Delivers Record Revenue Growth and Significant Margin Improvement

Raises 2022 Full Year Guidance for both Revenue and Adjusted EBITDA

SAN FRANCISCO, Nov. 10, 2022 (GLOBE NEWSWIRE) --  Wag! Group Co. (the "Company” or “Wag!”; Nasdaq: PET), which strives to be the #1 platform for busy pet parents, offering on-demand access to 5-star pet care, pet insurance options, and expert pet advice, today reported results for its third quarter, which ended on September 30, 2022.

“Wag! generated record financial performance in the third quarter, which is a testament to the resiliency and diversification of our business model within the non-discretionary pet care industry. Our trusted platform is transforming the pet health and wellness space, as we simplify access to premium services for all pet owners,” said Garrett Smallwood, CEO and Chairman of Wag!.

“The healthy fundamentals underpinning our growth and platform expansion positions us well for Q4 and beyond. Given the underlying strength in our core business and the momentum we’re seeing in the wellness category, we are increasing our 2022 outlook for revenue and Adjusted EBITDA guidance. We will continue to be disciplined operators and remain hyper-focused on managing growth, margin, and profit, all working towards delivering long term shareholder value,” concluded Smallwood.

Third Quarter 2022 Highlights:

• Revenue increased 161% to $15.4 million, compared to $5.9 million in the third quarter of 2021.
• Net loss of $(40.9) million, inclusive of one-time transaction costs of $39.5 million, compared to net income of $1.6 million in the third quarter of 2021, inclusive of one-time PPP loan forgiveness. Net loss excluding these one-time items improved to $(1.4) million, compared to $(1.9) million in the third quarter of 2021.
• Adjusted EBITDA improved to $(0.5) million, compared to $(2.6) million in the third quarter 2021.
• Gross Bookings increased 85% to $25.3 million, compared to $13.7 million in the third quarter of 2021.

Recent Business Highlights:

• Increased active Pet Parent Wag! Premium penetration to 53% in the third quarter of 2022, which surpassed the 50% long-term target we set at the launch of the program.
• Reached a total of 473,000 Platform Participants in Q3’22, an increase of 22% from Q2'22.
• Released Wag! Neighborhood Network in November 2022, which enables Pet Parents to not only filter across more than 21 unique specialties but also discover a great local Pet Caregiver right in their neighborhood. Demonstrates commitment to the strategy element of accelerating growth in existing markets through a best in class experience.
• Launched 30 minute drop-ins nationwide. We now have a full suite of 20-, 30-, and 60- minute drop-ins to complement our walking products. These drop-ins are particularly popular with puppies, older dogs, cats, and during days of inclement weather.
• Launched partnership with Babylist, the leading vertical marketplace and commerce destination for expectant parents, to better the experience for pets and their expectant families.
• Innovated the Pet Caregiver and Pet Parent experience — including launching the Premium Benefits Center to offer exclusive discounts on pet care products, debuting multi-day rebooking functionality, and improving the browse and book experience.
• Closed acquisition of Furmacy, Inc. in October 2022.
  

Full-Year 2022 Guidance

Wag! is raising its guidance for the year ending December 31, 2022, as previously presented in its Second Quarter 2022 Earnings Release and Investor Presentation available at investors.wag.co/news-events/overview:

For the full-year of 2022, we now expect:

• Revenue in the range of $51 million to $52 million, a 7% improvement versus our prior forecast at the midpoint of the range.
• Adjusted EBITDA loss in the range of $5 million to $6 million, a 39% improvement versus our prior forecast at the midpoint of the range.

Our financial guidance includes the following assumptions:

• A continued trend in return-to-office, as measured by the Kastle back-to-work barometer.
• A normalized travel season.
• Continued acceleration in wellness and stickiness in Wag! Premium as a result of marketing efficiency.
  

Wag’s Third Quarter Results Conference Call

Wag! will host a conference call and live webcast today, November 10, 2022, at 4:30 p.m. ET to discuss financial results. To access the live conference call, please pre-register here. Registrants will receive a confirmation with dial-in instructions. A live webcast of the call can be accessed by using this link. Following the live call, an archived webcast of the conference will be available on the investor relations page of the Company’s website at investors.wag.co/.

Wag! also provides announcements regarding financial performance and other matters, including SEC filings, investor events, press and earnings releases, on our investor relations website (investors.wag.co/), and/or social media outlets, as a means of disclosing material information and complying with disclosure obligations under Regulation FD. The list of social media channels that Wag! uses may be updated on the investor relations website from time to time. In addition, you may automatically receive email alerts and other information about Wag! when you enroll your email address by visiting the “Email Alerts” section at (investors.wag.co/ir-resources/email-alerts).

