Everyone, thank you all for coming. I'm Maria Ripps, Internet Analyst here at Canaccord. It's my pleasure to introduce Charlie Wickers, Rover's CFO, and Brent Turner, COO. Gentlemen, thank you so much for joining us today. Maria, it's great to be here. Thanks. Awesome. Well, starting with a bigger picture question, despite an adverse micro backdrop, your business has continued to deliver robust revenue growth and solid margin expansion, as evidenced by last week's strong Q2 results. Maybe just to start off, could you maybe rank order the top factors driving your continued momentum? As you look ahead, what are some of the top strategic priorities for the management team over the next couple of years? Sure. You know, product improvements have really driven the business. We're at a stage where the US business particularly, is sort of at the sort of early mid stage, where we've been able to identify a number of product improvements that we think can help accelerate new customer acquisition, drive repeat business on both sides of the platform. The strategy of the platform is or the tenants underneath it are reduced friction and increased value. We think where there's a lot of opportunity to do that, and we think that explains a lot of the recent momentum we've had. We've also had, you know, drops in CAC that are related to strengthening drivers of unit economics that have enabled us to push a little harder on the marketing front. Also some of the pre-recessionary forces that we expected to play out this year haven't, and that's been helpful. We are very focused on product at the company. We think there's a whole lot of room left to improve what we do, and as a result, to drive a lot more momentum and new customer acquisition and a lot more stickiness on both sides of the platform. Great. So the company and the broader industry continue to benefit from 2 trends. 1 is the rise in pet ownership, with roughly 87 million pet-owning households in the US alone. Number 2 is the humanization of pets. Can you maybe talk about how much momentum you think these 2 tailwinds have remaining and particularly as it pertains to your business? Are they still robust growth of robust drivers of growth as they were just a couple of years ago? Yeah, the big, the big driver of growth in our business is dissatisfaction with alternatives, that, that is worth talking about first. I mean, we have, we have two alternatives to Rover. One is, kennels and facilities, the other is, is friends, family, and neighbors. It's really dissatisfaction with those two, with those two alternatives that explain, Rover's momentum in the first place, and even its founding. When you think about the humanization of pets, you would think about that as an accelerant to dissatisfaction. So if I don't like taking my pet to a, a kennel or I don't like dropping her off with my neighbor, that's a kind of a problem if the pet is not a part of the family, but it's just a dog. If a pet is a cherished part of the family, then that's a huge problem, and it's worth bringing resources to bear to try to solve. In fact, I'm, I'm impressed in the surveys that we see constantly of the percentage of pet parents that say they won't even travel if they can't come up with a solution for their pet. This is humanization, you know, right down the fairway. I think that humanization is a one-way door. I think, you know, it's happening. It, it's hard to imagine it unhappening at this point. I think the United States is a little ahead of Europe, but not by far, as far as, as far as that's concerned. You know, we don't really don't know on the pet adoption standpoint, if it's continuing to rise. There's the data sets that we're able to get our hands on are sort of all over the board, but there's a real reason to believe that it's actually gone backwards a little bit from the peaks of 2020 and 2021. You know, internal data we can look at, for example, is the percentage of repeat bookings where somebody's recently added a pet, it feels like that may be softening a little bit. Internally, I think we may have an idea that pet adoption is slowing down a little bit, but inconclusive. Yeah. In addition to that, the 87 million you brought up- Mm-hmm. ... that's the, that's the US stat. Yeah. We also operate in Europe, and we have about a 50% increase in that number in the countries that we operate in in Europe. Life to date with Rover, we've booked about $4 million of those households. Just from a sheer opportunity size, in addition to everything that Brent said, there, there's a long room to run here. Yeah, that, that, makes sense. Demand for your services is highly correlated to leisure travel, as you pointed out, and we've seen record travel activity so far this spring and summer. There are some concerns that demand could be moderating as we head into the second half of the year. Having raised your full year guidance last week, can you maybe talk about what's embedded in terms of your expectations from the sort of broader macro environment for the second half of this year and into next year? Yeah. With regards to leisure travel, the, the reason why the correlation is there is because people tend to find pet care when the whole family unit is leaving home, not just one person leaving on a business trip, it's that whole family unit, and so that's the correlation. The last couple of years, leisure travel has been ramping quite a bit as people were returning to normal. The concept of revenge travel was out there for a period of time, and so that accelerated travel dynamics. Right now, from what we're seeing, is that leisure travel has normalized to 2019. That doesn't mean grow off of 2019- Mm-hmm. ...that means it's back at about 2019 levels. As we're thinking through the balance of the year and within the guide that we shared previously, we were taking into account those trends. On a go-forward basis, we don't necessarily think travel is the biggest driver going forward. We think it's one of many factors. Mm-hmm. Pet