Petmed Express Inc (PETS) 2021 Q2 法說會逐字稿

Welcome to PetMed's conference call to review the financial results for the second fiscal quarter ended on September 30, 2021. At the request of the company, this conference call is being recorded.

歡迎參加 PetMed 的電話會議，審查截至 2021 年 9 月 30 日的第二財季財務業績。應公司要求，本次電話會議正在錄製中。

Founded in 1996, PetMed is America's most trusted pet pharmacy, delivering prescription and nonprescription pet medications and other health products for dogs, cats and horses direct to the customer. PetMed markets its products through national advertising campaigns which direct customers to order by phone or on the Internet to increase the recognition of the PetMed brand name. PetMed provides an attractive alternative for obtaining pet medications in terms of convenience, price and ease of ordering and rapid home delivery.

PetMed 成立於 1996 年，是美國最值得信賴的寵物藥房，直接向客戶提供狗、貓和馬的處方藥和非處方藥以及其他保健產品。 PetMed 通過全國廣告活動營銷其產品，引導客戶通過電話或互聯網訂購，以提高 PetMed 品牌的知名度。 PetMed 在便利性、價格、易於訂購和快速送貨上門方面為獲得寵物藥物提供了一個有吸引力的替代方案。

At this time, I'd like to turn the call over to the company's Chief Financial Officer, Mr. Bruce Rosenbloom.

此時，我想將電話轉給公司的首席財務官布魯斯·羅森布魯姆先生。

I would like to welcome everybody here today. I would like to remind everyone that the first portion of this conference call will be listen-only until the question-and-answer session, which will be later in the call. Also, certain information that will be included in this press conference may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 or the Securities and Exchange Commission that may involve a number of risks and uncertainties. These statements are based on our beliefs as well as assumptions we have used based upon information currently available to us.

我想歡迎大家今天來到這裡。我想提醒大家，本次電話會議的第一部分將是只聽，直到問答環節，這將在電話會議的後期進行。此外，本次新聞發布會中將包含的某些信息可能包括 1995 年《私人證券訴訟改革法案》或證券交易委員會定義的前瞻性陳述，這些陳述可能涉及許多風險和不確定性。這些陳述是基於我們的信念以及我們根據目前可用的信息所使用的假設。

Because these statements reflect our current views concerning future events, these statements involve risks, uncertainties and assumptions. Actual future results may vary significantly based on a number of factors that may cause the actual results or events to be materially different from future results, performance or achievements expressed or implied by these statements. We have identified various risk factors associated with our operations in our most recent annual report and other filings with the Securities and Exchange Commission.

由於這些陳述反映了我們目前對未來事件的看法，因此這些陳述涉及風險、不確定性和假設。實際的未來結果可能會因多種因素而有很大差異，這些因素可能導致實際結果或事件與這些陳述明示或暗示的未來結果、業績或成就存在重大差異。我們在最近的年度報告和提交給美國證券交易委員會的其他文件中確定了與我們的運營相關的各種風險因素。

Let me now introduce our newly appointed CEO and President, Matt Hulett. Matt?

現在讓我介紹一下我們新任命的首席執行官兼總裁 Matt Hulett。馬特？

Thanks, Bruce. Good morning, and thank you for joining us. My name is Matt Hulett, and I'm the new CEO of PetMed.

謝謝，布魯斯。早上好，感謝您加入我們。我叫 Matt Hulett，是 PetMed 的新任首席執行官。

I'm incredibly honored and enthusiastic to join this iconic company, and I'm excited to be on this earnings call today. I would like to begin by thanking Bruce Rosenbloom for acting as interim Chief Executive Officer prior to my arrival.

能夠加入這家標誌性公司，我感到無比榮幸和熱情，我很高興能參加今天的財報電話會議。首先，我要感謝 Bruce Rosenbloom 在我到來之前擔任臨時首席執行官。

Before we update you on our progress on Q2, I would like to first share my personal thoughts and motivations regarding why I'm so optimistic about PetMed in our future. First, I'd like to introduce you to my dog, Harry, who's featured on this slide. He's the latest addition to our family and he's also a puppy. In fact, Harry is the first dog for my family. Our family had no idea what we were getting ourselves into. It's like having a newborn again, and as many of you fellow pet parents know, puppies can be challenging. We also can't imagine not having Harry in our lives, and we think of him as a member of our family.

在我們向您介紹我們在第二季度的進展之前，我想首先分享一下我個人的想法和動機，為什麼我對 PetMed 的未來如此樂觀。首先，我想向您介紹我的狗 Harry，它出現在這張幻燈片中。他是我們家的新成員，也是一隻小狗。事實上，哈利是我家的第一隻狗。我們的家人不知道我們讓自己陷入什麼境地。這就像重生一樣，正如你們許多寵物父母都知道的那樣，小狗可能具有挑戰性。我們也無法想像生活中沒有哈利，我們把他當作我們家庭的一員。

Personally, it is fulfilling to be involved in an organization where you can spend your time and energy on a business that has a positive social impact on society, while you are focused on generating returns for shareholders.

就個人而言，加入這樣一個組織是一件令人滿足的事情，在這個組織中，您可以將時間和精力花在對社會產生積極社會影響的業務上，同時專注於為股東創造回報。

Now that we've established my personal connection to the business, I'd like to spend some time walking through the rationale as to why I believe PetMed is a great long-term investment. Having a large addressable market is important. It enables more optionality for new brands and products to be developed. It provides more opportunity to develop a myriad of go-to-market strategies, targeted at different cohorts of customer segments. This also means that there's room for more market participants and for those market participants to coexist and flourish.

既然我們已經建立了我與企業的個人聯繫，我想花一些時間來解釋為什麼我相信 PetMed 是一項偉大的長期投資。擁有一個龐大的潛在市場很重要。它為新品牌和新產品的開發提供了更多選擇。它提供了更多機會來開發針對不同客戶群的大量上市策略。這也意味著有更多的市場參與者和這些市場參與者共存和繁榮的空間。

The pet industry's total addressable market is very large, and it is growing. Currently, it is over $100 billion and the service addressable pet medication market, where we participated to date, is approximately $10 billion. We are one of the leading pet pharmacies today. And as such, I see a future where we can extend our already sizable customer reach, combined with our widely respected and known brand into additional segments of the total pet care market as our future vision comes fully into focus.

