BARK, Inc. Class A

Ladies and gentlemen, thank you for standing by and welcome to the BARC First Quarter Fiscal Year 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during this time, you will need to press star 1 on your telephone keypad. Also, please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Mr. Mike Mujiz, Vice President of Investor Relations. Thank you. Please go ahead.

Good afternoon, everyone, and welcome to BARC's first quarter fiscal 2022 earnings call. Joining me today are Manish Janeja, CEO, and John Toth, CFO. Today's conference call is being webcast in its entirety on our website, and a replay of the webcast will be made available shortly after the call. Additionally, a press release covering the company's financial results was issued this afternoon and can be found on our investor relations website. Before we begin, I would like to remind you of the following information regarding forward-looking statements. The statements made on today's call are based on management's current expectations and are subject to risks and uncertainties that could cause actual future results and outcomes to differ. Please refer to our SEC filings for more information on some of the factors that could affect our future results and outcomes. Also during today's call, we will discuss certain non-GAAP financial measures. Reconciliation to our non-GAAP financial measures are also contained in this afternoon's press release. lastly i would like to remind everyone that our fiscal year and march 31st we are currently in fiscal 2022 which will consist of the last three calendar quarters of 2021 and the first calendar quarter of 2022. with that let me now turn the call over to manish thanks mike and good afternoon everyone uh thank you for joining our first earnings call trading under the bob ticker i would also like to thank our employees customers and partners for your contributions and continued support

