Rover Group Inc - Ordinary Shares (ROVR) 6 Nov 232023 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Rover Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

And I would now like to hand the conference over to your speaker today, Mr. Walter Ruddy, Vice President of Investor Relations and Capital Markets. ahead. go please Sir,

issued you earnings us we results. results at press discussing Thank our available third Relations Investor will discuss quarter the website release our in XXXX In announced which for afternoon. is to on joining investors.rover.com. Rover's be today, Good this call,

from being As being be will recorded is from there after Investor call. webcast replay the shortly reminder, a call Relations our and available live this website is for and

and Rover. is Co-Founder; Operating today Easterly, Aaron and Wickers, Executive Officer Turner, me Chief Brent With Officer; Chief Chief President Financial Charlie and Officer at

Before remind safe and and and operating make harbor performance will business I'd guidance, These Reform we the the non-GAAP and health, expectations prospects program, market strategies, industry, future factors statements certain and financial marketing, public metric other investment product of macroeconomic, travel XXXX. expansion, begin, market and GAAP profitability anticipated Litigation other and Securities like everyone share our regarding and initiatives opportunities, growth that and events, and trends, and future impacts, expectations, trends, liquidity, conditions. targets growth provisions within results, XXXX future pet real Act industry expected to estate and their forward-looking financial investments and margins, statements of management include residential repurchase care and

or XX-K in from expressed Form uncertainties and cause actual and Factors most recently could those that results our risks included during are statements and including under to and to Risk recent subject differ performance risks Forward-looking Form XX-Qs. filed uncertainties the elsewhere the materially unknown known or and call, implied

required of based and law. as expectations, of forward-looking projections forecasts We to information no current All on duty assumptions undertake and unless this estimates, the update speak today and by and only are beliefs management. statements

not of on performance. they place guarantees undue forward-looking future not should reliance as are statements You

News directly measures their historical We will directly reconciliations comparable non-GAAP financial most most investors.rover.com. financial non-GAAP comparable at can reconciliation in Events, be also The found GAAP posted GAAP Presentations and the certain and under discuss measure to measures. supplement

reasons comparable Non-GAAP the for or be forward-looking supplement, reconciliation financial measures non-GAAP any measures. a considered measures. non-GAAP should have GAAP most measures directly the as a not or superior For the not reconciliation future discussed financial provided of in GAAP we to substitute

QX Unless otherwise compare noted, to XXXX we call. will in metrics all this QX XXXX

let's turn the I'll call to that, With Aaron? CEO. get now Co-Founder Easterly, Aaron over started. and

to before guidance, Charlie investments Brent give discussing you, everyone, wrap I outline then marketing I product. we call turn the in financials questions. take third Thanks, before us for a and few by start to quarter by our will thank Walter, results, the the additional booking over earnings and and prepared our providing performance today. remarks highlights, and and joining on detail will XXXX our

spectacular We income a third million $XX.X net of had quarter, reporting million or of XX% a $XX.X EBITDA and adjusted margin.

$XX line, the top value grew to booking On $XXX revenue million. increased million, to gross

guidance As of increasing and for revenue and risk the we of XXXX, strong a reduced EBITDA macro our are again expected remainder adjusted in result our year. performance the

Beyond continue our build headline these on results, to priorities. we

while margin continued demonstrated prior in First, the EBITDA our in expansion. from able to were margin XX% business it. lower to the communicated, strong we operating XX% and evaluating net and continue increase be and substantial with results have income adjusted this our should that we in These higher much product than to adjusted bound year We we target marketing, how margin the EBITDA adjusted leverage investing of year. long-term EBITDA previously increasing are XX% suggest that

record up business X% points. demand of levels. bookings XX by over last outpaced new record result customer new our approximately achieved Second, This XXX,XXX, year's we of measure

and XX% of growth, up quarter another Europe tremendous continued and cat-only representing grew parents. resulting in its in reflecting XX% continued XX% of strength in our XXX% Third, had our Europe per total. non-U.S. non-U.S. bookings the markets with cat growth. GVB Canada, in strong markets our in XX% GBV Canada,

customers their LTV to all-time and QX from pacing the acquired QX while in pace. cohorts have record records, QX are Fourth, continued

last surpass years. Additionally, to year's cohorts continue prior

finally, products are to driving And improvements top our growth. line

to more continued have We parents initiatives roll to best pet help their match. out find

beyond these provide changes expect to We benefits enduring this quarter.

