Rover Group, Inc.

Good day, ladies and gentlemen. Thank you for standing by. And welcome to Rover's fourth quarter and full year 2021 earnings results conference call. At this time, all participants are on a listen-only mode. After this week's presentation, there will be a question and answer session. To ask a question during the session, you will need to press the star, then the one key on your touch-tone telephone. If you recall all of your assistants, please press star, then zero. I would now like to turn the conference over to your speaker host today, Brilly Johnson of Investor Relations. Please go ahead.

Good afternoon. Thank you for joining us to discuss Rover's fourth quarter and full year 2021 earnings results. In this call, we'll be discussing the results announced in our press release issued after the market closed, which is available on our investor relations website at investors.rover.com. As a reminder, this call is being webcast live from our investor relations website and is being recorded and will be available for replay from our investor relations website shortly after this call. With me on the call this afternoon is Aaron Easterly, Chief Executive Officer and Co-Founder, Brent Turner, President and Chief Operating Officer, Tracy Knox, Chief Financial Officer, and Charlie Wickers, VP of Finance at Rover. Before we begin, I'd like to remind everyone that management will make certain forward-looking statements on this call that reflect our current views and expectations related to our future financial performance, such as our 2022 financial guidance, future events, and industry and market conditions as well as forward-looking statements about Rover, its platform, and its market opportunities. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ maturely from those expressed or implied in the forward-looking statements. We strongly encourage you to review the information that Rover files with the SEC regarding specific risks and uncertainties, in particular, those that are described in the risk factor section of Rover's final perspectives filed with the SEC on November 22, 2021, and in robust Form 10-K to be filed for the year ended December 31, 2021. These forward-looking statements apply as to today, and we undertake no obligation to update these statements to reflect subsequent events or circumstances except as required by law. We should not place undue reliance on our forward-looking statements as they are not guarantees of future performance. Finally, during the course of today's call, we will discuss audited and unaudited GAAP and unaudited non-GAAP financial measures. we provide a reconciliation of the non-GAAP measures to the most comparable GAAP measures in the investor presentation, which is posted under News and Events on the Arrestory Relations section of our website. The non-GAAP financial measures provided should not be considered as a substitute for or superior to GAAP financial measures. Also to note, while our year-over-year comparison to 2020 shows a dramatic improvement, what is most notable are robust results relative to pre-COVID levels during 2019. Therefore, unless otherwise noted, we will compare all Q4 and full year 2021 metrics to Q4 and full year 2019 in this call. And with that, let's get started. I will turn it over to Aaron Easterly, co-founder and CEO. Aaron?

Well, thank you, Brindley, and thank you, everyone, for joining us today. I will begin by discussing our fourth quarter and full year 2021 earnings results. followed by outlining five key aspects of our business that I believe are critical to understanding Rover's business model and opportunity. Then I'll turn it over to Brent Turner to provide you with more details on our bookings, marking, and operations. Tracy Knox will then conclude by walking through the financials and our guidance. Overall, I am thrilled with the results the team delivered in 2021. Despite multiple material COVID waves in the second half of the year, a time in which we had believed there would be a general easing of pandemic headwinds, the business performed better than we had expected. This overperformance was across many key metrics, including revenue, customer acquisition costs, unit economics, and profitability. Revenue of $110 million was up 125% year over year and up 16% over 2019. Gross booking value, or GBV, grew 124% versus 2020 and 20% over 2019. Additionally, we generated our first full year of positive adjusted EBITDA, reporting $12.4 million. I am really excited about the operating leverage in the business as we scale and our ability to generate positive cash from operations. Despite Omicron, we report a strong fourth quarter. with revenue up 189% over Q4 of 2020 and up 41% over Q4 of 2019. Fourth quarter GBV was $166 million, our largest GBV quarter ever, driven by both an increase in total bookings to 1.2 million, as well as increasing average booking values. While we continue to manage for long-term profitability and enterprise value, not short-term, the recent gains in profitability demonstrate our strong operating leverage as the business scales. In the fourth quarter, we delivered adjusted EBITDA of approximately $8 million, marking Rover's third consecutive quarter of positive adjusted EBITDA. Now I'd like to highlight five key realities that give us confidence in our ability to achieve our long-term goals. First, Rover operates in a large market segment in a rapidly growing industry with several natural tailwinds. The backdrop of our business is incredibly positive. U.S. pet ownership is at an all-time high. Spend per pet increases over time. Pet services are expected to grow noticeably faster than the category in general, and we expect the shift towards digital will continue. Rover benefits from all of these trends. We are the clear category leader with strong competitive moats. Our proprietary data assets and technology fuel network effects. We have spent 10 years collecting data on a broad and unique set of service providers. This allows us to optimize the marketplace and improve our matching algorithms. Third, our margins are high and expanding. In 2021, our non-GAAP gross margins expanded to 83%. up from 81% in 2019. We have not seen inflation impact our gross margin. Our marketplace is about mass customization of pet care and pet care providers are empowered to set their own prices based on the specifics of their offerings. Our experience has been that these prices increase naturally with inflation, which we believe will be a natural inflation hedge. Fourth, Our business model has limited CapEx requirements. Our ability to service an increasing number of pet parents is based on attracting and retaining pet care providers, not building more facilities and new locations. As such, over time, we expect a material portion of our incremental revenue to translate into free cash flow as opposed to being reinvested in capital expenditures. And finally, we have strong unit economics. driven both by high gross profit per customer and low customer acquisition cost dynamics. Despite Delta and Omicron, gross profit trajectories per recently acquired customers are at or near all-time highs, which drives increasing customer lifetime values. Customer acquisition costs for 2021 were at an all-time low, driven by optimized marketing spend and word-of-mouth dynamics. While we expect to reinvest some of these gains in marketing, the combination of high LPV and low customer acquisition costs allows us to continue to scale customer acquisition efficiently. Rover is heading into 2022 stronger than ever. We're incredibly optimistic about the opportunities ahead of us. We have high confidence in our ability to execute and believe we can move the needle on our mission, making it possible for everyone to experience the unconditional love of a pet. And now I'd like to hand over the call to Brent to provide more detail on our bookings and operational performance.