寵物行業的潛在市場總量非常大，而且還在不斷增長。目前，它超過 1000 億美元，而我們迄今為止參與的服務可尋址寵物藥物市場約為 100 億美元。我們是當今領先的寵物藥店之一。因此，我看到未來我們可以擴大我們已經相當大的客戶範圍，結合我們廣受尊重和知名的品牌進入整個寵物護理市場的其他細分市場，因為我們的未來願景完全成為焦點。

In addition to the benefits of participating in a large market, the market timing is also considerably favorable. Pet ownership has always been high in the United States, but we have seen an increase in pet ownership, especially due to the macro effects of COVID-19. Pet ownership has surged to record heights and now 7 out of 10 U.S. households own a pet. Those new and existing pet parents will need more pet medications and other related health care services for their pet family members.

除了參與大市場的好處外，市場時機也相當有利。在美國，寵物擁有率一直很高，但我們看到寵物擁有率有所增加，尤其是由於 COVID-19 的宏觀影響。寵物擁有量飆升至創紀錄的高度，現在十分之七的美國家庭擁有寵物。這些新的和現有的寵物父母將需要為其寵物家庭成員提供更多的寵物藥物和其他相關的醫療保健服務。

As we have seen in other digital e-commerce verticals, the adoption curve of the digitization of retail is a favorable tailwind. This pull-forward of digital-based retail experiences has now given customers a taste of the future and has created new buying habits of purchasing more products and services online. Today, our addressable market is largely dominated by off-line sales, and we see the trend to purchase online is clearly very favorable to us.

正如我們在其他數字電子商務垂直領域所看到的那樣，零售數字化的採用曲線是有利的順風。這種基於數字的零售體驗的發展現在讓顧客體驗到了未來，並養成了在線購買更多產品和服務的新購買習慣。今天，我們的目標市場主要由線下銷售主導，我們看到在線購買的趨勢顯然對我們非常有利。

Pet parents see their pets as an extension of their own families, and they are increasingly demanding more healthy pet care options for their furry friends. We see this as a positive trend for PetMed and an opportunity. For example, we have increased the number of products that we carry and have started to include specialty dog food and higher-end wellness products, which we believe have contributed to the increase in our average customer order value.

寵物父母將他們的寵物視為自己家庭的延伸，他們越來越多地要求為毛茸茸的朋友提供更健康的寵物護理選擇。我們認為這是 PetMed 的積極趨勢和機遇。例如，我們增加了我們攜帶的產品數量，並開始包括特色狗糧和高端健康產品，我們認為這有助於增加我們的平均客戶訂單價值。

Lastly, just like we've seen in the human health care market, COVID-19 accelerated the increasing trend for the digitization of health care. In fact, in the pet market, For the first time, regulations related to in-person veterinary visits and prescription fulfillment were temporarily waived and moved online in unprecedented ways. We think this opens the door to the acceleration of digital-based telehealth services.

最後，就像我們在人類醫療保健市場上看到的那樣，COVID-19 加速了醫療保健數字化的增長趨勢。事實上，在寵物市場，有關獸醫上門和處方履行的規定首次被暫時取消，並以前所未有的方式搬到了網上。我們認為這為加速基於數字的遠程醫療服務打開了大門。

As I look at the business, there are several key competitive advantages that we can leverage in the future. First, our brand is widely known and trusted. Having a strong brand takes years to develop, and our customers look to PetMed as their trusted pharmacy and as their pet medication experts.

在我審視業務時，我們可以在未來利用幾個關鍵的競爭優勢。首先，我們的品牌廣為人知和信賴。擁有強大的品牌需要多年的時間才能發展，我們的客戶將 PetMed 視為他們值得信賴的藥房和寵物藥物專家。

Second, we have strong operational and quality efficiency as a pharmacy. Our customer care integration with our pharmacy is world-class, which ensures that customers get their products delivered quickly, but also accurately and our vet partners receive high-quality fulfillment and service delivered through our vet platform.

其次，作為藥房，我們擁有強大的運營和質量效率。我們與我們藥房的客戶服務整合是世界一流的，這確保了客戶能夠快速、準確地交付他們的產品，並且我們的獸醫合作夥伴可以通過我們的獸醫平台獲得高質量的履行和服務。

Our deep experience with the vet community is a latent competitive advantage. We currently have one of the largest direct-to-consumer vet networks in the online retail space. PetMeds has a large network of over 70,000 veterinarians that we have worked with over the company's history. Our online vet portal currently has 17,000 veterinarians and vet clinics. This is a core capability and asset because it enables us to expand our fulfillment capability as we scale our business.

我們在獸醫界的豐富經驗是一個潛在的競爭優勢。我們目前擁有在線零售領域最大的直接面向消費者的獸醫網絡之一。 PetMeds 擁有一個由 70,000 多名獸醫組成的龐大網絡，我們在公司歷史上一直與之合作。我們的在線獸醫門戶網站目前擁有 17,000 名獸醫和獸醫診所。這是一項核心能力和資產，因為它使我們能夠在擴展業務時擴展我們的履行能力。

Our prescription medication authorization rates are the highest they have ever been, which speaks volumes to the level of veterinarian cooperation we receive. Our pet pharmaceutical category expertise is something that I view as a unique strength. Being a differentiated provider allows PetMeds to focus our offering, especially as the market continues to get even more competitive. Again, more to come on where we see our branded business going in the coming months.

我們的處方藥授權率是有史以來最高的，這充分說明了我們獲得的獸醫合作水平。我認為我們的寵物藥品類別專業知識是一種獨特的優勢。作為差異化的供應商，PetMeds 可以專注於我們的產品，尤其是在市場競爭繼續變得更加激烈的情況下。同樣，我們將在未來幾個月看到我們品牌業務的發展方向。

PetMeds has long enjoyed close bonds with many of our supplier partners. Those relationships have developed over time to become even more strategic. Today, we have direct relationships with all of our major suppliers and we partner with them to market their products to our customer base. Our customer service and overall customer centricity ethos permeates our culture and our team. I've personally sat in on hours of phone calls between our customers and our service agents and I've never experienced such a tightly integrated and empathetic customer-centric organization in my entire career. We don't just have a transactional interaction with our customers, we have built trusted relationships.

