Mad Paws revenue more than triples as consumers flock to online pet services

Sydney-based pet services platform Mad Paws (ASX: MPA) has seen its revenue surge by threefold in the December half to hit $12 million as both new and existing customers embrace higher value bookings.

In an ASX update today, the company revealed its e-commerce and subscription segment –including food and nutrition business Dinner Bowl, pet toys retailer Waggly and pet beds purveyor Sash – saw revenue surge from $1.9 million to $8.7 million year-on-year.    

The result also reflects the group’s $25 million acquisition of Pet Chemist Online in April 2022, which gave Mad Paws access to a 44,000-strong base of active customers.

In November 2022 alone, the online pet pharmacy generated a record $1.15 million in revenue.

The update comes two weeks after the marketplace emerged from a trading halt to announce a $4 million growth capital raise, which will be used to support the integration of its brands into a single platform.

“The Pet Chemist growth is due to a number of factors including higher new customer acquisition (up 45 per cent), improvement in repeat customer transactions (up 62 per cent) as well as the implementation of our range expansion strategy which increased the proportion of over-the-counter orders to 58 per cent,” Mad Paws said in an ASX update to shareholders today.

“While the acquisition is a key driver of the change, Mad Paws delivered improvement in customer acquisition metrics across all businesses in the period driven by the increased use of our data assets, product capabilities improving conversion rates, campaign optimisations and cross-sell.”

Overall group operating earnings came in at a $2.6 million loss – a $1.6 million improvement year-on-year – which Mad Paws attributes to management focusing on profitable revenue growth, prudent cost management and disciplined capital management.

While marketing expenses increased by 17 per cent to $1.9 million, it now accounts for 16 per cent of total revenue spend as opposed to 50 per cent in the first half of FY22.

MPA also revealed that employment costs more than doubled to $3.1 million, largely a result of the inclusion of Pet Chemist’s cost base following acquisition, as well as cycling cost actions taken during the COVID-19 lockdowns in the first half of FY22.

“While the acquisition of Pet Chemist is a key driver of the change, Mad Paws delivered improvement in customer acquisition metrics across all businesses in the period driven by the increased use of our data assets, product capabilities improving conversion rates, campaign optimisations and cross-sell,” the company said.

Other segment operating expenses increased $300,000 due to a combination of platform growth increasing hosting and technology costs growing by $100,000 due to the Pet Chemist acquisition. Cost of goods drained company expenses by $6.7 million compared to $1.5 million in the prior corresponding period.

The company also indicated that it will recalibrate its Dinner Bowl business - a dog food delivery service that accounted for a $400,000 loss in the half.

“Mad Paws performed a strategic review of all business units during 1H FY23, and as result of this review the focus of the Dinner Bowl brand has been re-aligned by discontinuing the lower margin product lines,” Mad Paws said.

“The Dinner Bowl business will now operate using an outsourced third-party manufacturer, focusing on a lead generation model for other food manufacturers.”

Founded in 2014, Mad Paws has a database of over 19,000 pet service providers (pet sitters, walkers and groomers) registered on the marketplace across Australia and 450,000-plus users.

Since launching, more than 180,000 services have been booked through the platform.