Trupanion Reports First Quarter 2025 Results

SEATTLE, May 01, 2025 (GLOBE NEWSWIRE) -- Trupanion, Inc. (Nasdaq: TRUP), a leading provider of medical insurance for cats and dogs, today announced financial results for the first quarter ended March 31, 2025. “Q1 was a strong start to the year, with performance ahead of plan across key metrics,” said Margi Tooth, Chief Executive Officer and President of Trupanion. “We saw early momentum in both retention and pet acquisition, and with expanded margins in our subscription business, we're well-positioned to continue to invest in growth.” First Quarter 2025 Financial and Business Highlights Total revenue was $342.0 million, an increase of 12% compared to the first quarter of 2024.Total enrolled pets (including pets from our other business segment) was 1,667,637 at March 31, 2025, a decrease of 2% over March 31, 2024.Subscription business revenue was $233.1 million, an increase of 16% compared to the first quarter of 2024.Subscription enrolled pets was 1,052,845 at March 31, 2025, an increase of 5% over March 31, 2024.Net loss was $(1.5) million, or $(0.03) per basic and diluted share, compared to a net loss of $(6.9) million, or $(0.16) per basic and diluted share, in the first quarter of 2024.Adjusted EBITDA was $12.2 million, compared to adjusted EBITDA of $4.8 million in the first quarter of 2024.Operating cash flow was $16.0 million and free cash flow was $14.0 million in the first quarter of 2025. This compared to operating cash flow of $2.4 million and free cash flow of $(0.6) million in the first quarter of 2024.At March 31, 2025, the Company held $321.8 million in cash and short-term investments, including $48.8 million held outside the insurance entities, with an additional $15.0 million available under its credit facility. Conference CallTrupanion’s management will host a conference call today to review its first quarter 2025 results. The call is scheduled to begin shortly after 1:30 p.m. PT/ 4:30 p.m. ET. A live webcast will be accessible through the Investor Relations section of Trupanion’s website at https://investors.trupanion.com/ and will be archived online for 3 months upon completion of the conference call. Participants can access the conference call by dialing 1-866-250-8117 (United States) or 1-412-317-6011 (International). A telephonic replay of the call will also be available after the completion of the call, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (International) and entering the replay pin number: 10197710. About TrupanionTrupanion is a leader in medical insurance for cats and dogs throughout the United States, Canada, and certain countries in Continental Europe with over 1,000,000 pets currently enrolled. For over two decades, Trupanion has given pet owners peace of mind so they can focus on their pet's recovery, not financial stress. Trupanion is committed to providing pet parents with the highest value in pet medical insurance with unlimited payouts for the life of their pets. With its patented process, Trupanion is the only North American provider with the technology to pay veterinarians directly in seconds at the time of checkout. Trupanion is listed on NASDAQ under the symbol "TRUP". The company was founded in 2000 and is headquartered in Seattle, WA. Trupanion policies are issued, in the United States, by its wholly-owned insurance entity American Pet Insurance Company and, in Canada, by Accelerant Insurance Company of Canada. Trupanion Australia is a partnership between Trupanion and Hollard Insurance Company. Policies are sold and administered in Canada by Canada Pet Health Insurance Services, Inc. dba Trupanion 309-1277 Lynn Valley Road, North Vancouver, BC V7J 0A2 and in the United States by Trupanion Managers USA, Inc. (CA license No. 0G22803, NPN 9588590). Canada Pet Health Insurance Services, Inc. is a registered damage insurance agency and claims adjuster in Quebec #603927. Trupanion Australia is a partnership between Trupanion and Hollard Insurance Company. For more information, please visit trupanion.com. Forward-Looking StatementsThis press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to, among other things, expectations, plans, prospects and financial results for Trupanion, including, but not limited to, its expectations regarding its ability to continue to grow its enrollments and revenue, and otherwise execute its business plan. These forward-looking statements are based upon the current expectations and beliefs of Trupanion’s management as of the date of this press release, and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. All forward-looking statements made in this press release are based on information available to Trupanion as of the date hereof, and Trupanion has no obligation to update these forward-looking statements. In particular, the following factors, among others, could cause results to differ materially from those expressed or implied by such forward-looking statements: the ability to achieve or maintain profitability and/or appropriate levels of cash flow in future periods; the ability to keep growing our membership base and revenue; the accuracy of assumptions used in determining appropriate member acquisition expenditures; the severity and frequency of claims; the ability to maintain high retention rates; the accuracy of assumptions used in pricing medical plan subscriptions and the ability to accurately estimate the impact of new products or offerings on claims frequency; actual claims expense exceeding estimates; regulatory and other constraints on the ability to institute, or the decision to otherwise delay, pricing modifications in response to changes in actual or estimated claims expense; the effectiveness and statutory or regulatory compliance of our Territory Partner model and of our Territory Partners, veterinarians and other third parties in recommending medical plan subscriptions to potential members; the ability to retain existing Territory Partners and increase the number of Territory Partners and active hospitals; compliance by us and those referring us members with laws and regulations that apply to our business, including the sale of a pet medical plan; the ability to maintain the security of our data; fluctuations in the Canadian currency exchange rate; the ability to