Start Time: 16:30 January 1, 0000 5:15 PM ET Trupanion, Inc. (NASDAQ:TRUP) Q4 2023 Earnings Conference Call February 15, 2024, 16:30 PM ET Company Participants Darryl Rawlings - Founder, Chair and CEO Fawwad Qureshi - CFO Margi Tooth - President Laura Bainbridge - SVP, Corporate Communications Conference Call Participants Maria Ripps - Canaccord Genuity Jian Li - Evercore ISI Josh Shanker - Bank of America Ryan Tunis - Autonomous Research Jon Block - Stifel John Barnidge - Piper Sandler Wilma Burdis - Raymo ...

BOSTON, Feb. 15, 2024 (GLOBE NEWSWIRE) -- Boston, MA -- Block & Leviton is investigating Trupanion Inc. (NASDAQ:TRUP) for potential securities law violations. Investors who have lost money in their Trupanion Inc. investment should contact the firm to learn more about how they might recover those losses. For more details, visit https://www.blockleviton.com/cases/trup. What is this all about? After the market close on February 15, 2024, Trupanion Inc. announced Q4 and full year 2023 preliminary financial resu ...

SEATTLE--(BUSINESS WIRE)--Trupanion, Inc. (Nasdaq: TRUP), a leading provider of medical insurance for cats and dogs, reconvened world-renowned animal health and infectious disease authorities to continue the investigation into the reported uptick of on canine respiratory illness. Leveraging Trupanion’s extensive, real-time claims database, the panel was able to extrapolate trends reflecting an increase in respiratory-related invoices in specific areas across the U.S. and Canada, alongside declining or stag ...

SEATTLE, Jan. 30, 2024 (GLOBE NEWSWIRE) -- Trupanion, Inc. (NASDAQ:TRUP), the leading provider of medical insurance for cats and dogs, is reconvening world-renowned animal health and infectious disease experts in an upcoming live event. The session will provide the latest insights into the current state of canine respiratory illness in North America, and follows the exceptional interest generated by their November 2023 event. During the free, live webcast, Trupanion will share data from their extensive data ...

SEATTLE, Jan. 09, 2024 (GLOBE NEWSWIRE) -- Built In today announced that Trupanion (NASDAQ:TRUP), leading North American pet medical insurance provider, was honored in its 2024 Best Places to Work Awards. Specifically, Trupanion earned a place on Best Places to Work in Seattle, including Best Large Places to Work. The annual awards program includes companies of all sizes, from startups to enterprise organizations, and honors both remote-first employers as well as companies in large tech markets across the U ...

Total Subscription Revenue Growth ($ in millions) $182.2 $172.6 $175.0 $164.7 $158.3 $152.4 $150.0 $145.8 $139.8 $128.7 $122.0 | $125.0 $114.8| $107.7 $100.0 $100.0 $87.6 $83.6 $75.0 $50.0 $25.0 1 $4.4 $5.3 $6.3 $7.6 $8.8 $9.9$10.7 $0 J == ■| ■| ■| 2010 2015 2017 2018 2019 2021 2022 2023 2011 2012 2013 2014 2020 2016 $200.0 ($ in millions) Product Offerings *Managing General Agents (insurance commission revenue). We intend to transition these products to a Trupanion branded product over time. 1 4.0% 12.9% 1 ...

Trupanion, Inc. (NASDAQ:TRUP) Q3 2023 Earnings Conference Call November 2, 2023 4:30 PM ET Company Participants Laura Bainbridge – Senior Vice President-Corporate Communications Darryl Rawlings – Chief Executive Officer and Chair of the Board Margi Tooth – President Wei Li – Corporate Controller and Senior Vice President-Finance Fawwad Qureshi – Chief Financial Officer Conference Call Participants Maria Ripps – Canaccord Shweta Khajuria – Evercore ISI Josh Shanker – Bank of America Jon Block – Stifel Wilma ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 or ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____ Commission File Number: 001-36537 TRUPANION, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorp ...

