Alec Davidian: So we’re thinking through pay down across the rest of the year. We will most likely stagger it through the year, but it depends on ultimately the level of performance through the different quarters. So you’re quite possibly seeing us paying down a bigger chunk to begin with, to your point, and then as free cash flow hits later in the year, topping up to the remaining amounts.
Operator: Our next question comes from the line of Greg Pendy with Chardan.
Greg Pendy: Just a quick one, I guess, within the guidance and the EBITDA guidance. Can you talk about how you’re thinking about the Bright Horizons deal? Is that something that you’re going to be putting some dollars behind and hopefully, that will gradually roll out? And then also, is that built — where were you thinking in terms of your guidance on that?
Garrett Smallwood: In terms of Bright Horizons, there’s a refresher, Bright Horizons is a public company, ticker BFAM. They offer daycare and child care for I believe ages six months to seven years across the US, phenomenal business from all everything I can understand. And we’ve partnered with them to offer pet care via their distributed kind of employer sponsored channels, and it marks our entrants really in the employer sponsored channel. And so we really like this deal because it unlocks a great audience, think about it as major employers across the US, brands like Salesforce, et cetera. And a great brand in Bright Horizons and we kind of were able to piggyback and provide a great experience to their customers. These things generally have a ramp time, as I think you’re alluding to, it takes time to roll out to an employer and then go out to the employees and then figure out how to actually use it and figuring out how to actually benefit from it and actually put it to work.
So it probably is more of a back half ’24, ’25 thing than it is a first half 2024 thing frankly. But it’s not to say we aren’t already seeing some early signs of promise and we’re not really excited about the partnership, but it’s probably more of a back half/2025 win for us as it’s rolled out.
Greg Pendy: And then just one final one. Just on the return to office trends, I think you mentioned that it was a little bit sluggish in the fourth quarter, and you called out boarding on top of it. So just kind of wondering, in the fourth quarter, did you see maybe some of the hybrid workers choosing to work remotely more often given the holidays or just kind of anything notable to kind of call out on that? And how do you think about that in light of the revenue guidance for 2024?
Garrett Smallwood: I think what we saw throughout ’23, frankly, was a really trepidatious employer and employee, meaning like no real push or incentive to go back to the office. I think we generally hovered around 48% to 50% throughout the year across the major markets, and that’s a few days a week. We’re not assuming some massive step change there. We certainly think the macro pressure and the layoffs we’re seeing, especially across larger companies may accelerate the return to office and kind of the dependency then on Wag! daytime services, but we’re not necessarily pinning it in. We really — it wasn’t any sort of step change that year. I think we saw kind of a slower employer than maybe we had originally thought to push people back to office, but didn’t really change the pattern or use cases.
I think people still depend on us while they’re stuck in meetings all day, people still depend on us why there out on the weekends. People still depend on why they’re traveling. And then in terms of 2024, I think we might see some level of improvement but I don’t expect to be at the 85%, it probably gets to 55% or 60% by the end of the year, is my guess.
Operator: Our next question comes from the line of Aria Cole with Cole Capital.
Aria Cole: I’m sure when you do a financial analysis, you look at comparisons to other companies. As you well know Rover had been public. When they reached $110 million of sales a number of years ago, they were reporting EBITDA margins of 11%. And if you hit the guidance you’re suggesting over 2024, you’ll be at $110 million in middle range as well, reporting about 4% EBITDA margin. So the question really is, what is different about the mix of your business the two businesses that your margins are going to be lower? Is there some structural reason for why your margins are lower versus theirs because of what you offer, or is it a function of you’re just investing more money in sales and marketing to drive future growth?
Garrett Smallwood: I’m not sure if Rover was a public company when they were doing $110 million. But I can certainly say that when you are a public company, you are burdened by additional costs, which probably takes EBITDA margins down. As a reminder, it is not cheap being public in terms of both headcount, compliance, regulation, and just generally best practices. So I would add that in there. It’s probably actually a multi-percentage point impact to our fully loaded EBIT margin. Second part of that is, I think we’re probably in a different state as we think about future growth. I think we’re really investing in durable long term growth may be a bit differently than maybe they were. The third point I would add is there is a management presentation we published that gets a sense of kind of EBITDA margin scale along with free cash flow scale, which was just published, I think that gives us everyone a better idea kind of how we look as we get to higher platform participant numbers.
