Record Q4 Revenues of $21.7 Million, Up 27%
Year-over-Year
Record Annual Revenues of $83.9 Million, Up 53%
Year-over-Year
Positive Annual Adjusted EBITDA of $0.7
Million
Board Approves Up to $10 Million Debt Pay
Down
Management Announces 2024 Guidance and Longer
Term Outlook
Wag! Group Co. (the “Company” or “Wag!”; Nasdaq: PET), which
strives to be the #1 platform to solve the service, product, and
wellness needs of the modern U.S. pet household, today announced
financial results for the fourth quarter and full year ended
December 31, 2023.
Fourth Quarter 2023 Highlights:
- Revenues increased 27% to $21.7 million, compared to $17.0
million in the fourth quarter of 2022, a quarterly revenue record –
comprised of $6.3 million of Services revenue, $13.5 million of
Wellness revenue, and $1.9 million of Pet Food & Treats
revenue.
- Net loss was $3.5 million, compared to net income of $5.8
million in the fourth quarter of 2022, which included a one-time
benefit of $8.8 million related to the Forward Share Purchase
Agreement.
- Breakeven Adjusted EBITDA, compared to an Adjusted EBITDA loss
of $0.4 million in the fourth quarter of 2022.
Full Year 2023 Highlights:
- Revenues increased 53% to $83.9 million, compared to $54.9
million in 2022, an annual record – comprised of $24.4 million of
Services revenue, $52.9 million of Wellness revenue, and $6.6
million of Pet Food & Treats revenue.
- Net loss was $13.3 million, compared to net loss of $38.6
million in 2022, primarily due to one-time transaction costs of
going public in 2022.
- Adjusted EBITDA of $0.7 million, compared to an Adjusted EBITDA
loss of $3.9 million in 2022.
"2023 marks another record year of results for Wag!. We achieved
both record revenues and Adjusted EBITDA in the year,” said Garrett
Smallwood, CEO and Chairman of Wag!.
“The compounding of our bets in Services, Wellness, and Pet Food
& Treats are enabling us to differentiate Wag! for long-term,
profitable growth, and we’re thrilled to enter 2024 stronger than
ever,” concluded Smallwood.
Recent Business Highlights:
- Achieved 600,000 Platform Participants in Q4 2023, an increase
of 38% from 434,000 in Q4 2022.
- Acquired WoofWoofTV, a leading pet social media platform, with
18 million followers across Facebook, Instagram, Snapchat, TikTok,
and YouTube. WoofWoofTV marks Wag!’s entrance into media and
advertising.
- Achieved record revenue per Services cohort, after setting a
prior record in 2022. Annual cohort performance continues to
outperform legacy cohorts.
- Announced Wag! Pet Care Solutions are now available through
Bright Horizons Back-up Care Services, providing employers across
the nation with the ability to offer sponsored pet care solutions
for employees. This marks Wag!’s entrance into the employer
sponsored distribution channel.
Guidance and Outlook
For the full year 2024, we expect:
- Revenues in the range of $105 million to $115 million,
representing growth of 25% to 37%.
- Adjusted EBITDA1 in the range of $2 million to $6 million,
representing growth of 177% to 731%.
This guidance anticipates an Adjusted EBITDA margin in the range
of 2% to 5% and free cash flow in the second half of 2024.
We also announced that our Board of Directors has authorized a
debt pay down of up to $10 million of principal in 2024, which is
expected to accelerate the path to free cash flow.
Looking beyond 2024, we expect 25% compound revenue growth from
2024 through 2027, assuming no meaningful changes in the
macroeconomic environment, with the expectation of driving towards
greater than $200 million of revenues in 2027.
Management will further address full-year guidance on the
earnings conference call.
1
Information reconciling forward-looking
Adjusted EBITDA and Adjusted EBITDA margin to the comparable GAAP
financial measures is unavailable to the company without
unreasonable effort, as discussed in our Non-GAAP Financial
Measures and Other Operating Metrics section below.
Wag!’s Fourth Quarter and Full Year 2023 Conference
Call
Wag! will host a conference call and live webcast today,
February 14, 2024, at 4:30 p.m. ET to discuss financial results.
Investors and analysts interested in participating in the call are
invited to dial 877-407-9208 (international callers please dial
1-201-493-6784) approximately 10 minutes prior to the start of the
call. A live audio webcast of the conference call will be available
online at https://investors.wag.co.
A recorded replay of the conference call will be available
approximately three hours after the conclusion of the call and can
be accessed online at https://investors.wag.co for 90 days.
