Seth Basham: Got it. Fair enough. And secondly, could you expand on the insurance offerings and the Nationwide agreement that you signed? Is that the tip of the iceberg in terms of a more pronounced offering that you will have for our pet insurance?
Ron Coughlin: We said it very well. Yes, it’s €“ what we have said so far at the start of it. Let me start by saying this is a partnership with the number one player in insurance. So, we are talking scale right from the get-go, number one. Number two, nationwide came to us. In our prepared remarks, I talked about Petco becoming a platform company. Companies are coming to us to partner with us, whether that be Nationwide, whether that be Marriott, whether that be even Klarna to partner with us because we are increasingly giving them access and data against a very valuable customer base. We see insurance as a significant upside. If you look at it today, it’s about a $2.6 billion market, but penetration in the United States is relatively low vis-à -vis Europe, this is a big upside market.
Europe has roughly 25% penetration. U.S. is a fraction of that. So, big upside. We will be developing €“ we are developing a customized offering with Nationwide. It’s very easy to imagine bundling of insurance and veterinary care bundling of insurance and things like Vital Care, which is great because it’s a win-win, right, because if the pets are healthier, Nationwide costs are going to be lower. So, a lot of exciting things that can come of this. The other thing is they have a significant customer base that we can now market to. So, they might sell insurance to their existing customer base, but we can get €“ provide them with veterinary services. We can provide them at grooming services. We can provide them with merchandise. So, very excited about this partnership.
Operator: Our next question comes from Steven Forbes from Guggenheim. Please go ahead.
Julio Marquez: Hey guys. This is Julio Marquez on for Steven Forbes this morning. Just very quickly, congratulations on the quarter and on behalf of the Guggenheim team, our condolences to Yummy and good to see you guys setting up a fund in memory.
Ron Coughlin: Thank you.
Julio Marquez: So, in terms of Vital Care members, you mentioned an increase in POS conversions, I think if I heard that correctly. What exactly has changed there? And if you could, any color on demographics and new members and membership overall, specifically across generations. And maybe color on how €“ how you guys think about advertising across different cohorts there? Thank you.
Ron Coughlin: Sure. So, the fact that we accelerated our sign-up rate 40% is really exciting for us. The fact that we are now at 400,000, I think at Analyst/Investor Day, I said we are going to get to 1 million. It’s not a matter of if it’s when that timetable got accelerated with the success of some of the things we rolled out. One was companion animal, and we find companion animal customers, really, really interested in leaning into Vital Care, which is great to move that business. But the second thing, as you cited, is sign up at point of sale. So, before we enable that, you would €“ a customer would have to go on their phone and go through the whole registration process on their phone. Obviously, in some instances, that’s contingent on WiFi, etcetera.
Now, the Petco partner at the register at checkout can add on a Vital Care membership onto that purchase while they are having their credit card there for purchasing whatever they are in purchase. So, we saw a tangible increase in sign-ups. With that, we also needless to say, have more interactions from our Petco partners with customers because of that ability. So, it’s been a real win. And then back to Vital Care in terms of the Vital Care benefit to us, we get tangibly more traffic. 30% of these Vital Care customers are new to food with us, 30% are new to services with us. So, that means that we are getting more share of wallet of these customers. So, it’s been really, really effective. And I think there is a broader theme there which is Petco shifting more of its revenue base to recurring revenue, which makes us more predictable.
So, our revenue from recurring customers was up over 50%, and we are going to continue to drive into those recurring revenue programs like Vital Care, like insurance, like PupBox, etcetera.
