Rover Group, Inc. (NASDAQ:ROVR) Q4 2022 Earnings Call Transcript

Aaron Easterly: Sure. Sure. Hi, Ralph. It’s good to hear your voice. Yes, we definitely have intentionally modelled the business that way. When we look at the macro impact, we’re not seeing huge evidence of it hitting hard right now. So we’re assuming that there’ll be a general ramp into a more challenging macro environment towards the second half of the year. As a reminder, the Q1 this year is also a little bit weird, because we’re seeing some of the leftover effects of Omicron last year, says we kind of overlap a period that probably had a little bit of suppression in it, we would expect for the growth rates to be a little bit higher, but we are modeling and kind of increasing the impact as the year goes on for the macro piece.

Ralph Schackart: Great. And then in the prepared remarks you talked about the new distribution haven’t really strong impact for acquisition. And just if you could provide some more color around that is that Bright Horizons and the new deal, but anything get out, that’d be great. Thank you.

Brent Turner : Hi, Ralph, it’s Brent. It’s good to hear your voice. Yes, we are not allowed to say more beyond the prepared remarks. We are excited about the early returns on this partnership. And we think we’ve gotten not only some momentum in the marketplace as a result of it, but also a little bit of a roadmap to what successful partnerships can look like in the future. And so and we’re excited about Bright Horizons as a partner and what this year can look like.

Operator: Next question comes from the line of Andrew Boone of JMP Securities.

Andrew Boone: Good afternoon, and thanks for taking my questions. It sounds like one of the key investments for 2023 is more brand spend. Can you guys just double click in terms of what you guys have seen so far in terms of the test, and then talk a little bit more about the justification of ramping that brand spend around 2023, and maybe any thoughts on awareness?

Brent Turner : Hi, Andrew, it’s Brent. Thanks for being on the call. So going back to our philosophy around in the key challenge of the business on the brand side, now we are trying to build a category in this space, that compete with friends family neighbors with new concept. It’s not a not a new challenge for businesses like ours. On the other hand, we have made a philosophy decision internally that we will not spend money strictly to drive brand awareness that we are going to hold our spending accountable for demonstrable accelerations to new customer acquisition that we can see that we feel comfortable with from unit economic standpoint. What happened last year is we did a number of tests. YouTube, linear TV, streaming TV, we’re very interested in the video format and from advertising standpoint have felt that it offered us the best chance to tell our story and to do a combination of category development with new customer acquisition at the same time.

One of the reasons why those tests take a while was because the return of those channels takes longer to come in. Because a lot of the people that you’re hitting are not themselves in market so there’s quite a bit of creative learning, quite a bit of media source learning you have to do. But last year, we did get to conviction that we are seeing the unit economic performance we want; we are getting the category development that we want. And so those are the right decisions for us. So, in short, we’re doing it because we think it’s a good use of money when compared to other things that we can do. And it falls within our unit economic constructs.

Aaron Easterly: Andrew. This is Aaron. Just one additional comment, maybe summarizing that piece is we would lose the term brand spend there, pretty loosely. We are using some of the media channels more traditionally associated with brand marketers as a higher portion of our mix, but we’re still holding it accountable to our response metrics.