Wag! Group Co. Q1 2023 Earnings Call
Okay.
Good day, and thank you for standing by and welcome to the Wag first quarter 2023 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press star one one.
On your telephone you will then hear an automated message advising your hand is raised.
Withdraw your question. Please press star one again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Dan Frankfort from ICR.
Good afternoon, everyone and thank you for joining Wags conference call to discuss our first quarter 2023 financial results.
Call today are Garrett solid Chief Executive Officer, and Chairman Adam Storm.
Evident and chief product officer.
Alec Davidian Chief Financial Officer.
Before we get started please note that today's comments include forward looking statements.
Forward looking statements are subject to risks and uncertainties and involve factors that could cause actual results to differ materially from those expressed or implied by such statements.
These risks and uncertainties are included in our SEC filings.
Also during the call we may present, both GAAP and non-GAAP financial measures.
A reconciliation to the most directly comparable GAAP financial measures are available in our earnings release, which we issued today. The earnings release is available on the Investor Relations page of our website and has included an exhibit in the form 8-K furnished to the SEC Lastly, you can find our earnings presentation.
Posted on our IR website and with the SEC.
And with that let me turn the call over to Garrett.
Thanks Dawn.
Good afternoon, everyone and thanks for joining us to discuss our first quarter 2023 performance.
<unk> delivered another quarter of impressive top line growth ahead of our expectations. We are broadening our reach adding go to non discretionary consumer premium pet care platform.
For me the pet industry by becoming an all inclusive trusted partner for the premium pet parent.
Our team is capitalizing on the secular growth in pet ownership and we are just getting started and providing an ever expanding array of products and services to our pet parents.
I'll begin today by giving a high level summary of our first quarter financial results for atom, our president and Chief product Officer gives an update on our strategy and key initiatives for 2023.
Alec our Chief Financial Officer will close out with a more detailed overview of our first quarter 2023 results our capital allocation priorities and our guidance for 2023, both revenue and adjusted EBITDA, both of which we are raising today.
Well I could exist to make pet ownership possible and to be the trusted partner and your pet's journey from poverty to senior daily to annually.
By growing our footprint in all corners of the pet care market. We are ensuring wag is there for pet parents every step of the way.
We accomplish this by focusing on disciplined growth as seen by our performance in the first quarter of 2023.
Thrilled by our ability to integrate new assets into the <unk> platform not only add value to our business, but also to the pet parents as demonstrated by the acquisition of dog food advisor Dot com and our entrance into the $62 7 billion dollar pet food and treats category.
This acquisition is just one example, how we are introducing our community to other valuable assets we have.
Excited about our entry into the dog food category as it is the largest growing pet care category in terms of Tam demonstrating how we are proactively managing and recycling our capital to maximize shareholder returns.
In the first quarter, we saw continued momentum across the business achieved record revenue of $26 million up a 113% year over year, including pet food and treats.
Our adjusted EBITDA loss was <unk> 4 million from $2 6 million loss in the same period last year.
We are proud to stay at this quarter marks a milestone revenue run rate for wag and we are now projecting EBITDA profitability for fiscal year 2023.
Our focus remains on striking a sustainable balance of gross margin and profit.
Especially considering the ever developing macroeconomic backdrop.
During the quarter platform participants increased to 611000, an increase of 88% year over year and wag premium penetration increased to 55% significantly ahead of expectations, even at the fully rolled out 14 90.
Nine new member price points.
Taking a step back approximately 70% of U S households own a patent to 2023.
We specifically target the premium pet parents or roughly 15% of household and the current market with a proven propensity towards premium innovation across pet categories.
In Q4, 2022, we tested wagged premium pricing, resulting in a price increase for new pet parents from 999 to 14 99 per months illustrating the resilience of our premium business in a tough macroeconomic backdrop.
We saw continued growth in <unk> premium in Q1 exceeding expectations, we faced headwinds in our services business due to severe storms and rain across California and the coastline.
Despite the headwinds due to inclement weather, we continue to believe that pet parents are planning to utilize wag services as a return to office and weather returned to normal and some of our largest and most penetrated markets.
This belief is rooted in the fact that premium penetration grew in the face of service softness demonstrating pet parents intention to use our products when the need arises.
Next we recognized seasonal tailwind in our wellness business as a result of pet adoptions in Q4, 2022, which pulled forward demand for pet insurance and wellness plans.