evidence close the out of improved the is driving. the performance remainder outlook we of As year, QX our are engagement we

of with external and challenging encouraged we multiple drivers the we about underlying weakness While optimistic our broader are track, the remains environment in future.

the position, Our testament platform, of the to fundamental opportunity performance most of market business X and continually the power the to team. discipline our importantly, the dedication is the a over our model, and years last improve

well are of the to making we for experience everyone it of mission a our possible that believe pet. We positioned love unconditional further to

for opportunity pet-owning similar what's XX are a and U.S. Europe. tremendous, amount we Our in the growth with come. excited about approximately is million households And to in

to call discuss our performance. the over bookings and operational turn I'll to that, Brent With

discuss good and commentary Aaron, success Then by providing our to bit more afternoon will I Thanks, of our execution strategy. volumes. marketing I booking the will everyone. a on driving in begin

Finally, our I'll product wrap up by the quarter. investments highlighting during some of

bookings we bookings QX, a XX% of were year-over-year. platform. over new and the levels generated repeat on Total increased XX% record QX XXXX. increase X.X versus In business Repeat million,

is in third bookings highest and enhancements our further level provides to totaled performance efforts marketing continuing represents in bookings gains drive especially our X% as share. quarter-to-date. over XXXX. up it record product our the quarter are This encouraging evidence in market XXX,XXX, It that new New

Turning marketing XX% target In non-GAAP XX%. on marketing. QX, was of our of XX% expense end of to revenue, to the range lower

Hooman, team support magazine. that innovation our celebrated in topic the ad category and new video upper as growth discussion build My latest launched a funnel This channels. was several to has To through cost-effectively bookings concept spot Our yet is strategy online a of we another become our drive in ad QX active in

accelerate our customer channel us acquisitions. into beds media helping well expand maturation conversion channels markets to to Further, of has our continued in as European our drivers up-funnel new further enabled as

to and to turn driving QX, improving and we continued strategy of investments. new stickiness. product conversion I'll repeat platform our In by bookings execute Now rates

by to select pet to identify particularly launching beta This pleased Star feedback who of parent our respond program were exemplary care version better experiences. to markets. providers we First, Rover program provide in helps Sitter a

point and pets, the we in by out rolling schedule parent pet addressed ongoing like services functionality. daycare for dog them Second, easily pain Europe to their daytime allows recurring capability care booking for walking. This particularly

as drive we XXXX. to improvements these expect In customer in to both the bookings to functionality well More total, Contact recent in XX,XXX of we incremental These Sitters our capabilities. response implemented were enhancements Third, as program. refinements scheduling approximately changes to testing

would improvement team. of product I the to our like highlight Importantly, operations efforts

a technical customer these efficiency Getting nontrivial expect appropriate has We of enable have have are support time. providers contact our of improvements capabilities both pet members and wins, the to to rarest center. market those These been this double to the satisfaction, easier teams. messaging help. of for it development recently feedback accomplish required very of on parents self-service at same completed Adoption a and global who us capability and has wanted implementation more our care contact improved well strong, long-standing higher to from community for preparation of us as and ways as responses part and we app-based our to reengineering for

momentum, I accomplishments and look I'm progress. proud to more of and forward team's our

drive new we and complete, to never is though both product improvements repeat bookings. continue to work additional test and Our

Now to I'll to Charlie on performance. turn provide financial the call our detail over

demonstrates adjusted margin and by by growth, continued ability to us Start our guidance. EBITDA financial substantial followed phenomenal indicated, target. quarter income margins, clearly revenue confidence discussing including strong our during scale the net Further, low of produced Aaron expansion. and consider results EBITDA raising the Rover as the end success to quarter, this adjusted gives margin

