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Rover fetches strong earnings

Illustration of hundred dollar bills in the shape of a dog's head and two floppy ears.

Illustration: Victoria Ellis/Axios

Rover (Nasdaq: ROVR), the pet care company that rose to prominence during the pandemic, is profitable.

Driving the news: Rover shares have climbed ~20% this week after it raised its revenue and adjusted its profit forecast for the year after reporting a 30% revenue increase and that it swung to a profit.

How it works: The company offers dog boarding, housesitting, drop-in visits, doggy day care and dog walking.

  • "We still view ourselves as somewhat early in the development of the category," CEO Aaron Easterly says.

Zoom in: Many of its users, even first-time ones, will often become customers of its other services, Easterly says.

  • "If you can find a sweet spot where it's an opportunity to go and acquire new customers with the new offering, as well as better serve our existing customers, it's definitely a win," Easterly says.

What's next: Rover is interested in adding services to its platform, such as grooming, training, and different kinds of pet adoption, Easterly says.

  • Health and wellness is another area it's interested in.

Yes, but: Easterly says it won't shy away from M&A to get there, but the company hasn't participated in the market because of price.

  • There's a valuation dynamic taking shape, particularly for companies funded at high valuations, that's stalling M&A overall, he says.
  • "The price that they were hoping or thinking their business is worth is maybe not that way anymore," he says.

State of play: The pet industry is projected to grow to about $500 billion in 2030 from $320 billion today, according to Bloomberg Intelligence.

  • The growth, largely due to an increasing pet population and stronger demand for premium services because pet owners view their pets as children, has driven a wave of investment.
  • Earlier this year, the company invested in Seattle-based vet care service Felix&Fido's $4 million seed round.
  • In 2022, it acquired Good Pup, an early-stage company that provides video-based training services for dogs.
  • DogBuddy, Dog Vacay and Zingy Pet was also brought under its fold over the past few years.
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