Financial Data and Key Metrics Changes - Total revenue for Q2 was $270.6 million, representing a 23% year-over-year increase and exceeding expectations [84] - Adjusted operating income for the quarter was $16.8 million, down 19% from the prior year but up 8% sequentially [88] - Free cash flow improved by $3.9 million sequentially, moving towards a goal of positive free cash flow by Q4 [41][90] Business Line Data and Key Metrics Changes - Subscription revenue was $173.3 million for the quarter, up 19% year-over-year [84] - The average monthly revenue per pet was $64.41, with new pet ARPU in North America at $61.49 [8][9] - The cost to acquire a pet was $236, with a 24% reduction compared to the prior year [18][26] Market Data and Key Metrics Changes - Total subscription pets increased by 23% year-over-year to over 943,000 pets as of June 30, 2023 [56] - The average retention rate across North America's subscription products was 98.61%, slightly down from 98.74% in the prior year [56] - The company added approximately 4,000 new pets in Continental Europe during the quarter [80] Company Strategy and Development Direction - The company is focused on expanding adjusted operating margins, deploying capital efficiently, and returning to free cash flow positive by Q4 2023 [25][44] - A decentralized management approach is being implemented to enhance capital allocation and operational efficiency [5][11] - The company plans to provide more granular reporting on the internal rate of return for new pets, reflecting a shift in strategy towards a more diversified product and market approach [28][76] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about early signs of margin expansion and the effectiveness of pricing actions taken [14][32] - The company is monitoring inflationary pressures and expects to see further margin improvements if these pressures remain consistent [14][125] - Management remains confident in achieving free cash flow positive status by the end of 2023, supported by improved operational efficiencies [41][90] Other Important Information - The company is experiencing a shift in its business model with new products and channels contributing to growth, particularly in Continental Europe [51][50] - Fixed expenses as a percentage of revenue increased to 5.1%, influenced by costs related to new subscription products [58] - Stock-based compensation expense was $6.5 million during the quarter, with expectations to remain around $7 million per quarter for the remainder of the year [89] Q&A Session Summary Question: Update on California rate increases and filing process - Management provided an update on the California rate filing, indicating progress and a collaborative relationship with regulators [21][94] Question: Adjusted operating income target and approvals - Management confirmed that the adjusted operating income target is based on expected approvals and current pricing strategies [68][114] Question: Impact of California rate approval delays - Management stated that if delays occur, they will adjust their growth strategy based on market performance and margin strength [97][98] Question: Employee count and severance expenses - Management confirmed a 3% reduction in headcount during Q2, with some severance expenses included in fixed costs [129] Question: Retention rates and impact of lower-end plans - Management noted that retention rates are slightly impacted by lower-end plans but remain strong overall [120][137] Question: Future guidance and revenue projections - Management provided guidance for Q3 and full-year revenue, indicating expectations for continued growth despite some uncertainties [91][156]

