PetMed Express, Inc.

The request of the company, this conference call is being recorded. Founded in 1996, PetMeds is America's most trusted pet pharmacy, delivering prescription and non-prescription pet medications and other health products for dogs, cats, and horses direct to the customer. PetMeds markets its products through national advertising campaigns, which direct customers to order by phone or on the Internet to increase the recognition of the PetMeds brand name. PetMeds provides an attractive alternative for obtaining pet medications in terms of convenience, price, and ease of ordering, and rapid home delivery. At this time, I would like to turn the call over to the company's Chief Financial Officer, Mr. Bruce Rosenblum.

I would like to welcome everybody here today. I would like to remind everyone that the first portion of this conference call will be listened only until the question and answer session, which will be later in the call. Also, certain information that will be included in this press conference may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 or the Securities and Exchange Commission that may involve a number of risks and uncertainties. These statements are based on our beliefs as well as assumptions we have used based upon the information currently available to us. Because these statements reflect our current views concerning future events, These statements involve risks, uncertainties, and assumptions. Actual future results may vary significantly based on a number of factors that may cause the actual results or events to be materially different from future results, performance, or achievements expressed or implied by these statements. We have identified various risk factors associated with our operations in our most recent annual report and other filings with the Securities and Exchange Commission. Let me now introduce our newly appointed CEO and President, Matt Hewlett. Matt?

Thanks, Bruce. Good morning, and thank you for joining us. My name is Matt Hewlett, and I'm the new CEO of PetMed. I'm incredibly honored and enthusiastic to join this iconic company, and I'm excited to be on this earnings call today. I would like to begin by thanking Bruce Rosenblum for acting as interim chief executive officer prior to my arrival. Before we update you on our progress on Q2, I would like to first share my personal thoughts and motivations regarding why I'm so optimistic about pet meds in our future. First, I'd like to introduce you to my dog, Harry, who's featured on this slide. He's the latest addition to our family, and he's also a puppy. In fact, Harry is the first dog from my family. Our family had no idea what we were getting ourselves into. It's like having a newborn again, and as many of you fellow pet parents know, puppies can be challenging. We also can't imagine not having Harry in our lives, and we think of him as a member of our family. Personally, it is fulfilling to be involved in an organization where you can spend your time and energy on a business that has such positive social impacts in society while you are focused on generating returns for shareholders. Now that we've established my personal connection to the business, I'd like to spend some time walking through the rationale as to why I believe PetMeds is a great long-term investment. Having a large addressable market is important. It enables more optionality for new brands and products to be developed, It provides more opportunity to develop a myriad of go-to-market strategies targeted at different cohorts of customer segments. This also means that there's room for more market participants and for those market participants to coexist and flourish. The pet industry's total addressable market is very large, and it is growing. Currently, it is over $100 billion, and the service addressable pet medication market where we participated to date is approximately $10 billion. We are one of the leading pet pharmacies today, and as such, I see a future where we can extend our already sizable customer reach combined with our widely respected and known brand into additional segments of the total pet care market as our future vision comes fully into focus. In addition to the benefits of participating in a large market, the market timing is also considerably favorable. Pet ownership has always been high in the United States. But we have seen an increase in pet ownership, especially due to the macro effects of COVID-19. Pet ownership has surged to record heights, and now seven out of 10 US households own a pet. Those new and existing pet parents will need more pet medications and other related healthcare services for their pet family members. As we have seen in other digital e-commerce verticals, the adoption curve of the digitization of retail is a favorable tailwind. This pull forward of digital-based retail experiences has now given customers a taste of the future and has created new buying habits of purchasing more products and services online. Today, our addressable market is largely dominated by offline sales, and we see the trend to purchase online is clearly very favorable to us. Pet parents see their pets as an extension of their own families, and they are increasingly demanding more healthy pet care options for their furry friends. We see this as a positive trend for pet meds and an opportunity. For example, we have increased the number of products that we carry and have started to include specialty dog food and higher-end wellness products, which we believe have contributed to the increase in our average customer order value. Lastly, just like we've seen in the human healthcare market, COVID-19 accelerated the increasing trend for the digitization of healthcare. In fact, in the pet market, for the first time, regulations related to in-person veterinary visits and prescription fulfillment were temporarily waived and moved online in unprecedented ways. We think this opens the door to the acceleration of digital-based telehealth services. As I look at the business, there are several key competitive advantages that we can leverage in the future. First, our brand is widely known and trusted. Having a strong brand takes years to develop, and our customers look to PetMeds as their trusted pharmacy and as their pet medication experts. We have strong operational and quality efficiency as a pharmacy. Our customer care integration with our pharmacy is world-class, which ensures that customers get their products delivered quickly, but also accurately, and our vet partners receive high-quality fulfillment and service delivered through our vet platform. Our deep experience with the vet community is a latent competitive advantage. We currently have one of the largest direct-to-consumer vet networks in the online retail space. PetMeds has a large network of over 70,000 veterinarians that we have worked with over the company's history. Our online vet portal currently has 17,000 veterinarians and vet clinics. This is a core capability and asset because it enables us to expand our fulfillment capability as we scale our business. Our prescription medication authorization rates are the highest they have ever been, which speaks volumes to the level of veterinarian cooperation we receive. Our pet pharmaceutical category expertise is something that I view as a unique strength. Being a differentiated provider allows PetMeds to focus our offering, especially as the market continues to get even more competitive. Again, more to come on where we see our brand of business going in the coming months. PetMeds has long enjoyed close bonds with many of our supplier partners. Those relationships have developed over time to become even more strategic. Today, we have direct relationships with all of our major suppliers, and we partner with them to market their products to our customer base. Our customer service and overall customer centricity ethos permeates our culture and our team. I personally sat in on hours of phone calls between our customers and our service agents, and I've never experienced such a tightly integrated and empathetic customer centric organization in my entire career. We don't just have a transactional interaction with our customers. We have built trusted relationships. Before we comment on our earnings performance, I would like to reiterate several compelling reasons to invest and to continue to invest in PetMeds. PetMeds has several core fundamentals that are compelling, including a strong balance sheet. We do not have debt. We have over $100 million in cash, and we are cash flow positive. We have a long history of providing shareholder returns through our dividend and a strong return on equity that has been historically over 30%. We have started to build a recurring subscription base to our customers with a program, which we just recently launched in July of this year. Through our new auto ship and save program, where we are building higher lifetime value and recurring relationships with our customers. In September, approximately 20% of our customers signed up and ordered via our auto ship and save subscription program. And that number continues to rise. Our customers responded very positively and enrollment in auto ship and save has increased steadily throughout the quarter. We expect many of our reorder sales to eventually transition to auto ship and save by the end of our fiscal year, which will only continue to strengthen our relationship with our customers. We also continue to have a large base of returning customers, which is an indication of the quality of service and the value that we deliver to our customers. So to sum up the core company strengths, we have over 25 years of experience as a pure play pet pharmacy, fully licensed in 50 states, delivering fantastic service and value, which is recognized by our customers and continues to be rewarded with their loyalty. Our NPS score is over 80, which puts us in the upper quartile, along with some of the most beloved brands in the world. We are a direct-to-consumer brand with a rapidly growing addressable market, and we have successfully serviced more than 2 million active customers over the last two years. Now, I would like to have Bruce Rosenblum, our Chief Financial Officer, review our financials for the quarter.