adoption, Brent just talked about. One of the areas we're also looking into is the, the, the housing market and people actually relocating. A reason why people are looking for pet care is when their previous solution-... excuse me, their previous solution is no longer available, whether that's because they're moving, their friends, family, or neighbor moved, et cetera. So those are other macro dynamics that we're, we're looking at and, taking into account. For the back half of the year, we still, had anticipated a recessionary impact sometime in, first half of 2024, ramping to that point. We took that into account, and we continue to see elevated levels of illness. We, we look at case counts not only from a COVID standpoint, but an RSV standpoint, flu standpoint, et cetera, and we continue to see those elevated. We've taken those into account as well. Got it. I wanna touch on that in a minute, but switching to your core marketplace business. For those in the audience who may be newer to your story, could you give us a quick refresher of the services that your platform is offering and what are key growth drivers? You sort of just touched on that, but. Yeah, thanks. Well, the key growth driver is strong word-of-mouth. People, when people find out about Rover, and it still remains true, I think they hear what it is and they say, "Okay, if that's, if, if that's what you're saying it is, then that's the best thing I've ever heard in my life. But I wonder if it really works." So then they come to the site or to the apps, and they have a much better experience than they're expecting. It's still a delight to hear people talk about it. That drives a lot of word-of-mouth, something that really surprises and delights people in a way that they didn't expect, and people have a lot better experience than they expect. That continues to drive our business. The reason why they're so delighted is because we've taken services for which there are massive amounts of dissatisfaction and just made them easy and quite good. We actually have a quite, quite good customer experience. Mm-hmm. It's, you know, it's a lot of times it's hard to find friends, family, and neighbors. The unavailability is really high, flakiness is really high, and we sort of take all that out of the equation. The people that you look for are, are, are very easy to book. Overnight services, we have three different flavors. We have dog boarding, where you take the dog or the pet to someone else's house. I board my cat from time to time. Yes, it's a thing. We have drop-in services, which is where somebody can drop in a couple times. I was in California last week, and we had a drop-in sitter on my cats and our Quaker parrot. We, we have house sitting if you want somebody in, in your house the entire time. We in 2015 added daytime services, dog walking and doggy daycare, which are... we, we consider part of the daytime services for us. Yeah, and those services continue to grow, largely on the back of word-of-mouth. We use marketing to try to top off and to accelerate word-of-mouth. Mm-hmm. Mm-hmm. That's great. Are there any new services that the company is exploring that could expand your addressable market? Yeah, I mean, generally speaking, I would say we did not found Rover as a peer-to-peer platform because we were so excited about being Airbnb for dogs. We founded it because we thought that that was the winning model, that this is the way that this is going to be done. We never wanted to limit ourselves in that way. Back when we were private and we were raising money in, in the venture world, we would start our presentation by saying: Pet care, who's the first brand you think of? They would say: Nobody. We'd say: That's right, isn't it? That's right. You know, as economists, we are careful about saying things that might not become true, but when you're raising money from VCs, like, the vision is, like, slide number one or two, which, which, you know, requires you to call your shot. That's about as close as we got to it, but that remains true, and that remains true for us. We are guided by the desire to make it easier to have a pet, to, to discover pain points, that, either pet owners or people who are caring for pets have, and to try to bring technology to bear, to solve those. We think having solved the biggest and hardest one, which is the overnight services, we got a really good footing, to move from. Great. What are your thoughts about the current sort of supply and demand balance on the platform? Have you noticed any sort of organic tailwinds to supply, given sort of the challenging macro backdrop as people are looking to generate incremental income? Yeah. The most exciting thing about Rover from a supply standpoint is that once someone's matriculated, in other words, once they've had a couple of bookings, they really don't leave. They're very unlikely to leave. Our, churn rates on a monthly basis are low to mid-single digits. That makes things a lot easier in terms of scaling the marketplace. We really don't, spend very much on supply. In most of our services, we're trying to do is manage oversupply situations. Mm-hmm. It's important for us in order to develop network effects, is for our algorithm to be able to tell who's, who's performing and who's not. To do that, you need to get bookings to providers. We, we manage, we, we actually gate supply quite a bit. Mm-hmm. It probably is the case that, recently, it's been easier to pick up supply, but we- it's never been a problem. Got it. Let's spend a minute talking about your daytime services. Have you seen any meaningful uptick in demand as people are returning to the office? How are you thinking about investing in marketing and product to support this, this segment? We said on our last call that we've seen a gentle sort of uptick that looks a lot like a few businesses are now requiring their employees to come back into the office 2 days a week. It looks surprisingly like that. It doesn't look like a wholesale