Wag! Reports Record Fourth Quarter and Preliminary Full Year 2023 Results

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

) %

 

Contacts

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.