Wag! Reports Second Quarter 2024 Results
Quarterly Net Loss of
Achieved Record Quarterly Adjusted EBITDA of
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
“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 onAugust 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
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
-
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,
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
About
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
|
||||||||
Condensed Consolidated Balance Sheets |
||||||||
(unaudited) |
||||||||
|
|
|
|
|
||||
|
|
(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 |
|
|
|
|
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 |
|
|
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 |
|
|
||||||||||||||||
Condensed Consolidated Statements of Operations |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(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 |
|
|
||||||||
Condensed Consolidated Statements of Cash Flows |
||||||||
(unaudited) |
||||||||
|
|
Six Months Ended |
||||||
|
|
|
|
|
||||
|
|
(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 |
|
|
||||||||||||||||
Adjusted EBITDA (Loss) Reconciliation |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(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 |
)% |
|
||||||||||||||||
Key Operating and Financial Metrics |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(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 |
)% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240807728499/en/
Media: Media@wagwalking.com
Investor Relations
Wag!: IR@wagwalking.com
Source: