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1. Company Snapshot

1.a. Company Description

Wag! Group Co. develops and supports a proprietary marketplace technology platform available as a website and mobile app that enables independent pet caregivers to connect with pet parents.Its platform allows pet parents, who require specific pet care services, such as dog walking, pet sitting and boarding, advice from licensed pet experts, home visits, training, and access to other services.The company was founded in 2015 and is based in Purchase, New York.

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1.b. Last Insights on PET

Negative drivers behind Wag! Group Co.'s recent performance include the announcement of a review of strategic alternatives to maximize shareholder value, which may indicate potential divestitures or mergers. The company's Board of Directors is exploring opportunities to enhance value, including potential investments, partnerships, or transactions involving the Company or its assets. Additionally, the lack of recent earnings releases or positive news may have contributed to the negative sentiment.

1.c. Company Highlights

2. Wag! Posts Q1 2025 Results with Cost Controls and Strategic Progress

Wag! reported its Q1 2025 financial results, emphasizing disciplined cost management and operational efficiencies despite a year-over-year revenue decline. The company generated $15.2 million in revenue, a 6% sequential increase in platform participants to 472,000. Adjusted EBITDA improved, reflecting the company's ability to adapt to the current environment, with a loss of $1.2 million. The actual EPS came in at -0.1, slightly missing the estimated -0.07. Revenue was broken down into services ($4.9 million), wellness ($9.2 million), and pet food and treats ($1.1 million). Total costs and expenses decreased 25% year-over-year, driven by lower sales and marketing and platform operations and support expenses. The company ended Q1 with $11.7 million in cash and cash equivalents.

Publication Date: May -12

📋 Highlights
  • Revenue Performance:: Q1 revenue of $15.2 million, down year-over-year but with a 6% sequential increase in platform participants to 472,000.
  • Cost Management:: Sales and marketing expenses dropped 34% year-over-year, contributing to a 25% overall decrease in total costs and expenses.
  • Operational Efficiency:: Adjusted EBITDA improved, with a loss of $1.2 million, reflecting benefits from headcount streamlining and automation.
  • Strategic Partnerships:: Three major distribution partners went live, expected to enhance the insurance comparison business starting in Q2.
  • Financial Position:: The company ended Q1 with $11.7 million in cash and cash equivalents, maintaining its 2025 guidance of $84-$88 million in revenue.

Cost Management and Operational Efficiency

Sales and marketing expenses dropped 34% year-over-year, attributed to cost control and a more efficient customer acquisition strategy. Operational improvements, including headcount streamlining, automation, and deeper AI integration, continued to yield benefits. The company also made progress on strategic partnerships, with three major distribution partners going live at the end of Q1, expected to enhance the insurance comparison business starting in Q2. "We remain focused on executing our strategy and driving growth efficiently," said Wag! CEO, highlighting the company's commitment to operational discipline and innovation.

Strategic Partnerships and Growth Outlook

Wag! remains optimistic about growth in Q2, supported by strong business trends in April and early May. The company's progress in strategic partnerships is expected to further boost its insurance comparison business, adding new revenue streams. Guidance for 2025 remains unchanged, with expected revenue of $84-$88 million and adjusted EBITDA of $2-$4 million. The Board continues its strategic review, evaluating options to enhance shareholder value and reduce debt. Management expressed confidence in executing its strategy and driving growth efficiently.

Valuation and Financial Health

Analysts estimate next year's revenues to grow by 122.2%. The company's current valuation metrics show a P/S ratio of 0.11, indicating a low price relative to its revenue. However, other metrics such as P/B Ratio (-13.46) and EV/EBITDA (-2.55) raise concerns about the company's profitability and debt levels. The ROE (%) stands at 6180.47, reflecting significant debt and the company's efforts to manage its financial health. The Net Debt / EBITDA ratio of -1.67 highlights the company's negative debt position relative to its earnings. Free Cash Flow Yield (%) of -118.29 indicates negative free cash flow, a concerning sign for investors. ROIC (%) of -55.35 suggests that the company is not generating profits from its invested capital efficiently.

3. NewsRoom

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CARBIOS and Wankai New Materials sign the definitive agreement establishing a strategic partnership to the large-scale deployment of CARBIOS's PET biorecycling technology in Asia

Dec -02

Source: globenewswire.com

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Pet Valu Holdings Ltd. Announces Renewal of Normal Course Issuer Bid

Nov -28

Source: globenewswire.com

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CARBIOS signs two new multi-year commercial agreements for recycled PET with major players in the beverage industry

Nov -24

Source: globenewswire.com

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Algernon Health secures key investment and partners for PET rollout

Nov -21

Source: proactiveinvestors.com

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Algernon Health strikes US neuroimaging deal with AMI, closes first tranche of private placement

Nov -17

Source: proactiveinvestors.com

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Top Toy Brand LITTLEST PET SHOP Signs Global YouTube Sensation

Nov -10

Source: prnewswire.com

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Pet Valu Holdings Ltd. (PET:CA) Q3 2025 Earnings Call Transcript

Nov -04

Source: seekingalpha.com

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First Characterization of a TDP-43 PET Tracer Published in Nature Communications Showing Potential of AC Immune's ACI-19626 in Precision Medicine

Oct -24

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.29%)

6. Segments

Wholesale Pet Food and Pet-related Supplies

Expected Growth: 8.37%

The 8.37% growth in Wholesale Pet Food and Pet-related Supplies from Wag! Group Co. is driven by increasing pet humanization, rising disposable incomes, and a growing demand for premium and specialty pet food. Additionally, the expansion of e-commerce platforms and strategic partnerships have increased accessibility and convenience for pet owners, contributing to the segment's growth.