XX%, $XX was million. up GBV up in while quarter, factors. Increase was was to X primarily the driven revenue For revenue by XX%

XX% the described. First, driven increase approximately of the X/X in that growth was Brent revenue bookings by

Second, increase structure point the of was all the of the due which the revenue fee benefited to U.S. take higher owners rate XX.X%, from cancellation XX.X% XX% year shift and recognized rate approximately basis the XX from of ago, improvement. to a up X/X

And ABV unit take increase of in service. and XX% as of was have per an was rate both of by the were year-over-year. rate up ABV driven X% expansion revenue third, growth our in of which cancellation The price in as growth average an driven of $XXX, driver well Improvements approximately margins. increase higher main revenue

In increased QX, contribution XXXX. to in our margin non-GAAP approximately from QX XX% XX%

expenses. to Moving

We continue in business. while to invest peak through managing summer across the season costs up-funnel the marketing

beat contribution and improvement, margin line by bottom driven the the Beyond X quarter revenue items. was for the performance strong

operations in leverage QX, in support. was improvement QX from and support of an First, and XX% non-GAAP operations In XX% of revenue revenue, XXXX. continued

to range. invest marketing a marketing revenue low continues our investment marketing in business. QX, keeping In we able of in our drive expense Second, scale efficient of were end while to as our target percentage the non-GAAP in

managing non-GAAP respectively, commitment and product to in Third, of fixed from and Non-GAAP of XX% and non-GAAP both XX.X% development revenue, XX.X% QX XX% of was non-GAAP and our revenue, G&A was XXXX. G&A. product costs decreasing development

investments there are generate of they margins ability leverage our trajectory. Rover best this We enduring the if have sequence be potential that incremental investments our it medium-term current in will to incremental approach, us to additional drive to were to net is our demonstrate income. additional believe expected our improvement year-over-year investments only our continue believe annual that to continued We accretive to offerings. allow product, to With adding high-margin in and

have update Moving our of shares November authorized for of program. X.X purchase amount nearing our an we on full repurchased of Through aggregate the buyback X, price million total $XX million, to an a program.

generation investment is from our We're X, our November potential and cash our X.X of a As repurchase our of multiyear happy of of a the capital. million balance of we XXX.X shares that believe cash approximately current the XXXX. with decrease be effective an shares million, and to continues year-end business, outstanding

Board extension of of XXXX $XXX additional and available repurchase our Accordingly, authorized an February the refreshed with million. our to program capital has an

turning Now to guidance.

Aaron year excited raising final head As our are and we the months XXXX full guidance. are the we year, thus, as performance of by few in discussed, our

our continue macro We to has outpaced performance headwinds. that see

As in account in into the increase higher confidence our to in takes ability QX our our overperformance in a guidance current result, execute environment. the and

leisure spend to account previous travel and for impacts, to continue and on home an we're illness trends. sales eye guides, keeping Similar related and potential also volumes pet adoption trends, we

For million which over increase XXXX, revenue revenue million of we or the $XX million, XXXX. midpoint. expect a EBITDA be now at of million XX% at to EBITDA An would adjusted $XXX $XX the the adjusted full margin midpoint to year in XX% $XXX a

midpoint. expect midpoint $XX to million XX% XX% million in revenue, the revenue we quarter, a $XX million would in adjusted and $XX in adjusted which at at increase be or $XX XXXX, a over EBITDA margin Fourth to the million QX EBITDA

growth, line products shareholders. produced net dedication top fantastic investing the opportunity. and are capital while generated delivering all expanded adjusted in capitalize the Rover ability our team focus of and results EBITDA a summary, demonstration In Rover to and margins, our income, to of market the on These

for turn With now that, Operator, we open to can Q&A? will you it questions. up

Our William of first Schackart Blair. come from Ralph question will

on I little a And please. have on First color of customer more think growth. more Brent, the in efficient? Maybe question, then funnel new about It's you becoming acquisition. the media talked the finding accelerating you just upper you customer trends Are just follow-up, strategy. on you're new a really new Are media combination more channels? a I trends, call, strong seeing bit the both?

