Wag! Group (PET) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue declined 39% year-over-year to $13.2M, with a net loss of $6.3M and an Adjusted EBITDA loss of $1.9M, driven by a challenging marketing environment and Google search changes.

• Platform participants declined 41.9% year-over-year, impacting all revenue streams.

• Significant non-recurring expenses of $0.9M affected Adjusted EBITDA; excluding these, the loss would have been $1M.

• The company completed an $8.6M public offering in July 2024 to support liquidity.

• Substantial doubt exists regarding the company's ability to continue as a going concern due to ongoing losses and liquidity constraints.

Financial highlights

• Q3 2024 revenue: $13.2M (Wellness $6.5M, Services $5.4M, Pet Food & Treats $1.3M); net loss was $6.3M, and Adjusted EBITDA loss was $1.9M.

• Net loss margin for Q3 2024 was (47.4)% versus (10.1)% in Q3 2023; Adjusted EBITDA margin was (14.7)% versus 4.6% last year.

• Cash and cash equivalents were $8.4M as of September 30, 2024, down from $18.3M at year-end 2023.

• Net cash used in operating activities for the nine months ended September 30, 2024 was $5.3M.

• Cost of revenue (excluding D&A) was $1.1M, 9% of revenue; sales and marketing expense was $8.9M, 67% of revenue.

Outlook and guidance

• Q4 2024 revenue guidance: $15M–$18M; Adjusted EBITDA: $(0.5)M to $0.5M.

• Full year 2024 guidance: revenue $70M–$73M; Adjusted EBITDA: $(0.5)M to $0.5M.

• October wellness revenue rebounded 79% month-over-month, with positive trends continuing into November.

• Management expects operating losses to continue as investments in business growth persist.

• The company is actively seeking to refinance its debt before the August 2025 maturity but cannot assure success.