move, a makeshift, but, but it does, it does look like that. It's encouraging. You know, we had a narrative going into the pandemic. You know, when people spent a lot of time around their pets, being at home, they would become much more aware of, of them and much more aware of the pet's emotional needs, and so would be even more likely to book daytime services when they went back to work. So maybe we're starting to see the first fruits of that. Who knows where this is going in terms of return to work, but I would say so far, so good on that front. Okay, great. Let's talk about your international markets. I think you talked about European GBV increasing nearly 60% in Q2, so that was great to see. Could you maybe share some color on your broader strategy for entering and scaling new markets? I guess, what type of investments are you making today to continue to grow and scale? Yeah, the international business is at kind of a sweet spot right now. You know, when I first came to Rover, there's, there's certain phases that these marketplaces go through if you're operating them correctly. You know, our international business is what I would call the early sweet spot, where we're starting to get to a critical mass of supply. We're starting to get to a critical mass of demand, where the, the, the, the network effects can start to, to mature and start to take off. So conversion rates begin to really increase, the likelihood that a new pet parent on the platform will have a very good experience goes up quite a bit because the, the, the platform is able to make really good decisions about matches. Therefore, LTVs begin to take off because you're, you're really lowering the number of one and done customers you have. When I first came to Rover, the United States business was about the scale that Europe is at right now. It was just fun to operate the business at that time. We're excited about what's going on over there and sort of have some idea how far, how long the sweet spot will last, and hope I'm right about it. You know, in terms of entering new markets, I mean, we're, we're not super exciting. I mean, you've been around us a while, you know we're not that exciting. You know, it's a couple of questions. One is, what's the market opportunity there, in terms of TAM, in terms of disposable income, disposable income spent on pets, humanization of pets? The second is, how much customization is it really gonna take on our platform, in terms of incremental cost to be able to operate in a new geography? One thing that made Europe an early entry decision for us is that, you know, both those criteria were, were, were in really good shape in terms of our analyses of the opportunity. Pretty big opportunity over there. We think in Europe, there's once again, the amount of demand there is in the United States. We also had a thought that we could operate the platform pretty much as it is, the same theory, the same unit economic theory, the same dynamics would play out in Europe that played. Some customization, there's, you know, legal restrictions or, or legal differences that we have to take on, some translation and localization of content and experience, but in general, we could operate the same platform, and that has very much played out. There are key differences, but once all the puts and takes are placed, it's pretty much the same thing. We have some modest investments that we're doing. We're in the process of finally, I shouldn't say finally, rolling out our recurring billings capability to Europe right now. There are other small investments that we have that are Europe-specific to try to take into account more local preferences. Daytime services is a lot bigger deal in Europe than it is in the United States right now, there's some ways to double down on that. In general, it's not, it's not this thing that you have to go put a lot of specific effort in in order to drive. Yeah, that, that makes sense. Could you maybe briefly give us a quick overview of the competitive landscape in Europe and other non-US markets? Is it still largely dominated by a shadow market, or are there any established players? I know it kind of may vary by market, but maybe briefly. It, it does. You know, in Europe, we do have a set of players, you know, maybe 12-15, that have, you know, similar or smaller footprints to ours, but largely because we are... our presence over there is still subscale relative to the United States. The opportunity that we think about all the time is competing with the shadow market. You know, we like to say that we have this highly fragmented competitor base, and about half of them don't want the business anyway. That, that's who we're focused on, and, you know, how do they... why do customers, why do pet parents choose friends, family, and neighbors instead of Rover? You know, how, how do we need to be evolving the offering so that we address whatever pain points are left, whatever resistance to trial are left? You know, and we don't really in Europe or in the United States, focus on competitive concerns. I think we have always had the thought that we're pretty early to the space, so we were able to raise quite a bit of money, get quite a bit of investment done in tech, and trust, and safety, and product. We've, we've kinda always had the thought that, like, Look, if we just focus on what our, what our customers need, focus on differentiation around, I, I guess, friends, family, neighbors, addressing customer pain points, being competitor aware, but really customer obsessed, that we will be able to deliver better for customers than our competitors, and I think that's playing out. That is my expectation that's the way this will go. Great. Let's talk about marketing for a few minutes. You recently stated that you are seeing encouraging results from nascent marketing channels. Could you maybe talk about what are some of the newer channels that you are leaning into, and how do you see your marketing mix evolving over the next, let's