Ladies and gentlemen, thank you for standing by and welcome to the Wag Third Quarter 2022 Earnings Call. [Operator Instructions] I want to like turn the call over to your host Dawn Frankfort [Phonetic], you may begin..

Good afternoon, everyone, and thank you for joining Wag’s conference call to discuss our third quarter 2022 financial results. On the call today are Garrett Smallwood, Chief Executive Officer and Chairman; Adam Storm, President and Chief Product Officer; and Alec Davidian, Chief Financial Officer.

Before we get started, please note that today's comments include forward-looking statements. These forward-looking statements are subject to risks and uncertainties, and involve factors that could cause actual results to differ materially from those expressed or implied by such statements.

A discussion of these risks and uncertainties are included in our SEC filings. Also, during the call, we may present both GAAP and non-GAAP financial measure. Reconciliations to the most directly comparable GAAP financial measures are available in our earnings release, which we issued today.

The earnings release is available on the investor relations page of our website and is included as an exhibit in the Form 8-K furnished to the SEC. Lastly, you can find our earnings presentation posted on our IR website and with the SEC. And with that, let me turn the call over to Garrett..

Thanks, Dawn. Good afternoon, everyone, and thank you for joining us to discuss our third quarter 2022 performance. We had another record quarter with revenue of approximately 161% to 15.4 million from the prior year and adjusted EBITDA loss improving to 461,000 from the last quarter, which was only possible with the hard work of our team at Wag.

Our performance this quarter is a testament to our value proposition and the non-discretionary pet care industry and our ability to build upon our growth in the years ahead.

We'll be discussing our financial results for the third quarter, as well as reiterating our compelling growth strategy that positions us to deliver predictable and sustainable financial performance for the remainder of 2022 and beyond. After another exceptional quarter, we are raising our 2022 guidance for both revenue and adjusted EBITA.

I want to reiterate our mission here at Wag. We believe that being busy shouldn't stop you from owning or taking care of your furry family members. Our mission is simple. We solve the guilt and stress of owning a pet. We exist to make pet ownership possible and to bring joy to pets and those who love them.

We're building a strong non-discretionary consumer branded premium pet care platform that is transforming the pet industry by simplifying caring for the pets you love.

The 44 billion pet wellness and service industries are fragmented and largely offline and we are consolidating these industries online and through our mobile app, as we rapidly evolve as the number one pet wellbeing platform in the US. Our business is diversified and it's proven to be a return to normal post-pandemic needs.

A fundamental and imperative part of our business model is trust, as 75% of pet parents are not home while the service is being delivered, and we will continue to build on this trust to drive high-frequency utilization of our non-discretionary services.

I will now cover a high level overview of our third quarter performance before turning it over to Adam, President and Chief Product Officer, who will give an update on our strategy and key 2022 initiatives.

Then Alec, Chief Financial Officer, will discuss our third quarter results in more detail, our capital allocation, and our guidance for 2022, which again we raised today. Our momentum continued this quarter with record revenue increasing over 160% to 15.4 million compared to 5.9 million in the third quarter of 2021.

We achieved an impressive adjusted EBITDA loss of 461,000 from 2.6 million loss in the same period last year. We're keenly aware this is not the time or place for growth at all costs, and are instead striking a balance of growth, margin and profit.

Additionally, take rate improved to 61% compared to 43% in the third quarter of 2021, which was driven by the continued diversification of the platform, including instant pay, walker revenue, and wellness that apply upward pressure to take rate.

These were notable accomplishments and underscore the resiliency and diversification of our business model. During the quarter, we saw platform participants grow to 473,000, an increase of 22% from last quarter.

Wag! Premium penetration for the quarter was 53% versus 50% last quarter, achieving the long-term target penetration rate we set out at the launch of the program two and a half years ahead of schedule.

Wag! Premium penetration is key to the platform resiliency as pet parents who subscribe to Wag! Premium are paying an additional $9.99 per month and use Wag services seven to eight times per month, versus four to five times a month for non-subscribers.

On this note, we're actively testing Wag! Premium pricing, benefits, and possible other value adds to maintain the long-term target and provide value to pet parents who rely on Wag each and every week.

Continued Wag! Premium penetration demonstrates the compounding nature of our business, and propels the predictability and sustainability of our revenue. The deep rooted trust we have created in our business model leads to high frequency utilization.

Our LTV to CAC for the third quarter increased to eight to one demonstrating our sustained return to normal trend coming out of COVID and a testament to our strong view that Wag is a non-discretionary post pandemic need.

This quarter, we saw over 70% organic user acquisition rate and significant growth and awareness for our platform via strategic partnerships, and performance marketing initiatives. During this quarter, we also recognized significant interest in the pet caregiver gig.

And as a result, the average price that pet caregivers are paying to join the platform rose from around 2995 and Q2 to around 4150 in Q3. We continue to believe we have the best gig in America, which is why there are more than 400,000 pre-approved pet caregivers who are delivering value to the community each and every day.

At the current economics, we continue to have negative supply side CAC. We will continue to manage supply and demand on a market by market basis, and as a world returns to normal, we expect the pet caregiver pricing to adjust to reflect not only the delightful nature of the gig, but also the availability of gigs and local network effects.

Before turning the call over to Adam to discuss our growth initiatives, I will summarize Wag’s differentiated position in the pet care industry.

One, we are a trusted on-demand digital marketplace and our goal is to be the leading platform for premium pet care leveraging our strong consumer brand and efficient business model to drive long-term growth and shareholder value.

Two, Wag is a multi-faceted platform that's consolidating the fastest growing secular growth areas within the pet industry. This include our Mobile First subscription-based pet platform, the largest pet insurance marketplace in the US, and what we believe is the best gig in America.

Three, with more than 75% of pet parents away while services being delivered, we found that the ability to access on demand and recurring dog walk, pet sitting, training services and much more across 5300 cities in all 50 states is a way in the door with premium pet parents across the US.

We are becoming the button on the phone for the paw, a place that pet parents trust with their pets’ health and well being.

We are extremely excited about the growth in our business, including the wellness category, which is a major catalyst as pet parents are finding the ability to chat with licensed pet experts 24/7, pet wellness plans, and the ability to shop pet insurance and obvious value-add in a world full of options.

With that update, Adam would provide more color on our strategy..

Thanks, Garrett. I will now walk through the five top level elements of our 2022 strategy to drive long-term shareholder value; one, accelerate growth in existing markets; two, expand premium subscription offerings, three, platform expansion; four, opportunistic M&A, and five, operating scale.

As we've mentioned, we see significant opportunity to accelerate growth in existing markets as people resumed to more normal activities post-pandemic and utilize our expanded offerings, including the increasing return to office trend, which is the primary Wag use case.

Over the quarter, we saw a 47% of people back in office, per Castle data, which is the biggest jump we've seen today.

We anticipate this return to office tailwind to continue through 2022 and 2023, allowing us to sustainably grow within existing markets and capture additional sheltered wallet through the compounding effects of our premium subscription and additional product lines.

In addition to the increased return to Office trend, we're also in the early days of influx of new pet parents, with one in five people adopting a pet during the pandemic.

As these new pet parents return to office in normal activities, we believe Wag’s nondiscretionary services will be an integral part of how these new pet parents care for their furry family members.

Finally, we see the secular trend of the humanization of pets with people developing close bonds with their pets during the pandemic increasing which in turn leads to pet parents being more inclined to spend money on their furry family members.

Our second growth driver is to expand premium subscription offerings now that we have achieved our long-term target of 50% Wag! Premium penetration. We are now considering premium pricing tiers, subscription tiers and product bundling to capture more wallet share, grow revenue and drive additional value to the pet parent.

As a reminder, Wag! Premium subscribers receive a 10% discount on all services, VIP customer support, and unlimited 24/7 expert pet advice, which drives customer satisfaction, and retention, and willingness to up-sell to our expanding set of products and services.

As we emphasized last quarter, we're focused on maintaining Wag! Premium penetration in the coming quarters, as well as launching new and exciting product lines to drive long-term engagement.