PART I - FINANCIAL INFORMATION [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents unaudited condensed consolidated financial statements for Q2 and H1 2023, including Statements of Operations, Balance Sheets, and Cash Flows, with explanatory notes [Note 8. Reserve for Veterinary Invoices](index=16&type=section&id=Note%208.%20Reserve%20for%20Veterinary%20Invoices) This note details changes in the reserve for veterinary invoices, which increased by **$4.6 million** for the subscription business and **$7.8 million** for other business in H1 2023 - The reserve for veterinary invoices is an estimate of future payments for invoices dated on or before the balance sheet date, including internal processing costs, and is based on actuarial projections and management's assessment[50](index=50&type=chunk) Change in Reserve for Veterinary Invoices (Six Months Ended June 30, 2023, in thousands) | Segment | Beginning Reserve (Dec 31, 2022) | Ending Reserve (June 30, 2023) | Change | | :--- | :--- | :--- | :--- | | **Subscription Business** | $21,543 | $26,191 | +$4,648 | | **Other Business** | $22,191 | $30,011 | +$7,820 | [Note 9. Debt](index=18&type=section&id=Note%209.%20Debt) The company's **$150.0 million** credit facility had **$109.0 million** outstanding at **10.39%** interest as of June 30, 2023, with all covenants met - The company entered into a **$150.0 million** credit facility in March 2022, consisting of a **$60.0 million** initial term loan, **$75.0 million** in delayed draw term loans, and **$15.0 million** in revolving loans[56](index=56&type=chunk) - As of June 30, 2023, total outstanding borrowings were **$109.0 million**, with a stated interest rate of approximately **10.39%**[57](index=57&type=chunk)[60](index=60&type=chunk) [Note 13. Segments](index=22&type=section&id=Note%2013.%20Segments) The company operates two segments: subscription (64% of H1 2023 revenue) and other business, both reporting operating losses in H1 2023 - The company has two reporting segments: the subscription business (direct-to-consumer products) and the other business (underwriting for third parties and other solutions)[72](index=72&type=chunk) Segment Performance (Six Months Ended June 30, 2023 vs 2022, in thousands) | Segment | Revenue 2023 | Revenue 2022 | Operating Loss 2023 | Operating Loss 2022 | | :--- | :--- | :--- | :--- | :--- | | **Subscription Business** | $338,463 | $285,647 | $(31,585) | $(20,303) | | **Other Business** | $188,432 | $139,763 | $(5,847) | $(1,471) | | **Total** | **$526,895** | **$425,410** | **$(37,576)** | **$(21,885)** | Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $270,566 | $219,411 | $526,895 | $425,410 | | **Operating Loss** | $(13,090) | $(12,771) | $(37,576) | $(21,885) | | **Net Loss** | $(13,714) | $(13,618) | $(38,494) | $(22,473) | | **Net Loss Per Share (Basic and Diluted)** | $(0.33) | $(0.33) | $(0.93) | $(0.55) | Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2023 (unaudited) | December 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $520,595 | $469,096 | | **Total Assets** | $730,191 | $671,627 | | **Total Current Liabilities** | $330,658 | $289,616 | | **Total Liabilities** | $441,433 | $366,330 | | **Total Stockholders' Equity** | $288,758 | $305,297 | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(10,267) | $(6,720) | | **Net cash provided by (used in) investing activities** | $28,385 | $(25,137) | | **Net cash provided by financing activities** | $33,717 | $46,771 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Q2 and H1 2023 financial results, highlighting **24% revenue growth** driven by **25% increase in enrolled pets**, alongside widening net losses due to higher expenses [Key Operating Metrics](index=25&type=section&id=Key%20Operating%20Metrics) Key operating metrics show **total pets enrolled grew 25%** to **1.68 million**, PAC decreased to **$241**, and monthly retention slightly declined to **98.61%** Key Operating Metrics Comparison | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | **Total pets enrolled (at period end)** | 1,679,659 | 1,348,145 | | **Total subscription pets enrolled (at period end)** | 943,958 | 770,318 | | **Monthly average revenue per pet** | $64.00 | $64.24 | | **Average pet acquisition cost (PAC)** | $241 | $305 | | **Average monthly retention** | 98.61% | 98.74% | [Results of Operations](index=36&type=section&id=Results%20of%20Operations) Q2 2023 total revenue increased **23%** due to pet enrollment growth, but subscription cost of revenue rose to **87%** due to higher veterinary expenses and G&A increased significantly from non-recurring costs - Total revenue for Q2 2023 increased by **23% YoY** to **$270.6 million**, driven by a **19%** increase in the subscription business and a **32%** increase in the other business, primarily due to higher pet enrollment[121](index=121&type=chunk) - Subscription business cost of revenue as a percentage of its revenue increased from **84% to 87% YoY** in Q2 2023. This was due to an **18%** increase in underwritten policies and a **6%** rise in veterinary invoice expense per pet, influenced by inflation and increased usage of direct-pay software[123](index=123&type=chunk) - General and administrative expenses for H1 2023 increased **84% YoY** to **$34.2 million**, primarily due to a **$5.7 million** increase in stock-based compensation (including **$4.8 million** from executive departures) and a **$3.8 million** non-recurring settlement[128](index=128&type=chunk) - New pet acquisition expense decreased by **10% YoY** in Q2 2023 to **$20.8 million**, reflecting a strategic focus on more efficient acquisition channels[129](index=129&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) The company holds **$236.1 million** in cash and equivalents, with **$57.3 million** excess capital in insurance subsidiaries, deemed sufficient for 12 months, despite increased net cash used in operations - As of June 30, 2023, the company had **$236.1 million** in cash, cash equivalents, and short-term investments, with an additional **$40.0 million** available under its Credit Facility[136](index=136&type=chunk) - The company's insurance subsidiaries held **$213.1 million** of capital surplus, which was **$57.3 million** above the estimated risk-based capital requirement of **$155.8 million**[136](index=136&type=chunk) - Net cash used in operating activities was **$10.3 million** for the six months ended June 30, 2023, an increase from **$6.7 million** in the same period of 2022, primarily due to higher veterinary invoice expenses[134](index=134&type=chunk)[138](index=138&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risk disclosures have occurred in H1 2023 since the 2022 Form 10-K filing - There have been no material changes to the company's market risk disclosures since the fiscal year ended December 31, 2022[153](index=153&type=chunk) [Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[154](index=154&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[155](index=155&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings, none of which are currently deemed material - The company is subject to ordinary course litigation but does not believe any current matters are material[159](index=159&type=chunk) [Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) This section outlines key risks including a history of net losses, challenges in member growth and retention, reliance on contractors, potential for exceeding veterinary reserves, competition, and regulatory compliance - The company has a history of significant cumulative net losses, with a net loss of **$44.7 million** in 2022 and an accumulated deficit of **$171.6 million** as of December 31, 2022[162](index=162&type=chunk) - Business success is highly dependent on growing and retaining the member base, which involves uncertainties in pet acquisition spend, reliance on independent Territory Partners, and the ability to maintain high retention rates[161](index=161&type=chunk)[170](index=170&type=chunk) - Actual veterinary invoice expenses may exceed established reserves, particularly with rising veterinary care costs, inflation, and increased claims from the use of its direct-pay software[185](index=185&type=chunk)[188](index=188&type=chunk) - The business is heavily regulated by state, federal, and foreign laws, and failure to comply could result in significant penalties, fines, or license revocation[254](index=254&type=chunk)[255](index=255&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=69&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q2 2023, the company issued **419 shares** of common stock to a strategic distributor as part of an unregistered private placement - In Q2 2023, the company issued **419 shares** of common stock to a strategic distributor as part of a marketing agreement. The sale was unregistered, relying on the private placement exemption[284](index=284&type=chunk) [Other Information](index=69&type=section&id=Item%205.%20Other%20Information) CEO Darryl Rawlings terminated his Rule 10b5-1 trading plan on May 23, 2023 - CEO Darryl Rawlings terminated his Rule 10b5-1 trading plan on May 23, 2023[287](index=287&type=chunk) [Exhibits](index=70&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including CEO/CFO certifications, an amended non-employee director compensation program, and a new severance and change in control plan - Filed exhibits include CEO and CFO certifications, an amended Compensation Program for Non-Employee Directors, and a new Severance and Change in Control Plan effective July 28, 2023[289](index=289&type=chunk)