PetMeds 長期以來與我們的許多供應商合作夥伴保持著密切的聯繫。這些關係隨著時間的推移而發展，變得更具戰略意義。今天，我們與所有主要供應商都有直接關係，我們與他們合作，將他們的產品推銷給我們的客戶群。我們的客戶服務和以客戶為中心的整體精神滲透到我們的文化和我們的團隊中。我親自旁聽了我們的客戶和我們的服務代理之間的數小時電話，在我的整個職業生涯中，我從未經歷過如此緊密集成和以客戶為中心的組織。我們不僅與客戶進行交易互動，我們還建立了可信賴的關係。

Before we comment on our earnings performance, I would like to reiterate several compelling reasons to invest and to continue to invest in PetMeds. PetMeds has several core fundamentals that are compelling, including: a strong balance sheet. We do not have debt. We have over $100 million in cash, and we are cash flow positive. We have a long history of providing shareholder returns through our dividend and a strong return on equity that has been historically over 30%.

在我們評論我們的盈利表現之前，我想重申幾個令人信服的投資理由，並繼續投資 PetMeds。 PetMeds 有幾個引人注目的核心基本面，包括：強大的資產負債表。我們沒有債務。我們有超過 1 億美元的現金，而且我們的現金流為正。我們長期以來一直通過股息和過去超過 30% 的強勁股本回報率為股東提供回報。

We have started to build a recurring subscription base to our customers with a program, which we just recently launched in July of this year through our new AutoShip & Save program, where we are building higher lifetime value and recurring relationships with our customers. In September, approximately 20% of our customers signed up and ordered via our AutoShip & Save subscription program, and that number continues to rise.

我們已經開始通過一項計劃為我們的客戶建立經常性訂閱基礎，我們最近在今年 7 月通過我們新的 AutoShip & Save 計劃推出了該計劃，我們正在與客戶建立更高的生命週期價值和經常性關係。 9 月，大約 20% 的客戶通過我們的 AutoShip & Save 訂閱計劃註冊和訂購，而且這個數字還在繼續上升。

Our customers responded very positively and enrollment in AutoShip & Save has increased steadily throughout the quarter. We expect many of our reorder sales to eventually transition to AutoShip & Save by the end of our fiscal year, which will only continue to strengthen our relationship with our customers. We also continue to have a large base of returning customers, which is an indication of the quality of service and the value that we deliver to our customers.

我們的客戶反應非常積極，AutoShip & Save 的註冊人數在整個季度穩步增加。我們預計我們的許多再訂購銷售最終會在本財年末過渡到 AutoShip & Save，這只會繼續加強我們與客戶的關係。我們還繼續擁有龐大的回頭客群，這表明我們為客戶提供的服務質量和價值。

So to sum up the core company strengths, we have over 25 years of experience as a pure-play pet pharmacy only licensed in 50 states, delivering fantastic service and value, which is recognized by our customers and continues to be rewarded with their loyalty. Our NPS score is over 80, which puts us in the upper quartile along with some of the most beloved brands in the world. We are a direct-to-consumer brand with a rapidly growing addressable market, and we have successfully serviced more than 2 million active customers over the last 2 years.

因此，總結公司的核心優勢，作為一家僅在 50 個州獲得許可的純寵物藥房，我們擁有超過 25 年的經驗，提供出色的服務和價值，這得到了我們客戶的認可，並繼續得到他們的忠誠度回報。我們的 NPS 得分超過 80，這使我們與世界上一些最受歡迎的品牌一起處於上四分之一。我們是一個直接面向消費者的品牌，擁有快速增長的潛在市場，在過去 2 年中我們已成功為超過 200 萬活躍客戶提供服務。

Now I would like to have Bruce Rosenbloom, our Chief Financial Officer, review our financials for the quarter.

現在我想請我們的首席財務官 Bruce Rosenbloom 審查我們本季度的財務狀況。

Thanks, Matt. Now we'll review the financial results. We will compare our second fiscal quarter ended on September 30, 2021 to last year's quarter ended on September 30, 2020. And in some cases, we'll refer back to September 30, 2019.

謝謝，馬特。現在我們回顧一下財務結果。我們會將截至 2021 年 9 月 30 日的第二財季與截至 2020 年 9 月 30 日的上一財季進行比較。在某些情況下，我們將回顧 2019 年 9 月 30 日。

Similar to the quarter ended June 30, 2021, we faced a unique situation comparing 2 totally different environments between 2020 pandemic and 2021 post pandemic. We were coming off a strong September quarter last year, which was primarily driven by increased e-commerce demand as a result of the pandemic, which caused many retail stores to close and many veterinarians to be unavailable.

與截至 2021 年 6 月 30 日的季度類似，我們面臨著比較 2020 年大流行和 2021 年大流行後兩種完全不同環境的獨特情況。去年 9 月季度我們表現強勁，這主要是由於大流行導致電子商務需求增加，導致許多零售店關閉，許多獸醫無法使用。

However, during the most recent quarter, while the pandemic was abating and retail stores and veterinarians were open for business, the advertising market continued to surge with increased demand, dramatically driving up CPC and CPM rates by more than 50%. As a result, we spent approximately 33% less in advertising due to these cost increases.

然而，在最近一個季度，雖然大流行正在減弱，零售店和獸醫也開始營業，但廣告市場隨著需求的增加而繼續激增，將 CPC 和 CPM 率大幅推高了 50% 以上。因此，由於這些成本增加，我們在廣告上的支出減少了大約 33%。

For the second fiscal quarter ended on September 30, 2021, sales were $67.4 million compared to sales of $75.4 million for the same period the prior year, a decrease of 10.7%. But sales were only down 3.6% versus the quarter ended September 30, 2019, prior to the pandemic.

