Wag! Group Co.

And welcome to the WEG second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer 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 second 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 with 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 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 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 second quarter of 2024. First, I will provide an overview of our financial results for the second quarter. Following that, Adam, our President and Chief Product Officer, will share brief updates on our strategic priorities for 2024 and beyond. Then Alec, our Chief Financial Officer, will provide a more detailed analysis of our second quarter results and discuss our capital allocation priorities. In the second quarter, our revenues decreased 6% to $18.7 million, while our adjusted EBITDA increased to $1.6 million, a quarterly record for WAG. As we have communicated, these results were highly intentional as we reduced marketing spend to increase profitability in the short term. As noted in our preliminary results released in July, Our debt prepayment penalty expires this month, and our full debt becomes due a year from now. We are intensely focused on increasing adjusted EBITDA and free cash flow as we evaluate all options to refinance our debt. Strengthening our balance sheet and demonstrating consistent profitability is of the utmost importance. Additionally, we recently completed a $10 million registered public offering last month, and we will use the net proceeds to pay down a significant portion of our debt. we will refinance the remaining debt principle and strengthen our balance sheet, allowing us to generate substantial free cash flow. In fact, by lowering our debt principle and refinancing the remaining balance, we believe we'll be in a position to deliver positive free cash flow going forward. Our adjusted EBITDA margin is improving, as indicated by our 8.8% adjusted EBITDA margin in second quarter, which is a significant improvement from the 0.5% a year ago and the 0.7% from the first quarter of this year. As we return to growth, we expect to maintain a healthy adjusted EBITDA margin to balance profitability and growth going forward. In second quarter, we delivered a quarterly record adjusted EBITDA of $1.6 million, which was driven by reduced and more efficient marketing spend and operational efficiency across all business units. In turn, second quarter... platform participants decreased 15% year-over-year to 467,000. We remain focused on acquiring the highest quality customers. On the operations side, we continue to benefit from AI and process automation tools, which we will lean into in order to increase the quality of our products while reducing overall OPEX. As we move into the back half of the year, we remain focused on reaching more U.S. households as the all-encompassing trusted partner for premium wellness, service, and products. We expect to generate free cash flow as we benefit from lower interest expense in our debt, which ultimately provides us with increased flexibility to reward shareholders through opportunistic M&A, reinvesting in the business for further growth, and returning cash to shareholders through stock buybacks. And with that, I will turn the call over to Adam to review our strategic priorities for 2024.