Wag! also provides announcements regarding financial performance
and other matters, including SEC filings, investor events, press
and earnings releases, on our investor relations website
(https://investors.wag.co), and/or
social media outlets, as a means of disclosing material information
and complying with disclosure obligations under Regulation FD. The
list of social media channels that Wag! uses may be updated on the
investor relations website from time to time. In addition, you may
automatically receive email alerts and other information about Wag!
when you enroll your email address by visiting the “Email Alerts”
section at (https://investors.wag.co/ir-resources/email-alerts).
About Wag! – Wag.co
Wag! Group Co. strives to be the #1 platform to solve the
service, product, and wellness needs for the modern U.S. pet
household. Wag! pioneered on-demand dog walking in 2016 with the
Wag! app, which offers access to 5-star dog walking, sitting, and
one-on-one training from a community of more than 500,000 Pet
Caregivers nationwide. In addition, Wag! Group Co. operates Petted,
the nation’s largest pet insurance comparison marketplace; Dog Food
Advisor, one of the most visited and trusted pet food review
platforms; WoofWoofTV, a multi-media company bringing delightful
pet content to over 18 million followers across social media;
maxbone, a digital platform for modern pet essentials; and Furmacy,
software to simplify pet prescriptions. For more information, visit
Wag.co.
Non-GAAP Financial Measures and Other Operating
Metrics
Adjusted EBITDA is a non-GAAP financial measure defined as net
income (loss) adjusted for interest expense, net; income taxes;
depreciation and amortization; and share-based compensation, as
well as other items to be consistent with definitions typically
used by lenders, including transaction costs. Additionally, we
exclude the impact of certain non-recurring items which are not
indicative of our operating performance as well as other
transaction-specific costs that do not represent an ongoing
operating expense of the business, including but not limited to,
business combination transaction and integration costs and PPP loan
forgiveness. Adjusted EBITDA margin is calculated by dividing
Adjusted EBITDA by revenues. Adjusted EBITDA and Adjusted EBITDA
margin provide a basis for comparison of our business operations
between current, past, and future periods by excluding items from
net income (loss) that we do not believe are indicative of our core
operating performance.
Platform Participant is defined as a Pet Parent or Pet Caregiver
who transacted on the Wag! platform for a service in the quarter.
Services include dog walking, sitting, boarding, drop-ins,
training, premium telehealth services, wellness plans, and pet
insurance plan comparison.
Information reconciling forward-looking Adjusted EBITDA and
Adjusted EBITDA margin to GAAP financial measures is unavailable to
the Company without unreasonable effort. The Company is not able to
provide reconciliations of Adjusted EBITDA and Adjusted EBITDA
margin to GAAP financial measures because certain items required
for such reconciliations are outside of the Company’s control
and/or cannot be reasonably predicted, such as the provision for
income taxes. Preparation of such reconciliations would require a
forward-looking balance sheet, statement of income and statement of
cash flow, prepared in accordance with GAAP, and such
forward-looking financial statements are unavailable to the company
without unreasonable effort. The Company provides a range for its
Adjusted EBITDA and Adjusted EBITDA margin forecast that it
believes will be achieved, however it cannot accurately predict all
the components of the Adjusted EBITDA and Adjusted EBITDA margin
calculation. The Company provides an Adjusted EBITDA and an
Adjusted EBITDA margin forecast because it believes that Adjusted
EBITDA and Adjusted EBITDA margin, when viewed with the Company’s
results under GAAP, provides useful information for the reasons
noted above. However, Adjusted EBITDA and Adjusted EBITDA margin
are not measures of financial performance or liquidity under GAAP
and, accordingly, should not be considered as alternatives to net
income (loss), net income (loss) margin or cash flow from operating
activities as an indicator of operating performance or
liquidity.
Forward-Looking Statements
This press release contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Some of the forward-looking statements can be identified
by the use of forward-looking words. Statements that are not
historical in nature, including the words “anticipate,” “expect,”
“suggests,” “plan,” “believe,” “intend,” “estimates,” “targets,”
“projects,” “should,” “could,” “would,” “may,” “will,” “forecast”
and other similar expressions are intended to identify
forward-looking statements. These statements include those related
to the Company’s ability to further develop and advance its pet
service offerings and achieve scale; ability to attract and retain
personnel; market opportunity, anticipated growth, and future
financial performance, including management’s financial outlook for
the fiscal year 2024 and through fiscal year 2027 and other
expectations described under “Guidance and Outlook”.
