Quarterly Net Loss of $2.3 Million
Achieved Record Quarterly Adjusted EBITDA of
$1.6 Million
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 second quarter ended June 30,
2024.
Second Quarter 2024 Highlights:
- Revenues decreased 6% to $18.7 million, compared to $19.8
million in the second quarter of 2023 – comprised of $5.6 million
of Services revenue, $11.5 million of Wellness revenue, and $1.5
million of Pet Food & Treats revenue.
- Net loss improved to $2.3 million, compared to $3.9 million in
the second quarter of 2023.
- Adjusted EBITDA improved to $1.6 million, compared to $0.1
million in the second quarter of 2023.
"Our Q2 results were highly intentional, as we scaled back on
Sales & Marketing spend to increase near-term profitability
while we focus on addressing our debt obligations once the
prepayment penalty expires this month,” said Garrett Smallwood, CEO
and Chairman of Wag!. “Strengthening our balance sheet, driving
free cash flow and demonstrating consistent profitability are our
key priorities, and we look forward to making progress on these
objectives as move into the back half of the year.”
“We also look forward to benefiting from an enhanced balance
sheet as we continue to take the necessary steps to best position
the Company for continued growth, profitability, and shareholder
value creation.”
Recent Business Highlights:
- 467,000 Platform Participants in Q2 2024, versus 549,000 in Q2
2023.
- Achieved record quarterly Adjusted EBITDA of $1.6 million.
- Completed an underwritten registered public offering on July
18, 2024, the net proceeds of which were approximately $8.6 million
which we intend to use to pay down debt upon prepayment penalty
expiration on August 9, 2024.
Guidance
“In the second quarter, we delivered our highest quarterly
Adjusted EBITDA, which was driven by our focus on cost management
and operational efficiency,” said Alec Davidian, Wag! CFO. “Our
ability to generate free cash flow will allow us to service our
debt, improve our balance sheet and return to growth.”
For the third quarter 2024, we expect:
- Revenue in the range of $20 million to $24 million.
- Adjusted EBITDA1 in the range of $1.5 million to $2.5
million.
For the full year 2024, as previously communicated on July 10,
2024, we expect:
- Revenue in the range of $92 million to $102 million.
- Adjusted EBITDA1 in the range of $4 million to $8 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 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.
________________ 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!’s Second Quarter Results Conference Call
Wag! will host a conference call and live webcast today, August
07, 2024, at 4:30pm 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.
Wag! Group Co.
Condensed Consolidated Balance
Sheets
(unaudited)
June 30, 2024
December 31,
2023
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
9,234
$
18,323
Accounts receivable, net
7,512
10,023
Prepaid expenses and other current
assets
2,256
3,428
Total current assets
19,002
31,774
Property and equipment, net
1,144
347
Operating lease right-of-use assets
894
1,045
Intangible assets, net
7,860
8,828
Goodwill
4,646
4,646
Other assets
52
57
Total assets
$
33,598
$
46,697
LIABILITIES AND STOCKHOLDERS’
EQUITY (DEFICIT)
Current liabilities:
Accounts payable
$
6,850
$
9,919
Accrued expenses and other current
liabilities
2,044
4,015
Deferred revenue
1,642
1,781
Deferred purchase consideration – current
portion
185
547
Operating lease liabilities – current
portion
396
386
Notes payable – current portion
2,075
1,751
Total current liabilities
13,192
18,399
Operating lease liabilities – non-current
portion
645
816
Notes payable – non-current portion, net
of debt discount and warrant allocation of $2,721 and $4,563 as of
June 30, 2024 and December 31, 2023, respectively
21,468
25,664
Other non-current liabilities
78
172
Total liabilities
35,383
45,051
Commitments and contingencies
Stockholders’ equity (deficit):
Common stock
4
4
Additional paid-in capital
166,437
163,376
Accumulated deficit
(168,226
)
(161,734
)
Total stockholders’ equity (deficit)
(1,785
)
1,646
Total liabilities and stockholders’ equity
(deficit)
$
33,598
$
46,697
Wag! Group Co.
