PetMed Express (PETS) 6 Aug 242025 Q1 Earnings call transcript

Greetings and welcome to PetMed Express First Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Reed Anderson with ICR.

begin. may You

based There filings materially this be beliefs and as Reform are as including number a as or XXXX results and be law, to update current to matters, as statements no operator, Earnings these our report Commission. in occur subsequent based risks undertakes to any Securities PetMed. risk everybody or risks, associated forward-looking legal various Securities forward-looking and events, uncertainties. from or no the presentation factors of annual any or of used may our on included These may the the recent business other reflect respect welcome Call. statements except with authority. warranty those future our within matter Act or currently operations forward-looking Thank operations PetMed publicly competent any us. nothing uncertainties have and amended meaning we these Exchange events, assumptions. Actual be of statements of regulation the statements required obligation information PetMed most I'd this XXXX projected. available financial assurance Express applicable a to or on with by today of Exchange of well that We've identified and assumptions future representation during will be upon involve will in our as condition the information is and upon Securities can XXXX realized, could as be may Because results in contained relied Fiscal here should include concerning involve that based Certain views to these statements Litigation you, Private that like call Act First Conference the Quarter and differ

call over CEO turn to and me Campos. Sandra Now, Sandra? our let the President,

afternoon. for joining to this our Reed, conference call thank everyone you and Thanks,

provide an for financials, after will we the Christine remarks, will overview our which my Following lines open questions. of your

fiscal to results executives quarter company. first quarter as As we first important for of our background. Chief We added executive Chief out the that whom experienced Operating we the our QX top-tier Officer, of during my was May Chief added and and And quarter, XXXX, month new from year it's full a highly May joined close Marketing several Technology and new CEO. retail reflect a the transition note Officer all Officer, a ranks a Digital June. in new

leadership, Officer, with Doug organizational also new governance. leadership Krulik XX. As years accounting Chief of internal our enhancing and in financial excellence welcome more on focus controls, Doug and than aligning our we strengthening our operational to excited to XX continue experience as compliance we're Accounting strengthen starting operations, August brings

Board, a strategic new cybersecurity review Solivan been opportunities independent we've Leah pet extensive this with Additionally, the and our performance to independent results market. Today, greatly directors. innovation benefit address of we're our and from in will the significant directors new as us transformation pleased in I'll help the Justin $XXX first the recent and and billion expertise to care welcome quarter. long-term adding digital technology, and begin efforts in will Their Mennen

strategic my success. initiatives reposition are future primary will on be focus the the to for However, company that implementing we

areas PetCareRx to and towards team drive profitability. leadership PetMed significant growth and actions is new Our taking key in

quarter. initiatives, PetMed PetCareRx. made on operations We've consolidation new do key between financial growth, the optimizing improving operational is performance, Our clear, positive the half on the we impact not returns. and the in reduction customer progress team's cost of and can latter improvement, QX structure, our results shareholder focus To of reflect the fully ultimately, the including be which streamlining integrating enhancing strong cost and of

spend. our begun to site, and through enhanced effective team evolution engaging Additionally, an media growth advance messaging has creative targeted strategies and our our introducing customer of new

incremental trends Our signs momentum, facilitate we're recent these delivery. including create technology speed will of more values, longevity. We're seamless the handling journey strategy order early margins, customer and weight and increased value improvements products to validate for reflect and improvement call PetMed seeing improved leading through reversal development to gaining times a in name order key of and our indicators, will of few. indicators ecosystem the an of These create well-being to and reduced and a just key further services previous and

as specific down This For technological in QX decline promotional a year, XXX and to and broader challenges, consumer being sales factors, XX% usage basis year fiscal expectations, last with point macroeconomic have below which reflects addressed. XXXX, as compared are were decrease margin. well our results higher gross

resulted industry officially in in costs. improvement XXXX to it looked reported new As XX% ending an fiscal us operational despite quarter Starting to and board, customers new first our customer efficiency evidenced more customers existing in metric the second look metrics a versus acquisition spot, new on a be X% with media which update Utilizing not of that a a spend, typically These our we they retail turns XX-month XX% years improved set. in had in quarter, our will a of customers in constitutes XX,XXX continue customer, X inventory we from to reduction sure years. improvement all who with as at new bright make this in measures will year. Since in a line at reduction on that defining and have and achieved as XX-Q. inventory what XX% by strategic competitive an I have that were on standards, in we ago, Several the customer align I definition, come the redefined last purchased cycle.

