Rover Group, Inc. (NASDAQ:ROVR) Q1 2023 Earnings Call Transcript

Rover Group, Inc. (NASDAQ:ROVR) Q1 2023 Earnings Call Transcript May 9, 2023

Operator: Good day and thank you for standing by. Welcome to the Rover First Quarter 2023 Earnings Conference Call. Please be advised, today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Walter Ruddy, Investor Relations. You may begin.

Walter Ruddy: Good afternoon. Thank you for joining us to discuss Rover’s first quarter 2023 earnings results. In this call, we will be discussing the results announced in our press release issued today after the market close, which is available on our Investor Relations website at investors.rover.com. As a reminder, this call is being webcast live from our Investor Relations website and is being recorded and will be available for replay from our Investor Relations website shortly after the call. With me on the call this afternoon is Aaron Easterly, Chief Executive Officer and Co-Founder; Brendan Turner, President and Chief Operating Officer; and Charlie Wickers, Chief Financial Officer, Rover. Before we begin, I’d like to remind everyone that management may make certain forward-looking statements within the safe harbor provisions of the Securities Litigation Reform Act of 1995 on this call, including future GAAP and non-GAAP financial and operating results and targets, business metric performance in 2023 financial guidance, marketing and other strategies, anticipated future growth, prospects, margins, profitability and liquidity, expected investments and initiatives, macroeconomic, public health and travel factors and trends, partnership and expansion opportunities, U.S. and non-U.S. market growth expectations and opportunities and other future events, industry and market conditions.

Forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results or performance to differ materially from those expressed or implied during the call, including the risks and uncertainties included under risk factors and elsewhere in our Form 10-K filed on March 09, 2023, and in our upcoming first quarter 2023 Form 10-Q. All forward-looking statements speak only as of today and are based on current expectations, estimates, forecasts and projections and the beliefs and assumptions of management. We undertake no duty to update this information unless required by law. You should not place undue reliance on forward-looking statements as they are not guarantees of future performance. We will also discuss certain non-GAAP financial measures.

The most directly comparable GAAP financial measures and historical reconciliations to the most directly comparable GAAP measure can be found in the non-GAAP reconciliation supplement posted under News and Events, Presentations at investors.rover.com. For the reasons discussed in the non-GAAP reconciliation supplement, we have not provided the most directly comparable forward-looking GAAP measures or a reconciliation of any forward-looking non-GAAP measures. Non-GAAP financial measures should not be considered as a substitute for or superior to GAAP financial measures. Unless otherwise noted, we will compare all Q1 2023 metrics to Q1 2022 in this call. With that, let’s get started. I’ll now turn the call over to Aaron Easterly, Co-Founder and CEO.

Aaron?

Aaron Easterly: Thanks, Walter and thank you everyone for joining us today. I will start by outlining our high-level first quarter 2023 earnings results and give a few highlights before turning over the call to Brent to provide additional details on our bookings and investments. Charlie will then wrap the prepared remarks by walking through the financials and our detailed guidance before we take questions. We had an outstanding first quarter, surpassing our expectations. As a result, we are increasing our revenue and adjusted EBITDA guidance for the year. First quarter gross booking value was $209 million, while revenue was $41 million, and adjusted EBITDA was $575,000 or 1% margin, our first ever Q1 with positive adjusted EBITDA.

Beyond these top level results, the quarter was highlighted by the following: first, we had significant flow through of incremental revenue to adjusted EBITDA. We efficiently invested in marketing while remaining focused on managing expenses. This positive adjusted EBITDA margin of 1% is an improvement from the negative 17% margin a year ago. Second, we saw solid new customer bookings of 208,000, a 16% increase year-over-year. We are pleased with our growth in new customers and believe that our business has continued to scale at a rate that outpaces the natural growth of the category. Third, our customer cohort performance increased. Expected revenue from customers acquired during the quarter outpacing last year’s record driven by higher ABVs and additional bookings per customer.

We believe these improvements are partially attributable to our ongoing efforts to improve our value proposition and customer experience. Additionally, while the new customers have continued at their record pace, we’ve also seen that the pre-COVID customers have now recovered to the incremental net revenue trends we would have expected has there been no pandemic. Fourth, we have had sustained strong growth in our non-U.S. markets. Q1 GBV was up 68% year-over-year. Importantly, the same improvements to our unit economics that led to U.S. market share gains are starting to play out in Europe. We believe this allows us to be even more aggressive in driving growth going forward. And finally, as part of a suite of initiatives intended to drive cost-effective awareness and deepen our day-to-day relationship with pet parents, we launched Rover Gear, a collection of leashes and harnesses.

