Wag! Group Co. (NASDAQ:PET) Q1 2024 Earnings Call Transcript

Garrett Smallwood: Yeah. When we first — let me just take a step back. We have been talking about the veterinary clinic as like the Holy Grail for pet parents. For what it’s worth in our research and everything, we understand pet parents trust the vet office, and specifically their individual veterinarian, above anybody else. Like, if you think about the advice they get from that vet, that is the advice they will take 70%-plus of the time. And so for us, this is not like a new thing. We’ve been thinking about the vet office for years, frankly. We bought us really small business called Furmacy. I think, I mean, you can correct me. I think it’s something like 18 months ago. And our whole plan of that business was to figure out the vet office would really sticky and beautiful software that simplified the pet parents’ life.

And so as you all know, SaaS revenue is the best. It’s sticky. It’s recurring. That’s going to be the structure of that product. And if we can figure out how to acquire these customers through the vet office, the cross-sell should be pretty incredible. And so the reason we launched it, to answer your question, is it’s ready to be a go-to pharmacy. Our Furscription software is ready to rock. It’s going to be in the hands of vet clinics pretty quickly, as Adam mentioned, and it’s actually a really awesome product. We believe it’s the first of its kind of e-prescribing software for the vet clinic, things like Surescripts almost. And yeah, we couldn’t be more excited to kind of enter this channel, so just another fast moving water with a really sticky, durable revenue that we’re excited to kind of surprise and play.

Operator: The next question is from Greg Pendy from Chardan.

Greg Pendy: All right. Thanks for taking my question. Can you share any metrics that you might be seeing in terms of monthly engagement as you’re adding more services to the platform? Has that been changing at all? I think you had — people are engaging maybe seven times per month on average with the app?

Adam Storm: I’ll go ahead and take this one. Broadly speaking, yes. The cross-sell tends to get better as we add more products to our product suite. I think that’s what’s kind of — how does do these incremental — the incremental deal is seeing how premium membership has driven additional usage of our wellness products or additional usage of our pet food and treat products. And I think that with the announcement of WeCompare and the announcement of Furscription, this spider web of products where you might not need any given product at any given time, but you need something we offer that has all the internal metrics we looked at. It’s like the more we offer, the stickier the entire platform becomes. So yes, I think that the platform approach is working.

Greg Pendy: Great. And then just one more follow-up. Have you seen any changes? It seems like things have stalled macro-wise on return to office just for the services side. Has that impacted your view, or has it stayed the same per month when we last heard in the fourth quarter?

Garrett Smallwood: Yeah, I’ll take this one [indiscernible] such have strong opinions here. I think [indiscernible] even said he loved for more people to go back to the office, he loved for people to be taking the Ubers to and from. We said at the beginning this year, even early last year, we don’t really expect much change if there’s change at all upside. And so certainly, we think kind of castle back toward the back half of entrepreneurs kind of stalled out, frankly, that’s okay. Like, we had other fast-moving water were in and out of. But if it does accelerate, that would certainly be a great tailwind for the services business. Otherwise, like services is great. We like that business. We’re going to wait for the time and place to lean back into it. It just won’t be until kind of more people are mobile and, frankly, more people in the office. Adam, you can add anything you want.

Adam Storm: No. Yeah, that’s a good summary.

Greg Pendy: Thanks a lot.

Operator: [Operator Instructions]. The next question is from CJ Dipollino from Craig-Hallum.

Unidentified Analyst: Good morning, everyone. [Indiscernible] for Jeremy Hamblin this morning. Thanks for taking the question. Wanted to call out the severe weather that you highlighted in your guidance. We note severe levered weather kind of lingered in Q1, curious what you’re kind of calling out moving forward. Maybe it’s the tornadoes in the Midwest or just sort of what you’re seeing there?

Adam Storm: Yeah, the nice thing about having significant geo diversification is that any given weather events does not materially move the whole business. That’s — there’s the West, the West Coast got kind of like Miami weather in Q1, and there’s a number of important cities on the West Coast. So it can affect the overall numbers. But I wouldn’t read too much into kind of just like normal seasonal weather patterns. They’re going to affect the cities that they hit, like you might expect. But it’s not something that we’re overly concerned about. I think about it more as like a risk factor than something that needs to be baked into guidance.

Unidentified Analyst: Okay, got it.

Garrett Smallwood: The only thing that I’d add there is, clearly, another is like if it was a big example, but like in Q3, have a bunch of important cities are seeing, or even Q2, a really awkward or incremental weather. You might see a little bit of a difference in services, but TAM’s point, you’re talking a few percentage points, not 20 percentage points.

Unidentified Analyst: Right. And so it sounds like you’re not really seeing any lingering effects in Q2?

Adam Storm: I mean, start it started the quarter. It’s a small part overall. Nothing crazy yet. But look, I don’t want to jinx weather it’s actually not a bad luck. I’ve been in California, it’s been raining a ton. So yeah, but nothing so far.

Unidentified Analyst: Okay, cool. Understood. And then one more, if you don’t mind. I know you said WeCompare is not really baked into 2024 guidance, just kind of curious when that’s going to start showing up on the P&L?