the pivotal commercial, validate are steadfast operational that of the success. Since PetCareRx July, on and PetMed that seen positive taken. renames first repositioning financial the initiatives focus long-term are actions strategic Our have for and that to indicators week being we

X% result of our focus optimization XX% by organic these increased year, by by had engine continue a metrics customer on a strategically year. to as a uplift web due with conversion, and to compared rate our visits that of compared optimization, digital key conversion XX% was search media spend improve experiences. Along reduced to last will to we example, For last

have leads our focused partners efforts on We agency of revising marketing efficiently. overall the our realignment convert including order outside to strategy, in more

have well compared As our a over these and as order average month others, of efforts margin to month gross last our result year. value improved as

customer focus the our operational engaging and time centers. internally call pharmacy, past the center and challenges my and has Over and been our months, externally. experiences stakeholders, customer addressing optimizing in with both dedicated organizational substantial understanding structure X our on fulfillment I've

strategies. been executive system customer our team These new an in initiatives. stack, Our has a grow expand improved infrastructure. site architecture, strategies through leadership data involved upgrades Key aim strong efficiencies, modernized customer shaping and drive to and tech our enhanced market SEO-SEM stabilize base, navigation, and our better improved with transformation our me cart experience share actively include elements checkout and processes

message. our In with Additionally, the to goals. we and improved are includes I've that of costs partners, are and of negotiated I've implementing a my consistently investors chain. optimization product across and all many you and interactions, forward vendors, shared engaged strategic key have SKU align efforts communicated drive supply one strategy for rationalization

significant combined of enterprise over for acceptable, and PetMed several not has improvement. the years Our the last potential PetCareRx performance and is

products While believe on results. path to positive the growth the turnaround confirming our clear yielding with a time, to brand are will take company Building and strong meet indicators we we a and are our equity, of and actions that consumers. profitable restoring legacy early we recent on evolving tailored our services XX-year to into PetCareRx transforming for PetMed ecosystem the pet needs are today's dynamic

call I savings, position. outlined QX, the efficiencies, continued these we we maintaining priorities healthy will the and During our costs PetCareRx In over resulting the on consolidation $X of months. half operational both reducing million including PetMeds cost annualized organizations, second a in QX initiated focus liquidity realize which and for June, efforts, earnings coming across approximately in of a in

cash have $XX remain free. million as in of sheet balance of beginning the remains strong debt August, Our and and we

Our focus priority while Customer retention processes June are top in a improvements, of enhancing our driving positively to operating reducing expenditures, technology revenues. profitability more actively disciplined mind. top adopting approach July, while and is initiatives influencing experience our were line and expenses. a firmly were and on operating By we customer

and solutions experience. high-quality customer a retailer. To interactions launching the to technology-driven point this, be profitability. advanced in every at our believe we campaigns new will acquisition strategic other our taking growth enhance in will We with we're further aspect touch August, designed Delivering and to combination investing of sales is marketing our to these, enhance accelerate crucial that customer in position us actions achieve that as we're success marketing our every

our each service. Our frontline reflecting customer efforts gather I've from teams and in to our commitment customer invaluable is deeply our and to I've customer with been excellence experiences users, understanding on seamless, personalized firsthand. involved focused our feedback are interaction partnered success and that customers ensuring directly in engaging,

joy prescription with directly for they for been customers and valued Michelle told Michelle like loyal than customers our the spoke dog have highlighted I who appreciation quarter, Mike approval X every at connection with delivery. of that loyal they surprise Many strong auto and brand. treats have ship her Harper's receiving expressed expressed process the have in his that more This Mike, patrons me our years. our

insights valuable spoke some technology as However, positive have I into and with customer provided with well. less of us directly our disruptions several experiences, those customers recent also

tracking actively management into such underlying order strong with changes order to causes, addressing orders. in both making and and including and challenges and problems immediate are delivery, delays with issues have self-service their our We as system action the

the issues our This a powerfully years, preventing solutions elevate brand customers, customer underscores continues is must focus customer. to while every the been every that implementing disruption over interaction in XX also our resonate on takeaway, equity, with these built their which while recurrence we has for in swiftly, experience vital resolve future. loyal Our