截至 2021 年 9 月 30 日的第二財季，銷售額為 6740 萬美元，上年同期為 7540 萬美元，下降 10.7%。但與大流行之前截至 2019 年 9 月 30 日的季度相比，銷售額僅下降了 3.6%。

The decrease in sales was due to decreases in both new order and reorder sales. Our sales were negatively impacted by a much more competitive market in a crowded advertising space with substantially higher costs compared to the same quarter last year. In addition, during the past 6 months, there was a dramatic increase in veterinarian visits by both pet owners who are unable to visit their veterinarian during the pandemic.

銷售額下降是由於新訂單和再訂單銷售額的下降。與去年同期相比，在擁擠的廣告空間中競爭更加激烈的市場對我們的銷售產生了負面影響，成本大幅提高。此外，在過去 6 個月中，在大流行期間無法去看獸醫的兩位寵物主人看獸醫的次數急劇增加。

We believe the increase in veterinary visits was primarily due to pet owners needing to visit their veterinarians for their pet exams and to renew their prescriptions. Since some pet owners purchase medications directly from their vets, during the visit, the company believes this negatively impacted sales and especially reorder sales during the quarter.

我們認為，獸醫就診次數的增加主要是由於寵物主人需要拜訪獸醫進行寵物檢查並更新處方。由於一些寵物主人直接從他們的獸醫那裡購買藥物，在訪問期間，該公司認為這對本季度的銷售產生了負面影響，尤其是重新訂購銷售。

We were disappointed with our sales results during the quarter. However, sales were trending more positive in the months of August and September 2021 when you compare them to August and September 2019. Reorder sales decreased by 8.5% to $62 million for the quarter compared to reorder sales of $67.8 million for the same quarter last year. While for the quarter ended September 30, 2019, our reorder sales were $61.9 million.

我們對本季度的銷售業績感到失望。但是，與 2019 年 8 月和 2019 年 9 月相比，2021 年 8 月和 2021 年 9 月的銷售額趨勢更為積極。與去年同期的 6780 萬美元的再訂購銷售額相比，本季度的再訂購銷售額下降了 8.5% 至 6200 萬美元.而在截至 2019 年 9 月 30 日的季度，我們的再訂購銷售額為 6190 萬美元。

Encouragingly, reorder sales in the most recent quarter, while down versus a year ago, were up slightly compared to 2019 pre-pandemic. We would expect to see stronger reorder sales in the back half of fiscal 2022 as we anticipate more prescriptions being renewed.

令人鼓舞的是，最近一個季度的再訂購銷售額雖然與一年前相比有所下降，但與 2019 年大流行前相比略有上升。我們預計在 2022 財年下半年會看到更強勁的再訂購銷售，因為我們預計會有更多的處方被更新。

A positive trend to highlight for the quarter was the continued increase in our average order size. Our average order value was approximately $92 for the quarter compared to $87 for the same quarter last year and $85 for the quarter ended September 30, 2019. The increase in AOV can be attributed to a shift in our product mix to more prescription items and less over-the-counter items, with prescription items having a higher gross margin profile in comparison to over-the-counter items.

本季度要強調的一個積極趨勢是我們的平均訂單量持續增加。本季度我們的平均訂單價值約為 92 美元，而去年同期為 87 美元，截至 2019 年 9 月 30 日的季度為 85 美元。AOV 的增加可歸因於我們的產品組合向更多處方藥和更少處方藥的轉變非處方藥，與非處方藥相比，處方藥的毛利率更高。

As I mentioned earlier, during the quarter ended September 30, 2021, the advertising market was extremely competitive. And this increased demand drove up ad prices dramatically. As a result, our advertising spending was less efficient than usual and delivered fewer impressions than in prior years. Because of this, we believe our advertising spending was less effective in the most recent quarter in its ability to attract new customers.

正如我之前提到的，在截至 2021 年 9 月 30 日的季度中，廣告市場競爭異常激烈。這種需求的增加極大地推高了廣告價格。因此，我們的廣告支出效率低於往常，產生的印像也低於往年。正因為如此，我們認為我們的廣告支出在最近一個季度吸引新客戶的能力較差。

New order sales decreased by 30% to $5.4 million for the quarter compared to $7.7 million for the same quarter of the prior year. We acquired approximately 65,000 new customers in our second fiscal quarter compared to 96,000 for the same period the prior year. However, we anticipate that advertising prices should revert back to more normal levels as the pandemic further subsides, which should help increase the efficiency and effectiveness of our media spending and thereby continue to help us gain more new customers in the future. We are also in the process of reevaluating many of our current marketing relationships, which has resulted in changing some of our marketing partners with the expectation of improved marketing efficiency and results.

本季度新訂單銷售額下降 30% 至 540 萬美元，而去年同期為 770 萬美元。我們在第二財季獲得了大約 65,000 名新客戶，而去年同期為 96,000 名。然而，我們預計隨著大流行的進一步消退，廣告價格應會恢復到更正常的水平，這將有助於提高我們媒體支出的效率和有效性，從而繼續幫助我們在未來獲得更多新客戶。我們也在重新評估我們當前的許多營銷關係，這導致我們改變了一些營銷合作夥伴，以期提高營銷效率和結果。

For the second fiscal quarter, net income was $6.3 million or $0.31 diluted per share compared to $8.4 million or $0.42 diluted per share for the same quarter last year, a decrease to net income of 25%. For the second fiscal quarter, our gross profit as a percentage of sales was 28.5% compared to 30.5% for the same period a year ago. The percentage decrease for the quarter can be attributed to some of the major manufacturers shifting their funding from discounting product costs to cooperative marketing rebates. There may be an opportunity to improve gross margins in the second half of fiscal year 2022 if the shift to prescription medications continue.

第二財季淨收益為 630 萬美元或每股攤薄收益 0.31 美元，而去年同期為 840 萬美元或每股攤薄收益 0.42 美元，淨收益下降 25%。對於第二財季，我們的毛利潤佔銷售額的百分比為 28.5%，而去年同期為 30.5%。本季度的百分比下降可歸因於一些主要製造商將其資金從貼現產品成本轉移到合作營銷回扣。如果繼續轉向處方藥，可能有機會在 2022 財年下半年提高毛利率。

We had $106.6 million in cash and cash equivalents and $19.7 million in inventory with no debt as of September 30, 2021. The Board of Directors also declared a quarterly dividend of $0.30 per share on the company's common stock. The dividend will be payable on November 19, 2021 to shareholders of record at the close of business on November 8, 2021.