On that note we are thrilled to announce the addition of pop protect dot com to our suite of wellness products.
Well I guess now the exclusive marketing partner of Parker tax.
Only pet insurance plan with instant pay.
Our protector is the only brand in America to offer each customer and interest screen fee free and credit check free line of credit to cover veterinary bills. We.
We have successfully integrated <unk> into the padded pet insurance marketplace, which powers brands, such as Forbes and U S News.
In the first quarter, we saw an LTV to CAC ratio of six to one demonstrating our continued operational excellence and efficiency.
Organic user acquisition rate was 70%, which is a result of focus on the pet parent and pet caregiver experience.
Thoughtful virality and referral campaigns and strategic partnerships.
We remain excited about our ability to thoughtfully integrate and support pet parents throughout their pet's life through our new partnerships and initiatives.
Briefly touching on the supply side, we maintain supply and demand equilibrium through a variable platform fee, which averaged $53 17 in Q1 2023.
We have stated in the past, we believe that wagon vast gig in America, even in a tough macroeconomic environment.
Despite softening macroeconomic conditions, the demand to be a caregiver and our community is as strong as ever and we believe more and more pet lovers will turn to being a pet caregiving with wag to relieve a little stress get some sunshine and hang out with some key pumps.
To summarize I want to highlight my excitement for all of that lag has accomplished this quarter and since we've been public.
Our financial results demonstrate the effectiveness of our strategy and the benefits of continued investment in our current product offerings.
Our success underscores our capability to scale, our business across multiple markets within the pet industry driven by the inherent cross sell opportunities generated by our platform, we're committed to profitable growth for the remainder of 2023.
Please refer to our updated management presentation for more color on the success of our business and how far we have come in just four short quarters with real time insight into consumer trends, we are leaning into the fastest growing secular categories within the premium pet care market propelling our growth well ahead of the projections we put forward.
During our go public process at the end of 2021.
As Youll see we have been able to scale, our platform faster and more profitably than anticipated and well ahead of external expectations.
And with that I will turn the call over to Adam storm to provide additional insights into our strategy.
Thanks Garrett.
I'll now walk through the five top level elements of our 2023 strategy driving long term shareholder value and profitable growth.
One accelerate growth in existing markets to expand premium subscription offerings.
<unk> platform expansion for opportunistic M&A.
<unk> operating scale.
Coming off a strong year in 2022 this quarter showed an acceleration of growth in existing markets capitalizing on our return to office trend and post pandemic returned to normal.
<unk> back to work parameter remained steady hovering just below 50%.
We believe the back towards trend will continue slowly, but surely as individuals returned to the office due to labor market pressures.
We believe the demand for high quality personalized petcare far exceed the existing market given the increased rate of pet adoption and increase spend per pad.
As Garrett mentioned, we saw positive seasonality and significant growth in our wellness business in Q1 as a result of outside pet adoptions in Q4 of 'twenty two.
As a result, we now have two types of seasonality in the business travel and pet adoptions.
Further the trend and the Humanization of pets, beginning traction as millennials and Gen Z increasingly consider the needs of their test to be just as important as those of the rest of the family.
Moving onto our premium subscription penetration in 2022, we hit our long term target of 50% penetration due to the success of our second growth driver expanding subscription offerings.
As a refresher wap premium subscribers receive a 10% discount on all services VIP customer support unlimited 24, seven expert pet advice and exclusive partner offers all of which drive customer satisfaction and retention and their willingness to purchase our expanding set of products and services.
This quarter, we've expanded our offerings to include lifesaving recall alerts from our partner at Dawn could adviser and 50% off your first box a farmer's dawn premium pet food subscription.
Our premium penetration at 55% came in far ahead of plan even at the increased price of 14 99 per month as a result of the ever increasing value of the bundle.
We will continue to focus on increasing the value of the wag premium subscription for every member through additional benefits partnerships and offers.
Third we remain focused on platform expansion and diversifying the products and services within the platform, including new features such as the launch of service extensions, where pet caregivers, who are having a great time on a walk or drop in service and extend the service real time for 20 or 30 minutes.
This drives increased.
LTV and pump happiness in.
In the back half of 2023, we're excited to begin testing pet caregivers samples, where pet caregivers working with top brands can provide pet parents and their pumps customized treats foods and vitamins for purchase through the wag App.
Growing the marketplace through thoughtful product development and expanding the set of services available through our platform is integral to our growth plan in 2023.
