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At the same time pet services business Mad Paws (ASX: MPA) is wagging its tail over a positive first half FY24 result, the group has announced Seven West Media (ASX: SWM) will acquire a 10.8 per cent stake in the company for $5.25 million.
Founded in 2014 by Justus Hammer, Jan Pacas and Alexis Soulopoulos, Mad Paws is an online marketplace that allows customers to seek and offer pet sitting and hosting services, as well as dog walking, training or grooming. The company also operates pet healthcare brand Pet Chemist, pet treat company Waggly and e-commerce brand Sash.
The strategic investment of $5.25 million investment will be split between $1.25 million in cash and the equivalent of $4 million in advertising across Seven’s television, publishing and digital media assets. Collectively, the assets have a combined reach of more than 19 million Australians per month.
“We are excited about the strategic investment from Seven which reflects the strong market position Mad Paws has and quality of business the team has built,” Mad Paws co-founder and CEO Justus Hammer said.
“With over 6 million households now having at least one pet, Seven’s reach presents the perfect platform for taking Mad Paws’ growth to the next level.
“With Seven we will be able to reach a large national audience and position Mad Paws as the leading pet ecosystem in Australia.”
The news comes at the same time Mad Paws released unaudited financials for the first half of FY24, with group operating revenue increasing by 22 per cent year-on-year to $14.7 million. Marketplace revenue increased by 29 per cent to $4.3 million, while the e-commerce segment jumped by 19 per cent to $10.4 million.
Growth in the e-commerce sector was largely driven by sales from the Pet Chemist and Sash brands, as well as the expansion of private labels and increasing number of SKUs available in the warehouse.
The growth in the marketplace division was attributed to an 11 per cent increase in bookings versus 1H23, with average booking values rising by six per cent.
The Sydney-based group also made strides towards positive group operating EBIDTA, reporting a loss of $399,000 compared to $2.5 million the year prior. The change was fuelled by profitable revenue growth, marketing cost optimisation and the closure of loss-making Dinner Bowl product lines.
After the initial $5.25 million investment from SWM, Mad Paws also has a 24-month discretionary option to acquire further advertising placements from the media giant to the value of $4 million. If exercised by Mad Paws, the purchase will be settled through the issue of a second tranche of ordinary shares to SWM.
“Mad Paws has built a high-quality digital eco-system over the past three years and is now in a strong position to consolidate and grow its brand via national brand marketing,” Seven West Media CFO, managing director and CEO elect Jeff Howard said.
“We know brand awareness is critical for driving trust and demand for a digital marketplace business. We look forward to working with the Mad Paws team to help them become a household name across Australia.”
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