They are designed to meet the needs of pet parents and care providers, incorporating feedback from our customers in addition to our unique expertise. We are proud of the team’s accomplishments this quarter, and there’s a lot of opportunity that remains. We have helped over 4 million pet parents book loving and trusted care, including nearly 1 million new pet parents in the past 12 months. With approximately 87 million pet-owning households in the U.S. alone, we have a significant opportunity to further our mission of making it possible for everyone to experience the unconditional love of a pet. Our Q1 performance was strong, and we see an exciting opportunity for further progress towards our long-term operating objectives. With that, I’ll turn the call over to Brent to discuss our bookings and operational performance.

Brent Turner: Thanks, Aaron and hello to everyone on the call. I’ll begin by providing more commentary on the performance of the business and driving booking volumes. I’ll then move to marketing expenses and the execution of our marketing strategy. Finally, I’ll say a few things about our product investments during the quarter. In Q1, we continued to generate significant new and repeat business from the platform. Total bookings increased 27% versus Q1 2022. Repeat bookings were 1.3 million, a 29% increase year-over-year and new bookings totaled 208,000, up 16% year-over-year. We are particularly pleased with our new bookings performance. Although we observed sluggish category demand through April, the Rover marketplace outpaced the category nicely.

Our growth over 2022 was also positively impacted by the soft Q1 last year due to the Omicron wave. Turning to marketing, in Q1, non-GAAP marketing expense was 22% of revenue in the middle of our target range of 18% to 25%. As we stated in our previous call, we are gaining conviction around the returns for our more nascent marketing channels. As a result, we are expanding our marketing efforts even amidst small swings in category demand. For example, in the United States, we concluded a test of next door advertising with positive results that we plan to build on in Q2. We also increased spend on YouTube, some of which represented new additional testing. Further, we kicked off the development of a meaningful refresh of our video creative in order to leverage a more rapid test-and-learn methodology.

We plan to deploy this approach across YouTube and other video channels such as streaming and linear television. We also concluded our first YouTube test in the UK with positive results that we plan to build on in Q2. Finally, Rover’s integration into the current season of the television show, Workin’ Moms, saw its first airing in Canada on CBC, and we are excited about its global expansion on Netflix, which started in April. Last, I would like to make a few comments about our product, marketplace and engineering teams’ contributions to the strong quarter. In considering improvements to Rover, we are always led by feedback from the pet parents and care providers on our platform. We also believe that most improvements in 2-sided marketplaces, if conceived and executed properly, translate directly into powerful financial returns for the business.

Against that backdrop, we are happy to report that Q1 investments to simplify our booking flow are projected to help Rover acquire an incremental 15,000 customers over the next 12 months. Investments to help care providers understand how to succeed on Rover have boosted new customer conversion and repeat booking rates on the platform and continued investments to increase the effectiveness of matches between pet parents and care providers have further nuts new customer acquisitions upwards, enabling us to outpace industry demand. We anticipate similar performance from these teams in the coming quarters. It is also worth mentioning that these improvements are on top of the platform benefits from recent investments in trust and safety and the scalability of our operations, which we expect to be additional contributors to our financial performance in the future.

We are proud of our results this quarter as our team continued to drive both new and repeat customer bookings while building scale. Now I’ll hand the call over to Charlie to provide further detail on our financial performance.

Charlie Wickers: Thanks, Brent. I’ll start by providing an overview of our financial results for the quarter, followed by guidance. As Aaron stated, the quarter was strong, including the significant step forward of achieving our first ever Q1 with positive adjusted EBITDA, driving a significant improvement in adjusted EBITDA margin year-over-year. This demonstrates the margin leverage possible as we continue to scale toward our long-term targets. For the quarter, revenue was $41 million, up 48%, while GBV was $209 million, up 36%. The increase in revenue was primarily driven by the 27% growth in bookings, a 7% increase in ABV and an improvement in cancellation rates to 11.6% from 12.7% in Q1 2022. Additionally, there was a positive impact from an increase in our recognized take rate from 22% in Q1 2022 to 23.2% in Q1 2023, which benefited from the cancellation rate improvement and the continued upward mix shift in owner and provider side fees.