Over the quarter, we continue testing in the Wag! Premium benefits center, and found that the number one thing pet parents are looking for help with is choosing food for their specific test needs, age and activity levels. We plan to hone in on this need and continue to develop our holistic approach to the Wag! Premium ecosystem.

Third, we're focused on platform expansion and diversifying the products and services within the platform, including the recent launch of a full suite of dropping products, including 20, 30 and 60 minute options across all markets in the US and multi-day bookings, which enables pet parents to book multiple services for the same day and just drop into visits when a pet parent is away from home for an extended period of time.

This simplicity of choice drives both retention and frequency and feeds into Wag! Premium. The upward pressure we have seen in take rate is driven by these high margin products and services and we continue to focus on the growing surface area of the platform to deliver long-term margin expansion and predictable revenue streams.

We're thrilled about the opportunity to dig deeper into the wellness category with the expansion into veterinary clinics, including software to simplify prescription medicine and food through our acquisition of Furmacy, as well as our partnership with Babylist, the leading vertical marketplace for new parents.

We remain thrilled with our partnerships with Tractor Supply and Petsense we announced last quarter and continue to grow our relationships in the fourth quarter. Fourth, prioritizing growth in our business through opportunistic M&A.

Last quarter, we announced Wag entry into an agreement to acquire Furmacy, Inc., which was completed in October after receiving regulatory approval.

We're extremely excited about the opportunity this provides to expand our reach in the pet wellness category and feel that this is the first step in demonstrating our commitment to diversification, which is a compelling part of our long term growth objectives. As a reminder, Furmacy’s mission is to deliver pet health directly through your front door.

Furmacy does this by empowering veterinary clinics with easy-to-use pharmacy software, giving them the ability to prescribe medication instantly and have it delivered to the pet parent store the same day, and usually in less than a few hours from a local warehouse.

With the closing of this transaction and eye towards the future, we're well-positioned to sustain strong performance and effectively compete in the marketplace. The final element of our strategy is operating scale.

This quarter we saw improvement in margins across the board, proving the scalability of our online platform that connects pet parents with the highest quality pet caregivers. Our customer acquisition unit economics seen in our 8-to-1 LTV CAC ratio continued to be well ahead of our targets for the period.

Adjusted EBITDA margin improved from 7% to 3% loss from Q2 to Q3 2022 demonstrating our improving efficiency as we scale. We continue to be intensely focused on businesses and opportunities that have low fixed costs, low OpEx and a rapid ability to scale.

We continue to be bullish on software enabled marketplaces that have structurally high EBITDA margins and the healthy fundamentals underpinning our growth and platform expansion positions as well for Q4 and beyond. We will continue to be disciplined operators and remain hyper-focused on managing gross margin and profit.

With that, let me turn the call over to Alec..

Thank you, Adam and thank you, everyone for joining our third quarter call. Our focused on being the number one premium pet services platform to pet parents has allowed us to achieve a record quarter once again, with continued platform diversification and growth in both service and wellness revenue.

I'll start by diving into our third quarter results, followed by updates on our 2022 guidance. In the third quarter, we achieved the highest quarterly revenue in our company's history at 15.4 million, totaling 37.8 million revenue year-to-date.

In three quarters, we have nearly achieved our initial 2022 full year revenue estimate of 41.8 million as stated in our initial investor deck in April 2018. This increase translates to approximately 3X revenue growth for both quarter-over-prior quarter, as well as Q3 2022 year-to-date versus Q3 2021 year-to-date.

The growth in revenue was primarily driven by success in our diversification of revenue streams, including items such as well as, Wag! Premium, Instant Pay, Pet Caregivers services, as well as increased pet parent engagement, and return to office trends.

Pet parents continue to demand access to various pet services they are part of and have a strong interest in wellness services, showing particular interest in doing the best for their furry family friends. This is evident with wellness contributing to 62% of revenue in Q3 22.

As Garrett indicated, we have become so much more to our pet parents than just like go to walking, sitting, boarding, and training platforms. The trust we built through our traditional on-demand services, coupled with the digital age of our platform have become evident via a growth in multiple service categories.

Platform take-rate was 61%, up from 43% from the same period last year. This is primarily driven by an 85% growth in gross bookings from Q3 last year, arising from continued diversification of the platform applied upward pressure to the platform take-rate. Turning to expenses during the third quarter.