Given this is a first learning stall, I will take the opportunity to reiterate Bark's mission, highlight the durable secular tailwinds that we are benefiting from, and ultimately share why we believe Bark is uniquely positioned to capture market share and deliver long-term shareholder value. I will then turn the call over to John Toth, Bark's CFO, to walk you through our recent financial performance in more detail. First, let's begin with some key highlights from our strong first quarter. Fiscal 2022 is off to a great start. We saw robust growth in subscription shipments, driving total revenue to the top end of our guidance range. Our top line was accompanied once again by strong margins and healthy customer acquisition costs. In fact, our customer acquisition costs were lower last quarter than in the quarters going back to fiscal 2019, despite doubling our subscription base over that time period. Looking at the business in more detail, revenue in our core direct-to-consumer segment came in at $105 million, an impressive 55% increase year-over-year. We added 280,000 new subscriptions last quarter, bringing total active subscriptions to over 1.9 million. We delivered a record 3.6 million subscription shipments in the quarter, a 52% increase compared to the same period last year. Our out-of-box feature, which reflects our cross-selling capabilities, also drove significant growth, accounting for over $7 million in revenue in the quarter, a 174% increase compared to last year. Average order value was also up 87 cents to $29.21 versus last year. Turning to our commerce business, which includes sales of bought products through retailers such as Target, Costco, and Amazon, Total revenue in this segment was $12.2 million, a 59% increase year-over-year, driven by growth in revenue from both existing partners as well as new partners such as Lowe's. This performance is encouraging as the segment helps broaden awareness of BART products and presents an opportunity for us to convert these customers to monthly subscribers. We have had a lot of recent success in the segment, To date, 20 individual SKUs have topped $1 million in sales at a single retail partner, with seven falling between $2 million and $4 million. Our total revenue for the first quarter was $117.6 million, which came in at the top end of our guidance range for the quarter while maintaining our best-in-industry gross margin at 59% plus. We were also pleased with our customer acquisition costs. which came in at $48.36, down 6% from the previous quarter. This in an environment of raising media costs. Additionally, the customers we acquired were of higher value, thereby delivering a healthy three to four months' payback on a gross margin basis. On an year-over-year basis, our CAC was up from a particularly low $30.83 we had achieved last year. However, this comparison isn't as relevant in our view as the overlapping impact from COVID, which resulted in lower than normal customer acquisition costs. Nonetheless, we are extremely pleased with a strong start to the fiscal year and believe we are strongly positioned to capitalize on the immense market opportunity. Taking a step back, I would like to reiterate the broader Bark opportunity for those on the call that are newer to our story. Bark's mission is simple and has not changed since our fourth space check nine years ago. Make all dogs happy. Our customer service, our happy team, and wellness advisors help us build lifelong relationships with dogs and their parents, which drives high retention and lifetime value. This is a core and highly differentiating asset particularly as we expand into new product categories like food and health. As a positive experience, our customers have had with the BarkBox product that have a halo effect on our newer categories, which have larger addressable markets and are less discretionary. On the broader industry side, we continue to benefit from durable secular tailwinds. Globally, dog ownership continues to grow at a healthy clip. Today, an estimated 63 million households in the U.S. own a dog. of which we serve only 1.9 million. If nationally, that figure is much higher. Furthermore, the humanization of pets is an ongoing trend that we continue to benefit from. Dog parents are spending more time and more money on their pets, often viewing them as members of the family. This is particularly apparent amongst millennials and Gen Z. This presents a significant opportunity for Bark to grow its market share across our fun, food, health, and home verticals. So why is Park uniquely positioned to capitalize on these rising types? First, we have an incredible asset in our customer experience happy team, which delivers highly personalized experiences and ensures complete customer satisfaction. To that end, our customer satisfaction scores have been around 95% for the past four years. Second, we leverage our growing data set to personalize and optimize our products at scale. This data enables us to better understand our customers' needs, while machine learning capabilities allow us to predict and tailor our suite of products for your dog based on age, weight, breed, and more. Furthermore, this data better enables us to cross-sell products and recommend specific and individualized add-on products for our customers. It strives higher average order value and margin accretion. Third, We are the only vertically integrated dog brand. All of our product categories are designed, manufactured, and distributed by us. Bark is a brand. We are not a marketplace selling third-party products. We are happy to sell our products through marketplaces to reach all dog parents and further raise brand awareness in the same way that Nike sells its sneakers in Foot Locker. However, the value proposition is different across these businesses. For example, we regularly partner with other iconic brands like Warner Brothers and the NBA. Our margins are two to three times higher than that of a traditional tech marketplace, and our social media presence, which exceeds 9 million followers across our various channels, is significantly larger. To put that last figure in context, our box-to-box Instagram handle alone has more followers than iconic lifestyle brands such as Peloton, Oatly, and Beyond Meat, which is extremely powerful as it serves as a force