Fourth we plan to prioritize growth through opportunistic M&A as we did in 2022.
<unk> strategically positioned to capitalize on pet specific M&A as a function of our deep understanding of the consumer and our technology first DNA, which allows us to rapidly integrate and expand our platform.
In early April we acquired Max from a top tier digital platform for modern pet essentials.
Well higher expands <unk> reach into the pet supplies market and deepened our commitment to the needs and standards of the premium petcare.
In addition, this improves our ability to thoughtfully curate the wag brand through caregiver apparel and collaborations.
The final element of our strategy is operating scale, which I will briefly touch on and Alex will expand on our unit economics and fixed cost operating leverage drove operating margin improvements across the board. This quarter adjusted EBIT margin improved from minus 22% to minus 2% year over year, a 20 percentage point improve.
<unk>.
As Gary mentioned, we are now intensely focused on positive adjusted EBIT margin for the remainder of 2023, which will achieve through efficient marketing payback cycles continued operational excellence platform integrations and cross sell and best in class customer experience.
I will now turn the call over to Alex to discuss our financials in more detail.
Alec.
Thank you Adam and thank you everyone for joining our first quarter 23 earnings call.
It has been an excellent start to the year with growth outpacing our expectations through a three diversified revenue streams.
US on a path to achieve profitability this year.
I'll begin with a review of the first quarter 'twenty three financial results, followed by our 23 guidance, which we are raising today.
Q1, 'twenty three with another new record quarter for us with revenue of $20 6 million up 113% from Q1, 'twenty, two including pet food and treats revenue that was a new revenue stream for us this quarter.
Adjusted EBITDA loss for the quarter improved $4 million compared to $2 1 million in Q1, 'twenty two ahead of expectations.
We have an effect doubled the business in the space of 12 months, while reducing our adjusted EBITA loss by 85%.
Our continued acceleration as the outcome of our commitment to disciplined growth our ability to expand our platform to earn the entire lifecycle and continued product innovation.
As awareness of pet wellness offerings in the U S. <unk>, we see a long runway for pet wellness offerings.
As a reminder, pet insurance penetration in the United States with less than 4% versus well over 20% in the UK.
Our wireless offerings are comprised of wireless plans, a pet insurance comparison marketplaces, and pet prescriptions of like growing from $5 $2 million in Q1 'twenty two.
$13 9 million this quarter.
We continue to add new insurance providers to the pet insurance comparison marketplace, which is available to pet parents to well known brands such as port tractor supply.
News and many of them.
Okay.
Q1, we added the poll protect brand to our insurance comparison marketplace and all the exclusive distributors of this differentiated insurance product.
Service revenue grew from $4 4 million during Q1 last year to $5 $4 million this quarter.
We have seen a steady increase in walk us retaining to the office and increased travel versus year ago.
Finally for Q1, our newly quiet Doug feet advisor contributed $1 4 million of revenue to offset revenue stream pet food and treats.
Okay.
Turning to expenses during the first quarter.
Cost of revenue, excluding depreciation and amortization was $1 million in Q1, 'twenty, three or 5% of revenue compared to <unk> 8 million or 8% of revenue in Q1 'twenty two.
The dollar amount increase was a direct result of increased demand driving incremental payment processing fees and background check costs, the increase in pet parent activity and applications.
Nevertheless cost of revenue decreased as a percentage of revenue as our technology costs scale with right.
We are demonstrating incredible control over our variable and fixed costs and plan to continue our focus on cost control measures for the remainder of 'twenty three.
Operations and support expenses $3 2 million in Q1, 'twenty, three or 15% of revenue.
Compared to $2 6 million or 27% of revenue in Q1 'twenty two.
Okay.
While there has been an increase in expense in dollar terms year over year. This increase has been principally driven by personnel related compensation costs and stock compensation expense.
However platform operations and support expenses approximately half as a percentage of revenue as a result of our platform scale and operational excellence.
Okay.
Sales and marketing expense was $13 3 million in Q1, 'twenty, three or 64% of revenue compared to 63% of revenue in Q1 'twenty two.
We continue to strategically invest dollars in partnerships.
The initiatives and launches and general marketing spend in order to capture net new pet parents and cross sell them complementary platform offerings within the wag ecosystem.
However, as seen by a flat percentage of revenue year over year, we remain judicious with spend.
