Rover Group, Inc.

Thank you for standing by and welcome to the Rover fourth quarter and full year 2022 earnings results conference call. At this time, all participants are on a listen-only mode. After the speaker's presentations, there'll be a question and answer session. To ask a question at that time, please press star 11 on your telephone. As a reminder, today's conference call is being recorded. I will now turn the call over to your host, Mr. Walter Ruddy, Investor Relations and Capital Markets. Please go ahead, sir.

Good afternoon. Thank you for joining us to discuss Rover's fourth quarter and full year 2022 earnings results. In this call, we will be discussing the results announced in our press release issued today after the market close, 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 the call. With me on the call this afternoon is Erin Easterly, Chief Executive Officer and Co-Founder, Brent Turner, President and Chief Operating Officer, and Charlie Wickers, Chief Financial Officer at Rover. Before we begin, I'd like to remind everyone that management will make certain forward-looking statements within the safe harbor provisions of the Securities Litigation Reform Act of 1995 on this call, including future GAAP and non-GAAP financial and operating results, business performance, and 2023 financial guidance, marketing and other strategies, future growth, prospects, profitability and liquidity, expected investments and initiatives, macroeconomic, public health and travel factors and trends, partnership and expansion opportunities, statements regarding our share repurchase program, other future events, industry and market conditions, and domestic and international market growth opportunities. Forward-looking statements, are subject to known and unknown risks and uncertainties that could cause actual results or performance to differ materially from those expressed or implied during the call, including the risks and uncertainties included under the caption risk factors and elsewhere in our form 10Q filed on November 10th, 2022 and our upcoming form 10K. All forward-looking statements speak only as of today and are based on current expectations, estimates, forecasts, and projections and the beliefs and assumptions of management. We undertake no duty to update this information unless required by law. You should not place undue reliance on forward-looking statements as they are not guarantees of future performance. We also discussed certain non-GAAP financial measures. The most directly comparable GAAP financial measures and historical reconciliations to the most directly comparable GAAP measure can be found in the Non-GAAP Reconciliation Supplement posted under news and events presentations on our investor relations website. For the reasons disclosed in the non-GAAP reconciliation supplement, we have not provided the most directly comparable forward-looking GAAP measure or reconciliation of any forward-looking non-GAAP measures. Beginning in the third quarter of 2022 or adjusted EBITDA and non-GAAP general and administrative expense calculations exclude the amount of our previously announced legal settlement. and our adjusted EBITDA calculations was updated to reflect the change in fair value of and omit the loss from an equity method investment. Non-GAAP financial measures should not be considered a substitute for or superior to GAAP financial measures. Unless otherwise noted, we will compare all Q4 2022 metrics to Q4 2021 and full year 2022 metrics to 2021 on this call. With that, let's get started. I'll turn the call over to Aaron Easterly, co-founder and CEO. Aaron?

Thanks, Walter. Thank you, everyone, for joining us today. I will start by outlining our high-level fourth quarter and full year 2022 earnings results, give a few highlights, and then provide some comments on the year ahead. I will then turn the call to Brent to provide additional detail on our bookings and investments. Charlie will then wrap up the prepared remarks by walking through the financials and our detailed guidance before we take questions. Our fourth quarter capped off a great year at Rover, with both revenue and adjusted EBITDA up year over year and above the high end of our guidance range. Full year gross booking value was just shy of $800 million, while revenue was $174 million, and adjusted EBITDA was $21 million, or a 12% margin. Turning to the fourth quarter, We recorded revenue of $52 million, gross booking value of $218 million, and adjusted EBITDA of $11.2 million, or a 22% margin. Of note, we had net income of $5.3 million in the quarter, a milestone I'm proud of and look forward to repeating in the future. Behind these impressive results was the hard work of our team, who executed against several important focus areas. First, we attracted a record number of customers to Rover Group this year. In 2022, the Rover Marketplace new customer bookings were 939,000, the highest level ever, up 17% year over year. We expanded our marketing mix, including opening up new distribution as a vehicle to drive customer acquisition. The Bright Horizons deal showed positive signs in Q4, and we are excited to continue this momentum in the employer-sponsored care channel. We also added training as an offering with our acquisition of GoodPup, which we continue to integrate within the marketplace. GoodPup now obtains a significant percentage of its customers from the Rover ecosystem, and we expect the business to drive single-digit millions in revenue in the coming year. Second, 2022's cohorts have continued their record trajectory, resulting in their highest expected LTVs to date. This is a result of strong unit performance, take rate, and ABVs. In the past year, we have focused on improving the booking experience, and we expect there to be opportunities for future gains. Third, we are increasingly demonstrating the operating leverage in our core business. Adjusted EBITDA margins grew to 12% for the full year, but the effect was much more evident in the second half of the year as we neared the end of our marking and fixed cost normalization. Fourth quarter adjusted EBITDA margin was 22% compared to 20% in the year prior. Fourth, our international business continues to see strong GBV growth. Further evidence that Rover is not just a U.S. phenomenon. Europe grew 78% year over year during Q4. Full year GBV growth was particularly strong in the U.K. and France. As we look to 2023, we believe it is prudent to plan for external economic and health-related factors that could impact our business. While our 2023 base case includes impacts from these potential external factors, we remain confident in our ability to grow profits, generate cash, and achieve our long-term financial objectives. In light of our strong operating results and long-term outlook, we are also pleased to announce our board has authorized a $50 million buyback program. As stewards of the company's assets, we are committed to deploying capital strategically in order to drive long-term value for stockholders. To do so, in general, our lean is to pursue opportunities to reinvest in our business through a combination of improvements in our technology, select expansions to our services, either organically or inorganically, and calculate bets to accelerate new customer acquisition. As we consider our market opportunity, forward-looking cash flow, strong balance sheet, need for investment in the business, and our current market valuation, we saw an opportunity to reinvest in our business and create value for stockholders. We expect this program to commence shortly, but the overall execution will be dependent upon market dynamics. All in all, I'm proud of the team's progress and the results Rover produced this year. As we look forward, there is immense opportunity for Rover, and we are energized by our plans. Now I'll hand the call over to Brent to provide more detail on our bookings and operational performance.