Our first quarter ABV was $142, up 7% year-over-year. As expected, this rate of growth has continued to moderate. The main driver of ABV growth was an increase in average price per unit of service. Our first quarter cancellation rate was 11.6% and an improvement of 110 basis points versus the first quarter of 2022 as we lapped Omicron and following the trends we have observed in third-party disease measurement data. As discussed on prior calls, an improvement in cancellation rate is meaningful to our margins as 100 basis points in cancellation rate has tended to equate to approximately 100 basis points in adjusted EBITDA. Moving to expenses, due to the disciplined approach of our team, we were able to efficiently invest in marketing to drive growth while managing costs effectively.

While the majority of our bottom line beat was driven by strength in revenue, we also yielded efficiency and expenses, specifically in operations. Non-GAAP operations and support decreased approximately $300,000 quarter-over-quarter and decreased from 18% to 16% as a percentage of revenue year-over-year as our consolidation to a single outsource provider started ahead of schedule. As Brent mentioned, non-GAAP marketing expense was 22% of revenue in the middle of our target range and an improvement from 25% to 22% as a percentage of revenue year-over-year, demonstrating efficiency even during our seasonally low period. Consistent with our prior comments, we continue to believe that our cost structure is generally right-sized for the operating environment, which resulted in modest growth in our remaining expense items.

Adjusted EBITDA was $575,000 or a margin of 1%, up from the adjusted EBITDA loss of $4.8 million or a margin of negative 17% in Q1 of last year. Our improvement in adjusted EBITDA was a result of strong revenue, along with the moderate increases in fixed cost investments and marketing spend within our target range. We remain committed to showing the strong margin leverage potential of our business and our ability to scale profitably. Moving to the balance sheet, our cash, cash equivalents and investments was $265 million as compared to $273 million at year end 2022. The decrease was driven by prepaid, primarily for annual contract renewals of approximately $5 million and $3 million of spend on our stock repurchase program from its inception in mid-March through the end of the quarter.

Through May 3, we have repurchased a total of 1.7 million shares for an aggregate purchase price of $7.4 million. I would like to give thanks to the whole team at Rover for their dedication and discipline in continuing to grow the business while scaling our margins. In total, our business continued to deliver fantastic top and bottom line results during the quarter. Now turning to guidance. As Aaron discussed, we are excited by our performance to date, though we recognize that much of the year is still in front of us. As such, we are raising our full year guidance to account for our over-performance in Q1 while continuing to include potential impacts of a mild to moderate recession and other macro disruptions related to public health concerns or travel.

A recession that is more mild or occurs later than we modeled it may result in incremental upside to our new increased guidance. For the full year 2023, we now expect revenue of $207 million to $217 million, which at the midpoint would be a 22% increase in revenue over 2022 and adjusted EBITDA of $29 million to $34 million. For the second quarter, we expect $51 million to $53 million in revenue, which at the midpoint would be a 20% increase in revenue over Q2 2022, and $3 million to $5 million in adjusted EBITDA. In summary, we are excited about our overall performance during the quarter and look forward to continuing to execute against our priorities this year to drive growth in the top line while marching toward our long-term margin goals.

We look forward to connecting with you again to discuss our progress in Q3. And with that, we will now turn to questions. Operator, can you open it up for Q&A?

Q&A Session

Operator: Thank you. Our first question comes from Tom White by with D.A. Davidson. Your line is open.

Tom White: Great. Thanks for taking my questions. Maybe two, if I could. I guess, first, when you guys look out over the landscape this year and beyond, what do you see as some of the key investments maybe you need to make on the caregiver or supply side of the platform that will continue to drive more caregiver growth, more engagement with caregivers, just ways to maybe gain deeper relationships and market share with them. That would be number one. And then just secondly, in the prepared remarks, I thought I heard, you mentioned maybe sluggish category demand in April. Could you maybe just unpack that a little bit explain what you’re seeing? Thanks.

Brent Turner: Hi, Tom, it’s Brent here. Thanks for the questions. On the supply side, I think we’ve said in previous calls that in general, in terms of acquiring the amount of suppliers that we need, we don’t really have to do a lot from a marketing standpoint. Generally speaking, in terms of helping our care providers succeed in the platform, our general strategy is to move – to continue to make investments in the platform such that they understand how to unlock the benefits of working on the platform and that we have gotten ahead of a lot of the pain points that they – are in front of them as they work with pet parents. I think over the past year, we’ve increased in our conviction that we’ve done a good job of anticipating those pain points and addressing them, but we’ve not done as good a job of communicating how to leverage them.