G&A expense was $5 million in Q1, 'twenty, three or 24% of revenue compared to $2 4 million or 25% of revenue in Q1 'twenty two.
The dollar amount increase in G&A expenses, driven by personnel related compensation costs and stock compensation expense as we hire and retain key talent M&A related costs and public company compliance, including expenses related to the compliance with the SEC and NASDAQ, including legal audit and consulting fees.
That being said G&A expense as a percentage of revenue is flat compared to a year ago, even with public company compliance costs illustrated by our ability to scale to date and into the future.
Adjusted EBIT, which is a key profitability measure that we use to manage the business improved $1 7 million adjusted EBITDA loss of $4 million.
This compares to an adjusted EBITDA loss of $2 1 million in Q1 'twenty two.
To put that into perspective, adjusted EBITA margin improved approximately 20% from minus 21, 8% in Q1 2002 to minus one 9% in Q1 'twenty three.
Our focus for the remainder of 2003 is crossing the line adjusted EBIT profitability.
Turning to our balance sheet, we ended the first quarter with approximately $33 million in cash cash equivalents and accounts receivable.
Our balance sheet remained strong in the context of a pricing kashif.
In a comfortable position to fund our growth objectives, while also maintaining flexibility to pursue strategic M&A, when we believe opportunity aligns with our goals.
Okay.
Moving to our guidance of 23.
Art mentioned, we are thrilled with another quarter of impressive growth and as a result, we are raising the full year 'twenty three guidance previously provided on our fourth quarter 'twenty to cool.
Okay.
For the full year 'twenty three we now expect.
Total revenue in the range of $80 million to $84 million, an increase of 46% to 53% year over year and eight.
8% improvement versus our prior forecast at the midpoint of the range.
Adjusted EBIT in the range of zero to.
Two $1 million or 150% improvement versus the prior forecast at the midpoint of the range.
The forecast incorporates our total target of the rule of 50, meaning revenue growth plus adjusted EBIT margin north of 50% for the full year.
With our updated full year guidance, we are projecting revenue growth of 50 plus percent year over year, and adjusted EBIT margins of 1%.
This range for a while that was comfortably to meet our projected revenue targets and maintain a profitable growth trajectory.
Our financial guidance includes the following considerations.
Severe weather effects service demand and holidays drive incremental overnight versus daytime status demand.
Going forward, we expect the skew to overnight in daytime services, depending on summer and holidays, most likely in Q2 and Q4.
Pet adoption during the holidays also pet insurance penetration and demand for wellness plans.
Going forward, we expect seasonal strength in Q4 and Q1 for wireless.
We anticipate that continued growth in the industry driven by factors such as rising pet ownership pet insurance.
<unk>, an increasing demand for premium products and services will have a positive impact on our financial performance in 2003, including on our entrance to pet food and treats.
General trends related to the state of the economy interest rates and consumer confidence we.
We have factored in potential risks opportunities related to these macroeconomic factors in order to accurately forecast our financial performance.
We recognize that there may be potential risk to our financial performance in 'twenty, three such as disruptions to global supply chain.
Changes in consumer behavior due to unexpected events, such as delayed or lower than expected return to office.
Digital and performance marketing trends the potential.
Impact of AI, and our ability to expand through partnerships.
In summary.
Strong Q1, 'twenty three results demonstrate our ability to execute and achieve impressive growth in a tough macroeconomic backdrop as we lean into the fastest growing sector of the categories within the pet care market that deliver the most value to pet parents and to shareholders.
We remain focused on disciplined operational excellence and delivering shareholder value and achieving profitability for the fiscal year 'twenty, three while delivering targeted 50% year over year growth.
And with that we now welcome Q&A.
Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Our first question comes from Matt Koranda with Roth <unk> Kim you May proceed.
Hey, guys good afternoon.
Just wanted to see if you could touch on that.
Pretty large acceleration.
During the quarter.
Any more color on where you're seeing success.
Any comments on sort of the balance between pet parents and caregivers with platform. It was helpful to hear that demand from the carrier side, So really strong.
Maybe I'll come back with.
The large increase for us on a quarter over quarter basis.
Yes.
Hey, Matt Garrett great to hear from you.
Taking a step back we saw 611000 platform participants in Q1 was about 88% year over year growth.
We saw that kind of across the platform, we saw some services growth.
We saw some.
<unk> demand and then we obviously saw significant wellness demand.