截至 2021 年 9 月 30 日，我們擁有 1.066 億美元的現金和現金等價物以及 1970 萬美元的存貨，沒有債務。董事會還宣布了公司普通股每股 0.30 美元的季度股息。股息將於 2021 年 11 月 19 日支付給在 2021 年 11 月 8 日營業結束時登記在冊的股東。

The company continues to be committed to returning capital to our stockholders. However, the declaration and payment of future dividends is discretionary and will be subject to a determination by the Board of Directors each quarter following its review of the company's financial performance.

公司繼續致力於向我們的股東返還資本。然而，未來股息的宣布和支付是酌情決定的，將由董事會每季度在審查公司的財務業績後作出決定。

This ends the financial review. Operator, we are now ready to take questions.

財務審查到此結束。接線員，我們現在準備好接受提問了。

(Operator Instructions) And our first question is from Anthony Lebiedzinski from Sidoti.

（操作員說明）我們的第一個問題來自 Sidoti 的 Anthony Lebiedzinski。

Yes. So welcome, Matt, and welcome back Bruce, too. So as far as new order sales. I mean, obviously, you guys did have certainly felt the impact of the advertising market being lower. But the -- kind of what gives you confidence that things will bounce back in the back half of the fiscal year?

是的。非常歡迎，馬特，也歡迎布魯斯回來。就新訂單銷售而言。我的意思是，很明顯，你們確實感受到了廣告市場走低的影響。但是 - 是什麼讓你相信事情會在本財年的後半段反彈？

Just curious as to what's driving that. And maybe, perhaps, are you seeing some good results -- better results so far in the current quarter? I was just wondering about your confidence level about your ability to bounce back with the new order sales.

只是好奇是什麼驅動了它。也許，也許，您是否看到了一些好的結果——本季度迄今為止的更好結果？我只是想知道您對通過新訂單銷售反彈的能力的信心程度。

Anthony, this is Matt. And thanks for the question. Great to hear from you again. And then Bruce, feel free to chime in.

安東尼，這是馬特。謝謝你的提問。很高興再次收到你的來信。然後布魯斯，請隨意插話。

A couple of things about that. One is, I would say that we're taking a small bite too fast approach to looking at our new customer acquisition. We basically rewired our entire marketing partnerships and agencies in the last, I would say, well, I've been here 2 months, though, we've done that in the last 4 weeks. And that will be rolling out very soon.

關於那件事的幾件事。一是，我想說我們在尋找新客戶獲取方面採取的方法太快了。我們基本上在過去重新連接了我們的整個營銷合作夥伴關係和代理機構，我會說，好吧，我來這裡已經 2 個月了，不過，我們在過去 4 週內完成了這件事。這將很快推出。

So we're looking at our capital allocation spend to where we spend. I think we've been spending too aggressively in some channels where we haven't seen the return and we haven't been taking advantage of new sources of traffic where we actually think we have a lot of advantage. That's one. Two, is we're spending a lot more time rewiring our system and databases around tracking our customers better and really focusing on reengagement. And for rates in general, we are seeing some changes to the rates out there.

因此，我們正在研究我們的資本分配支出到我們支出的地方。我認為我們在一些我們沒有看到回報的渠道上花費過於激進，並且我們沒有利用我們實際上認為我們有很多優勢的新流量來源。那是一個。第二，我們是否花費更多時間重新佈線我們的系統和數據庫，以更好地跟踪我們的客戶並真正專注於重新參與。對於一般的費率，我們看到那裡的費率發生了一些變化。

I think some of the channels like Facebook have obviously gotten more expensive due to the loss of first-party data due to the Apple IDFA decision. So those are some channels that obviously, I think, are just still getting hotter in terms of increased CPMs and CPCs. But in others, we're seeing favorable trends. So it depends on the channel. But for us, we're really looking at each channel and seeing how we get incrementality out of each channel, which is different than what we did in the past.

我認為，由於 Apple IDFA 的決定導致第一方數據丟失，一些渠道（如 Facebook）顯然變得更加昂貴。因此，我認為，就增加的每千次展示費用和每次點擊費用而言，這些渠道顯然仍在變得越來越熱門。但在其他方面，我們看到了有利的趨勢。所以這取決於渠道。但對我們來說，我們真的在關注每個渠道，看看我們如何從每個渠道中獲得增量，這與我們過去所做的不同。

Okay. Got it. Okay. And then in terms of your gross margins, you did mention that you have been shipping more items like specialty dog, which obviously is much heavier than the typical pet medication. So as we look to refine our models here, like how should we think about it as you -- on the one hand, it sounds like you're doing a good job with increasing your AOV, but how is the margin -- gross margin impact going to be because of that?

好的。知道了。好的。然後就你的毛利率而言，你確實提到你運送了更多的物品，比如特種狗，這顯然比典型的寵物藥物重得多。因此，當我們在這裡改進我們的模型時，就像我們應該如何考慮它一樣 - 一方面，聽起來你在增加 AOV 方面做得很好，但利潤率如何 - 毛利率影響會是因為那個嗎？

Yes, Anthony, I'm going to take that question, if you don't mind. As far as our margins to those past quarter, we have, as we maybe have spoken off-line before, but our vendors shifted funding to our co-op marketing in lieu of discounting products and just negatively impacted our gross margins during the quarter. And it will probably be like that going forward where instead of getting price discounts off the price of the items or the inventory, these rebates and these promotions are going to be below the line as a -- in the advertising line item.

是的，安東尼，如果你不介意的話，我要回答這個問題。就我們過去一個季度的利潤率而言，正如我們之前可能已經離線說過的那樣，但我們的供應商將資金轉移到我們的合作營銷而不是打折產品，這對我們本季度的毛利率產生了負面影響。而且它可能會像這樣前進，而不是從商品或庫存的價格中獲得價格折扣，這些回扣和這些促銷活動將作為廣告項目中的一項低於線下。

So as far as moving forward with gross margins, that you'll see that as an overriding factor. But however, as we've also seen our ship moving back to more prescription than OTC, we do expect a positive trend in margins moving forward because of that going back to some sense of normalcy pandemic versus post-pandemic when it comes to our mix shift of items.