say, six to twelve months? Yeah. Well, I mean, generally, what we're trying to do is use marketing to accelerate word-of-mouth and to build a category that currently doesn't exist, and we're trying to do it in a way that makes financial sense for the business. That means being best in class in, in search, but being really, really careful about trade-offs between marginal cost of additional supply and volume, or additional demand and volume, and then, and then, pushing up the funnel into channels like social, YouTube, linear streaming, TV, as many partnerships as we can sort of get going, that make financial sense, and to try to hold all those accountable for driving new customer demand. We're excited about YouTube. We think we've got YouTube to a place of being an always-on channel for us, always on in the United States, always on in Europe. I can't believe that at the level, the level of scale that we're running at in Europe, that we've already gotten YouTube to work. I'm pretty proud of that. We're gotten next door to an always-on state, United States, always on in Europe. Very excited about that. Our momentum with partnerships is okay, I would say. Our tests with linear and streaming TV are solid. I don't expect us to be able to scale linear and streaming TV in the near term. You know, we'll have to improve conversion rate at some level. YouTube's got a long way to go. Then we are also doing, as we said in the call this time, we are doing tests of TikTok. Mm-hmm. I'm sort of in the who-knows-where-that's-going to place right now. Mm-hmm. Got it. That, that makes sense. Your business, as you pointed out, generates a lot of organic traffic via word of mouth, which helps to keep CAC manageable. Could you maybe talk about your thoughts around brand investments as a possible tool to support continued strong word-of-mouth dynamics? Yeah, a little bit of a nerdy answer, but, here, here you go. I mean, when I first came to Rover, we were impressed by Jonah Berger's book, Contagious, which is about the types of things people share, sort of the 10-year answer to the tipping point. That was a little bit more interesting. Sorry. The, the, the book was about the types of things that when people find out, they tend to talk about a lot. We were really impressed with things like, things that put someone in a particular emotional state that they like, like things that are funny. We have definitely curated our blog, definitely curated our, our TV to be funny, to be light-hearted, to be very, very shareable. You know, you, we've got 500 blog posts about, you know, different things about your dog's poop and whatever, and people tend to, people tend to share blog posts about poop. It's pretty... It's, it's unbelievable. We had one investor say, "It is, you know, I'm looking at your blog. Is the whole business built on poop?" Like, well, it kind of is, you know. It's a little harsh, but all right. We, we're really impressed with the idea of, you know, things that make people feel insightful or helpful. Our, a lot of our content, a lot of our blog, a lot of our marketing material will be about tips on about making it easy to be a pet, or, "Hey, my dog is doing this, what does that mean? My cat is doing this, what does that mean?" You know, "Does my cat really love me? How do I communicate with my cat?" You know, things that be helpful. So, we have really followed in that mode of trying to... You know, as a product person, you know, by sort of the way I think, if I have a marketer or I have a product person that says, "I'm gonna try to get people to do X," like, whatever they're gonna say after that, it's probably not gonna make much sense. If they say, "This is what people are kind of doing, and I'm gonna go get in that flow and try to accelerate it to our benefit," then that starts to make sense, and that's, that, that's a general arc by which we try to do marketing and product. Got it. That makes sense. I think we have just a minute or two left. I wanna ask, maybe a question or two on financials. Charlie, going back to your guidance that contemplates, a mild to moderate recession with a peak impact in sometime in the first half of next year, how do you think about the potential upside to outlook if the economy can successfully navigate sort of a soft landing and avoid a recession? Yeah, what, what I said on that call. Mm. If there is a soft landing or the, the recession is more mild or is later than we've anticipated, there is upside to our plan. With regards to, to how we think about it, we think about a recession dynamic as a demand suppression. We don't think it's gonna impact, cancellation rates. We don't think it's gonna impact, average booking values on the platform, et cetera. We think it's about a demand suppression. To the extent that that doesn't, play out the, the way that we, we had contemplated in the guidance, the upside is there. With regards to the, the actual lift on the demand side, probably somewhere in the neighborhood of 2%-10%. It's a pretty wide range. Mm-hmm. The outcomes of a recessionary impact are quite wide themselves. That's generally how we think about it. Got it. That, that makes sense. I think going back to the time when you were going public, you talked about long-term adjusted EBITDA margin of about 30%. Mm-hmm. Is that still your long-term target? What type of margin expansion should investors expect over the next couple of years? Yeah, our, our target is greater than 30%. With regards to the last couple of quarters, the incremental margins, the business has been able to demonstrate there have been at 40%, maybe a little bit over 40%. As we think about the second half of the year, our guide implies something in the 30% range. We have a little bit of a hard comp to lap there, but on a go-forward basis, we are gonna march towards that target. Expect something in that range or slightly above. Great. Well, with that, we're out of time. Charlie, Brent, thank you so much for joining us today. Yeah. Thank you.