About Wag! – Wag.co

Wag! strives to be the #1 platform for busy pet parents, offering access to 5-star dog walking, pet sitting, expert pet advice, wellness plans, and one-on-one training from Wag!’s community of 400,000 local pet caregivers nationwide, in addition to pet insurance options from the leading pet insurance companies. Making pet parents happy is what Wag! does best. With safety and wellness at the forefront, Wag! has a trusted record of experience with more than 12 million pet care services completed by pet caregivers on the Wag! Platform, across 5,300 cities and 50 states, with pet parents rating 96% of services as 5-star. Wag! also operates Petted.com, the nation's largest pet insurance comparison marketplace, Furmacy.com, a local pharmacy which supports busy veterinary clinics, and the Wag! Pet Caregiver App, which empowers pet caregivers to care for pets in their neighborhood and earn real money. For more information, visit wag.co.

Non-GAAP Financial Measures and Other Operating Metrics

Adjusted EBITDA is a non-GAAP financial measure defined as net income (loss) adjusted for (benefit from) income taxes, interest income (expense), depreciation and amortization, transaction costs and stock-based compensation expense. Additionally, we exclude the impact certain non-recurring items which are not indicative of our operating performance, including but not limited to, business combination transaction costs and PPP Loan Forgiveness. Adjusted EBITDA provides a basis for comparison of our business operations between current, past, and future periods by excluding items from net income (loss) that we do not believe are indicative of our core operating performance.

Gross bookings is a non-GAAP financial measure defined as the total dollar value of a transaction booked via the platform for pet and wellness services, in each case without any adjustment for discounts or refunds, Pet Caregiver earnings and Pet Parent incentives. Bookings are an indication of the scale of our current platform, which ultimately impacts revenue.

Take rate is a non-GAAP financial measure calculated as revenue divided by gross bookings. Take Rate is an indication of marketplace economics, and is impacted by product offerings with different margin structures. We use take rate to identify key revenue drivers in our marketplace.

Platform Participant is a non-GAAP financial measure defined as a Pet Parent or Pet Caregiver who transacted on the Wag! platform for a service in the quarter. Services include dog walking, sitting, boarding, drop-ins, training, premium telehealth services, wellness plans, and pet insurance plan comparison.

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some of the forward-looking statements can be identified by the use of forward-looking words. Statements that are not historical in nature, including the words “anticipate,” “expect,” “suggests,” “plan,” “believe,” “intend,” “estimates,” “targets,” “projects,” “should,” “could,” “would,” “may,” “will,” “forecast” and other similar expressions are intended to identify forward-looking statements. These statements include those related to the Company’s ability to further develop and advance its pet service offerings and achieve scale; ability to attract personnel; market opportunity, anticipated growth, and future financial performance, including management’s financial outlook for the future. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to: management’s financial outlook for the future; market adoption of the Company’s pet service offerings and solutions; the ability of the Company to protect its intellectual property; changes in the competitive industries in which the Company operates; changes in laws and regulations affecting the Company’s business; the Company’s ability to implement its business plans, forecasts and other expectations, and identify and realize additional partnerships and opportunities; and the risk of downturns in the market and the technology industry. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of the Company’s Registration Statement on Form S-1 filed on September 14, 2022, as amended on October 31, 2022, and other documents filed, or to be filed, by the Company from time to time with the Securities and Exchange Commission, including our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and the Company assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. The Company does not give any assurance that it will achieve its expectations.

Contacts Media:

Wag!: Media@wagwalking.com 

Investor Relations:

Wag!: IR@wagwalking.com 

ICR for Wag!: WagIR@icrinc.com 

Financial Statements and Adjusted Reconciliations

[1] Includes stock-based compensation expense in 2022 incurred in connection with the Business Combination of $23.9 million. Of the $23.9 million, $2.8 million is included in Platform operations and support, $2.1 million in Sales and marketing, and $19.0 million in General and administrative expenses on the condensed consolidated statement of operations.
[2] Of this amount, $1.8 million is included General and administrative expenses and the remainder as contra revenue on the condensed consolidated statement of operations.
[3] Relates to the changes in the fair value of Forward Purchase Agreements that were entered into prior to the closing of the Business Combination and is included in Change in fair value of derivative liability on the condensed consolidated statement of operations.
[4] Excluding the impacts noted in [1] and [2] above, Platform and Operations Expense is approximately 18% of revenues, Sales and marketing approximately 59%, and General and administrative approximately 19% for the three months ended September 2022.