因此，就提高毛利率而言，你會認為這是一個最重要的因素。但是，然而，由於我們也看到我們的船恢復到比 OTC 更多的處方，我們確實預計利潤率會向前發展，因為當涉及到我們的組合時，這會回到某種正常的大流行與大流行後的感覺物品的轉移。

Okay. Got it. And then so in terms of the capital allocation, just curious to get your thoughts, Matt, as far as looking at pets for years, the company has a been a company with a lot of cash in growing the dividend and started maintaining a very healthy cash position. Just wanted to get your thoughts about that as should we -- how should we think about that, especially the dividend? What are your thoughts there?

好的。知道了。然後就資本配置而言，馬特，就多年來觀察寵物而言，我很想知道你的想法，該公司一直是一家擁有大量現金的公司，可以增加股息並開始保持非常健康的狀態現金頭寸。只是想听聽您對此的看法——我們應該如何考慮這一點，尤其是股息？你有什麼想法？

Yes, I think there are several things to unpack there. It's a great question. I've been a long listener of Pet's earnings calls as well. So I'll try to give a slightly different answer. I'd say with the dividend, we're always looking at that, and it's always subject to change, but we've been pretty consistent with the dividend and nothing to announce here, obviously.

是的，我認為那裡有幾件事情要打開。這是一個很好的問題。我也一直是 Pet 財報電話會議的長期聽眾。所以我會嘗試給出一個稍微不同的答案。我想說的是股息，我們一直在關注它，它總是會發生變化，但我們與股息非常一致，顯然這裡沒有什麼可宣布的。

But to your cash question, with over $100 million in cash with interest rates being so low, there -- I think there's a lot of opportunities in this space to deploy cash and allocate capital more efficiently to get higher returns. There's also a lot of businesses in the pet ecosystem that, fortunately, in this market, different than other verticals, there's a lot of ways to partner, a lot of ways to look at M&A as well. So we're certainly going to be looking at those in the future since we do have such a large cash position.

但是對於你的現金問題，有超過 1 億美元的現金和如此低的利率，我認為這個領域有很多機會可以更有效地部署現金和分配資本以獲得更高的回報。寵物生態系統中也有很多企業，幸運的是，在這個市場上，與其他垂直市場不同，有很多合作方式，也有很多方式來看待併購。所以我們肯定會在未來關注這些，因為我們確實擁有如此龐大的現金頭寸。

And lastly, it's a little early for me to articulate the strategy. I have been around for 2 months. I think the first 4 weeks felt like 6 months because there was a lot to do and learn and now I'm kind of settling in and feeling better about things. But yes, I think there's a lot of opportunity to deploy capital differently, especially given the tailwinds in pet ownership. So that's kind of a nonanswer answer, Anthony, other than I think we're taking a fresh look at that. And I would expect that we will make some decisions in the coming quarters that we'll obviously update everyone on.

最後，我現在闡明戰略還為時過早。我已經待了 2 個月了。我認為前 4 週感覺就像 6 個月一樣，因為有很多事情要做和學習，現在我有點安頓下來，對事情感覺更好。但是，是的，我認為有很多機會以不同的方式配置資本，特別是考慮到寵物所有權的順風。所以這是一個沒有答案的答案，安東尼，除了我認為我們正在重新審視它。我希望我們將在未來幾個季度做出一些決定，我們顯然會向所有人通報最新情況。

And our next question is from Steph Wissink with Jefferies.

我們的下一個問題來自 Jefferies 的 Steph Wissink。

The first is I wanted to just go back to some of the comments in your prepared remarks around vet visits. And I think I heard you correctly that there's an inverse correlation, meaning when vet visits go up, you tend to see vets sell prescription and OTC directly and so your business feels that impact. Is that the right way to think about it? Or is there a net second derivative where in follow-up to those primary prescriptions, you'll start to see some of the secondary prescription refills in your business?

首先是我想回到你準備好的關於獸醫訪問的評論中的一些評論。我想我沒聽錯，這是一種負相關，這意味著當獸醫訪問量增加時，您往往會看到獸醫直接出售處方藥和非處方藥，因此您的企業會感受到這種影響。這是正確的思考方式嗎？或者是否存在淨二階導數，在跟進這些主要處方後，您將開始在您的業務中看到一些次要處方補充劑？

Steph, this is Bruce. Let me address that question. Really, the vet visit information is really to try to give an understanding of what we were seeing last year versus this year. Last year, during the pandemic, virtually all the vet offices were closed. And there really wasn't many alternatives where our pet owners can turn to for medications and many were trying online pet medications for the first time. And so that was definitely something that we welcomed last year.

斯蒂芬，這是布魯斯。讓我來回答這個問題。真的，獸醫訪問信息實際上是為了了解我們去年與今年所看到的情況。去年，在大流行期間，幾乎所有獸醫辦公室都關閉了。我們的寵物主人可以尋求藥物治療的替代品確實不多，許多人都是第一次嘗試在線寵物藥物治療。所以這絕對是我們去年歡迎的事情。

This year, all those clinics were open for business, and they're making up for lost time. So they are making sure -- if they haven't seen that pet in a 12-month period, they're enforcing and making sure that pet owners coming into their clinic. So it's almost a resetting of the prescription cycle. And many of the pet owners are going to the vet, buying there.

今年，所有這些診所都營業了，他們正在彌補失去的時間。所以他們要確保——如果他們在 12 個月內沒有看到那隻寵物，他們就會強制並確保寵物主人進入他們的診所。所以這幾乎是處方周期的重置。許多寵物主人都會去看獸醫，在那裡買東西。

And then we're in line for the refill, and we can sort of do our data. We know when it's time for a reorder, and we'll go ahead and market for that reorder -- subsequent reorder. And we expect to see that in the second half of this fiscal year is what I was referring to earlier in the call.

然後我們排隊等待補充，我們可以做我們的數據。我們知道什麼時候需要重新訂購，我們將繼續為重新訂購市場——隨後的重新訂購。我們希望在本財年的下半年看到我在電話會議早些時候提到的情況。

Okay. Got it. And then my second question is on ad spend. I think you mentioned both that you expect advertising prices to revert. I'm curious if you could just give us a sense of do you expect them to go back to pre-pandemic levels on a purchasing price basis? Or do you still expect there to be a bit of inflation post pandemic?