Equally spread alongside the revenue beat proportionately as a reminder, we tried it we really spent a lot of time managing the supply and demand equilibrium services, we really don't want to get out of balance on it has become.
The real problems on the demand or the supply side, so really no imbalance or nothing different than prior quarters in terms of caregivers, but I think we called this out in Q4 Q4, we're going to be kind of a seasonal in terms of services and why you saw kind of a deceleration in Q4, and then a reacceleration in Q1.
Hope that helps.
Okay great.
And then.
Just I mean.
Our strong growth.
Curious how many more.
The key drivers of revenue this quarter, how do you expect that to trend for the rest of the year in the conference and the guidance that you provided.
I understand.
Of what.
Wellness revenue obviously.
The insurance marketplace likely being the largest.
How is the.
If you could touch on those.
Sure.
Growth is not at all.
Is your expectations sort of the other components of revenue that would be great.
100%.
So wellness as a reminder, a few buckets of products.
Things like wellness plans with our pet insurance comparison marketplace.
It's 20% extra pet advice a lot of that is going to be in terms of Q1, and what youll see kind of throughout the rest of the year is going to be just a function of seasonality Q1, you saw significant amount of <unk>.
New pets adopted as part of the holidays in December .
And so we saw that kind of demand spike.
Early in Q1, I think we'll see some kind of taper off event. Some normalization in Q2 Q3, and then probably another kind of Reacceleration in Q4, specifically within pet insurance and wellness plans.
And again I think we're really thinking about this year is 50% year over year revenue growth for the totality of the year and then really focused on EBIT margins. This year. So we're targeting a 1% plus EBIT margin, which gives us a guidance of zero to one so I think when you're really thinking about how we manage the bottom just manage the top.
Probably answer your question, we do expect some seasonality in wellness and Q1 and Q4.
Okay.
Makes sense I'll, just sneak one more in.
Thanks.
Just wanted to Johnson adviser acquisition that looks like its running nicely.
Curious if you can maybe you can talk about if youre seeing anything.
Synergies.
That acquisition.
Yes.
Just any early commentary.
Turning.
Yeah, absolutely. So we are thrilled to be.
The owners of dog food advisor Dot Com, which we believe is the number one marketplace for pet food and treat advice on the internet and huge thanks to Dr. Mike <unk> started that would say many many years ago and are taking care of his community.
Our next question comes from Tom White with D. A Davidson you May proceed.
Hey, this is why it's wants in on for Tom Thanks for taking our questions.
I just wanted to talk a little bit more about category share trends. So far this year could you give us a little bit better sense of what you see as the key investments needed to further improve your category position and how investors should think about the growth output for the yield from those investments looking out over the medium to long term.
Yeah. So right now I think you know we operate in a couple of different interesting sectors of pet spend a great deal from you and thanks for the time.
The first being obviously services kind of where most famous for things like on demand dog walking onto been dropping sitting on boarding training et cetera, second would be wellness, which we talked about earlier things like wellness plans and pension costs and everything else and then most recently in pet food and treats and I think where you're going to see from wag and management, specifically its going to lean into the fastest growing secular pet trends, so where do we see the.
Most kind of Tam upside, where pet parents naturally pulling us forward and where are we then going to find the best row as the best ROI kind of at the time in R&D. So so far because of kind of the slow back to work and kind of people returning to normal slowly, but surely the last three years and just generally pet trends, we have found those to be wellness pet food.
Treats and services probably in some some of that order. So we're investing in all you know thoughtfully, but we're really leaning in at any given time into what we think is the fastest growing category.
Hope that answers your question I mean, we think the time is kind of dynamic or is that theres, a best time at any given time.
Got it Okay. That's very helpful. And then just related to back to work we noticed that the barometer is actually starting to pick up again over the past few weeks you may be talk about whether that's in line with what you've seen in terms of demand so far in the second quarter, and where you see that going.
Yeah, I mean look I really have been.
Repetitious to give my opinion or thoughts on where people will land with back office I think it's been three years now almost of.
<unk> are saying, we're going to go back to normal and not really going back to normal so I'd hate to say.
But I think it's gonna happen in general our expectation is a very slow and steady return to office led by Red States frankly like more open state. So, let's say things like Texas, Florida, et cetera, and probably the lagging states would be things like places like New York and in California.
So we're being really conservative about our back to work assumptions and look at that accelerates that would be upside.
