Wag! Group Co.

Good morning and welcome to the WAG first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I'll now introduce your host, Greg Robles, with Investor Relations. Thank you. You may begin.

Good afternoon, everyone, and thank you for joining WAG's conference call to discuss our first quarter 2024 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 filings within the SEC. 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 direct 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 and Form 8K furnished to the SEC. These non-GAAP measures are not intended to be a substitute for our GAAP results. Lastly, you can find our earnings presentation posted on our IR website and with the SEC. 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 first quarter of 2024. First, I will provide a brief overview of our financial results for the first quarter. Following that, Adam, our President and Chief Product Officer, will share updates on our strategic priorities for 2024 and beyond. Then Alec, our Chief Financial Officer, will provide a more detailed analysis of our first quarter results and discuss our capital allocation priorities. We're excited to announce another successful quarter for the WAG team, in line with our expectations for revenue and ahead of our expectations for adjusted EBITDA, in addition to achieving positive cash flows from operating activities. During the quarter, revenue grew 13% year-over-year to $23.2 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, wellness products, and veterinary needs. Following the quarter close and more recently, we announced the launch of Prescription, digital e-prescribing and prescription management SaaS tools for veterinary staff across the U.S., with a robust wait list of veterinary clinics. We also announced We Compare, a new consumer brand that aims to be the easiest way to compare insurance products, starting with auto. Adam will discuss these launches in greater detail. On the operations side, we have found success in AI and automation, ending Q1 24 with 78 employees, down 8% from 84 in Q4 23. This has been achieved within customer success, QA, marketing, and design. We have found that senior employees equipped with AI are an order of magnitude more productive than those without. As a result, we reached nearly $1.2 million in annualized revenue per employee in Q124, up 23% year-over-year. Finally, we are sharing that 78% of revenue in Q124 was B2B revenue, which is defined as revenue generated by business partners such as pet insurance companies, pet food companies, wholesale distribution partners, and pet treat companies, which demonstrates the growing value of our platform and creates predictability for future revenues. Our adjusted EBITDA was $0.2 million, an increase from a loss of $0.4 million in the same period last year. Our priorities continue to center around achieving a sustainable equilibrium between growth, profit, and margin. In the first quarter, platform participants increased to 671,000, an increase of 10% year-over-year, and WAG training penetration continues to hover around our 50% target. In regards to sales and marketing and overall consumer trends, and CPMs continue to be elevated through the end of the year as a result of the election, a competitive consumer environment, and elevated competition in the pet category. We've seen upwards of a 90% change in spend across key marketing partners and platforms. Accordingly, we will continue to invest in proprietary customer acquisition with initiatives such as We Compare and Prescription, which we expect to accelerate in the back half of this year. We remain 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 this year. We believe we're in the early innings of a secular growth trend in the premium wellness, service, and product categories in which we operate. In summary, the team at WAG continues to execute against our goals and deliver strong and sustainable growth. Our first quarter results demonstrate our ability to scale our platform profitably and show the effectiveness of our strategy and business model to become the number one platform for premium U.S. households. And with that, I will turn the call over to Adam to review our strategic priorities for 2024. Thanks, Garrett.