Wag! Group Co. (PET)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 revenue was $15.17M, down 34.7% year over year but roughly flat sequentially; GAAP net loss was $(4.89)M with loss per share $(0.10) . Adjusted EBITDA was $(1.24)M (−8.1% margin), versus +$0.17M (0.7% margin) in Q1 2024 and $(0.96)M (−6.2% margin) in Q4 2024 .
• Management said results were slightly ahead of internal profitability expectations and in line on revenue; noted early Q2 strength and all three major distribution partners went live at the end of Q1 to drive Wellness growth beginning in Q2 .
• Full-year 2025 guidance was maintained: revenue $84–88M and adjusted EBITDA $2–4M; Board continues strategic review aimed at potentially strengthening the balance sheet and reducing debt .
• No sell-side Q&A occurred on the call, suggesting limited coverage; near-term stock catalysts are execution on distribution partnerships, Q2 growth trajectory, and any outcomes from the strategic alternatives review .

What Went Well and What Went Wrong

What Went Well

• “We are pleased to begin 2025 with results slightly ahead of our expectations on profitability and in line with expectations on revenue,” highlighting cost discipline and operational streamlining benefits .
• All three major distribution partners went live at the end of Q1 and are expected to drive “meaningful impact within our insurance comparison business beginning in Q2,” positioning Wellness for acceleration .
• Early Q2 trends were described as strong, with management “well positioned to accelerate growth through the second quarter,” aided by AI-enabled process efficiencies and reduced marketing spend .

What Went Wrong

• Revenue declined 34.7% year over year to $15.17M; adjusted EBITDA swung to a loss of $(1.24)M from +$0.17M in Q1 2024, reflecting weaker top-line and margin pressure .
• Net loss margin widened to −32.2% from −18.3% in Q1 2024; platform participants fell year over year (472K vs. 671K), although improved q/q (472K vs. 445K) .
• Cost of revenue (10% of revenue) and platform ops (17%) were modestly above historic ranges, while sales and marketing remained high (within the historic 60–70% range), indicating ongoing cost intensity despite discipline .

Financial Results

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO: “We are pleased to begin 2025 with results slightly ahead of our expectations on profitability and in line with expectations on revenue… encouraged by the early traction… distribution partnerships… strength of business trends through April and into May” .
• CEO: “We’re continuing to see the benefits… streamlining of head count, automation and the deeper integration of AI into our core workflows” .
• CFO: Platform participants 472K (+6% q/q); Q1 revenue $15.2M and adjusted EBITDA loss $1.2M; cost of revenue 10% and platform ops 17% of revenue, modestly above historic ranges; guidance maintained .
• President: Wellness partners will “enhance our marketing positioning and allow us to scale more efficiently” with reduced marketing spend; early Q2 momentum noted .

Q&A Highlights

• The conference call included no analyst Q&A; operator closed the session without questions, implying limited sell-side engagement this quarter .
• Closing remarks reiterated focus on execution and shareholder value while the strategic review proceeds .

Estimates Context

• Wall Street consensus (S&P Global) for Q1 2025 EPS and revenue was unavailable for PET at the time of analysis due to missing mapping in the S&P Global CIQ dataset. As a result, we cannot definitively classify Q1 as a beat or miss versus consensus [SpgiEstimates error for PET].
• Near-term estimate revisions may hinge on Wellness growth from distribution partners in Q2 and demonstrated marketing efficiency; watch for updated coverage as execution evidence emerges .

Key Takeaways for Investors

• Top-line stabilized q/q with Wellness strength; sequential trends plus partner activation set the stage for Q2 acceleration, while guidance was reaffirmed—focus on delivery against $84–88M revenue and $2–4M adjusted EBITDA for FY 2025 .
• Profitability remains pressured: adjusted EBITDA margin deteriorated to −8.1% and net loss margin widened; cost lines (platform ops and cost of revenue) were slightly above historic ranges despite discipline—monitor cost normalization as AI efficiencies scale .
• Wellness is the growth lever: three partners went live at Q1-end; management expects “meaningful impact” starting Q2—KPIs and segment mix should reflect rising Wellness contribution .
• Liquidity improving at the margin: Q1 operating cash flow turned positive ($1.41M), cash rose to $6.12M; Board exploring balance sheet–accretive options to reduce debt—strategic review outcomes are a key catalyst .
• Limited sell-side interaction (no Q&A) reduces external estimate clarity; traders should watch for intraperiod updates and any 8-Ks related to strategic alternatives that could re-rate the equity .
• Services softness and marketing intensity remain risks; execution on channel diversification and partner-driven demand will be critical to margin trajectory .
• Narrative into Q2: AI-enabled operations, partner ramps, and disciplined spend are core to the turnaround—track platform participants, Wellness revenue, and adjusted EBITDA margin as near-term scorecard items .