Sign in

You're signed outSign in or to get full access.

WG

Wag! Group Co. (PET)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue rebounded sequentially to $15.433M, up ~17% QoQ, but fell 29% YoY; adjusted EBITDA loss narrowed to $(0.963)M while net loss was $(4.814)M and EPS was $(0.10) .
  • Actual Q4 adjusted EBITDA came in below prior guidance (range of $(0.5)M to $0.5M), while revenue landed at the low end of guidance ($15M–$18M) — a miss on profitability driven by residual marketing efficiency headwinds and higher holiday S&M .
  • Management announced a Board-led strategic alternatives review (including potential investments, partnerships, sale/merger), with BofA Securities as advisor, positioning this as a key stock reaction catalyst alongside FY2025 guidance .
  • FY2025 guidance: revenue $84M–$88M and adjusted EBITDA $2M–$4M, underpinned by three major new Wellness distribution partners and improving search stability; sequential growth expected through the year .
  • Balance sheet focus remains priority: year-end cash and AR totaled ~$12.2M, equity turned slightly negative, and the company seeks options to reduce debt; management emphasized disciplined cost optimization and AI-driven efficiency .

What Went Well and What Went Wrong

What Went Well

  • Wellness stabilization and three major new distribution partners expected to accelerate demand; management “leaning into AI through high-quality content and strategic partnerships” to improve reach and conversion .
  • Sequential rebound from Q3: platform participants, revenue, and adjusted EBITDA each improved >17% QoQ; Q4 revenue $15.4M, adjusted EBITDA loss $(0.963)M .
  • Services benefitted from return-to-office tailwinds and improving demand; management flagged stable Google trends and AI integration to optimize headcount and automate rules .

What Went Wrong

  • YoY deterioration: Q4 revenue down to $15.433M from $21.673M; net loss widened and adjusted EBITDA slipped from breakeven; net loss margin moved to (31.2)% vs (16.0)% last year, driven largely by Google search changes impacting Wellness .
  • Profitability miss vs guidance: adjusted EBITDA was $(0.963)M vs prior $(0.5)M to $0.5M range; higher December S&M spend to capture holiday demand and lagged revenue recognition contributed to the shortfall .
  • Balance sheet strain: stockholders’ equity turned negative (deficit of $(0.489)M) and current portion of notes payable rose to $18.960M at year-end, elevating near-term refinancing needs .

Financial Results

Quarterly Performance (Sequential Trend)

MetricQ2 2024Q3 2024Q4 2024
Revenues ($USD Millions)$18.651 $13.204 $15.433
Net Loss ($USD Millions)$(2.251) $(6.262) $(4.814)
EPS (Basic & Diluted, $USD)$(0.06) $(0.13) $(0.10)
Adjusted EBITDA ($USD Millions)$1.639 $(1.943) $(0.963)
Net Loss Margin (%)(12.1)% (47.4)% (31.2)%
Adjusted EBITDA Margin (%)8.8% (14.7)% (6.2)%

Year-over-Year Q4 Comparison

MetricQ4 2023Q4 2024
Revenues ($USD Millions)$21.673 $15.433
Net Loss ($USD Millions)$(3.465) $(4.814)
EPS (Basic & Diluted, $USD)$(0.09) $(0.10)
Adjusted EBITDA ($USD Millions)$0.005 $(0.963)
Net Loss Margin (%)(16.0)% (31.2)%
Adjusted EBITDA Margin (%)—% (6.2)%

Segment Revenue Breakdown

SegmentQ3 2024 ($USD Millions)Q4 2024 ($USD Millions)
Services$5.4 $5.3
Wellness$6.5 $8.9
Pet Food & Treats$1.3 $1.2

KPIs and Operating Metrics

KPIQ2 2024Q3 2024Q4 2024
Platform Participants (end of period, thousands)467 367 445
Net Cash Provided by (Used in) Operating Activities ($USD Millions)$(2.189) $(3.253) $(1.729)
Sales & Marketing Expense ($USD Millions)$11.037 $8.862 $10.385

Non-GAAP Adjustments (Q4): Adjusted EBITDA excludes interest expense (net) $1.194M, income taxes $0.082M, D&A $0.619M, stock-based compensation $1.787M, severance $0.129M, legal settlement $0.040M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ4 2024$15M–$18M Actual: $15.433M Met low end (not a formal guidance update)
Adjusted EBITDAQ4 2024$(0.5)M to $0.5M Actual: $(0.963)M Below guidance
RevenueFY 2024$92M–$102M (set July 10) $70M–$73M (updated Nov 13) Lowered
Adjusted EBITDAFY 2024$4M–$8M (set July 10) $(0.5)M to $0.5M (updated Nov 13) Lowered
RevenueFY 2025n/a$84M–$88M New
Adjusted EBITDAFY 2025n/a$2M–$4M New

