Maria Ripps : Great. Good afternoon, and thanks for taking my questions. First, you shared contribution to revenue growth in the quarter, but can you maybe just talk about some of the areas of strength in the quarter versus your internal expectations at the time you provided guidance back in August? And I guess how sustainable some of those factors are heading into Q4?
Charlie Wickers: Hi, Maria. It’s Charlie. I’ll take a first shot at that and see if Aaron or Brent want to weigh in. With regards to how we were thinking about the business last quarter, one of the biggest things that was an unknown for us was how the macro was going to play out starting here in Q3 and continuing into Q4. At that time, the best estimates that we had seen externally were regarding a recession with a chance of it hitting in Q4. As we went through the quarter, we just continued to see strength from the business. Not only did our product wins play out, but whatever level of macro disruption there was, we were able to overcome it. And so that contributed quite a bit to the quarterly beat. With regards to revenue, I walked through those.
But with regards to the expense dynamic, we have a pretty good line of sight to our costs. They are controllable. We have a team that is dedicated to staying within the parameters that they have set for themselves within a quarter. So really, the biggest, if you want to call it a surprise, was with regards to the macro, but it was to the positives.
Maria Ripps : Got it. That’s very helpful. And then is there any color you can share in terms of how you’re thinking about the level of investment next year? And to what extent is your investment cadence predicated on the macro environment?
Aaron Easterly: Well, it’s worth kind of dividing that a little bit into our investments and product versus marketing. Brent has talked about for several quarters now, our desire to move a little bit more up funnel and to reach more of that friends, family, neighbors segment that we think is our primary TAM opportunity. We expect that to continue. But to Charlie’s point, the team is very disciplined about working within the constructs of our unit economic parameters. We don’t drive growth for the sake of driving growth. We drive growth because we believe it’s profitable growth and a very profitable growth. So we think that that dynamic kind of plays out naturally. In a weaker environment, we’ll probably spend less than we otherwise would in a stronger environment, we’ll probably spend a little bit more.
With regards to the product side and our investments in new capabilities, we continue to think that we are generally staffed appropriately. We expect to continue to invest heavily into our existing product and make it work better and better and better. But we also expect to continue to experiment in new opportunities to address pet parents’ Pain Points, and so there’ll be a continued mix of that. For our product investments, we have a longer horizon. So we wouldn’t expect to whipsaw that investment around too much based on the ebbs and flows on a quarter-to-quarter basis on the macro.
Maria Ripps : Got it. That makes sense. Thanks so much for the call and congrats on the strong quarter.
Aaron Easterly: Thank you.
Operator: Thank you. [Operator Instructions]. One moment, please, for our next question. Our next question will come from Eric Sheridan of Goldman Sachs. Your line is open.
Eric Sheridan: Thanks so much for taking the questions. Maybe two if I can. One would be a longer-term one. How do you continue to sort of think about pricing of your services longer term in terms of elasticity and what that might mean for incremental margin or ability to reinvest back in the business over the long term, when you see some of the supply-demand dynamics around the services layer of the platform? That would be number one. And then you talked a little bit about cancellation rates. I think they’re still below sort of pre-COVID levels. Any update on things you’re doing to sort of address cancellation rates over the medium to long term, maybe bring them back into sort of a normative state? Thanks.
Brent Turner: Hi, Eric. We believe that the pricing in the marketplace continues to drift up, although not as quickly as it did before. If you look pre-COVID, we generally saw a drift up in the price points that providers charged, both as a function of market maturity as well as developing their own reputation on the platform. That drift up in price has been somewhat counteracted by market mix shifts. So if we expand more into geographies that are less developed and have lower cost of living, those may have lower price points. But when you look within service lines and within markets, there’s a pretty clear drift up. We do believe that the overall improvement in our cohorts is one of the things that contributes to our confidence in our ability to invest in both marketing and product.
It’s nice to see the return to normal almost with regards to our cohorts just improving year-over-year. We think part of that improvement gets automatically funneled back into our marketing, because it can increase what we’re willing to spend for a new customer without any change to our earn back period or LTV to CAC ratio. But we can also invest some of it in product as well, which we have a longer term view. But we don’t expect the pricing changes to be so material that that would materially change how we’re approaching our fixed cost structure.
Charlie Wickers: Eric, I’ll take your question on the cancellation rate. So a couple of quarters ago I brought up a product enhancement that we rolled out and has been burning in with time, and that’s what the ability for providers to be flexible or adjust their cancellation rate policies. We’ve continued to see the adoption of that tick up. About 25% of providers on the platform have now opted in for a three-day cancellation rate policy, a little bit more aggressive. That was up about 400 basis points year-over-year, so that’s continuing to burn in. We also look for other opportunities to make it more known for pet parents as they are looking, whether or not a provider has a higher level of last minute cancellations on their side.
So we are doing things to make it more obvious for users of the platform to understand cancellation rate dynamics and we’re seeing that play out with time. Here in Q3, we did see some ebbs and flow with regards to illness waves. But during this quarter, we saw our cancellation rate not be as affected as in the past quarters. So we do see some normalization taking place relative to illness. But we think with time, our cancellation rates could probably continue to drift down.
Eric Sheridan: Great. Thank you.
Operator: Thank you. Again, one moment please for our next question. Our next question will come from Tom White with DA Davidson and Company. Your line is open.
Tom White: Great. Good evening. Thanks for taking my questions. Two, if I could. I guess first, I think there’s some comment maybe from you, Aaron, about LTV for customers acquired in the quarter, kind of approaching all-time records. I was hoping you could just kind of unpack some of the drivers there. And then second, I’m curious about booking windows. One of the big OTAs talked about some expansion of the booking windows on their recent call and seeing kind of a strong pipeline of travel booked kind of in the first quarter. I’m curious if you guys are seeing kind of similar dynamics as it relates to your booking windows for overnight stays. I wouldn’t expect it to be maybe for as far out as kind of the first quarter. But just curious to hear your thoughts on how you’re feeling generally about visibility over the next several months. Thanks.