Pet Food and Pet-related Supplies

Expected Growth: 7.43%

The 7.43% growth in Pet Food and Pet-related Supplies from Wag! Group Co. is driven by increasing pet humanization, rising disposable incomes, and a growing pet population. Additionally, the shift towards online shopping, premiumization, and the demand for healthy and sustainable products are contributing to the segment's growth.

Royalties and Sub-lease

Expected Growth: 10.27%

The 10.27% growth in Royalties and Sub-lease from Wag! Group Co. is driven by increasing pet adoption, rising demand for pet services, and expansion into new markets. Additionally, strategic partnerships and investments in technology have enhanced the company's platform, leading to higher transaction volumes and revenue growth.

Promotion and Other Service

Expected Growth: 11.53%

Wag!'s 11.53% growth in Promotion and Other Services is driven by increasing pet adoption, rising pet humanization, and growing demand for pet wellness services. Additionally, the company's expanding partnerships with pet food and supply companies, as well as its investments in digital marketing and customer acquisition strategies, contribute to this growth.

In-store Services

Expected Growth: 9.95%

Wag!'s In-store Services growth is driven by increasing pet humanization, rising demand for pet wellness and convenience, strategic partnerships with pet food retailers, and expansion into new locations. Additionally, the company's focus on digital transformation, enhanced customer experience, and loyalty programs contribute to its 9.95% growth.

7. Detailed Products

Wag! Walking

On-demand dog walking services, allowing pet owners to schedule 30-minute walks for their dogs

Wag! Drop-In Visits

In-home dog visits for pet owners who need someone to check in on their dogs, provide playtime, and administer medication if needed

Wag! Overnight Stays

In-home overnight dog sitting services, providing pet owners with a trusted and convenient solution for their dog's care

Wag! Training

Personalized dog training sessions, helping pet owners address behavioral issues and improve their dog's obedience

Wag! Walking Premium

Enhanced dog walking services, including extended walks, extra attention, and personalized care

8. Wag! Group Co.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Wag! Group Co. operates in a niche market, providing pet care services, which reduces the threat of substitutes. However, the rise of pet-sitting and dog-walking apps could pose a moderate threat.

Bargaining Power Of Customers

Wag! Group Co. has a large customer base, which reduces the bargaining power of individual customers. Additionally, the company's subscription-based model and loyalty programs help to retain customers.

Bargaining Power Of Suppliers

Wag! Group Co. has a large network of walkers and sitters, which reduces the bargaining power of individual suppliers. The company's technology platform also helps to manage the supply chain efficiently.

Threat Of New Entrants

The pet care industry is growing rapidly, and new entrants may be attracted to the market. However, Wag! Group Co.'s established brand and technology platform provide a barrier to entry for new competitors.

Intensity Of Rivalry

The pet care industry is competitive, with several established players. However, Wag! Group Co.'s focus on technology and customer experience helps to differentiate it from competitors.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 94.41%
Debt Cost 11.18%
Equity Weight 5.59%
Equity Cost 11.18%
WACC 11.18%
Leverage 1689.00%

11. Quality Control: Wag! Group Co. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Red Violet

A-Score: 5.5/10

Value: 0.9

Growth: 8.7

Quality: 7.6

Yield: 1.0

Momentum: 9.5

Volatility: 5.0

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Dave

A-Score: 4.8/10

Value: 1.1

Growth: 8.0

Quality: 8.7

Yield: 0.0

Momentum: 10.0

Volatility: 1.3

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Blend Labs

A-Score: 4.1/10

Value: 8.4

Growth: 6.2

Quality: 3.2

Yield: 0.0

Momentum: 5.0

Volatility: 2.0

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American Software

A-Score: 4.1/10

Value: 2.6

Growth: 3.0

Quality: 6.1

Yield: 5.0

Momentum: 5.0

Volatility: 2.7

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Viant Technology

A-Score: 3.9/10

Value: 6.2

Growth: 8.0

Quality: 5.3

Yield: 0.0

Momentum: 1.5

Volatility: 2.3

1-Year Total Return ->

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Wag

A-Score: 3.8/10

Value: 10.0

Growth: 6.3

Quality: 6.5

Yield: 0.0

Momentum: 0.0

Volatility: 0.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

0.05$

Current Price

0.05$

Potential

-0.00%

Expected Cash-Flows