And I think certainly you can the castle backward.
Barometer is a good indication of where people are and what's happening, but it'd be you know.
I would not want to say that it's definitely to get to 80% anytime soon.
It's helpful.
Yep Yep, that's great. Thank you very much.
Yeah.
Thank you.
Our next question comes from Jack <unk> with Craig Hallum Capital Group You May proceed.
Thanks, guys. This is Jack on for Jeremy Congrats on the great quarter and thanks for taking the questions.
My first one would be so it sounds like demand for that to be a P. C. G still remains strong could.
Could you talk a little bit about the rationale behind the the web business as an option for <unk>.
$199 option by.
The way I read it looks like only new applicant concurrently use this option.
Probably test it with existing caregivers, but it's really just one of our thoughtful kind of rollouts for the community.
Great. Yeah. That's helpful color and then kind of following up on the last question I guess, how do you guys think about just a hybrid hybrid work environment. Overall I mean, it seems were to be where most workplaces and states are trending right now I mean does that hurt.
Benefit your platform overall.
I mean, frankly, we would hybrids great like we just see junior office once or twice a week, that's how often average pepper in choosing wax right. So we're not looking for and we're not expecting frankly, a for a five day work week in office anytime soon or we're expecting is a slow and steady Monday Wednesday, or Tuesday, Thursday returned office those of day, you're leaving.
And your proper for a friend behind for 610 12 hours a day and there was the days you end up using a wax surface doing research on your pet food, Rob dating her pet insurance plan et cetera, et cetera, So again, our assumptions or.
Slow and steady and we don't need you everyday.
Got it and then just last one for me you guys mentioned the headwinds seen from weather in California, I guess more broadly how's the services segment performing you know coastal more urban areas versus suburban areas, maybe is it still highly.
Highly concentrated in the urban areas are spreading a bit more to the suburbs just kind of what you're seeing regionally yeah, what I'll, let him take that he spent the most time thinking about kind of geography's out of it's gonna take that one sure sure. So certainly there was you know and in fact with with the old the California's storms and and Q1 had an effect on.
Service volume basically less people.
Less people in office unless people traveling you know <unk> My services in terms of the go forward you know what I'd really break it down along the line. You said you know geared said earlier, it's back to work barometer is really gonna be the driving force for the dog walking business in terms of house or.
<unk> split out between you know tier one tier two tier three markets, it's not to say that the the gigantic majority of the businesses in New York L. A San Francisco, there really is a long tail too.
These services are being performed the the the the bigger driver is really what does the return to office trend look like over the next two years and I think it's fair to say, we all thought that that was going to trend we'd be about 50% on <unk>.
A council back to work by now so our I think our <unk> go forward expectations are that that's just gonna you know pick.
Pick up very moderately over the next 24 months.
Great. That's it for me, thanks, guys and congrats again.
Thank you and as a reminder to ask a question you will need to press star one one on your telephone.
Our next question comes from Brian Dobson with short in capital markets. You May proceed.
Hi, Thanks, very much so the.
The pricing power in the subscription segment is is impressive considering that you saw greater penetration during the quarter Uhm, what does that tell you bet where pricing could ultimately go there.
Hey, Brian I'll take this one even though Adams.
Most passionate about web premium a general I think if you. So yes, let me take a step back Gray question. Thanks for it we certainly believe and are surprised frankly about the fact that.
<unk> premium penetration.
Actually accelerated in Q1 255 per cent.
And that's with the 14 99 wag premium monthly fee rolled out to 100 per cent.
So it's frankly took us by surprise, we are kind of sensitive to the fact that the market is kind of very dynamic right now in terms of the macro and I think generally consumers are feeling significant pricing pressure. So I don't think I really our goal is is maxing out or taking you know.
100 per cent of our pricing power and putting it to work right now what we're really focused on is the long term goal of the building up its platform. So what other benefits can we give to the wag premium subscribers. What other ways can we tie together you know the way you shop for pet food and the way you buy Petrie, Sir how you pipette insurance and how can we make that all.
Part of whack pregnant I think Adam alluded to it and it is March specifically around Hey, we we know a enable people to get a discount on their first box of premium pet food or were they get re callers and kind of kind of save their pets live at the foods, if the food's bad. So I think we're sending most of our time there but to answer your question like yes. It certainly was surprising that as we did not expect this level of acceleration in the corner.
Great Thanks and you.