And so a lot of our investments this year are towards making sure that our care providers understand how to leverage the platform, if that makes sense. The category demand, we were talking about that as – particularly, as it relates to new customer. We use – in terms of our own metrics, we use a basket of terms in Google that are – that were observable in Google Trends that go toward our category. And in Q1, we – and over time, those terms – the volumes under those terms have been sort of predictive of what sort of demand we see across the platform. We observed the volume changes in that basket in Q1 to be down low double digits, 10% to 20%. I’m pretty happy with how we responded to that, though, recent improvements from a product standpoint in terms of conversion rates have helped us continue to outpace the category, as we said on the call.

Tom White: Okay. Great, thank you very much and nice start of the year.

Operator: Our next question comes from Cory Carpenter with JPMorgan. Your line is open.

Danny Pfeiffer: Hey, guys. This is Danny Pfeiffer for on for Cory Carpenter, I just have two quick ones. For the first one, as we’re seeing many companies pursue, how cost savings by means of reducing office real estate in more flexibility on remote work. Can you talk about any color on return on office trends? And then on the second, can you talk about what drove the improvement in cancellation rates in 1Q and if you’re making any assumptions around how cancellation rate will trend within your guide? Thanks.

Aaron Easterly: Yes. Danny, nice hearing from you. Tell Cory, we said hi. With regards to in-office policy, we operate a hybrid structure, where employees can come in or work from home for the most part. We have some teams that are required to be in the office multiple days per week and then other people that are full remote. We don’t see a big need to change that right now. We would expect to evolve it as we collect more data and how we’re doing as a company and how employees are doing. But we don’t expect to have major changes on our lease obligations in the near-term, although we could opportunistically look at some opportunities they present themselves.

Charlie Wickers: And Danny, this is Charlie. With regards to the cancellation rate improvement, there is a couple of things that have been going on. About 12 to 18 months ago, one of the things that we introduced was the ability for providers to adjust and change their cancellation rate policies. Every – previously, they were pretty favorable to pet parents where cancellations could take place all the way up until the day the stay was supposed to start. With the introduction of those and with the burn in of providers setting a little bit more stricter cancellation rate policies over time, that’s helped improve cancellation rates modestly. In addition to that, and I tried to hint on this on the call as well. One of the macro trends that we have seen since the pandemic started and played out over the last couple of years, as there was a pretty high correlation between our – the relative change in our cancellation rate, with the relative change and the amount of disease that we were able to see in third-party wastewater data tools.

And what we had observed is during Q1 of this year, that started to tick down quite a bit relative to the year ago period and a lot of last year. And we saw our trend in cancellation rates to the same.

Danny Pfeiffer: Thanks, guys.

Operator: Our next question comes from Eric Sheridan with Goldman Sachs. Your line is open.

Eric Sheridan: Thanks so much for taking the questions. Obviously, in the release, you talked about increasing customer lifetime value, and you’ve made a couple of references around marketing and churn so far. Can you help us better understand some of the unit economics that you’re seeing and how we should be thinking about driving higher lifetime customer value over a multi-year time frame for the platform and how you’re thinking about what you’re learning today and possibly projecting that forward away from what may or may not happen in the near-term from the certainty standpoint. And then looking out to the remainder of the year, is there any way to better unpack how you’re thinking about return to work, business travel, consumer travel, some of the inputs that you’ve talked about before that could create either upward or downward volatility in your results? Thanks so much.

Aaron Easterly: Sure. Let me start with the second piece first. As Charlie alluded, we do continue to think it’s prudent to plan for a mild to moderate recession such that there will be some headwinds on leisure travel. When we look at the year-over-year data from Expedia bookings, TSA, at a high level, it seems like the growth in leisure travel is moderating and maybe will moderate even further into Q2 and Q3. So I think that’s kind of our baseline case. Now with regards to return to work, we think that there is a possibility that, that would accelerate our daytime services business, and that’s very much possible, although, we have not seen much of a mix shift year-over-year between our overnight services and our daytime services.