好的。知道了。然後我的第二個問題是關於廣告支出。我想你提到了你希望廣告價格恢復。我很好奇您是否可以讓我們了解您是否希望他們在購買價格的基礎上回到大流行前的水平？還是您仍然預計大流行後會出現一些通貨膨脹？

And related to that, I think you also used the word -- words less efficient. Can you maybe talk a little bit about what you're doing to tweak your marketing mix or your marketing plans out over the next couple of quarters to try to improve some of the efficiency even if the costs remain a little bit elevated?

與此相關，我想你也使用了這個詞——效率較低的詞。你能不能談談你正在做什麼來調整你的營銷組合或你的營銷計劃在接下來的幾個季度中試圖提高一些效率，即使成本仍然有點高？

Yes. And I'll take your second question first. Couple of things. I would say, overall, the way in which we've been purchasing media is going to change significantly. We're looking at new and have actually implemented new marketing partners to help us with that, that specialize in specific areas of media. I won't get into the channels themselves. But obviously, Google, Facebook, Connected TV, there's a lot of options out there. And I think the way we've configured media spend to date needed a fresh pair of eyes. So that's one.

是的。我會先回答你的第二個問題。幾件事。我想說，總的來說，我們購買媒體的方式將發生重大變化。我們正在尋找新的並且實際上已經實施了新的營銷合作夥伴來幫助我們，專門從事特定媒體領域。我不會自己進入頻道。但顯然，谷歌、Facebook、聯網電視，那裡有很多選擇。而且我認為我們迄今為止配置媒體支出的方式需要一雙新的眼睛。這就是一個。

Two is just adding more data around the decisions that we're making around our media buys was another, I'd say, quick win that we've implemented. And then, lastly, to your first question, media rates have been dancing around quite a bit. I was in the language learning space prior to this with Rosetta Stone, and we took advantage of favorable rates during the pandemic because advertisers were leaving things like brand advertising to performance. I would say going into the holiday season, it's too early to tell since it's a very competitive time to be buying advertising. But I would say that I'm a little bit more optimistic about rates than I was when I started 2 months ago.

二是圍繞我們圍繞媒體購買所做的決策添加更多數據，我想說的是，我們已經實施了快速取勝。然後，最後，關於你的第一個問題，媒體費率一直在波動。在此之前，我在 Rosetta Stone 的語言學習領域工作，我們在大流行期間利用了優惠的價格，因為廣告商將品牌廣告等事情留給了績效。我想說進入假期，現在下結論還為時過早，因為現在是購買廣告的競爭非常激烈的時期。但我會說，與 2 個月前開始時相比，我對利率更加樂觀。

(Operator Instructions) Our next question is from Ben Rose with Battle Road Research.

（操作員說明）我們的下一個問題來自 Battle Road Research 的 Ben Rose。

Yes. And I know we haven't had a chance to meet, Matt, but I look forward to meeting you post call. A couple of questions with regard to pet health advice. In -- on your slides, Matt, you talked about the growth in the telehealth market. And I was just curious to know what thoughts you have with regard to the Ask the Vet service that you offer now and whether you envision that being expanded in some way or perhaps being monetized in some way in the future?

是的。我知道我們還沒有機會見面，馬特，但我期待在電話後見到你。關於寵物健康建議的幾個問題。在——在你的幻燈片上，馬特，你談到了遠程醫療市場的增長。我只是想知道您對現在提供的 Ask the Vet 服務有何想法，以及您是否設想該服務會以某種方式擴展或在未來以某種方式獲利？

Ben, looking forward to catching up in subsequent conversations. Yes, I'm really excited about the pet telehealth space. There's been a lot of innovation in the space. There's a lot of different start-ups that I actually talked to personally in the space to get some advice. I think the way I'd start is I always try to evaluate businesses not only on the TAM and the timing and the kind of the fundamentals, but also the customer relationships.

本，期待在隨後的談話中趕上來。是的，我對寵物遠程醫療領域感到非常興奮。這個領域有很多創新。實際上，我在該領域與許多不同的初創企業進行了個人交談，以獲得一些建議。我認為我開始的方式是，我總是嘗試不僅根據 TAM 和時間以及基本面的種類來評估業務，而且還嘗試根據客戶關係來評估業務。

An inordinate amount of our customers are wanting additional services from us. They almost -- they're giving us permission to give them more advice than we are today because prescriptions are, in a way, the milk at the back of the proverbial store with the customer because they see PetMed as the expert in pet health care. It just so happens as the customer is leaving the store, we're not providing a lot of expert experience yet.

過多的客戶希望我們提供額外的服務。他們幾乎——他們允許我們給他們比今天更多的建議，因為在某種程度上，處方藥就像眾所周知的商店後面的牛奶，因為他們將 PetMed 視為寵物保健專家.它恰好發生在顧客離開商店時，我們還沒有提供很多專家經驗。

And so I keep pet telehealth as us being very well positioned to add additional services that we don't do today because customers really view us as that specialty pharmacy. They're not viewing us as the major retailer with lots of different services. We're not known for selling food. We're not selling -- we're known for selling dog toys. We're known for providing expert advice.

因此，我保持寵物遠程醫療，因為我們處於非常有利的位置，可以增加我們今天不提供的額外服務，因為客戶真的將我們視為專業藥房。他們並沒有將我們視為提供許多不同服務的主要零售商。我們不以賣食物而聞名。我們不賣——我們以賣狗玩具而聞名。我們以提供專家建議而聞名。

And so for pet telehealth, well, the market is really small. I see is an opportunity to engage with our AutoShip customers in really unique ways, and then sell them additional services. So nothing to announce, but we're certainly going to be doing a lot of testing even this quarter on this topic, which I hope -- hopefully, I'll be able to talk to you about next time.