This quarter includes a number of one-time transaction costs in aggregate of 39.5 million, which I will exclude for the purposes of like-for-like comparison to the prior year. Customer revenue excluding depreciation and amortization were 1 million or 7% of revenue compared to 15% of revenue in Q3 2021.

The improvement in Q3 2022 is driven by the scalability of our business combined with an increase in service offerings with high margin. Platform operations and support expenses were 5.6 million or 2.8 million excluding transaction costs. This equates to 18% of revenue compared to 43% in Q3 2021.

The improvement in Q3 2022 is driven by the operational excellence and scalability of our technology, infrastructure, and realization of investments made in both technology and support processes. Sales and marketing expenses were 11.3 million or 9.2 million excluding transaction costs. This equates to 59% of revenue compared to 54% in Q3 2021.

This is primarily attributed to a 4.7 million increase in partnership activity, as we invest in launching the new partners, together with a 1.3 million increase in personnel related compensation, and agency costs for marketing team consultants and marketing agency partners. G&A expenses were 23.8 million or 3 million excluding transaction costs.

This equates to 19% of revenue compared to 34% in Q3 2021. While G&A costs have increased in dollar terms, as a result of investment in public market infrastructure, and investing in talent, a decrease as a percentage of revenue year-over-year demonstrates our ability to scale revenue versus G&A costs.

Our approach has been and continues to be grounded in prudently managing our G&A expenses, while continuing to strategically invest in the business. Adjusted EBITA, which is an important profitability measure that we use internally to manage the business, improved 2.1 million to an adjusted EBITA loss of 461,000.

This compares to an adjusted EBIT to loss of 2.6 million in Q3 2021. Turning to our balance sheet, we ended the third quarter with over 28 million in cash and cash equivalents.

Our balance sheet remains strong in the context of our operating budget, and puts us in a strong position to comfortably fund our growth objectives, while also maintaining flexibility to pursue strategic M&A when we believe the opportunity aligns with our goals.

As you saw in our Q2 earnings release, we have entered into an agreement to acquire Furmacy, subject to regulatory approvals. We obtained all necessary approvals and closed this acquisition in October.

We're incredibly excited with this acquisition and have already welcomed Furmacy team members to Wag! and have built a strong alignment of value since the beginning.

Furmacy’s proven track record in providing high-quality prescription services to pet parents, coupled with a deep industry expertise makes them the right partner for Wag!’s next chapter of diversification and broadening reach into the pet food and medicine market segments. Now I will comment on our updated guidance for fiscal 2022.

As you heard from Garrett, we are very pleased with the strong performance we saw during the third quarter, and our ability to provide solutions to pet parents. As a result, we are raising the guidance we previously provided in our Q2 earnings release.

Our revised guidance assumes a continued trend in return to office, as measured by the cost of back to work measure and continued platform diversification.

For the full year 2022, we now expect total revenue in the range of 51 million to 52 million, an increase of 155% to 160% year-over-year and 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.

We are very pleased with our record performance this quarter and remain confident in our diversified and efficient business to produce sustainable growth for the remainder of 2022 and into 2023. And with that, we will now take Q&A..

[Operator Instructions] Our first question comes from Jeremy Hamblin with Craig-Hallum, your line is open..

Thanks so much and congratulations on the strong results. I wanted to just start by seeing if we could get a little more detail on the wellness platform, which really seemed to have some explosive growth.

I think by my math 62% of revenue is about 9.5 million and I wanted to see if you could provide some color as to whether or not you're getting more of that growth that's coming from your insurance marketplace versus pet expert care..

Absolutely. Jeremy, good to connect. Thanks for the time. I think, generally, we're seeing a lot of excitement around our suite of wellness products. As a reminder, wellness, we classify as a few different things. It's Wag! standalone Wag! Wellness Plans.

It is our 24/7 expert pet advice, which for Wag! Premium members is bundled in as a kind of free benefits, and is headed and compare, which are the largest pet insurance marketplaces in the US from our understanding.

I would generally say last quarter, we certainly saw more and more pet parents looking for pet insurance help and that was certainly a catalyst for growth..