accumulation had the Yes, is Ralph. we've for think that while. we're efforts starting I Thanks, of see going what a to

growing a not kind talked or about because get steady you accelerating months. it we've only it kind how had get on in rolling think upper future on And final some in and channels trend increasing rate, see up-funnel channels, calls lot immediately the funnel starting of our you at of we're we've returns of upper a but of to a then the bookings. I of previous

a We in where And from is with staying channels. standpoint. the momentum try to we're think category. is the internal of look think think an doing acquisition we of what -- have a take doing to our we ahead And well at attributable measure that customer lot category we're we and we a what then up-funnel

Too is doing, early what new early to signals although very have say been the spot positive.

driven. bigger of seeing getting that product color they weakness And guessing as any picture. on awesome. you I'm Great. still that still track, Maybe about yet sort just really, talked are it's drivers a weakness of you that the you're if the more the lot in in drivers, would just posting really a kind be of Maybe a on any think strong growth. follow-up, level? reconcile on relative can at same Are then I Aaron, better Just basis? you the they still just

Sure.

lot a travel are several always into So reality same last because and the over the business. network was a that been our and sitter neighbors. and of moving lot to of more without the has COVID, been when the complex. they make consider more inputs a kind are has Rover on place People a But dominating to of focus years, move likely friends, family a

So housing market impacts Rover.

in are willing are little the COVID environment what little Interest of matter pets a that And also and to are becomes people on kind steadier. adoption to big travel those and seeing pet factors. as a starting spend we're bit more their bit

we what really it how seeing especially believe scales. growth The we a the to as is competitive We have testament we're in work, a well can do. advantage business

an marketplace services. of largest far, by of really online we are, We And transactional good have terms word player pet in for mouth. share the

category, continue outgrow different that to we to although more So become factors categories all complicated. the hope to contribute

Thank you.

from Our JMP of Boone will Securities. question. next come Andrew line the of

start I accelerated repeat to just strong another want with quarter. bookings. there and Growth

comments to us help In understand question, addition just seeing? to anything is else to that that strength can there you're you your unpack the Ralph's

for Sure. business has kind our is something up continually Repeat of been that bookings year-over-year.

our cohorts look you varies a little pre-COVID, year-to-year. year. If the And force every go just bit up driving

bit may long-term be customer, more a more little pricing, retention. sometimes may it's it sometimes it on Sometimes per bookings on be better

pre-pandemic. trend But the of services. it's kind we introduction Sometimes saw the new of that's normal

to return fundamentals the underlying of kind And we've our so just a X years, seen business around the over cohorts. of the last

specifically, quarter last acceleration per little compared we the This an daytime of in our to saw customer services. bit on a bookings year

overnight well. hasn't mix early little see. overall nice but to a per to bit, yet, So phenomenon, seeing that's that that It's the the we're the than or more bookings customer It whether too not a it's as was say services. up work year-over-year but moved return much to dynamic

to then kind was, long-term revenue wanted I margins this I go quarter. of to And last helpful. on That's margins. think, XX% EBITDA Incremental

throughout You guidance us look guys it? about want right is you then at potential Understood have guys that give over steady plus the long-term margins not of XX% from how very may that think way XXXX. XX early something of do of guys XXXX is think and Or much the that printed it's of imply kind to about here. kind the state you and But here to there?

to too the Andrew, on is yes, long-term the guidance why end of we're our set margins guide. main growth, incremental XX%. health it's a to provide and quarters, take for take our too the second last that I performance strong, us the would number. the wins new been that. this at couple a us above have reasons from XX%. the as But Previously, at on getting from that of at this this back causing -- give based low booking quite of looking it incremental But you customer time. We're early side, EBITDA beyond we're say adjusting it at product But guide the year, getting early that dynamic, repeat adjusted to look just as is was one we're that the well step

