Wag! Group Co.

Greetings. Welcome to the WAG Q4 2023 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the form of presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Gary Smallwood, Chief Executive Officer and Chairman. You may begin.

Good afternoon, everyone, and thank you for joining WAG's conference call to discuss our fourth quarter and full year 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 is included in our earnings release today and our filings with the SEC, including our upcoming 10-K for the year ended December 31, 2023. We also remind you that we undertake no obligation to update the information contained on this call. These statements should be considered estimates only and are not a guarantee of future performance. Also, during the call, we present both GAAP and non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are available in today's earnings release. These non-GAAP measures are not intended to be a substitute for our GAAP results. Lastly, you can find our earnings release and earnings presentation posted on the investor relations page of our website. And with that, I'll now turn the call over to Garrett Smallwood.

Good afternoon and thank you for joining us today to discuss our financial performance for the fourth quarter and full year 2023 and provide guidance for fiscal year 2024. First, I will provide a brief overview of our financial results for the fourth quarter and discuss our 2024 plans. Following that, Adam, our president and chief product officer, will share updates on our strategic plans and key initiatives for 2024 and beyond. Then Alec, our chief financial officer, will provide a more detailed analysis of our fourth quarter and full year 2023 results, discuss our capital allocation priorities, and share our 2024 guidance. We're excited to announce another successful quarter for the WAG team in line with our expectations for revenue and adjusted EBITDA, which resulted in the high end of our range for fiscal year 2023 for revenue and midpoint of our range for adjusted EBITDA. During the quarter, revenue grew 27% year over year to 21.7 million, which was a new quarterly record. This growth was driven by the success of our wellness business fueled by pet parent demand for pet insurance and wellness products, In addition, we are seeing early signs of success with MaxBone within services, which validates our longer-term growth initiatives by expanding our reach within retailers to the premium product category. Our adjusted EBITDA was break-even, an increase from a loss of $0.4 million in the same period last year. As we navigated the dynamic macroeconomic landscape, our primary objective centered around achieving a sustainable equilibrium between growth, profit, and margin. In the fourth quarter, platform participants increased to 600,000, an increase of 38% year-over-year, and WAC premium penetration remained above our 50% target. To summarize 2023, this was a year of operational efficiency as we demonstrated adjusted EBITDA profitability for three consecutive quarters, reaching fiscal year adjusted EBITDA profitability significantly ahead of schedule. We did this while growing revenues 53% year over year and reinvesting in the platforms. A few highlights for the year include entering the pet food and treat category with our acquisition of Dog Food Advisor and the launch of Cat Food Advisor, deepening our offerings in the wellness category with our exclusive offering of Prop Protect, the only pet insurance product offering instant pay in the U.S., and entering the premium pet essential category with the acquisition of MaxBone. We couldn't be more excited about the proprietary technology breadth of our platform and deep relationships we have with premium households as we enter into 2024. In 2024 and beyond, we are focused on profitable revenue growth and reaching more U.S. households as the all-encompassing trusted partner for premium wellness, service and products. We will do this by reinvesting free cash flow into growth, which we expect to achieve in the back half of 2024. We believe we are in the early innings of a secular growth trend in the premium wellness, service, and product categories in which we operate. We are nearly overwhelmed with the opportunities ahead of us and the resilience and strength of the premium households we service, who are showing no signs of slowing down. Accordingly, we are eager to build, innovate, and acquire in order to expand the WAG platform and deliver for our customers. As of today, we're setting a path to reach more than $200 million in revenue by fiscal year 2027, which quantifies the clear demand for our platform. This translates into year-over-year profitable growth of at least 25% for the next four years. We will do this while maintaining disciplined headcount growth through the use of AI and process automation. In summary, the team at WAG continues to execute against our goals and deliver strong and sustainable growth. Our fourth quarter and full year results demonstrate our ability to scale our platform faster and more profitably than anticipated and show the effectiveness of our strategy and business model to become the number one platform for premium U.S. households. Our 2024 guidance, which Alec will outline shortly, demonstrates our commitment to durable year-over-year profitable revenue growth. And with that, I will turn the call over to Adam to review our strategy for 2024.