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Pet services business Mad Paws (ASX: MPA) has its tail wagging today after announcing record Q2 revenue results, despite Omicron putting a dampener on pet sitting bookings during a typically busy holiday period.
The company saw quarterly operating revenue hit $2 million for the first time during the period, up 199 per cent on Q2 FY21.
Half of that was generated by its marketplace business (comprised of dog food delivery service Mad Paws Dinner Bowl, toys and treats business Waggly and a curated e-commerce site for pet accessories Mad Paws Home) which achieved $1 million in revenue for the first time, up 63 per cent on the prior corresponding period.
“We’re very happy with our results and very excited about the last quarter in a challenging environment,” Mad Paws CEO Justus Hammer said.
The CEO noted the company was able to reach record revenue levels even though one of the busiest periods for pet sitting was impacted, with many choosing to cancel holidays as Omicron swept across Australia during the summer holiday season.
While most of the impact of Omicron was felt very late in the quarter, the company still managed to chalk up a 57 per cent increase in customer acquisition, and processed 53,000 bookings and transactions - up 81 per cent on Q2 FY21.
“Overall, the results are a reflection of the very strong macro trends that we’ve seen over the last couple of months,” Hammer said.
“Pet ownership has increased significantly throughout the pandemic, and there’s some great data out there now from Animal Medicines Australia…we now have over 30 per cent higher pet ownership for cats and nearly 25 per cent higher ownership for dogs.”
Animal Medicines Australia reports people now spend $3,237 on their dogs per year and $2,074 on cats, with an implied total addressable market for dogs and cats of $30.3 billion.
“This really shows that whole humanisation and premiumisation of pets, and people are really focused on making sure that not only are their own lives getting better, but also their pets’,” Hammer said.
On a micro level, CFO Graham Mason said the company increased new customers by 8 per cent, while the average booking value increased by 9 per cent.
However, Mason expressed disappointment at the group’s subscription revenue of approximately $800,000, noting it was “below management’s expectations”.
Looking to the future, Hammer said the company’s focus “hasn’t changed much”, but Mad Paws will be using its $8.9 million in cash to continue scaling the business, particularly the marketplace segment.
“The marketplace is the engine room, with over 15,000 transactions per month now, giving us the opportunity to really scale the other businesses faster,” Hammer said.
“We’re really focused on driving that growing marketplace because it will benefit all other parts of the business as well.”
To help turbocharge that scale, Hammer said the company is setting up new productions facilities close to the company’s warehouse in Melbourne to support its marketplace businesses.
Ultimately, the CEO pointed to some tailwinds blowing in Mad Paws’s favour, particularly an anticipated boom in travel once COVID-19 restrictions ease further.
Hammer said pent up travel demand will result in increased bookings for the company’s pet sitters - a phenomenon Mad Paws experienced on a smaller scale in November 2021.
“What’s helping us particularly is that shift from offline to online - people are much more comfortable now looking for products and services online,” he said.
“I think we’ve seen the first indications of [the pent up travel demand] particularly in November last year. Now this has been slowed down significantly with Omicron, but as I said before we still are seeing significant growth for the marketplace now.”
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