Got it. And then in terms of looking at what you're doing with your pet caregivers and kind of the platform access fee, which clicked up quite a bit.

Are you thinking about keeping that as a one-time fee? What types of consideration to potentially making that a monthly or quarterly fee, $2 a month, let's say, to stay on the platform to really ensure that you're in sync with your PCGs that want to stay active versus those that might lapse after, let's say, 6 or 12 months?.

Absolutely. So taking a step back, we are certainly seeing across the US a different what we'll call Jeremy a return to normal. New York City certainly seems has opened up pretty quickly and aggressively maybe compared to a San Francisco, and that difference has led us to see a different level of engagement by market for pet caregivers.

So believe it or not, we still believe the best thing in America and I know a lot of people who don't want to go out at 2 o'clock on a Tuesday and walk a golden doodle and so we've seen a really strong interest in becoming a member of the community and building a business on Wag! as a pet caregiver, and as a result we have been able to test dynamic pricing to participate in the platform as a function of supply and demand equilibrium.

Meaning if we're seeing a significant amount of demand and not enough supply, we will rebalance the other way, and we're seeing a lot of supply and as much demand, re balance the other way.

To your point about possibly introducing ongoing a subscription like product or a recurring revenue fee for caregivers, I would just take a step back and say we have a suite of products that caregivers use today.

One would be something like Instant Pay, which allows an instant withdrawal of their funds as a really fast growing part of our business that we're excited about.

There are other mechanisms that we capture kind of dollars from caregivers, but I wouldn't say it's out of the question to think that at some point, there could be additional ways that we provide value to people who are building their business on Wag!.

Great. Last one real quick for me. So the Q4 guidance, it looks like it implies like 13.2 to 14.2 million, a little bit of a step down sequentially from what you had in Q3. Last year in Q4, you had a pretty nice step up, I think, even when backing out the timing of the acquisitions.

But just wanted to get a sense, is there a seasonality in play here to consider in that or other factors in which you're guiding to those levels?.

No, I think that's right. I would just say, we're definitely being thoughtful, and probably a little conservative on how we think about seasonality. And there's three things that are probably going to happen this quarter, just when you think about consumer behavior.

One is, more people will move from daytime services to overnight services as they travel. And as a reminder, we really the whole family to be traveling, someone's staying home with the pet, they don't normally revert to a sitting in boarding like products. So we're certainly interested in how travel will perform this quarter.

And then finally, as people think about, in this environment, certainly their pets’ needs, it is not totally clear to us, if they'll be forced to prioritize family over pet in some circumstances.

And where I'm going with that is, specifically pet insurance, pet health, pet wellness plans, and the subscription product are really important core decisions for your pet.

But when it comes to maybe the holidays, and you're thinking about Christmas presents, or Hanukkah presents, whatever it might be, and you have to make a decision, we think people generally opt to support their family. So we're excited about today's trend.

We're excited about kind of where we think the next couple months are going to go, but there's definitely some conservatism in thinking..

Got it. Thanks so much for the collar guys. Congrats..

One moment before our next question. Next question comes from Matt Koranda with ROTH, your line is open..

Hey, guys, good afternoon. Thanks for the questions here. Just wanted to spend back to the services revenue for just a moment if we could, I mean north of 300% growth year-over-year, if I'm calculating it right here.

Want to see is there any way you can unpack that just between sort of the insurance marketplace, revenue stream versus kind of the wellness plans and all other items within the services line? And then just how sustainable is it to assume that you can like 2X or 3X, that segment, year-over-year over the next few quarters? It just seems like a really breakneck growth base, which is great, but just wanted to kind of get a sense for like, how do we level set and normalize or think about kind of normalized growth into having it at 2023?.

Yeah, so appreciate time. As always, thanks for being here. We aren't separating out wellness and again, the reason is a bunch of things. There's seasonality in that business, there are new product lines we're experimenting within that.

I think we mentioned on the call, we're going to begin experimenting pretty aggressively with premium bundling, premium pricing, premium benefit, benefits center, that is a very dynamic part of the business that we're excited about and there are many kind of important pieces to it.