Can you give us any color on on what the contribution might be from your partnership with <unk> kind of how you see that evolving over the next 12 months.
It couldn't be more excited about the partnership with pop protect dot com, which we believe is an industry first kind of brand and experience for pet parents, taking a step back. The reason we're so excited about it cause it was a partnership is one <unk>.
It's a product that's highly differentiated in the market to it's a <unk>, it's a product that pet parents frankly need argued.
<unk> picking evers needed and three we obviously believe it's a great fit for our audiences and so it's still early innings on where we expect that to be Bryan. We certainly think it'll help you know continue to power, our wellness growth and and put it.
Upside there, we haven't really kind of split out how we're thinking about that business, but generally very excited about the opportunity to to promote it and integrated.
Great Thanks, and congratulations on the Beach <unk>.
Thank you.
Our next question comes from.
Jason Helsing with Oppenheimer and you May proceed.
Hey, guys multitasking so.
I do my best.
So I just wanted to make sure I got that so the increase in platform participants.
From the 434 to 611, so how much of that was seasonality versus what was it with any of that from dog advisor.
Or is it just like organic rose.
Yeah. The majority of that is gonna be from the existing lines of business small amount for net dot <unk> dot com, we have separate out, but it's mostly organic majority of it okay.
And then when we think about.
Then was there any marketplace dynamics around I think service revenue is kind of flattish I think like down a little bit sequentially.
How do you think about seasonality versus other marketplace dynamics going on or.
Whatnot.
Services, specifically, we think is a function of weather last thing people want Jason and you probably feel this pain is a wet dog, especially when you're not home, especially a wet dog running around and making herself comfortable on your couch.
So bad weather in Q1 really effects dog walking, which as you know as an important product in our services ecosystem. We don't expect that trying to continue expect you know going forward.
Some resilience and some acceleration.
Also say that in Q4, and you don't see that as much effect because the sitting in boarding time period, where like the dog is with you or the cats with any more of that.
Makes ship the city Yeah people are still travel so cute you should be better generally you know expect you'll hopefully they can come out whether to kind of calm itself, but hopefully you been following interest been brutal on the coast.
Yeah, and then when you think about pet insurance.
Just broadly what do you think you guys actively tried any differently than the other solutions that have been in market day.
And what are you referring to the interest in the market place in general, though I mean like what are you. What do you believe you're doing differently right I mean, you know.
<unk> has been out there for awhile, there's been other solutions like just having.
Obviously, you're showing pretty good growth in the wellness business I mean.
What do you think you're doing different that consumers are really finding a feeling.
Yeah.
<unk>. So let me, let me break out what I kind of value I've found in our in our customers certainly share with US what is hands down believe we have the best comparison engine.
For pet insurance products and wellness plants like if you're shopping for a pet insurance. We believe that we have the best way to shop for that with the best matching we have the best reviews, we have the best content, we get the best U G. C. Like we can generally make sure you're getting the right product for your pet Nowadays you know, Jason it's actually very difficult to find the right pet insurance products.
To we can kind of think through what other things your pet's gonna need right like once you find pet insurance, we can be really thoughts about the wireless plan, you know, making sure you're getting the right food food in trade. So just like taking care of your pets, just your general pet wellness and ability to kind of delight. Your pet and then finally in terms of pop protect protect us is incredible.
The only from I understand any pet insurance product with instant pay so no interest no fees you have a credit the availability of credit like you use. It you know it's just it's amazing products. So strong around recommend checking out pop protect dot com, but with a bunch of these factors that combine to make you know shopping for pet insurance delightful with wagg frankly.
And then just like one last one I mean, it does seem like.
Against their will you're going to see more west coast people going back to work you know <unk>.
Some point in the second quarter are definitely in the third particularly at large tech companies.
You know that should be a tailwind.
You know from what I heard it sounds like you're not meaningfully baking that into your all your guidance is that fair. That's right. We certainly hope so, but we're not basing that on the model we're not based on the motto on that assumption frankly.
Thank you very much.
And thanks for multitasking.
Thank you and this concludes the Q&A session and I'd like to turn the call back over to Gird Smallwood for any closing remarks, I want to thank everyone for taking the time to attend today and please check out the updated wag management presentation of Wag Dot co any investor Relations section Hope you have a great rest of your day.
Thank you. This concludes today's conference call. Thank you for participating he may now disconnect.
Mmm.
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