Release Date: July 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Mad Paws Holdings Ltd (ASX:MPA, Financial) achieved a 3% increase in group pro forma operating revenue, reaching $6.7 million in Q4 FY24.
- The company saw a significant improvement in EBITDA, with a $500,000 increase compared to the previous year.
- Operating cash flow improved by $600,000 year-on-year, indicating better financial health.
- The company successfully launched the Mad Paws pet store, consolidating its brand and offerings under a single platform.
- Mad Paws Holdings Ltd (ASX:MPA) secured a new $2 million debt facility with a 36-month term, providing financial flexibility for future growth initiatives.
Negative Points
- Revenue growth was lower than expected at 3%, impacted by soft market conditions and holiday timing.
- Group transaction volumes were down 4% compared to the prior corresponding period.
- Waggly's revenue decreased by 41% due to reduced marketing investment in the subscription offering.
- The company incurred a $0.2 million cash restructuring expense related to marketing and operations overhaul.
- Despite improvements, the group still reported a negative operating EBITDA of $0.3 million for Q4 FY24.
Q & A Highlights
Q: You referred to softer trading conditions in the quarter. Can you elaborate on what you are seeing?
A: Justus Hammer (CEO): It's challenging to provide an exact read due to timing differences of holidays. Consumers are still traveling, but the timing of winter holidays varied by state, making it hard to get a precise read.
A: Graham Mason (CFO): Travel market data shows international travel is normalizing to 2019 levels. Despite this, our platform investments have helped us outperform in key categories. The upcoming media campaign with Seven West Media aims to increase awareness and drive demand.
Q: Can you provide some more background on the debt refinancing and need for this facility?
A: Graham Mason (CFO): The facility supports our brand and customer acquisition campaign and helps manage potential market uncertainties. The flexible funding solution, combined with $1.4 million in product and tech savings, will help us navigate potential headwinds while supporting the Seven West Media campaign.
Q: What are the key operational highlights for the quarter?
A: Justus Hammer (CEO): We finalized brand consolidation and tech builds, launched the Mad Paws Pet Store, and improved warehouse and customer service efficiencies. Focused on prescription medication to drive new customer acquisition and improved margins.
Q: How did the financial performance fare in Q4 FY24?
A: Graham Mason (CFO): Group pro forma operating revenue increased by 3% to $6.7 million. Excluding Waggly, growth was 10%. Operating EBITDA improved by $0.5 million to negative $0.3 million. E-commerce reached breakeven for the first quarter.
Q: What are the strategic focuses and outlook for FY25?
A: Justus Hammer (CEO): We are focusing on driving cross-sell through brand consolidation and leveraging the upcoming media campaign. The platform has reached maturity, allowing us to innovate and reduce costs. The new debt facility and restructuring put us in a strong position for growth.
Q: How did the marketplace and e-commerce divisions perform?
A: Graham Mason (CFO): Marketplace revenue increased by 4% to $1.8 million. E-commerce revenue was up 3% to $4.9 million, with Pet Chemist revenues increasing by 16%. Waggly revenue was down 41% due to lower marketing investment.
Q: What are the key financial metrics for the quarter?
A: Graham Mason (CFO): Group transaction volumes were down 4%, but up 6% excluding Waggly. Operating cash flow before sitter liability movement was negative $0.3 million. The new debt facility provides a pro forma cash balance of $3.9 million.
Q: What are the plans for the upcoming media campaign?
A: Justus Hammer (CEO): The campaign with Seven West Media will spend $4 million over 9-10 months, reaching over 2 million people. It includes 5,000 spots and will be supplemented by performance marketing and a significant social campaign.
Q: How has the company improved operational efficiencies?
A: Justus Hammer (CEO): We focused on automations and new processes in the warehouse and customer service teams, achieving the highest efficiency levels to date. Continued improvements are expected to yield further benefits.
Q: What are the key drivers for future growth?
A: Justus Hammer (CEO): The consolidation of brands, platform maturity, and the upcoming media campaign are key drivers. The new debt facility and cost reductions position us well to capitalize on growth opportunities in the coming quarters.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