To your point about kind of ongoing and future growth rates, look, I think we generally said that our long-term growth target was in a 40% plus, we're certainly far ahead of that in 2022. And we continue to be very bullish on the category in general.

Many but two reasons for that are, we believe, fundamentally, that we're targeting a premium [Indiscernible] people are not really concerned about booking two, three, four, seven services a month, and also bundling that with a premium and with the pet insurance purchased and with a wellness plan and whatever else.

And finally, it's really not discretionary. When you're forced to go back to the office or you're traveling, you don't really have a choice.

Like if your family is out of town or your family is not there, your kids are at school, you really need a Wag! and so we can see me very bullish on just the long-term prospects we originally laid out in our investor deck, I think about a year ago..

Got it. And then just any preliminary thoughts on sort of how you begin to tear the premium service with those, it was an interesting comment that we could start to see that.

Is that essentially -- are you tearing it to help with some of the on-boarding for more active pet parents into the premium service? What's the purpose behind that? And then just any thoughts on sort of how you might kind of split out different services and wellness plans into different premium offerings?.

Yeah, I mean, it's a great question. So, look, just again, think about the platform, we're building the platform for the premium pet parent. We've told everyone it's the button on the phone for the pie, amazes us that there's no button on the phone for the pod today in today's kind of dynamic digital era of iPhones and Androids.

And so we think about Premium, Premium is really the glue that holds all these products together. Whether it's a dog walk or a sitting or a boarding or training or a pet insurance purchase or a wellness plan, Premium is how we think about this kind of bundling of products and services for unique pet parents.

And what we're finding as the platform is scaling so rapidly and you can see, I think platform participants that grew something like 22%, quarter-over-quarter, people have different needs.

So if you're a pet parent, you exclusively use Wag! for walking, you might have different needs and the pet parent uses us for sitting and boarding and walking and wellness. And so we think as the platform scales, we will need to better identify and serve each of those unique cohorts. I think that's what you can expect from Premium.

I don't give you too much more, because generally, anything we do in the next year will be copied two or three years later. But we're excited about the opportunity to really deliver pet parents unique value to identify the cohorts that are using us and to provide additional value as we bundle in these additional platforms.

And I would also say they’re tided in the Furmacy right, Furmacy is the prescription engine for the business at some point..

Great, appreciate that details, Garrett. I'll leave it there..

Thank you..

One moment for our next question. Our next question comes from Rohit Kulkarni with MKM Partners..

Hey, thanks. Congrats on the quarter, and nice to hear from you. Maybe a big picture on just a competitive environment. How do you think that has evolved? And now that you're -- you've had the IPO and perhaps you're more under the spotlight in a way.

So maybe just talk through how do you think competitive environment has evolved or where do you see the biggest kind of focus areas from your standpoint?.

Well, first off, Rohit, always a treat. Thank you for being here. We are just operating like we operate, regardless of the environment or regardless of kind of where we as a business. We're passionate people about the products we're building. We're operationally efficient.

We believe we're operationally excellent, frankly and we're going to do what we say we're going to do. And I think all those things you'll see in this quarter results, you'll see it based on last quarter's results. And we think that we're not really going to change the pace of evolution of the business. We're innovating quickly.

We're launching products and services that people love, unlike our peers who have had to exit categories that are not a fit. And we're continuing to drive outsized returns on the small bets we make, and the things that we're pushing forward. So in general, I think our goal is to be ahead of everyone.

And I think we've demonstrated that in the last year, with the products and services, we put out in the ecosystem..

Really cool. And then on marketing, maybe talk about how has LTV to CAC kind of trended for you over the last few months and where do you see that going in terms of -- it clearly feels that the internal marketing is leading to more people in the marketplace on both sides, so perhaps talk about how you're thinking about that..

It's an interesting environment for performance marketing, one of the partnerships, frankly. Two things we're seeing separately. One is, in this market, we're seeing a lot of interest in Wag! as an add-on as people return to normal. And so you saw that with Tractor Supply and Petsense, you saw that with Babylist.