multiplier for us to launch and market new products and categories. Lastly, we are Omi Channel. We sell products direct to consumer, but we also leverage partnerships with top retailers like Petco and PetSmart, in addition to the ones I mentioned before. You can buy Bug Box toys waiting in line in Dunkin' Donuts, walking through the Costco food court, or strolling through the pet aisle in Target. So how do we intend to capitalize on these opportunities and deliver long-term shareholder value? To that end, we remain focused on the following key growth strategies. One, expansion to new product categories. Two, scaling and optimizing existing products. Three, enhancing cross-selling and add-on opportunities. Four, increasing our presence in retailers and other marketplaces. I will touch on each of these, but first, I'd like to spend some additional time on our expansion into new categories. We are more than just a dog toy company. We are the only company offering dogs and their parents a suite of products spanning the four core pet categories, fun, food, health, and home. We are replicating the success we have had in the fun category by applying our learnings and data into our newer categories, extend the lifetime value of our customers, and drive increases in average order value. While we are still in early days, we have progressed in these categories and we are confident that the halo effect from our BarkBox success will enable us to replicate our success across new initiatives such as BarkBright and Eats. BarkEats is a highly personalized meal plan created for your specific dog and delivered in portion daily meals. Our wellness advisors work with dog parents to understand their dog and create a meal plan consisting of high quality kibbles, toppers, and other supplements. Our nutritionists maintain ongoing relationships with our customers, navigating the dog's wellness over time and recommending different meal plans and supplements as the dog matures. Currently, Personalization in the kibble market is limited and generally consists of a label on the bag indicating puppy, adult, or senior. This presents bar to the significant opportunity to capture market share of the $40 billion plus kibble business in the United States alone by creating a highly personalized and premium product at a more mass market price point. We are confident in our ability to scale this business as we leverage our data and customers from our existing play category. Given the magnitude of the opportunity, investing in our Eats product and infrastructure is a key priority, which will enable us to reach more markets in line with the plan for full national rollout by end of fiscal year. We have also made a number of recent enhancements in our Eats products as well. First, we redesigned the packaging to be more consistent with the brand identity. We also launched an active box feature for existing BarkBox and SuperChewer customers, which will allow us to cross-sell into our 1.9 million active subscriptions. This will enable our current subscribers to add eats from their existing dashboard in a couple of easy clicks. The same is true for our proprietary bright dental product, as well as home products like bed. While still early days, we are extremely pleased with the early reception of eats. We cannot provide specific numbers at this time, However, July was by far our strongest month to date, and it is looking like August will be even stronger. Encouraging early data from ETH is notwithstanding the fact that we have spent minimal marketing dollars. Most of our customer acquisition has been through word of mouth. One of our founders, Carly Strife, is leading ETH for us and is dedicated to its long-term success. All in all, we are excited about these new categories and look forward to updating you on our progress over the coming months. Moving on, Our second priority is to continue scaling and optimizing our toy and treat subscription business. Our passionate, happy team engages over 250,000 customers per month. We learn about you and your dog, which helps deepen our connection with the customer and provides us with valuable insights and data. A creative team then leverages this data to inform product design and development decisions as part of the flywheel. Our third priority is to enhance cross-selling opportunities. We utilize our data-centric model to recommend add-ons. Historically, this was focused on just toys and treats. However, we are scaling this opportunity by including eats, bright, and home products as additional add-on features. This is a meaningful opportunity for us as we look to grow average order value and extend the lifetime value of a customer. As I mentioned, we increased our add-to-box revenue by 174% last quarter. We anticipate additional growth as we execute on these priorities and continue to improve our machine learning capabilities, enabling us to cross-sell our products more effectively. And fourth, we are focused on increasing brand partnerships and retail distribution. We have had the privilege of partnering with some truly iconic brands, including the NBA, Warner Brothers, Universal Studios, Dunkin' Donuts, and more. These partnerships raise awareness of our brand and drive incremental sales. Recently, we signed a unique collaboration with Netflix, which will roll out next year. These types of opportunities remain a key priority, and we will continue to secure new and exciting licensing deals. We are also looking to expand our presence in retail. These channels raise the visibility of a product and create additional channels for us to convert one-time sales to monthly subscriptions. In summary, S522 is off to a great start, and the market opportunity for Bark is immense. Our mission is to make all dogs happy and be obsessed over supporting a unique relationship and bond between each dog and the parent, be it at home, while many of us work from home, or back in office. A strong brand enables us to profitably scale this business beyond that of a traditional marketplace or retailer. I'm proud of our team's customer obsession and dogged determination towards disciplined execution to deliver results. We will continue to execute, and we look forward to updating you on our progress as we scale the BART ecosystem. With that, I will turn the call over to John.