Just bound. to it's fact to bring suggests adding change that that felt it material that the to Charlie's believe a we we lower compelled up point,

or could long-term of that We to not a how flow-through looking more and about margins. points think percentage So is way talking incremental proposal through very the way in drive your good flow terms we're our incremental basis the that think points. at

years. to term, we're use talking long about we When X X typically the term

higher. do the X-year is to of you it for go if we range saying, X- were think could But think right frame. kind we're we actually the is now that's even appropriate doing So what yes, to out time hey, work longer, be

One moment please for next our question.

question next come Canaccord. will of from Ripps Our Maria

of are those strength And revenue you provided the contribution areas time August? can expectations some to back the about some you sustainable First, I QX? in of factors quarter heading guess, just the at shared guidance of in you growth versus how your But the into talk quarter. in internal maybe

or Charlie. unknown of was to it's see want a to one biggest how of regarding at the first chance QX with we I'll last a how was With a externally were us that shot in. that Maria, At quarter, that Brent Aaron the weigh in it to macro going have for about the things best thinking here was hitting out play the if seen and QX. regards business in starting continuing were QX. take an into recession that and time, estimates we

just the disruption we our but wins from As there product level we play only overcome of Not through whatever the it. quarter, able did to strength were we was, continued went to see business. out, macro

so the contributed to bit beat. And a quite quarterly that

expense I line good regards through controllable. They costs. But walked with With to are revenue, the pretty to dynamic, those. have regards of to our sight we

a have within is parameters for themselves a have to that set team staying We quarter. the they within dedicated that

the really regards it So call you but the positive. to it, to biggest, to if was macro, want surprise, with the was a

And That's how on cadence very the macro about the is investment then in helpful. predicated of to you investment share year? you're there level of environment? next terms your And is what can color any extent thinking

product that to move versus of kind now reach little and worth marketing. is talked TAM opportunity. that family, up neighbor segment primary our bit about desire we more of friends, into several investments more bit little dividing it's Well, a Brent that our a to in our quarters think for has funnel

to that We expect continue.

driving drive growth and very growth. parameters. profitable But the within growth believe it's for because Charlie's unit about point, the economic team We drive don't the of constructs growth disciplined of very profitable sake working growth. a we to We is our

naturally. plays that weaker more. spend a we'll environment, a dynamic environment, that bit out In probably less and otherwise we think would. In a than we spend we'll little probably stronger So

side in our continue we are new capabilities, investments we the With and generally regards to think that product staffed appropriately. to

We But new and pain we also our and better expect to work expect parents' continue into heavily make to continue existing points. pet to product better. it to better address opportunities and in to invest experiment

that. continued there'll a of And so mix be

our longer a For horizon. have product we investments,

much wouldn't and we a that on around on to on whipsaw So flows ebbs macro. too the investment quarter-to-quarter basis expect the based

strong quarter. Congrats it. the That on Got makes sense.

Sheridan Our next Eric of Sachs. come from question will Goldman

for Maybe would sort do about to supply-demand incremental in the of when think longer-term reinvest might would a be margin X, continue ability be I see back of elasticity pricing to or if one. over term platform? mean of term dynamics services services one. the what layer you How terms you in the One that around can. your the longer business number the of of some That long and

And then bit you rates. talked a cancellation little about

things still address doing I sort back sort think Any you're cancellation pre-COVID state? maybe on sort below they're the normative rates update medium to long into a to levels. over of term, them of of bring

the to before. as Eric. believe the as it up in did that pricing quickly continues not We drift Hi, although marketplace

we platform. price pre-COVID, as price market saw function the well generally maturity by that own of counteracted look That a a reputation somewhat drift-up both you been in on If market providers developing drift-up mix shifts. their as charge, has in the points as

markets, price you when So of lines drift-up. within living, less we and developed expand clear more lower that have a there's pretty have cost points. into and may look if those But lower within geographies are service

both the We to But our product into have improvement our some do to increase period we're that one part new confidence invest of believe invest overall as that because that automatically in our well, contributes in without also of marketing the or willing improving just in year-over-year. our a any which product. almost return customer of cohorts what to funneled We can to ratio. to we to normal LTV view. it a CAC gets it back nice regards spend in for our think can marketing change cohorts longer-term see It's earn-back with to the ability and improvement to is our things we

be to we don't our But cost that would that fixed change materially we're how the so expect material pricing changes approaching structure.

