Rover Group, Inc.

Good day and thank you for standing by. Welcome to the Rover third quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during that session, you will need to press star 1 1 on your phone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. And I would now like to hand the conference over to your speaker today, Mr. Walter Ruddy, Vice President of Investor Relations and Capital Markets. Sir, please go ahead.

Good afternoon. Thank you for joining us to discuss Rover's third quarter 2023 earnings results. In this call, we will be discussing the results announced in our press release issued today, 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 there shortly after the call. With me today is Aaron 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 harbour provisions of the Security Litigation Reform Act of 1995. These include future GAAP and non-GAAP financial and operating results, targets and trends, business metric performance in 2023 financial guidance, marketing, product investment and other strategies, anticipated future growth, prospects, margins, profitability and liquidity, expected investments and initiatives and their impacts, macroeconomic, public health, pet care industry, residential real estate and travel expectations, factors and trends, market growth and expansion expectations and opportunities, statements regarding our share repurchase program, and other future events, industry, and market conditions. 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 risk factors and elsewhere in our most recent Form 10-K and recently filed Form 10-Qs. 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 will also discuss certain non gap financial measures, the most directly comparable gap financial measures and historical reconciliations to their most directly comparable gap measure can be found in the non gap reconciliation supplement posted under news and events presentations at investors.rover.com. For the reasons discussed in the non gap reconciliation supplement, we have not provided the most directly comparable forward looking gap measure or reconciliation of any future non-GAAP measures. Non-GAAP financial measures should not be considered as a substitute for or superior to GAAP financial measures. Unless otherwise noted, we will compare all Q3 2023 metrics to Q3 2022 in this call. With that, let's get started. I'll now turn the call over to Aaron Easterly, co-founder and CEO. Aaron?

Thanks, Walter, and thank you everyone for joining us today. I will start by discussing our third quarter 2023 earnings results and give a few highlights before turning the call over to Brent to outline our booking performance and investments in marketing and product. Charlie will then wrap the prepared remarks by providing additional detail on the financials and our guidance before we take questions. We had a spectacular third quarter, reporting net income of $10.5 million and adjusted EBITDA of $17.5 million, or a 26% margin. On the top line, gross booking value grew to $266 million, revenue increased to $66 million. As a result of our strong performance and reduced expected macro risk in the remainder of 2023, we are again increasing our revenue and adjusted EBITDA guidance for the year. Beyond these headline results, we continue to build on our priorities. First, we demonstrated continued strong operating leverage in our business with substantial adjusted EBITDA and net income margin expansion. We were able to continue investing in product and marketing while increasing adjusted EBITDA margin from 20% in the prior year to 26% this year. These results suggest that the lower bound of our long-term adjusted EBITDA margin target should be higher than the 30% that we have previously communicated, and we are evaluating how much to increase it. Second, we achieved record new customer bookings of 290,000, up 8% over last year's record levels. This result outpaced our measure of new business demand by approximately 20 points. Third, our non-U.S. markets had another quarter of strong growth. GBV in Europe grew 71% and 35% in Canada, resulting in our non-U.S. markets representing 10% of the total. GBV for cat-only bookings continued its tremendous growth, up 134% in Europe and 58% in Canada, reflecting our continued strength with cat parents. Fourth, LTV from customers acquired in Q3 are pacing to all-time records, while the Q1 and Q2 cohorts have continued their record pace. Additionally, last year's cohorts continue to surpass prior years. And finally, improvements to our product are driving top-line growth. We have continued to roll out more initiatives to help pet parents find their best match. We expect these changes to provide enduring benefits beyond this quarter. As we close out the remainder of the year, our Q3 performance and improved outlook is evidence of the engagement we are driving. While the broader environment remains challenging, with underlying weakness and multiple of the external drivers we track, we are encouraged and optimistic about our future. Our performance over the last two years is a testament to the fundamental power of the business model, our market position, the opportunity to continually improve the platform, and most importantly, the dedication and discipline of our team. We believe that we are well-positioned to further our mission of making it possible for everyone to experience the unconditional love of a pet. Our opportunity for growth is tremendous, with approximately 87 million pet-owning households in the U.S. and a similar amount in Europe, and we are excited about what's to come. With that, I'll turn over the call to Brent to discuss our bookings and operational performance.