所以對於寵物遠程醫療來說，市場真的很小。我看到這是一個以真正獨特的方式與我們的 AutoShip 客戶互動的機會，然後向他們出售額外的服務。所以沒有什麼可宣布的，但我們肯定會在本季度就這個主題進行大量測試，我希望——希望下次我能和你談談。

Okay. Great. And with regard to the company's relationships with the veterinarian community in vet clinics, this is the first time that I've heard you quantify the number of veterinarians and clinics that you work with and find that to be an intriguing opportunity. I was curious to know plans that you have to perhaps reduce friction with the veterinarians or to improve relationships with them?

好的。偉大的。關於公司與獸醫診所獸醫社區的關係，這是我第一次聽到你量化與你合作的獸醫和診所的數量，並發現這是一個有趣的機會。我很想知道您有哪些計劃可以減少與獸醫的摩擦或改善與他們的關係？

Yes, Ben, thanks for noticing that. And it was intentional to put that in there because I was quite surprised when I first started the company. We have a vet portal that's used today. I've seen other competitors in the space "numbers". And I think some might be surprised that we have a larger network than most. I think our relationship with vets has been a little confrontational, to be honest, over the stand of the company when we first started because we are the pioneers in the space.

是的，本，感謝您注意到這一點。把它放在那裡是有意的，因為當我剛開始創辦這家公司時，我感到非常驚訝。我們有一個今天使用的獸醫門戶。我在“數字”領域見過其他競爭對手。我認為有些人可能會對我們擁有比大多數人更大的網絡感到驚訝。我認為我們與獸醫的關係有點對抗，老實說，在我們剛開始的時候，在公司的立場上，因為我們是這個領域的先驅。

I think when we would go to the veterinarian conferences, we are probably the least likely to be welcomed. And I think now there's other players in the space, and we've kind of opened the door for them. And I think we're kind of seen as a more friendly player in the space, to be honest. Our vet verification rates are as high as they've ever been. I think there's a lot of things we could do in our best portal to make the veterinarian's life easy.

我認為當我們去參加獸醫會議時，我們可能是最不可能受到歡迎的。而且我認為現在這個領域還有其他參與者，我們已經為他們打開了大門。老實說，我認為我們在這個領域被視為更友好的參與者。我們的獸醫驗證率與以往一樣高。我認為我們可以在我們最好的門戶網站上做很多事情來讓獸醫的生活變得輕鬆。

We're very sympathetic to veterinarians. They are overworked. They have some of the highest suicide rates of any profession. And I think that there's a lot we could do to be a better friend to the vet. And our vet portal, I think, has a great start, but I think there's a lot of opportunity to automate what they do in their clinics. And we're going to be pro-vet in terms of how we approach the market. Our intent is not to be anti-vet.

我們非常同情獸醫。他們工作過度。他們是所有職業中自殺率最高的。而且我認為我們可以做很多事情來成為獸醫更好的朋友。我認為我們的獸醫門戶網站有一個很好的開端，但我認為有很多機會可以使他們在診所所做的工作自動化。我們將在如何進入市場方面成為專業人士。我們的意圖不是反獸醫。

And our questions-and-answers portion of the call has ended. I would now like to turn the call back to Matt Hulett, the company's CEO, for his concluding remarks.

我們的電話問答部分已經結束。我現在想把電話轉回給公司首席執行官 Matt Hulett，聽取他的總結髮言。

Thank you. I want to reiterate what Bruce just covered in his financial highlights section. We are disappointed with our sales results for the quarter. But after my 2 months on the job, I'm confident there is much we can do and will do to improve our business growth.

謝謝。我想重申 Bruce 剛剛在他的財務亮點部分中提到的內容。我們對本季度的銷售業績感到失望。但在我上任 2 個月後，我相信我們可以做很多事情，並將做很多事情來改善我們的業務增長。

To be clear, in a market that's growing, PetMed needs to be -- to make the necessary changes to our operating playbook to take advantage of the market trend. In my first weeks here, I've listened in on countless customer service calls, engaged with over 20 pet industry leaders, brief research analysts and have engaged with our own main pharmaceutical partners.

需要明確的是，在一個不斷增長的市場中， PetMed 需要——對我們的運營手冊進行必要的改變，以利用市場趨勢。在這裡的頭幾週，我接聽了無數客戶服務電話，與 20 多位寵物行業領導者接洽，向研究分析師簡要介紹，並與我們自己的主要製藥合作夥伴接洽。

I've already seen in a lot of core areas that we can and have already begun to improve in this business, and these include the following: using more data insights to acquire and retain customers; better segmentation of our customer base in order to drive more mass personalization of our offers and services; improved new customer acquisitions through a different allocation of variable marketing spend; expanded product and services that are already being demanded by our customers.

我已經在很多核心領域看到我們可以並且已經開始改進這項業務，其中包括：使用更多數據洞察力來獲取和留住客戶；更好地細分我們的客戶群，以推動我們的產品和服務更加大規模個性化；通過可變營銷支出的不同分配來改善新客戶獲取；擴展我們的客戶已經需要的產品和服務。

Since I've only been with PetMeds for a short period of time, I'm not ready yet on today's call to provide a comprehensive future strategy or capital allocation plans for the business, and that would be premature. However, I do have a 90-day and 180-day plan that I presented to our Board of Directors, and I'll be sharing more about our vision and strategy with you during our Q3 earnings call.

由於我只在 PetMeds 工作了很短的時間，我還沒有準備好在今天的電話會議上為公司提供全面的未來戰略或資本配置計劃，那還為時過早。但是，我確實向董事會提交了 90 天和 180 天的計劃，我將在第三季度的財報電話會議上與您分享更多關於我們的願景和戰略的信息。

But I'll say this today. We firmly believe that we can take advantage of the large market tailwinds, leverage the main core strengths we highlighted today and execute on a broader strategic vision for the company. We look forward to briefing you in the coming quarters on our strategy and our progress. Thank you for listening in. Operator, this ends the conference call.

但我今天要說的是。我們堅信，我們可以利用巨大的市場順風，利用我們今天強調的主要核心優勢，為公司執行更廣泛的戰略願景。我們期待在未來幾個季度向您介紹我們的戰略和進展。感謝您收聽。接線員，電話會議到此結束。

Thank you. This ends today's conference call. You may disconnect your lines at this time. Thank you for your participation.

謝謝。今天的電話會議到此結束。此時您可以斷開線路。感謝您的參與。