Q1 2025 Wag! Group Co Earnings Call
Matthew Koranda, Jason Helfstein, Jason Helfstein, Jason Helfstein, Jason Helfstein, Jason Helfstein
Speaker Change: Good morning. Welcome to the Wob Q1 2025 Ernie's conference call. At this time, online
Speaker Change: A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press the star's to roll on your telephone keypad.
As a reminder, this conference is being recorded.
Speaker Change: I'll now introduce your host, Greg Robles with Investor Relations. Thank you, you may begin.
Speaker Change: Good morning everyone, and thank you for joining WAG's conference call to discuss our first quarter 2025 financial results.
Speaker Change: On the call today are Garrett Smallwood, Chief Executive Officer and Chairman, Adam Storm, President and Chief Product Officer, and Alec Davidian, Chief Financial Officer.
Speaker Change: Before we get started, please note that today's comments include forward-looking statements.
Speaker Change: These 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. A discussion of these risks and uncertainties are included in our filings with the SEC.
Speaker Change: We also remind you that we undertake no obligation to update the information contained on this call. These statements should be considered estimates only and are not a guarantee of future performance.
Speaker Change: Also, during the call, we present both GAP and non-GAAP financial measures. Reconciliation to the most directly comparable GAAP financial measures are available in our earnings release which we issued today.
Speaker Change: The earnings release is available on the Investor Relations page of our website and is included in Exhibit and Form AK, furnished to the SEC.
Speaker Change: These non-GAAP measures are not intended to be a substitute for our gap results. And with that, I'll now turn the call over to Garrett Smallwood.
Garrett Smallwood: Good morning and thank you for joining us today to discuss our financial performance for the first quarter of 2025.
Garrett Smallwood: First, I will provide business updates and an overview of our results.
Garrett Smallwood: Following that, Adam, our President and Chief Product Officer, will share brief updates on our strategic priorities.
Garrett Smallwood: Then, Alec, our Chief Financial Officer will provide a more detailed analysis of our first quarter 2025 results and discuss our guidance for 2025.
Speaker Change: We began the year in line with and slightly ahead of our expectations from profitability standpoint, despite a year-over-year decline in revenue.
Speaker Change: Through discipline cost management and operational efficiencies, we delivered improved adjusted EBITDA, demonstrating our continued ability to adapt and execute in the current environment.
Speaker Change: Sales and Marketing Expenses declines slightly sequentially and 34% year-over-year, reflecting discipline, cost control, and a more efficient customer acquisition strategy through channel diversification.
Speaker Change: We're continuing to see the benefits from the operational improvements we implemented throughout last year, including the streamlining of headcount, automation, and the deeper integration of AI into our core workflows.
Speaker Change: At the same time, we also made progress on the Strategic Partnership Front. As previewed last quarter, all three of our major distribution partners we secured went live at the end of Q1 and are expected to drive meaningful impact within our insurance comparison business beginning in Q2.
Speaker Change: We're excited about the value these partners bring, especially in an environment where we are consciously reducing marketing expense.
Speaker Change: Looking ahead, we're well positioned to accelerate growth through the second quarter, supported by strong business trends through April and early May.
Speaker Change: We were made committed to evaluating all strategic options and will continue to fly updates as appropriate.
Garrett Smallwood: Thanks, Garrett. As we continue to operate with discipline and focus, the underlying fundamentals of our business remain strong.
Garrett Smallwood: In the services ecosystem, we're seeing steady demand as more pet parents return to the office and we remain focused on driving additional value to customers through product innovation and cross-el opportunities.
Speaker Change: Within wellness, the three major distribution partners that Garrett mentioned will enhance our marketing positioning and allow us to scale more efficiently, which is especially important as we maintain reduced marketing spend.
Speaker Change: At the same time, as more users engage with our platform, we're constantly exploring new ways to deliver more value and deepen engagement across our portfolio.
Speaker Change: We're optimistic about the momentum that we've seen in Early Q2 and remain focused on discipline and execution while growing efficiently. I will now turn the call over to Alec to discuss our financial performance in more detail.
Alec: Thanks, Adam. As Garrett mentioned, our Q1 results reflect our focus on operating efficiency and the initial innings of scaling new opportunities and partners to achieve improved profitability and growth into a G25.
Alec: In the first quarter, we had 472,000 platform participants in the WAG ecosystem.
Alec: as a sequential quarter of a quarter growth of 6%. Revenue and adjusted EBITDA loss worth $15.2 million and $1.2 million respectively, both declining slightly versus Q4.
Alec: From a revenue category results perspective, first quarter services was 4.9 million, while this was 9.2 million, compared food and treats was 1.1 million.
Alec: Total cost and expenses for the first quarter were down 25% euro over year by over $6 million specifically cost of revenue was $1.4 million in Q1 which came in at 10% of revenue just outside of our historic 7 to 9% range
Alec: Platform Operations and Support Expenses 2.5 million in Q1 or 17% of revenue, which is modestly above our historic 13 to 15% range.
Alec: We continue to thoughtfully invest in AI and other technologies to optimize our processes and systems and are seeing increased efficiencies with every passing quarter.
Alec: Delta Marketing expense was $10.4 million in Q1, which is within our historic 60-70%
Alec: We are continuing to thoughtfully approach customer acquisition and taking steps to expand scale in a strategic manner.
Alec: GNA expense was $4 million in Q1, which is within a historic 20 to 26% range driven by the fixed cost nature of GNA.
Alec: From a balance sheet perspective, we ended the first quarter with $11.7 million in cash and cash equivalent and accounts receivable.
Alec: As the board continues its strategic review, the board is evaluating potential options that could be accretive to our balance sheet and allow us to reduce our debt balance.
Alec: In closing, I want to reiterate that we remain focused on executing our strategy while continuing to assess opportunities that drive shareholder value.
Alec: We will continue to provide updates when appropriate and will continue to act in the best interest of Asha Holders.
Alec: And with that, I will now turn the call back to the operator.
Speaker Change: Thank you, and ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press a store followed by the number one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing any keys.
Alec: David, we draw your question, please press a store to one moment please for your first question.
Speaker Change: And we have no further questions at this time. I would like to turn it back to Mr. Garrett Smallwood for closing remarks.
Garrett Smallwood: Thank you everyone, and thank you so much to our wonderful WAG employees who are working so hard each and every day to deliver to our shareholders, our customers, and our end users, and with that, let's you go. Thanks so much.
Speaker Change: Thank you, presenters and ladies and gentlemen. This concludes today's conference call. You may now disconnect.
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Matthew Koranda, Jeremy Hamblin, Jason Helfstein
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