Forward-looking statements are predictions, projections and other
statements about future events that are based on current
expectations and assumptions and, as a result, are subject to risks
and uncertainties. The preliminary financial results for the
Company’s fourth quarter and full year ended December 31, 2023
included in this press release represent the most current
information available to management. The Company’s actual results
when disclosed in its Form 10-K may differ from these preliminary
results as a result of the completion of the Company’s financial
closing procedures; completion of the audit by the Company’s
independent registered accounting firm; and other developments that
may arise between now and the filing of its Form 10-K. Many factors
could cause actual future events to differ materially from the
forward-looking statements in this press release, including but not
limited to: management’s financial outlook for the future; market
adoption of the Company’s pet service offerings and solutions;
failure to realize the financial benefits of acquisitions; the
ability of the Company to protect its intellectual property;
changes in the competitive industries in which the Company
operates; changes in laws and regulations affecting the Company’s
business; the Company’s ability to implement its business plans,
forecasts and other expectations, and identify and realize
additional partnerships and opportunities; and the risk of
downturns in the market and the technology industry. The foregoing
list of factors is not exhaustive. You should carefully consider
the foregoing factors and the other risks and uncertainties
described in the “Risk Factors” section of the Company’s filings
with the Securities and Exchange Commission, including the most
recent Annual Report on Form 10-K and Quarterly Reports on Form
10-Q. These filings identify and address other important risks and
uncertainties that could cause actual events and results to differ
materially from those contained in the forward-looking statements.
Forward-looking statements speak only as of the date they are made.
Readers are cautioned not to put undue reliance on forward-looking
statements, and the Company assumes no obligation and does not
intend to update or revise these forward-looking statements,
whether as a result of new information, future events, or
otherwise. The Company does not give any assurance that it will
achieve its expectations.
Wag! Group Co. Preliminary
Consolidated Balance Sheets (unaudited)
December 31,
2023
2022
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
18,323
$
38,966
Accounts receivable, net
10,023
5,872
Prepaid expenses and other current
assets
3,428
2,585
Total current assets
31,774
47,423
Property and equipment, net
347
88
Operating lease right-of-use assets
1,045
695
Intangible assets, net
8,828
2,590
Goodwill
4,646
1,451
Other assets
57
64
Total assets
$
46,697
$
52,311
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
9,919
$
7,174
Accrued expenses and other current
liabilities
4,015
4,765
Deferred revenue
1,781
2,232
Deferred purchase consideration – current
portion
547
750
Operating lease liabilities – current
portion
386
306
Notes payable – current portion
1,751
1,264
Total current liabilities
18,399
16,491
Operating lease liabilities – non-current
portion
816
435
Notes payable – non-current portion, net
of debt discount and warrant allocation of $4,380 and $7,008 as of
December 31, 2023 and December 31, 2022, respectively
25,664
24,970
Deferred purchase consideration –
non-current portion
—
493
Other non-current liabilities
172
—
Total liabilities
45,051
42,389
Commitments and contingencies
Stockholders’ equity:
Common stock
4
4
Additional paid-in capital
163,376
158,335
Accumulated deficit
(161,734
)
(148,417
)
Total stockholders’ equity
1,646
9,922
Total liabilities and stockholders’
equity
$
46,697
$
52,311
Wag! Group Co. Preliminary
Consolidated Statements of Operations (unaudited)
Three Months Ended
Twelve Months Ended
December 31,
2023
December 31,
2022
December 31,
2023
December 31,
2022
(in thousands, except per share
amounts)
Revenues
$
21,673
$
17,036
$
83,916
$
54,865
Costs and expenses:
Cost of revenues (exclusive of
depreciation and amortization shown separately below)
1,767
997
5,477
4,024
Platform operations and support
2,845
2,790
12,475
13,825
Sales and marketing
13,735
10,500
50,523
35,156
Royalty
—
—
1,791
—
General and administrative
4,736
3,869
19,223
32,415
