and 43,763,126 shares authorized, 36,849,076 and
6,121,253 outstanding at December 31, 2022 and December 31, 2021,
respectively
$
4
$
1
Additional paid-in capital
158,094
3,736
Accumulated deficit
(148,417
)
(109,850
)
Total stockholders’ equity
(deficit)
9,681
(106,113
)
Total liabilities, mezzanine equity and
stockholders’ deficit
$
52,311
$
16,462
Wag! Group Co.
(f/k/a CHW Acquisition
Corporation)
Consolidated Statements of
Operations
(In thousands, except for
share amounts and per share data)
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
(Unaudited)
(Unaudited)
Revenues
$
17,036
$
8,101
$
54,865
$
20,082
Costs and expenses:
Cost of revenues (exclusive of
depreciation and amortization shown separately below)
997
843
4,024
2,777
Platform operations and support
2,790
2,552
13,825
10,265
Sales and marketing
10,500
5,230
35,156
10,221
General and administrative
3,869
1,988
32,415
6,956
Depreciation and amortization
140
156
571
388
Total costs and expenses
18,296
10,769
85,991
30,607
Change in fair value of derivative
liability
8,750
—
(4,958
)
—
Gain on forgiveness of PPP loan
—
—
—
3,482
Interest expense, net
(1,686
)
(56
)
(2,470
)
(61
)
Income (loss) before income
taxes
5,804
(2,724
)
(38,554
)
(7,104
)
Income tax benefit (expense)
—
—
(13
)
793
Net income (loss)
$
5,804
$
(2,724
)
$
(38,567
)
$
(6,311
)
Net earnings (loss) per share
Basic
$
0.16
$
(0.45
)
$
(2.07
)
$
(1.10
)
Diluted
$
0.07
$
(0.45
)
$
(2.07
)
$
(1.10
)
Weighted average common shares outstanding
(basic)
37,372,096
6,118,864
18,641,076
5,742,807
Weighted average common shares outstanding
and dilutive potential common shares (diluted)
79,468,239
6,118,864
18,641,076
5,742,807
Wag! Group Co.
(f/k/a CHW Acquisition
Corporation)
Consolidated Statement of Cash
Flows
(In thousands)
Year Ended December
31,
2022
2021
(Unaudited)
Cash flows from operating
activities
Net loss
$
(38,567
)
$
(6,311
)
Adjustments to reconcile net loss to
net cash used in operating activities:
Stock-based compensation
24,492
222
Gain on PPP loan forgiveness
—
(3,482
)
Amortization of debt discount on debt
financing
1,034
—
Provision for deferred taxes
—
(793
)
Depreciation and amortization
571
388
Issuance of Community Shares
1,971
—
Noncash interest – deferred purchase
consideration
81
54
Noncash change in fair value of
derivatives
4,958
—
Changes in operating assets and
liabilities:
Accounts receivable
(3,234
)
(2,478
)
Prepaid expenses and other current
assets
534
(675
)
Deferred costs
—
(930
)
Other assets
—
872
Accounts payable
4,853
1,299
Operating lease liabilities
32
—
Accrued expenses and other current
liabilities
369
(364
)
Deferred revenue
344
88
Other non-current liabilities
—
(146
)
Net cash used in operating
activities
(2,562
)
(12,256
)
Cash flows from investing
activities
Purchases of short-term investments
—
(17,692
)
Proceeds from sale and maturity of
short-term investments
2,550
27,481
Payment of deferred purchase
consideration
(718
)
(188
)
Cash paid for acquisition of Compare Pet
Insurance, Inc.
—
(1,509
)
Net cash acquired in acquisition of
Furmacy, Inc.
54
—
Purchase of property and equipment
(51
)
(5
)
Net cash provided by investing
activities
1,835
8,087
Cash flows from financing
activities
Proceeds from exercises of stock
options
17
3
Payments on PPP loan
(404
)
(54
)
Proceeds from Blue Torch Financing
Agreement
24,123
—
Repayment of Blue Torch Financing
(161
)
—
Proceeds from the issuance of Series P
preferred stock, net of issuance costs
10,925
—
Proceeds from Business Combination with
CHW, net of transaction costs
2,348
—
Net cash provided by financing
activities
36,848
(51
)
Net change in cash, cash equivalents, and
restricted cash
36,121
(4,220
)
Cash, cash equivalents and restricted cash
at beginning of period
2,845
7,065
Cash, cash equivalents and restricted
cash at end of period
$
38,966
$
2,845
Supplemental disclosures of cash flow
information:
Cash paid during the year for interest
(2,470
)
22
Cash paid during the year for income
taxes
—
1
Non-cash financing
transactions:
Conversion of preferred shares to common
stock
(121,188
)
—
Wag! Group Co.
(f/k/a CHW Acquisition
Corporation)
Adjusted EBITDA
Reconciliation
(In thousands)
(Unaudited)
Three Months Ended
December 31,
Year Ended December
31,
($ in thousands)
2022
2021
2022
2021
Revenues
$
17,036
$
8,101
$
54,865
$
20,082
Adjusted EBITDA reconciliation:
Net income (loss)
5,804
(2,724
)
(38,567
)
(6,311
)
Add (deduct):
Interest expense (income)
1,686
56
2,470
61
Depreciation and amortization
140
156
571
388
Share based compensation [1]
476
39
24,492
222
Issuance of Community Shares [2]
—
—
1,971
—
Integration and transaction costs
associated with acquired business
220
—
220
—
Change in fair value of derivatives
[3]
(8,750
)
—
4,958
—
Gain on forgiveness of PPP loan
—
—
—
(3,482
)
Tax (benefit) expense
—
—
13
(793
)
Adjusted EBITDA
$
(424
)
$
(2,473
)
$
(3,872
)
$
(9,915
)
[1] The year to date period includes
stock-based compensation expense in the third quarter of 2022
incurred in connection with the Business Combination with CHW of
$23.9 million. Of the $23.9 million, $2.8 million is included in
Platform operations and support, $2.1 million in Sales and
marketing, and $19.0 million in General and administrative expenses
on the consolidated statement of operations.
[2] For the year to date period, of this
amount, $1.8 million is included General and administrative
expenses and the remainder as contra revenue on the condensed
consolidated statement of operations.
[3] Relates to the changes in the fair
value of Forward Purchase Agreements that were entered into prior
to the closing of the Business Combination and subsequently settled
in the fourth quarter of 2022.
Wag! Group Co.
(f/k/a CHW Acquisition
Corporation)
Non-GAAP Measures
($ in thousands, except
percentages)
(Unaudited)
Three Months Ended
December 31,
Year Ended December
31,
2022
2021
2022
2021
U.S. GAAP Measures:
Revenues
$
17,036
$
8,101
$
54,865
$
20,082
Net income (loss)
$
5,804
$
(2,724
)
$
(38,567
)
$
(6,311
)
Net income (loss) %
34.1
%
(33.6
)%
(70.3
)%
(31.4
)%
Net cash flows used in operating
activities
$
1,016
$
(1,906
)
$
(2,562
)
$
(12,256
)
Non-GAAP Measures:
Adjusted EBITDA
$
(424
)
$
(2,473
)
$
(3,872
)
$
(9,915
)
Adjusted EBITDA Margin
(2.5
)%
(30.5
)%
(7.1
)%
(49.4
)%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230221005586/en/
Contacts Media: Wag!: Media@wagwalking.com
Investor Relations: Wag!: IR@wagwalking.com ICR for Wag!:
WagIR@icrinc.com
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