Earnings Call Themes & Trends

TopicQ2 2024 (Prior-2)Q3 2024 (Prior-1)Q4 2024 (Current)Trend
AI/technology initiativesLeaning into AI/process automation to lower OpEx Navigating AI-driven changes in search; diversify channels Integrating AI to automate rules, optimize headcount; high-quality content partnerships Broader deployment; efficiency gains
Google search dynamicsIntent to rely more on durable partnerships vs paid search; election-year marketing headwinds Significant impact from Google AI Overview and SERP changes; wellness down; October wellness +79% MoM rebound Stability in Google trends; wellness normalized; building with new partners Stabilizing after shock
Partnerships/distributionStrategic focus on partnerships/M&A (Bright Horizons, Tractor Supply cited as examples) Pursuing new distribution partners for Wellness Three major new partners signed to accelerate Wellness Expanding
Services demand/return-to-officePremium services demand durable; improving environment Seasonal/holiday mix; platform participants context Tailwinds from return to office benefiting services Improving
Debt refinancing/strategic alternativesEquity raise to pay down debt; planning refi; target ~10% rate Debt paydown; exploring asset sales (Dog Food Advisor, Prescription platform) Board advancing strategic alternatives; focus on reducing debt; BofA advisor Intensifying
Prescription platform (Furmacy)Long-term growth prospects in Rx B2B SaaS; update next call Preparing for Q1 2025 launch; pursuing large distribution deals Pipeline noted; 2025 priorities under review Nearing launch

Management Commentary

  • “We are excited about the forward momentum in our business, highlighted by the addition of three major new distribution partners that we believe will accelerate demand for Wellness. Additionally, we have seen stability in Google search trends and we are leaning into AI through high-quality content and strategic partnerships.” — Garrett Smallwood, CEO .
  • “Q4 results demonstrate the initial rebound from Q3 with all key metrics of platform participants revenue and adjusted EBITDA up greater than 17% sequentially quarter-over-quarter.” — Alec Davidian, CFO .
  • “The primary driver of the revenue growth in ’25 will be Wellness with some participation from Services… we expect Q1 through Q4 to grow revenues pretty much sequentially as these partners roll out and scale.” — Adam Storm, President & CPO .
  • “Our Board is advancing its review of strategic alternatives… including potential investments, strategic partnerships, sale, merger, or other strategic transactions…” — Press release .

Q&A Highlights

  • FY2025 revenue cadence: Growth primarily from Wellness, scaling as new partners go live; sequential growth expected throughout 2025 .
  • Near-term trajectory: Q1 2025 “trending well,” modest sequential improvement from Q4; Q2 to reflect normal seasonality but larger driver will be new partner rollouts .
  • Cost structure: Room to optimize further; aggressive use of AI to reduce cost buckets and improve flow-through as partners scale .
  • Guidance conservatism: Management remained cautious given recent Google changes; acknowledged October rebound but kept prudent assumptions .

Estimates Context

  • S&P Global consensus estimates for PET were unavailable at the time of retrieval; as a result, estimate comparisons are omitted and we anchor comparisons on company guidance and actuals (Values retrieved from S&P Global were unavailable via the tool).
  • Given actual Q4 adjusted EBITDA below guidance and revenue at the low end, near-term Street EBITDA expectations (where they exist) likely need to be revised lower for Q1, with full-year 2025 revenue estimates calibrated to partner-driven ramp and sequential progression (versus a step-function), while monitoring margin leverage from AI-driven efficiency and marketing normalization .

Key Takeaways for Investors

  • Sequential recovery but not fully healed: Q4 showed improvement from Q3; however, profitability missed guidance, indicating Wellness marketing normalization and partner ramp still in early innings .
  • 2025 setup hinges on Wellness partners: Three major distribution partners and stable search trends are the core growth engine; expect sequential revenue progression as integrations scale through Q2–Q4 .
  • Cost discipline continues: Management targeting further optimization (AI-driven) to enhance flow-through as revenue ramps; watch S&M efficiency and G&A scalability .
  • Balance sheet and refinancing remain critical: Equity turned slightly negative, current debt heavy; strategic alternatives and potential asset sales could be catalysts for de-leveraging .
  • Guidance signals ambition with execution risk: FY2025 revenue $84M–$88M and adjusted EBITDA $2M–$4M require sustained Wellness demand and efficient acquisition; monitor quarterly cadence vs plan .
  • Trading implications: Strategic alternatives announcement plus partner ramp news flow are near-term catalysts; downside risks include further search volatility and delayed partner scaling .
  • Focus metrics: Wellness segment revenue trajectory, adjusted EBITDA progression, S&M efficiency ratios, cash/AR vs debt, and milestones on strategic review resolution .

Additional Q4 2024 Press Release Notes

  • The Q4 8-K press release also announced the Board’s strategic alternatives review and named BofA Securities as financial advisor, with no set timetable and no assurance of a transaction; company reiterated focus on balance sheet strength and debt reduction .