Thanks, Manish, and thank you, everyone, for joining us today. There have been a lot of new beginnings at Bark, but today is a really significant one. This past Friday, we filed with the SEC our S-8, which registers employee options. The S-8 is the last filing associated with our transaction. And with the filing of our 10-Q tomorrow, we truly begin our life as a public company. As Manish mentioned, we hit the ground running in the first quarter of fiscal 2022. The quarter ended June 30, 2021. As for many companies, this quarter's year-over-year comparisons are dominated by the outbreak of COVID in the U.S. during this quarter last year. With that said, our growth this quarter is all the more significant, given the relatively difficult year-over-year comparisons we faced given the surge in subscriptions this time last year. Nonetheless, we continued to see strong results as we profitably acquired new customers while simultaneously retaining our existing customer base. We were also able to maintain healthy unit economics in spite of meteor rates rising to pre-COVID levels. The quick summary is our revenue, margins, CAC, and other key performance metrics that best illustrate the health of the business are all on track or better than we expected. We are affirming our full-year guidance, notwithstanding the freight and shipping headwinds that we and others are experiencing. Starting at the top of the P&L, Total revenue for the quarter was $117.6 million, a 57% increase year over year. Our direct-to-consumer segment, which represented 90% of our revenue last quarter, was $105 million, up roughly 57% compared to last year. This growth was primarily driven by a 52% increase in subscription shipments. Additionally, average order value, AOV, was up 87 cents to $29.21 year-over-year. These results largely reflect the continued performance of our play subscription business. However, as Eats, Bright, and Home become more meaningful contributors to our revenue, we expect our average order value to increase over time. Remember, the AOV of an Eats subscription is over two times that of a play subscription. This fact, coupled with a growing add-to-box strategy for products like Bright and Home, give us confidence in our ability to grow both AOV and retention per customer over time. Turning to the commerce segment, total revenue was $12.2 million, a 59% increase compared to the same period last fiscal year. Our strong top-line results were accompanied by continued cost discipline, total gross profit was $69.8 million, which resulted in a healthy gross margin of 59.3%. This is in line with previous quarters, despite the increases in freight costs that were mentioned earlier. On that note, we are not anticipating a short-term solution to the heightened freight and shipping costs. And so we are responding to these challenges strategically. First, by accelerating investment in self-managed fulfillment assets, and further diversification. Second, we are actively managing our network of shippers, being more selective about who focuses where to take advantage of our economies of scale. And third, by more effectively managing the timing of certain shipments to optimize costs. We will continue to monitor this situation and expect freight rates to be a headwind throughout this fiscal year. Nonetheless, we are very pleased with our margin profile last quarter. and the team has done a terrific job responding to the situation and putting us in the enviable position of having grown our gross profit and allowing us to affirm our guidance despite these headwinds. Moving on, we acquired 280,000 new subscriptions during the quarter. Our customer acquisition costs came in at $48.36, down 6% from the previous quarter, however, up from the COVID-driven low of $30.83, which we achieved in the same period last year. Total advertising and marketing expense associated with these new subscriptions was $13.5 million. This, coupled with our high gross margin of 59%, resulted in a very healthy LTV to CAC of five times. As Manish mentioned, we build lifelong relationships with dogs and their parents, which drives our high retention and high lifetime value. And with our new products coming online, we are just getting started. Our average monthly subscription shipment churn for the quarter was 7.4% versus 6.2% for the same quarter a year ago. This delta is due primarily to the surge of new subscriptions that occurred during the same quarter last year. Because there was significant growth in subscribers at this time last year, there was a significant overweighting this quarter of customers hitting their one-year anniversary, which is typically when we see the majority of churn in a cohort. the behavior of this COVID surge cohort is not significantly different from the behavior of any other cohort. It just resulted in a disproportionate number of subscribers coming to their anniversary at the same time, and so putting pressure on the shipment churn number for the overall subscriber base. For prior commentary, we believe 6% average monthly subscription churn is a reasonable baseline for BARC with its current business mix. We expect this number to vary from this baseline in individual quarters, but decrease over the longer term as one, product mix begins to include Eats and Bright, which are more necessity products, and two, as subscribers increasingly purchase more than one product from us. As a follow-on note, we've been told that we may be somewhat punitive in our definition of churn. We use this metric as defined primarily because the inverse of shipment churn gives a reasonably accurate approximation of average monthly lifetime. One divided by 0.06 equals roughly 16 and a half months, which is terrific for a subscription company. We do also look at churn on an active subscription basis, which is more aligned with how our peers in the dog space report churn. If we define churn as subscriptions which received a shipment during the 364-day period preceding this quarter, our retention would be approximately 97.5% or a churn of 2.5%. And if we look at it on a customer basis as opposed to a subscription basis, it would be even lower. Moving on, total G&A for the quarter was $69.5 million versus $32 million in the same period a year ago. $17 million, or roughly half of this increase, was in our shipping and fulfillment costs due to a combination of higher volume from increased sales as well as higher rate. Another roughly $10 million is associated with investments in people to build our new businesses and technology to support our cross-selling initiatives. And the balance is attributed to a variety of items, including over $5 million in transaction-related fees and several non-cash accounting charges. The details of all of this is included in our 10-Q. Moving down the P&L, interest expense, which is associated with our outstanding convertible notes, was $1.6 million in the quarter, largely offset by other income of $1.4 million. Net loss for the quarter was $24.8 million on a GAAP basis, and $10 million if you exclude one-time costs associated with the closing of the transaction, non-cash charges and warrant value, and non-cash loss on extinguishment of debt. Finally, adjusted EBITDA was negative $7.6 million, which is in line with our expectations. For our guidance provided back in December of last year, this is an investment year for us. Investment in people, investment in new products, investment in technology, and investment in fulfillment. It is worth noting that last year, with disciplined marketing spend and less expense in growing new businesses, Mark was net income positive, which demonstrates the strength of our business model. One additional point I would like to make is that our play subscription vertical was adjusted EBITDA positive last year. In my view, this demonstrates our ability to scale new businesses quickly and profitably. This is encouraging. as we scale and invest in our newer initiatives, which we believe will exceed the size of the play segment over time. Turning quickly to the balance sheet, we ended the quarter with $321 million in cash, which affords us the ability to strategically invest in high ROI opportunities. We intend to maintain a very disciplined ROI approach to our capital allocation and continue to seek opportunities to optimize our efforts on this front. Finally, to guidance for The second quarter of 2022, we expect total revenue of approximately $122 million. For the full year, we're reiterating our previously provided revenue and EBITDA guidance. In summary, we are well on our way to executing the plan we laid out in December of 2020, growing our subscriptions, maintaining solid margins and unit economics, and have a healthy balance sheet that enables us to intelligently invest in exciting growth initiatives. I'm very proud to be working with this team and reporting on the great work we are doing. The team is excited to be a public company and eager to deliver long-term shareholder value. Our thesis remains very much intact and robust. We are on a huge and cycle-agnostic rising tide called the dog market, and we are the only brand for the market with over 9 million social followers and nearly 2 million active subscribers. We have the opportunity to leverage those deep customer relationships into new and sticky products that introduce us to enormous market segments like food. And we have a strong business model, high margin, strong unit economics that will scale our profitability over time, and a visible, forecastable horizon. With that, I'll turn the call over for question and answers.

