Pet services platform Mad Paws’ (ASX: MPA) 'ecosystem' strategy has made a major impact on the company’s group operating revenue which more than tripled in the second quarter of the current financial year.
Announced this morning, MPA group operating revenue rose by 232 per cent to $6.6 million in 2Q23, up from $2 million in the prior corresponding period.
This was buoyed by marketplace revenue nearly doubling to reach $1.9 million, while the company’s e-commerce and subscription businesses - including food and nutrition business Dinner Bowl, pet toys retailer Waggly and pet beds purveyor Sash - generated $4.8 million, up by 360 per cent.
The company, co-founded by Alexis Soulopoulos who will be presenting at Business News Australia’s upcoming E2E Summit in February, also added 33,000 new customers in the quarter - an 108 per cent improvement on Q2 FY22.
Co-founder and CEO Justus Hammer said Mad Paws’ results for this latest quarter demonstrated a strong rebound in trading post-COVID and represented early signs of success for the company’s pet life-cycle strategy.
“Our trend of strong profitable revenue growth in 2022 has accelerated, with group revenue for the quarter growing 75 per cent against the corresponding quarter in 2021 on a pro-forma basis as well as our achievement of record months for both the Marketplace and Pet Chemist business,” Hammer said.
“We are also excited to be acquiring new customers at a faster rate than ever before, which is a result of our improved customer retention strategies, driving a more loyal and long term customer base across all verticals.”
The CEO added that the marketplace businesses reached ‘an all-time high in December’ - traditionally the busiest period for the platform, while its e-commerce and subscription businesses continued to scale.
“Mad Paws is a fast growing, capital light business, being driven by the strong tailwinds of the Australian pet sector,” Hammer said.
“We are already the market leader in both the pet marketplace and pet medicine sectors, but we believe we have only just begin to penetrate this multi-billion dollar opportunity in Australia alone as we continue to build awareness and shift pet owners from traditional suppliers of these products and services.”
The company says it is now making ‘strong progress’ towards operating on an EBITDA-positive basis, achieved by a combination of efficient customer acquisition through site optimisation, improved customer repeat rates and other ‘customer experience and product initiatives’.
This included the recalibration of its Dinner Bowl business - a dog food delivery service.
“As result of this review the focus of the Dinner Bowl brand has been re-aligned by discontinuing the lower margin product lines. The Dinner Bowl business will now operate using an outsourced third-party manufacturer, focusing on a lead generation model for other food manufacturers, which will save the Dinner Bowl business $0.2m per quarter from January 2023,” MPA said.
“Overall, the Marketplace business improved on its already positive EBITDA profile and this is expected to continue. In the e-commerce offering, Pet Chemist is adding good diversification, generating approximately the same revenues as the Marketplace business on a close to breakeven basis.”
Further, the company noted it was focused on continuing to grow its share of the Australian pet market while achieving profitability in the medium term.
“The key short-term goal is to create a single platform for customers to book or buy Mad paws products and services reducing friction for our customers and allowing us to cross sell existing customers to increase our share of wallet,” MPA said.
“For our marketplace vertical, Mad Paws will focus on increasing sitter supply to match owner demand, efficient customer acquisition, continued improvements in our search algorithms and maximising operating EBITDA.
“For our subscription and e-commerce businesses, Mad Paws will seek to accelerate growth by improving efficiencies in gross margins and new customer acquisition, as well as further leveraging the cross-sell opportunities across our 328,000 customers. This will be aided by product range expansion, where we have seen significant success with nearly 500 additional SKUs added to the Pet Chemist business in the last 6 months alone.”
Shares in MPA are up 3.23 per cent to $0.16 per share at 10.40am AEDT.
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