Seattle pet-sitting platform Rover debuts in public listing

With Chico, Olive and Roxie on the podium and dozens of other dogs joining virtually, Seattle-based Rover rang the opening bell on Nasdaq on Monday and made its stock market debut.

Rover, an online pet care marketplace, began trading under the ticker “ROVR” after finalizing a merger with San Francisco-based mailbox company Nebula Caravel last week.

The listing earned the company an additional $ 270 million in cash. The stock closed 6% higher than its debut price on Monday.

The company first announced the deal in February. Rover’s investor presentation revealed that the pandemic halved the company’s revenue from 2019 to 2020. Last year got even more difficult when the company laid off 41% of its employees.

The company reduced its net loss to $ 24 million in 2020, from $ 35 million the previous year. Although sales this year are expected to return to 2019 levels, the 10-year-old company doesn’t expect a profit until 2022.

Rover makes money when dog and cat owners search for pet care services from a pool of pet sitters on its platform. Zoo keepers can offer dog trips and day care when the owners are at work, as well as house sitting and visits when the owners are on vacation. Sitters set their own prices, but Rover takes 25% of all transactions.

When the pandemic locked pet owners at home, Rover’s business suffered. “It hurt us in the short term.” said CEO Aaron Easterly. “People haven’t traveled. People didn’t go to work. “

Increased pet ownership during the pandemic may give the company a second wind. According to the American Pet Products Association, pet ownership in the United States rose to 70% of all households last year, the highest ever. Since the COVID-19 outbreak, more than one in five people have bought new pets, many citing loneliness.

Total bookings in May increased by almost 20% compared to two years earlier. In June, Rover recorded $ 56 million in transactions on its platform, more than ever before.

“People are simply willing to spend more and more money making sure their pets are looked after and given top-notch care and experience,” said Tom White, senior equity research analyst at investment bank DA Davidson, providing an explanation of the expense .

In 2017, Rover acquired California-based DogVacay, giving pet owners access to what is believed to be the largest network of pet care providers in the United States and Canada. In 2018, the company acquired DogBuddy to accelerate its presence in Europe.

“We’re at the intersection of a number of amazing trends,” said Easterly. “Pet ownership increases over time, and ‘spend per pet’ tends to increase over time.”

According to Rover, the company now operates in 96% of the US zip codes and 10 countries in North America and Europe.

White’s company estimates that “overnight services” for pets or anything else non-medical is a $ 9 billion market. However, with only 10% of pet owners paying for these services, DA Davidson’s report predicts the market could expand tenfold by 2030.

The company’s recent surge in bookings has not been without growing pains. According to local news outlets across the country, recent reports have surfaced that pets cared for via Rover’s platform have been lost, injured, or in some cases found dead while in the possession of sitters. The Seattle Times was unable to verify these accounts.

Easterly said security has been the company’s priority since day one, citing the company’s 24/7 pet sitter support line as a corporate action. Sitters can always access the line if they have any questions about caring for a pet. The line also provides access to veterinarians if the sitters are concerned about the animal’s health.

The company also said the sitters go through background checks before they are allowed to offer their services. And bookings come with insurance coverage for unplanned events or expenses that the sitters may incur.

Still, “the work is never done in terms of what we can do better,” Easterly said.

White, who focuses on internet marketplaces, said these security risks not only apply to rovers, but are an unfortunate reality for online platforms of this nature. “I see that in a lot of other gig-type business models that I cover, like ride sharing or Airbnb … Unfortunately [Rover] it will never be able to completely eradicate it. “

Ivan Feinseth, chief investment officer at Tigress Financial Partners based in New York, said he still sees opportunities in the way Rover is consolidating a “very fragmented market of random service providers” made up mostly of family and friends.

The company would like to expand its range in the future. In Seattle, Denver, Austin, and Washington DC, Rover has started piloting services such as bathing, blow drying, ear cleaning, nail clipping, and even haircuts for pets.