At this time, I would like to remind everyone in order to ask a question, you may press star then the number one on your telephone keypad. Again, that's star one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Steph Wisink from Jefferies. Your line is open.

Thank you. Good afternoon, everyone. And John, thank you for going through that detail on churn. I think it's really important to just decompartmentalize the way you're reporting it versus some of your peers. Thank you for that. But my first question actually relates to CAC. I'm just curious if you can talk a little bit about the benefits you're seeing in some of your initiatives to acquire customers and how we should be thinking about CAC going forward to the balance of this fiscal year.

Thanks, Jeff. Good to hear from you. We're very fortunate. Our CAC this quarter over the prior quarter was actually down 6%. So we have a really good team that's very nimble at managing across channels. We continue to pursue our operating goal of breaking even in four months, and for the past four quarters we've been breaking even in three and even two. So we're sort of on track for CAC. Don't expect it to move up terribly much in our fiscal Q3 calendar, Q4, which is the gift-giving season. You always see it go up a little bit, but average for the year we feel like we're in a good place right now.

Okay, great. That's very helpful. And then the second thing I wanted to just unpack was the EATS business. Can you talk a little bit about some of the early learnings? And I apologize, my dog Betty wanted to make her self-known on your conference call. So I want to just talk a little bit about EATS, if you could.

Hey, Seth. This is Anish. It's a little bit premature for us to share any breakdowns for each right now. What we can share is that July was a very strong month. August is turning out to be even stronger. And all this is basically with almost zero cash. You know, we are doing it through word of mouth. We are skating faster. Our plan is to launch nationwide by end of the fiscal year. So we are able to do that right now. We can ship nationwide. We are not actively marketing nationwide. And that's part of our plan for the rest of the fiscal year.

Okay, great. Last really quick one, Jonathan, for you as well, just on the GNA. If you could just help us think through any changes to your assumptions for the balance of the year. Should we kind of use the first quarter run rate as a good and reasonable run rate?

Yeah, we... We'll be following up with some more detail in the queue on adjustments related to the transaction. So speaking operationally, because we have some lingering transaction costs running through the P&L, but from an operational perspective, We're affirming our guidance for EBITDA, adjusted EBITDA, for the balance of the year. This is an investment year for us. We're growing the teams for Bright and EATS. We're growing the technology for machine learning. So this quarter is in line with where we want it to be, and we think we're going to end up where our guidance had suggested.

Okay, John, just for clarification, the shipping cost that you're calling out is inflationary. That would be in your SG&A. Is that correct?

That's right. Shipping and fulfillment is in SG&A. But I wouldn't characterize it as inflation. The real reason it's up is volume. We just ship more packages. So we are seeing rate increases, as everybody in the U.S. is, on shipping and fulfillment, but the driver for the increase in SG&A was we grew shipments over 50% quarter over this quarter last year. So that just moves the number up as you ship more packages. It's revenue-related, if that makes sense.

Okay, very clear. Thank you very much.

your next question comes from the line of maria rips from canaccord your line is open uh great and congrats on your first quarter as a public company and uh great results uh i just wanted to follow up on on it uh can you maybe share with us where you are in the logistics investment cycle there and uh can you talk about sort of what kind of cross-sell uptake you've seen today in markets where it is available And when do you think would be sort of a good point to start supporting the food rollout with marketing?