your take rate. I'll Eric, on question cancellation

providers of out adjust in couple a product their cancellation So a we quarters ability to with with has rolled enhancement burning and I that ago, for the that's time. And rate be or been up flexible brought policies.

of about that's X-day that so opted adoption up. now the providers a a cancellation basis to see up bit tick XXX year-over-year, platform the in. have burn points on in XX% to continued aggressive. About more of We've continuing little rate for policy, That's

We their looking has provider make whether also they're look as pet for side. higher other it to on or last-minute known a more opportunities for level not of parents cancellations a

that out things So to the obvious dynamics, users it play understand make time. of we more we're for cancellation to doing are with rate platform and seeing

not see in we ebbs flows affected as this Here illness regards our QX, with did But as quarters. waves. to saw we during quarter, be rate some past and cancellation in

see illness. place time, drift But think we So continue relative rates do normalization could down. probably we our to with some cancellation to taking

from come & question Tom will Davidson White Company. of next D.A. Our

there. first, some Two, kind guess, of all-time records. some the think unpack just you, about for the could could. from was quarter I Aaron, of hoping drivers comment kind customers there if you I LTV I maybe in was approaching of acquired I

second, I'm windows. then booking curious And about

kind next it talked to kind for similar hear I a relates just kind as and wouldn't over windows the curious pipeline your on strong far months. their as to feeling in on visibility it of the the some out of overnight windows of how booked as quarter, OTAs seeing your thoughts if to quarter. you're several generally dynamics about you big One guys expect but about kind maybe booking first stays. the be of recent are expansion booking first travel seeing the of of Curious of call

things. to then quarter question first LTVs the this for take I'll couple of for one. second Tom, The hand and Charlie over it were a driven the by

in per minor also means first bookings the customer customer is more that seen per last X fact value a a moderation services. we've was rates X realized you seen the the on the we've improves. increase first daytime year cancellation of our of compare of if that some the And That basis this months in a versus months pronounced year. year-over-year the little bit The

capable but higher day the than using year, People Historically, trips you're a care the walking, use doggy frequently. much services. of if are you of frequency lot that daytime take a may more services only overnight can a handful

fact So the little there higher we've is that bit positive. a seen increase also

The driven is, LTV overall that's amount of to last expansion this was year fair it less say, the probably year. pricing than the that portion

Tom, changes with our regards to booking report. window, there's to in end no major

overnight in booked X and advance. continue to Our about booked daytime week our services in a to be weeks continue advance, about be services

come JPMorgan. question of of from line the next Our Cory Carpenter will

Maybe and impact any in October Europe? your events, talk whether exposure you, in Charlie, see one just in you for to for talk, similar around about the Aaron. bookings potential did Charlie U.S. or could there? you one could you geopolitical Or just

an lessons Horizons us any terms partnership, on just of for Bright you you the go update in give secondly, And could the going future? how could learned on then partnerships that's in and maybe

take I Cory, of those. think is Brent, this both I'll

has political anything been noticeable. in events, hit you Anytime impacts there's trend see events represented or radar reportable. can nothing something whether is somewhere screen we event in volume sometimes that On there's the weather or terms of world, a the a that's political not have seen that Florida going on, of in there's things, our but small have sort

not The report status. of a Bright in to terms lot Horizons partnership,

continues exist. partnership the -- to to continue We

continue we to reacquire of We continue as and customers through and to acquire proud be that partnership. them partners

front around think we the which we that also we're is We offer terms learn in and can nothing do other there have the report themes those -- yet. us to for of the emerged Rover to -- of the audiences are occasion, that partnerships, in surfaced But getting that application of from. around

I the conference now in closing Easterly, back further I the remarks. would queue. turn like seeing to no for the am questions CEO, Aaron to

Thank call joining you all our today. for

this about Have day, really pleased the excited of wonderful business quarter, are what's we're the and come. performance to with everyone. We a

This concludes Thank all you today's participating. conference for call.

and have You may now day. disconnect, pleasant a