Condensed Consolidated
Statements of Operations
(unaudited)
Three Months Ended
Six Months Ended
June 30, 2024
June 30, 2023
June 30, 2024
June 30, 2023
(in thousands, except per share
amounts)
Revenues
$
18,651
$
19,820
$
41,870
$
40,443
Costs and expenses:
Cost of revenues (exclusive of
depreciation and amortization shown separately below)
1,158
1,243
2,728
2,269
Platform operations and support
2,714
3,492
5,674
6,662
Sales and marketing
11,037
10,758
26,692
24,033
Royalty
—
1,791
—
1,791
General and administrative
3,809
4,821
8,048
9,805
Depreciation and amortization
580
375
1,158
756
Total costs and expenses
19,298
22,480
44,300
45,316
Interest expense
1,597
1,897
3,482
3,771
Interest income
(75
)
(238
)
(227
)
(482
)
Loss on extinguishment of debt
—
—
726
—
Other expense, net
—
65
—
9
Loss before income taxes
(2,169
)
(4,384
)
(6,411
)
(8,171
)
Income taxes
82
38
81
38
Equity in net earnings of equity method
investments
—
553
—
553
Net loss
$
(2,251
)
$
(3,869
)
$
(6,492
)
$
(7,656
)
Loss per share, basic and diluted
$
(0.06
)
$
(0.10
)
$
(0.16
)
$
(0.20
)
Weighted-average common shares outstanding
used in computing loss per share, basic and diluted
40,914
38,109
40,496
37,590
Wag! Group Co.
Condensed Consolidated
Statements of Cash Flows
(unaudited)
Six Months Ended
June 30, 2024
June 30, 2023
(in thousands)
Cash flow from operating activities:
Net loss
$
(6,492
)
$
(7,656
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation
2,952
2,463
Non-cash interest expense
1,229
1,350
Depreciation and amortization
1,158
756
Reduction in carrying amount of operating
lease right-of-use assets
151
168
Equity in net earnings of equity method
investments
—
(553
)
Loss on extinguishment of debt
726
—
Changes in operating assets and
liabilities, net of effect of acquired business:
Accounts receivable
2,511
(1,850
)
Prepaid expenses and other current
assets
1,007
1,049
Other assets
5
(5
)
Accounts payable
(3,069
)
2,241
Accrued expenses and other current
liabilities
(1,806
)
(700
)
Deferred revenue
(139
)
368
Operating lease liabilities
(160
)
(176
)
Other non-current liabilities
(94
)
218
Net cash used in operating activities
(2,021
)
(2,327
)
Cash flows from investing activities:
Cash paid for acquisitions, net of cash
acquired
(128
)
(9,503
)
Cash paid for equity method investment
—
(1,470
)
Purchase of property and equipment
(860
)
(31
)
Net cash used in investing activities
(988
)
(11,004
)
Cash flows from financing activities:
Repayment of debt
(5,714
)
(551
)
Debt prepayment penalty
(100
)
—
Proceeds from exercises of stock
options
109
90
Other
(375
)
(382
)
Net cash used in financing activities
(6,080
)
(843
)
Net change in cash and cash
equivalents
(9,089
)
(14,174
)
Cash and cash equivalents, beginning of
period
18,323
38,966
Cash and cash equivalents, end of
period
$
9,234
$
24,792
Wag! Group Co.
Adjusted EBITDA (Loss)
Reconciliation
(unaudited)
Three Months Ended
Six Months Ended
June 30, 2024
June 30, 2023
June 30, 2024
June 30, 2023
(in thousands, except
percentages)
Net loss
$
(2,251
)
$
(3,869
)
$
(6,492
)
$
(7,656
)
Interest expense, net
1,522
1,659
3,255
3,289
Income taxes
82
38
81
38
Depreciation and amortization
580
375
1,158
756
Stock-based compensation
1,656
1,121
2,952
2,463
Integration and transaction costs
associated with acquired business
—
152
—
189
Severance costs
50
131
127
131
Loss on extinguishment of debt
—
—
726
—
Legal settlement
—
500
—
500
Adjusted EBITDA (loss)
$
1,639
$
107
$
1,807
$
(290
)
Revenues
$
18,651
$
19,820
$
41,870
$
40,443
Adjusted EBITDA (loss) margin
8.8
%
0.5
%
4.3
%
(0.7
)%
Wag! Group Co.
Key Operating and Financial
Metrics
(unaudited)
Three Months Ended
Six Months Ended
June 30, 2024
June 30, 2023
June 30, 2024
June 30, 2023
(in thousands, except
percentages)
Platform Participants (as of period
end)
467
549
467
549
Revenues
$
18,651
$
19,820
$
41,870
$
40,443
Net loss
$
(2,251
)
$
(3,869
)
$
(6,492
)
$
(7,656
)
Net loss margin
(12.1
)%
(19.5
)%
(15.5
)%
(18.9
)%
Net cash provided by (used in) operating
activities
$
(2,189
)
$
1,253
$
(2,021
)
$
(2,327
)
Adjusted EBITDA (loss)
$
1,639
$
107
$
1,807
$
(290
)
Adjusted EBITDA (loss) margin
8.8
%
0.5
%
4.3
%
(0.7
)%
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Media: Media@wagwalking.com
Investor Relations Wag!: IR@wagwalking.com Gateway for
Wag!: PET@gateway-grp.com
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