accelerating our the prescription Royal ensure also food initiative that was will we several by timely reinforce our many customers us. efficient expanding our process efforts through in we We of SKUs for are As modernizing our X technology offering. Vetster, experience, visit In incremental I Food and also have effectiveness quarter. mentioned, and already This strategic more past position and and has an in service. telehealth this seen included Rx we competitive weeks, our to our growth begun partner, works important Hill's trust the place delivery operational enhance a a These achieved have milestones. enhanced and more launch months both our complementary the which strategic Canin XXX for launched streamlined

cementing well-groomed, comprehensive as whose and franchise to a mission rapidly growing affordable our strategic with pet wellness grooming and Secondly, a solution. in moment partnership with recently we're aligns developing providing partnerships ecosystem, enhance ours pet

and important offerings to wellness meet products product PetMeds our with services million into integrated by approximately run the and our an of continue to that reduced streamline be equity brand brands reiterate where wellness and steps their rate PetCareRx into I our This be the recommendation are company's they our as customers grooming operating mentioned, are. It's partnership integrating basis, which equally efforts be and engine. as will growth well to We will expenses, broaden have will we've the taken underway, consolidate initiatives. reinvested some operations and annualized will $X on we

an a operations IT, buying marketing team consolidated organizations. perspective, across our unified teams those from single digital First, we've and into

thus in our New locations, centers improving customers. processes Florida of prescription while across authorizations our operate to speed fulfillment the of technologies will of standardized are and pharmacies speed people, independently, and the our and orders delivery that those ensuring Second, and York

a and an July we with technology legacy perspective, drive are our modernized of areas immediate long-term concentrating and technology effort several a to system call Third have call state-of-the-art as key support we to improvement. service. From XX, customer center to both notably, on center

increasing For pharmacy clinics our approvals to process veterinary to our enable veterinary provider between order homes. approval delivery accelerating rate to connection pharmacy includes and Rx instance, also streamlining the of the speed the faster the authorization technicians increasing our to number reduce customers' the we're friction. portal through and while of This expedite

pharmacy our efficiency. greater with by have are our alone, reduced orders XX% few the times now processing teams Over weeks past X and

over We and into This PetCareRx. is done are months. tap past just we've of beginning the long-term few underscored to by potential the PetMed that the work

ensure and community only Our in customer We a the portion grew significant currently which and billion XXXX annual to with a and road with sustained $XXX of revenues veterinary care exceeded prescription by disciplined represent X% driven fraction market, pet of annually growth US medication. aim broad our execution has map. a thriving

customer growth, results implementing We are the strategic she boost to will confident in more can we satisfaction me detail. all and hand the call that cover key so drive that will departments these first Christine, are quarter With over metrics. that enhance let initiatives diligently profitability, across that,

or decrease for million new provide Sales fiscal the sales. period to this compensation Sandra. was The $X.XX to from you, to first driven offset of $X.X XX% million Thank year-over-year per decline million June primarily stock $XX share per for by an ending loss by I'll were million in income related of to the new by approximately a the quarter, million the XXXX $X.XX compared was update expense the recapture due Gross quarter $X.X or of million as executives. same $X.X quarter of expense the promotional quarter. driven XX.X% loss same the lower medication diluted EBITDA use a quarter $X.X gross change million year, and period year-over-year for customers period compared same reflected customers a the gross $XX of CEO same to EBITDA Adjusted in share XX.X% the results activity a was the first net now approximately year frequently. profit welcomed on last quarter $XX.X compared XX,XXX last We XX, higher the The XXXX. profit customers million, most lower in lower of year-over-year due year. decrease prescription last margin to a year, $X.X the in for decrease decrease departure from XX,XXX the year. compared other the quarter and XX.X% recent in same in adjusted was last more fourth year. to was primarily previous of profit. Net The last diluted discounts period

balance Turning sheet. to the

XXXX, As of equivalents had $XX and million we debt. of and XX, June cash no

that, in like for We will mentioned, concluding have provide would August, questions. Sandra Sandra call million now we after $XX remarks. Operator? open of As the early to some cash. And

from And We of will first our now come Markets. Ryan will Lake begin the Street question question-and-answer session. [Operator Capital Instructions]. Meyers