Depreciation and amortization
503
140
1,673
571
Total costs and expenses
23,586
18,296
91,162
85,991
Interest expense
1,731
1,961
7,417
2,886
Interest income
(193
)
(275
)
(907
)
(416
)
Other expense (income), net
—
(8,750
)
21
4,958
Income (Loss) before income taxes and
equity in net earnings of affiliate
(3,451
)
5,804
(13,777
)
(38,554
)
Income taxes
14
—
93
13
Equity in net earnings of equity method
investments
—
—
553
—
Net income (loss)
$
(3,465
)
$
5,804
$
(13,317
)
$
(38,567
)
Earnings (Loss) per share:
Basic
$
(0.09
)
$
0.16
$
(0.35
)
$
(2.07
)
Diluted
$
(0.09
)
$
0.07
$
(0.35
)
$
(2.07
)
Weighted-average common shares outstanding
used in computing earnings (loss) per share:
Basic
39,416
37,372
38,402
18,641
Diluted
39,416
79,468
38,402
18,641
Wag! Group Co. Preliminary
Consolidated Statements of Cash Flows (unaudited)
Year Ended December
31,
2023
2022
(in thousands)
Cash flow from operating activities:
Net loss
$
(13,317
)
$
(38,567
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation
4,712
24,492
Non-cash interest expense
2,506
1,115
Depreciation and amortization
1,673
571
Reduction in carrying amount of operating
lease right-of-use assets
333
366
Change in fair value of derivative
liability
—
4,958
Issuance of Community Shares
—
1,971
Equity in net earnings of equity method
investments
(553
)
—
Other
12
—
Changes in operating assets and
liabilities, net of effect of acquired business:
Accounts receivable
(4,083
)
(3,234
)
Prepaid expenses and other current
assets
(395
)
534
Operating lease liabilities
(208
)
(334
)
Other assets
7
—
Accounts payable
3,995
4,853
Accrued expenses and other current
liabilities
(841
)
128
Deferred revenue
(478
)
344
Other non-current liabilities
172
—
Net cash used in operating activities
(6,465
)
(2,803
)
Cash flows from investing activities:
Proceeds from sale and maturity of
short-term investments
—
2,550
Cash paid for acquisitions, net of cash
acquired
(10,430
)
54
Cash paid for equity method investment
(1,470
)
—
Purchase of property and equipment
(361
)
(51
)
Other
—
(718
)
Net cash provided by (used in) investing
activities
(12,261
)
1,835
Cash flows from financing activities:
Proceeds from exercises of stock
options
104
17
Proceeds from debt, net of discount
—
24,123
Repayment of debt
(1,264
)
(565
)
Proceeds from issuance of Series P
preferred stock, net of issuance costs
—
10,925
Proceeds from Business Combination with
CHW, net of transaction costs
—
2,589
Other
(757
)
—
Net cash provided by (used in) financing
activities
(1,917
)
37,089
Net change in cash and cash
equivalents
(20,643
)
36,121
Cash and cash equivalents, beginning of
period
38,966
2,845
Cash and cash equivalents, end of
period
$
18,323
$
38,966
Wag! Group Co. Preliminary
Adjusted EBITDA (Loss) Reconciliation (unaudited)
Three Months Ended
Twelve Months Ended
December 31,
2023
December 31,
2022
December 31,
2023
December 31,
2022
(in thousands, except
percentages)
Net income (loss)
$
(3,465
)
$
5,804
$
(13,317
)
$
(38,567
)
Interest expense, net
1,538
1,686
6,510
2,470
Income taxes
14
—
93
13
Depreciation and amortization
503
140
1,673
571
Stock-based compensation
1,184
476
4,712
24,492
Integration and transaction costs
associated with acquired business
—
220
189
220
Severance costs
68
—
199
—
Legal settlements
163
—
663
—
Change in fair value of derivative
liability
—
(8,750
)
—
4,958
Issuance of Community Shares
—
—
—
1,971
Adjusted EBITDA (loss)
$
5
$
(424
)
$
722
$
(3,872
)
Revenues
$
21,673
$
17,036
$
83,916
$
54,865
Adjusted EBITDA (loss) margin
—
%
(2.5
) %
0.9
%
(7.1
) %
Wag! Group Co. Preliminary Key
Operating and Financial Metrics (unaudited)
Three Months Ended
Twelve Months Ended
December 31,
2023
December 31,
2022
December 31,
2023
December 31,
2022
(in thousands, except
percentages)
Platform Participants (as of period
end)
600
434
600
434
Revenues
$
21,673
$
17,036
$
83,916
$
54,865
Net income (loss)
$
(3,465
)
$
5,804
$
(13,317
)
$
(38,567
)
Net income (loss) margin
(16.0
) %
34.1
%
(15.9
) %
(70.3
) %
Net cash provided by (used in) operating
activities
$
(1,841
)
$
775
$
(6,465
)
$
(2,803
)
Adjusted EBITDA (loss)
$
5
$
(424
)
$
722
$
(3,872
)
Adjusted EBITDA (loss) margin
—
%
(2.5
) %
0.9
%
(7.1
) %
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240214548963/en/
Media: Wag!: Media@wagwalking.com
Investor Relations: Wag!: IR@wagwalking.com Gateway for Wag!: PET@gateway-grp.com
Wag (NASDAQ:PET)
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