So if that effect is going to happen, it hasn’t happened yet in a big way, but we will keep an eye on that during Q2. With regards to the LTV issues, we’ve seen gains on both the price side as well as the actual usage side for the bookings per customer. And we’ve also seen the pre-COVID cohorts kind of return to normal, even though COVID is not gone. That gives us, I would say, increasing confidence that the steadiness of those cohorts has a chance of returning to the clockwork-like predictability we saw pre-pandemic, although we’re not ready to say that for sure yet. But gives us optimism on that, I think historically, if you looked at what we have in our investor presentation, we look at just a 5-year period for LTV to CAC ratios.

And typically, we want to target something in the 5% to 7% range or 5:1 and 7:1 range with that. So we feel like everything we’re seeing is consistent with our long-term operating principles.

Eric Sheridan: Great. Thanks for the color.

Operator: Our next question comes from Maria Ripps with Canaccord. Your line is open.

Maria Ripps: Great. Thanks for taking my questions. First, and you touched on this a little bit, but could you maybe share a little bit more color on what you are seeing in terms of the macro environment and its impact on demand relative to what was initially contemplated in your full year guidance? It seems like things are improving. So, maybe you could unpack a little bit sort of some of the specific customer behavioral changes that you are seeing? And then I have a quick follow-up.

Aaron Easterly: Hi Maria, it’s good to hear your voice. With regards to kind of what we are seeing versus the plan, we generally have seen the actual be pretty darn close to what we thought was going to happen in the year, including some relative softness in the baseline category demand on a year-over-year basis. And that seems to be relatively backed up with some of the other travel-related companies as well as the TSA data and other third-party sources. So, there have been some surprises on the operational side being a little bit more efficient. There have been some positive surprises on the prior to COVID cohorts. We have seen some better returns out of our product team than we had kind of forecasted this point in the year. But the overall demand environment is pretty similar to what we modeled.

Maria Ripps: Great. And then secondly, how should we think about sort of the cadence of new product features or offerings coming to the platform over the next few years? And you have talked about sort of enabling a more seamless booking experience and improving trust and safety on the platform. Is there any additional color you maybe can share around those efforts?

Aaron Easterly: Sure. I would say, we expect our product enhancements or releases to roll frequently, like every couple of weeks, every month. Some of those may be barely noticeable to customers accepting certain use cases. And then we would expect to have some bigger bets often in the forms of limited tests in certain geographies or initial rollouts that are larger in nature in terms of changing our product mix, but to roll out a little bit less frequently. We expect that we can drive return via our product investments in our core business for quite a while. I think we were bothered by the tough decisions we had to make on the size of our product team during the pandemic. And our view was that the work wasn’t done in terms of just optimizing the core business. So, there is room to run.

Brent Turner: Maria, this is Brent. I just kind of wanted to add, jumping on top of that. We both on the usability side, on the matching side, on the additional investments to continue to drive more trust on the platform and the perception of the trustworthiness of the platform. We still don’t feel like we are that far along. We feel like there is quite a bit of investment that we could make that will be financial contributors to the business and that we can keep doing that for a while.

Maria Ripps: Got it. That’s very helpful. Thank you both very much.

Operator: Our next question comes from Andrew Boone with JMP Securities. Your line is open.

Andrew Boone: Hi. Good afternoon. Thanks for taking my questions. You guys talked about some marketing categories that are seeing traction. How should we think about marketing investments for the remainder of the year? And then I wanted to go and touch on international. I think it sounded like you guys continue to see strong traction in Europe, can you just double-click on that and give us an update more broadly in terms of what you are seeing and anything you want to highlight in terms of product or geographic areas that are outperforming? Thanks so much.

Brent Turner: Hey Andrew, it’s Brent. Thanks for being on the call. Yes. We are pretty pleased with marketing thus far. And our general hope is that we can continue expanding our activities. The thing that we are most excited about is we have gotten to the place, particularly with our upper funnel channels, video, the things that we are doing that are not search related that we feel like we can continue running those even with the little degradations in – or a little sluggishness in the category demand, which is not necessarily how we felt in years past. That has been bolstered by product wins that have helped us on the unit economics front, and we hope to continue doing that. Now obviously, there are things that could happen in the economy that would make particularly some of our up-funnel spend less practical.

But in general, our plan is to keep doing that and to keep expanding it. Now, it’s worth reminding you that we run – we do not run any media for pure awareness purposes. We hold everything we run to new customer marginal CAC limits, cost of customer acquisition. And so to the extent that we are running it, we feel like we have a demonstrable way inside the business to demonstrate why that’s a good decision on those terms.

