Wag! Group Co.

Good day and thank you for standing by. Welcome to the WAG first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dawn Frankfurt from ICR.

Good afternoon, everyone, and thank you for joining WAG's conference call to discuss our first quarter 2023 financial results. On the call today are Garrett Smallwood, Chief Executive Officer and Chairman, Adam Storm, President and Chief Product Officer, and Alec Davidian, Chief Financial Officer. Before we get started, please note that today's comments include forward-looking statements. These forward-looking statements are subject to risks and uncertainties and involve factors that could cause actual results to differ materially from those expressed or implied by such statements. A discussion of these risks and uncertainties are included in our SEC filing. Also, during the call, we may present both GAAP and non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are available in our earnings release, which we issued today. The earnings release is available on the investor relations page of our website and is included in exhibit in form 8K furnished to the SEC. Lastly, you can find our earnings presentation posted on our IR website and with the SEC. And with that, let me turn the call over to Garrett.

Thanks, Dawn. Good afternoon, everyone, and thanks for joining us to discuss our first quarter 2023 performance. WAG delivered another quarter of impressive top-line growth ahead of our expectations. We are broadening our reach as a go-to, non-discretionary consumer premium pet care platform, transforming the pet industry by becoming an all-inclusive, trusted partner for the premium pet parent. Our team is capitalizing on the secular growth of pet ownerships and we are just getting started in providing an ever-expanding array of products and services to our pet parents. I will begin today by giving a high-level summary of our first quarter financial results. For Adam, our President and Chief Product Officer, gives an update on our strategy and key initiatives for 2023. Alec, our Chief Financial Officer, will close out with a more detailed overview of our first quarter 2023 results. our capital allocation priorities, and our guidance for 2023 to both revenue and adjusted EBITDA, both of which we are raising today. WAG exists to make pet ownership possible and to be the trusted partner in your pet's journey, from puppy to senior, daily to annually. By growing our footprint in all corners of the pet care market, we are ensuring WAG is there for pet parents every step of the way. We accomplished this by focusing on discipline growth, as seen by our performance in the first quarter of 2023. We are thrilled by our ability to integrate new assets into the WAG platform to not only add value to our business, but also to the pet parents, as demonstrated by the acquisition of dogfoodadvisor.com and our entrance into the $62.7 billion pet food and treat category. This acquisition is just one example of how we are introducing our community to other valuable assets. We are excited about our entry into the dog food category as it is the largest growing pet care category in terms of TAM, demonstrating how we are proactively managing and recycling our capital to maximize shareholder returns. In the first quarter, we saw continued momentum across the business and achieved record revenue of 20.6 million, up 113% year over year, including pet food and treats. Our adjusted EBITDA loss was 0.4 million from a 2.6 million loss in the same period last year. We are proud to say that this quarter marks a milestone revenue run rate for WAG, and we are now projecting EBITDA profitability for fiscal year 2023. Our focus remains on striking a sustainable balance of growth, margin, and profit, especially considering the ever-developing macroeconomic backdrop. During the quarter, platform participants increased to 611,000, an increase of 88% year-over-year, and WAG premium penetration increased to 55% significantly ahead of expectations, even at the fully rolled out 1499 new member price point. Taking a step back, approximately 70% of US households own a pet in 2023. And of those, we specifically target the premium pet parents, or roughly the 15% of pet households in the current market with a proven propensity toward premiumization across pet category. In Q4 2022, we tested WAG premium pricing, resulting in a price increase for new pet parents from $9.99 to $14.99 per month, illustrating the resilience of our premium business in a tough macroeconomic backdrop. Although we saw continued growth in WAG premium in Q1, exceeding expectations, we faced headwinds in our services business due to severe storms and rain across California and the coastline. Despite the headwinds due to inclement weather, we continue to believe that pet parents are planning to utilize WAG services as they return to office and weather returns to normal in some of our largest and most penetrated markets. This belief is rooted in the fact that premium penetration grew in the face of service softness, demonstrating pet parents' intention to use our products when the need arises. Next, we recognize seasonal tailwinds in our wellness business. as a result of pet adoptions in Q4 2022, which pulled forward demand for pet insurance and wellness plans. On that note, we are thrilled to announce the addition of PawProtect.com to our suite of wellness products. WAG is now the exclusive marketing partner of PawProtect, the only pet insurance plan with instant pay. PawProtect is the only brand in America to offer each customer an interest-free, fee-free, and credit-check-free line of credit to cover veterinary bills. We have successfully integrated PawProtect into the petted pet insurance marketplace, which powers brands such as Forbes and U.S. News. In the first quarter, we saw an LTV to CAC ratio of 6 to 1, demonstrating our continued operational excellence and efficiency. Organic user acquisition rate was 70%, which is a result of focus on the pet parent, and pet caregiver experience, thoughtful virality and referral campaigns, and strategic partnerships. We remain excited about our ability to thoughtfully integrate and support pet parents throughout their pet's life through our new partnerships and initiatives. Briefly touching on the supply side, we maintain supply and demand equilibrium through a variable platform fee, which averaged $53.17 in Q1 2023. As we have stated in the past, we believe that WAG is the best gig in America, even in a tough macroeconomic environment. Despite softening macroeconomic conditions, the demand to be a caregiver in our community is as strong as ever, and we believe more and more pet lovers will turn to being a pet caregiver with WAG to relieve a little stress, get some sunshine, and hang out with some cute pups. To summarize, I want to highlight my excitement for all that WAG has accomplished this quarter and since we've been public. Our financial results demonstrate the effectiveness of our strategy and the benefits of continued investment in our current product offering. Our success underscores our capability to scale our business across multiple markets within the pet industry, driven by the inherent cross-sell opportunities generated by our platform, and we're committed to profitable growth for the remainder of 2023. Please refer to our updated management presentation for more color on the success of our business and how far we have come in just four short quarters. With real-time insight into consumer trends, we are leaning into the fastest growing secular categories within the premium pet care market, propelling our growth well ahead of the projections we put forward during our go public process at the end of 2021. As you'll see, we have been able to scale our platform faster and more profitably than anticipated and well ahead of external expectations. And with that, I will turn the call over to Adam Storm to provide additional insights into our strategy.