some First just a that little the me, you bit provide during kind drove of the pressures one ultimately saw macro of on guys for detail can wondering if that you quarter more then drive despite out being your growth pressures the business to confidence level in XX% revenue decline. business And be macro of there? seeing able back that of any might maybe the the

that, Ryan. take I'll

as the in just the and -- definite owners they're past. to frequent the to are for clinics our I've of We're XX% pressures, thinking That's affecting as Those getting at relates price had there and to about as for days. on themselves. on business. it macro for the prescriptions So though and veterinary actually coupons And that thinking multiple I've spend first, is one what even product. issue. are that lower that therefore as customer are ship an promotions, they're macro relates spend. other seeing auto heard they listening macro it their to decrease request customers factors how pressure would on less fewer a are total with basis, animals prescription even increased definitely spend, going are the pet calls well the the than both definitely a issues It's our the less affecting consumers been their their

customers this we're them. more who are, As that know it are about seamless at this to now I in in very way total segment we create we we the our very engaging know how experience actually in we and And mentioned billion truly going addressable sector terms scratching and relates of the a being market industry. we -- able are $XXX barely for the things that we point again, is this who these and are to one feel, in surface the is, confident confident are of that customers large

strongly not are the we currently. Those So, a lot customers, can more we of customer new are increase technology, customers. customers, to be the deliveries to more to the going we marketing the to capture continue of delivering lot that have but customers a strategies, very changing speedier to that the and of frictionless of feel seamless, the to only going and service a lot able deliver and frequency

if it. end -- I the here said into stabilization a And then think of of would we presume about towards you then the quarter Got bit and little QX.

kind we not the how think a rest given or slowing the you So, stabilization? maybe of should growth about of if sort guys seen decline revenue, have throughout this year of some

margins. well revenues, as the Yes. is we're this the seeing from as rates stabilization Well, conversion

margins as improving the been well So, month-over-month. have

gross we've So, June to a part. the April, from seen consistent uptick May, July, margin

very actually positive a So as improvement well. that's

continuation a sales week-over-week the seeing we're to improve. On piece,

is rate customer is to new past customers factor. continued at also continuing also And months, on I mentioned and over that well. we consistent unique increase as last and which as increased a stay unique our versus from important conversion the our look they've to an changes metrics year the So, transactions pretty stabilize, standpoint, -- before, X also

it. for And question me. last Got then Okay.

technology little called the softness some bit You that quarter. a of a out drove issues during

you Just around were. detail technology can little bit wondering problems if what more provide those a

We going that customers our of the up call hold had our was that, having implemented February. wait place pharmacy and center, raised previously the had and with that for mentioned new time longer the that well fiscal a at with fiscal actually this some ended January initial QX to of order that customer taking as into as earlier year this challenges And we management that -- end year, year. system started disruptions some we in

them. veterinary already. getting as addressing We've well. clinics also for bit, starting seeing prescription started and May, reduced as be was already of we've We've times. greatly. that but been address it impacting times hold improved to to But we calling they significant pretty approvals wait were we're those pharmacy a them So, April, course, were these And in

Our able those -- a call been more-timely also with be improve back time to down able down back to pharmacy prescriptions -- are the as mentioned, times partners that our on and and this to and at have our ability And for point. clinic are very, I the basis. well a handle very times to we've veterinary the to contact approved, technology rate normal center actually call

Those are and time, So, accounts it system order have to that management self-service wait been have for impacting auto addressed that our times, relates customers' as things we these being ship. seen look so pull was on area and little customer upon and we in dive bit each addressed, terms every deeper and a a we're of continuing to that improve deeply can that experiences those.

concludes our remarks. Sandra would This session. for like I question-and-answer call to turn Campos to back the closing any over

your for PetMeds your PetCareRx, you time interest thank and Well, and greatly in appreciate we support.

and our conference the there. of as during half next a transformation, of events want growth and already to on the commitment to you. their still we're and our stages our rapid during Although we be improve of and to to passion discussed steady attending of of for all business, investor year employees the ongoing priorities. this pet and our key our our look I of back progress in their new call, execution forward Thank mentioned, We understanding look early initiatives families, forward you that you on updating thank seeing number will for we progress also making will their are today many drive profitability. dedication and I our

today's now attending has for disconnect. Thank The concluded. conference now you and presentation you may