Hey, Maria. This is Manish. So for Eats, I've mentioned still in early days, but given our success in the play category and the data and the relationships, we can leverage from that. We are optimistic about Eats being successful. It has a much larger time completed play. From a nationwide perspective, we do ship from the East Coast right now. United Economics allow us to be able to serve the country although we are still investing basically across east and west hubs to serve the country. We have made it available, so if you discover EATS, we will serve you, but we are not actively marketing into the entire 48 states. That's the answer to your first question. And the second about in terms of investment. In terms of breaking apart EATS, we're not ready to do that right now. We believe we'll be doing it next year.

Got it. That's very helpful. And maybe just a quick follow-up. Can you talk about some of your retail partnerships? How important are those in your brand building effort? And have you done any studies that would suggest stronger brand recognition in regions where you have broader retail presence?

Yeah, so from retail or commerce segment perspective, actually, we always work back from a mission of making all dogs happy, which means that, you know, we'll serve you even if you're not a direct-to-consumer customer. It's a profitable business. It helps us raise awareness. You know, we have multiple partners. We announced the partnership with Lowe's, and there's more coming. And all those partners, we work backwards from that partner's customer to design the product and serve them. So we don't – I don't have the data right now to break down in terms of conversion. I think your question is basically what percent would convert over into direct-to-consumer subscription, right? So we don't have that breakdown, but we're seeing basically brand awareness raised across these partnerships and different cohorts around the country where we do not serve to that scale yet.

Got it. That's very helpful. Thank you very much.

Sure.

Our final question comes from the line of Nick Jones from Citi. Your line is open.

Great. Thanks for taking the questions. Maybe a follow-up on the commerce segment. Could you maybe frame what the remaining opportunity is in terms of retailers you can partner with? And then maybe once you do partner, what does the ramp look like until you start seeing material sales? And then I have a second question. Thanks.

Hey, Nick. Good to hear from you. It's John. We see a lot of room to run in retail, but we always see it as baseline about 15% of our total revenue. We want to make sure that retail is as profitable as the DTC business. And we're just in the early days of rolling out to all the locations and some of the big names we have, like PetSmart, Petco, Target, et cetera, Lowe's. So a lot of room to run. The problem is it has to keep up with a fast-growing DTC business, so we expect it to always be in about that 15% total revenue range. Is that helpful?

Yep, that's helpful.

Let me add one more thing to that, Nick. So another advantage, aside from awareness and profitable businesses, Retail, the way I view it, allows us for asset-light expansion in serving international consumers. That can inform our strategy for international down the road when we're ready. So that's something that we think about in terms of retail partnerships, like Costco and other partners, how can we actually expand from an asset-light fashion.

Got it. Thanks. And then maybe taking a step back and – You know, your category is a little unique. I think some of the other e-commerce players are, you know, they're really laughing tough cops because people are kind of stepping out of the house, spending less time on the screen. Maybe that's going back with the Delta variant, but in the dog category, a lot of people can bring their dogs outside of the home. So I guess any thoughts on the current COVID landscape and how you guys are looking at the back half as kind of uncertainty builds? Do you see any pullback on, I guess, people bringing dogs into the home? or are things kind of still chugging along as they were before? Thanks.

So there are a few points around that. One is that there are 63 million households with dogs right now. We're in less than 2 million. And of those less than 2 million, our primary injection point had been play. Now, to think about, you know, injecting into different categories about home, food, and health, which has higher STAM, higher AOV, cross-selectile opportunities, those are very critical. So we've seen the industry being agnostic of these cycles that are hitting us. Now, the results that you've seen that we share today is that we are actually at a CAC that closed in 2019. We are basically at the CAC of five. We are acquiring customers that are more valuable through add-to-box, essentially, right? So, those are the good tailwinds that we've seen. And the quarter that last COVID was actually one of our really strong quarters as well. So we're pretty bullish on how this is kind of unraveling. And those are not these dogs in our lives. You know, when you look at the net addition of dogs in our lives, that's actually much positive. And it's not just a COVID tailwind happening for years. COVID did accelerate it to a large extent.

Great. Thanks for taking the questions.

This concludes today's conference call. Thank you for your participation. You may now disconnect.