I think we're overall very excited about the possible partnerships in 2022 and 2023 and, obviously, beyond. Performance marketing is just a really dynamic and changing environment right now. Our belief, structurally, is that the market will continue to evolve.

There' most likely be a significant pullback in ad spend across different ecosystem players and that'll give us a chance to lean in. You saw 8-to-1 LTV to CAC this quarter, I think it was similar last quarter and we're just kind of testing waters across a number of different mediums with different efficacy.

We could definitely say that the market is changing pretty rapidly..

Okay, sounds good. Thanks, guys and congrats..

One moment for our next question. Our next question comes from Brian Dobson with Chardan, your line is open..

Hi, good evening. Thanks for taking the question. So, as you're thinking about Premium subscription penetration, the growth there is very impressive.

Do you see a natural top to that penetration level or how do you expect that to, call it, evolve over the longer term?.

Yeah, absolutely. Adam, we want to talk about Premium..

Yeah, I'd be happy to. Yeah, so when we launched the Premium product in the first place, early 2020, our total penetration rate was [Technical Difficulty] launch a bunch of new value add benefits into the ecosystem to achieve that 50% target just based on kind of all the cohort metrics we look at [Technical Difficulty] we've hit that 50% mark.

Our perspective on premium is changing a little bit from penetration being the primary metrics that we drive towards, moving towards pricing and bundling, like Garrett alluded to.

Pricing, making sure the monthly versus annual plans are priced correctly for all of the different products and services that are serving as your entry point into the ecosystem and then bundling as wellness and health-related services get larger and become a more meaningful part of the ecosystem.

Thinking about health specific bundles that lean towards a set of value adds that are better for that health conscious customer. So that's kind of our perspective there is to maintain penetration at 50% or so and then monetize the network incrementally better..

Yeah, excellent. Thanks. That's helpful.

And then would you mind expanding on some of your key strategic partnerships with brands like Tractor Supply or Kimpton? How do you see those relationships impacting customer acquisition cost over time?.

I mean, it's just a -- first off, it is a fantastic suite of brands. I think Kimpton is one of those pet friendly hotel brands in the country, Tractor Supply is America's largest rural retailer, and performing exceptionally for their customers, pay customer first. Hal, I think, comes from Home Depot and Macy's, just a phenomenal retail executive.

So we generally want to align ourselves with brands that we think take care of take care of pet parents, and help get us into the house, frankly. And so we'll continue to build out those relationships, think about additional ways to be present in store, online, through loyalty programs, etc, etc. I think really it is just the start..

Excellent, thanks very much..

One moment for our next question. Our next question comes from Jason Helfstein with Oppenheimer, your line is open..

Thanks. Two questions. I do apologize if they’re already asked; just jumping around on to the calls.

Can you help us understand what percent of customers use more than one service in the quarter and maybe how that compares with last year just the evolution of customers, taking more than one service, starting with one and kind of growing? And then I guess the same idea with frequency is there a way to think about kind of number of purchases per week that you've seen today versus nine months ago or a year ago? Just understand those two variables.

Thank you..

Hi, Jason. Good to talk to you. So look, I think we shared early on, our long-term rebooking rates, kind of people that book a first service then go and book another service continues to be about 90% plus, so once you kind of try it, and keep on buying it, so to speak.

We haven't disclosed multi service booking rate, just because that's pretty -- changed pretty aggressively quarterly based on sitting or boarding, drop-in in weather, believe it or not, incremental weather changes customer behavior; meaning if you're in Miami last quarter, you probably went from using a lot of walking into a lot of drop-ins.

So it's difficult to give you an exact answer there but I can just generally say we're excited about the trend we're seeing. And then in terms of frequency and customer behavior, look, the average pet parents using us four to five times a month, that really hasn't changed.

Premium pet parents continue to be that seven plus number, that really hasn't changed. What we're just seeing is kind of more customers falling into that Premium cohort..

That makes sense..

Thank you..

I'm not showing any further questions at this time. I’d like to turn the call back over to management for any closing remarks..

Thank you all for the time. We're excited to continue to build this business and become the button on the phone for the millions of pet parents. Wish you all a great day..

Ladies and gentlemen, this concludes today's presentation. You may now disconnect and have a wonderful day..