When people start subjecting their pets to their toxic relationship patterns, you know it’s cause for concern. After dumping their emotional baggage on them and making them companions, Aussies are now having to let go of their pets in light of the growing economic crisis.
During Covid, more and more people adopted pets, perhaps to prevent lockdown boredom or just to fulfill a lifelong dream. So much so that between 2019 and 2021, dog ownership in the country increased by nearly 50%. But as Covid takes a backseat, people are returning to their old, pet-less lives in full steam. Plus, the growing inflation is not helping. Waitlists to surrender pets are overloaded, worrying pet shelter owners.
Everyone is feeling the pinch right now, including pets, pet owners, shelters and even dog sitters. However, even as the sector suffers, the pet products and services marketplace Mad Paws (ASX: MPA) seems to be thriving. The Company reported a group revenue growth of 232% to $6.6 million as of December 2021.
The Company recorded 33,000 new customers in Q2 FY23, up 108% on Q2 FY22. Mad Paws has been benefitting from remote work and people fulfilling their pent-up travel desires, thus increasing demand for sitters and other services.
Co-Founder & CEO, Justus Hammer, commented, “Our results for this Quarter demonstrate both a strong rebound in trading post-COVID and the early signs of the success of our pet life-cycle strategy to expand the share of wallet from adding different products and services into the Mad Paws pet ecosystem. Our trend of strong profitable revenue growth in 2022 has accelerated, with group revenue for the Quarter growing 75% 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.”
All of Mad Paws’ businesses, from its toys and treats subscription Waggly to its online pharmacy Pet Chemist, reached an all-time high in December, traditionally the Company’s busiest period. That’s possibly thanks to the Christmas and New Year festive spirits. Marketing costs were down to 16 per cent from 47 per cent in Q2 FY22, and its EBITDA margin was 24 per cent up from 20 per cent in Q1 FY23.
The Company’s eCommerce and subscription businesses generated $4.8 million in revenue for the Quarter, up 360% on Q2 FY22. For its online pharmacy Pet Chemist, November was a record month as it brought in over $1.15 million in operating revenue.
Moreover, the Company reviewed the food subscription service Dinner Bowl’s strategy and changed its focus on high-margin pet food lines by outsourcing lightly cooked and raw food lines to a local industry leader. It got rid of the low-margin options and expects savings of $0.2 million per quarter from January 2023—savings it might need this year.
In 2023, Mad Paws plans on increasing sitter supply to match owner demand, boosting efficient customer acquisition, undertaking continued improvements in search algorithms, and maximising operating EBITDA.
Given the state of economic affairs, Mad Paws might also want to start preparing a contingency plan. The current consumer spending might only last till people finally make it off the waitlist and surrender their pets. The Company’s report doesn’t factor in the growing financial pressures or changing priorities. Tough trading conditions likely lay ahead for Mad Paws, so it might want to press paws on its growth efforts.
Alinda is a Business Reporter for The Sentiment
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