Aaron Easterly: Andrew, this is Aaron. With regards to international, we did say that there was a lot of strength. GBV grew 68% year-over-year and a take into account exchange rate fluctuations. But we have also seen subcategories have grown much faster. So, for example, in Europe, we are relatively late to provide the type of support for CACs that we wanted to. And CAC bookings grew 200% year-over-year in Europe, so really great performance. Additionally, the thing that we are probably most excited about in international is less so the numbers and more of the underlying dynamics of the marketplace. We have seen in the past that when we can get to enough scale that the engine and the algorithms that power the marketplace start to make really good decisions on how to surface information to pet parents that we can see ourselves a step-up, not just in terms of revenue, but the drivers of unit economics.

And when that happens, we can actually deploy more capital and drive customer acquisition more aggressively with no deterioration in unit economics. And we are starting to see that in Europe. So, to the degree that we have been growing fast, that’s great to the degree the foundation is even stronger by which to cement our position and drive share gains and competitive differentiation that feels even better.

Andrew Boone: Thank you.

Operator: One moment for our next question. Our next question comes from Ralph Schackart with William Blair. Your line is open.

Ralph Schackart: Good evening. I have two questions, please. First, just on the linearity of cancellations, maybe can you sort of talk about how that trended during the quarter? And maybe, I guess how perhaps that progressed through Q2 to the extent you can comment on that, any trend line that should draw there? And then I have a follow-up.

Charlie Wickers: Hi Ralph, it’s Charlie. With regard to the cancellation rate, especially on a year-over-year basis, we saw a lot of improvement in January as we were lapping Omicron. And the improvement started to decrease a bit throughout the rest of the quarter. What does that mean from a linearity standpoint, it means as we exited the quarter at that 11.6%, we were roughly that all quarter long. With regards to Q2, it’s pretty early with regards to the booking dynamic within Q2 itself. A lot of the bookings start to get built up towards end of quarter stay starts. So far, trend is holding, but too soon to call how it’s going to land.

Ralph Schackart: Great. And maybe, Aaron, just on a previous comment or question on Europe, you had sort of made some comments that once you get the scale, the underlying engine really kicks in, you could deploy capital at strong unit economics. Are you at that scale point yet? Just any color, sort of the sense of where you are and how quickly you could move capital, I guess at an increasing rate into Europe? Thank you.

Aaron Easterly: Sure. Our scale depends on market. So, Germany is still very nascent. UK and Canada is a little bit more developed. We have seen really good growth in UK, France, Spain and Germany, even though it’s off of a really small base. We see typically a more gradual evolution in the unit economics. So, people are more likely to contact service providers, people are more likely to book service providers and they contact them. People are more likely to come back. We see word-of-mouth go up as a percentage of customer acquisition. And those things kind of – if they can drift up in tandem, it’s really good, because they are basically all multiplicative. But I would say, I don’t think we feel like any of them have reached full maturity yet in our European markets. So, we think there is more room to run there, but the fact that the trends look so good, makes us really happy.

Ralph Schackart: Okay. That’s helpful. Thank you.

Aaron Easterly: Sure.

Operator: One moment for our next question. Our next question comes from Lauren Schenk with Morgan Stanley. Your line is open.

Lauren Schenk: Great. Thanks. I just have a follow-up on something we talked, I think on the last quarter call around some pricing sensitivity that you thought you were seeing, particularly on the new customers on and you were running some tests. Any update there on testing our strategies to maybe bounce it out a little bit better? Thank you.

Brent Turner: Hey Lauren, it’s Brent. It’s good to hear you. So listen, we are continuing to test, not a lot to update. We are increasing our conviction that there is price elasticity. We are not sure that the marketplace is worse off from a revenue standpoint as a result of slightly lower units. We were not sure that the trade between higher price and lower units as a bad one. The more complicated thing that we are trying to test is to figure out in a world where we do not set the price for our providers, how to go out and leverage that insight to make a better trade-off if there is one to make, but we do not have an update around results that we feel good about.

Lauren Schenk: Thank you.

Operator: And I am not showing any further questions at this time. I would like to turn the call back over to Aaron Easterly for any closing remarks.

Aaron Easterly: Thank you all for listening to Rover’s Q1 earnings call. We appreciate your ongoing interest in the business, and we are excited to share more about how the year unfolds in the next quarter. Thanks again.

Operator: Ladies and gentlemen, this does conclude today’s presentation. You may now disconnect and have a wonderful day.