protect our proprietary and member information; the ability to maintain our culture and team; the ability to maintain the requisite amount of risk-based capital; our ability to implement and maintain effective controls, including to remediate material weaknesses in internal controls over financial reporting; the ability to protect and enforce Trupanion’s intellectual property rights; the ability to successfully implement our alliance with Aflac; the ability to continue key contractual relationships with third parties; third-party claims including litigation and regulatory actions; the ability to recognize benefits from investments in new solutions and enhancements to Trupanion’s technology platform and website; our ability to retain key personnel; and deliberations and determinations by the Trupanion board based on the future performance of the company or otherwise. For a detailed discussion of these and other cautionary statements, please refer to the risk factors discussed in filings with the Securities and Exchange Commission (SEC), including but not limited to, Trupanion’s Annual Report on Form 10-K for the year ended December 31, 2024 and any subsequently filed reports on Forms 10-Q, 10-K and 8-K. All documents are available through the SEC’s Electronic Data Gathering Analysis and Retrieval system at https://www.sec.gov or the Investor Relations section of Trupanion’s website at https://investors.trupanion.com. Non-GAAP Financial MeasuresTrupanion’s stated results may include certain non-GAAP financial measures. These non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in its industry as other companies in its industry may calculate or use non-GAAP financial measures differently. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on Trupanion’s reported financial results. The presentation and utilization of non-GAAP financial measures is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. Trupanion urges its investors to review the reconciliation of its non-GAAP financial measures to the most directly comparable GAAP financial measures in its consolidated financial statements, and not to rely on any single financial or operating measure to evaluate its business. These reconciliations are included below and on Trupanion's Investor Relations website. Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a company’s non-cash expenses, Trupanion believes that providing various non-GAAP financial measures that exclude stock-based compensation expense and depreciation and amortization expense allows for more meaningful comparisons between its operating results from period to period. Trupanion offsets new pet acquisition expense with sign-up fee revenue in the calculation of net acquisition cost because it collects sign-up fee revenue from new members at the time of enrollment and considers it to be an offset to a portion of Trupanion’s new pet acquisition expense. Trupanion believes this allows it to calculate and present financial measures in a consistent manner across periods. Trupanion’s management believes that the non-GAAP financial measures and the related financial measures derived from them are important tools for financial and operational decision-making and for evaluating operating results over different periods of time. Trupanion, Inc.Condensed Consolidated Statements of Operations(in thousands, except share data) Three Months Ended March 31, 2025 2024 (unaudited)Revenue: Subscription business $233,064 $201,134 Other business 108,911 104,987 Total revenue 341,975 306,121 Cost of revenue: Subscription business 189,845 172,132 Other business 101,027 97,762 Total cost of revenue(1),(2) 290,872 269,894 Operating expenses: Technology and development(1) 8,072 6,960 General and administrative(1) 19,892 14,673 New pet acquisition expense(1) 20,516 16,843 Depreciation and amortization 3,791 3,785 Total operating expenses 52,271 42,261 Loss from investment in joint venture (305) (103)Operating loss (1,473) (6,137)Interest expense 3,211 3,596 Other (income), net (3,240) (2,843)Loss before income taxes (1,444) (6,890)Income tax (benefit) expense 39 (38)Net loss $(1,483) $(6,852) Net loss per share: Basic and diluted $(0.03) $(0.16)Weighted average shares of common stock outstanding: Basic and diluted 42,775,955 41,917,094 (1)Includes stock-based compensation expense as follows: Three Months Ended March 31, 2025 2024 Cost of revenue $1,259 $1,390 Technology and development 1,151 1,254 General and administrative 4,528 3,449 New pet acquisition expense 2,892 2,059 Total stock-based compensation expense $9,830 $8,152 (2)The breakout of cost of revenue between veterinary invoice expense and other cost of revenue is as follows: Three Months Ended March 31, 2025 2024 Veterinary invoice expense $247,450 $233,569 Other cost of revenue 43,422 36,325 Total cost of revenue $290,872 $269,894 Trupanion, Inc.Condensed Consolidated Balance Sheets(in thousands, except share data) March 31, 2025 December 31, 2024 (unaudited) Assets Current assets: Cash and cash equivalents$166,308 $160,295 Short-term investments 155,508 147,089 Accounts and other receivables, net of allowance for credit losses of $1,046 at March 31, 2025 and $1,117 at December 31, 2024 290,104 274,031 Prepaid expenses and other assets 16,417 15,912 Total current assets 628,337 597,327 Restricted cash 39,702 39,235 Long-term investments 376 373 Property, equipment and internal-use software, net 101,938 102,191 Intangible assets, net 12,130 13,177 Other long-term assets 16,356 17,579 Goodwill 38,323 36,971 Total assets$837,162 $806,853 Liabilities and stockholders’ equity Current liabilities: Accounts payable$9,681 $11,532 Accrued liabilities and other current liabilities 36,907 33,469 Reserve for veterinary invoices 54,042 51,635 Deferred revenue 267,357 251,640 Long-term debt - current portion 1,350 1,350 Total current liabilities 369,337 349,626 Long-term debt 127,526 127,537 Deferred tax liabilities 1,884 1,946 Other liabilities 4,742 4,476 Total liabilities 503,489 483,585 Stockholders’ equity: Common stock: $0.00001 par value per share, 100,000,000 shares authorized; 43,804,141 and 42,775,955 issued and outstanding at March 31, 2025; 43,516,631 and 42,488,445 shares issued and outstanding at December 31, 2024 — — Preferred stock: $0.00001 par value per share, 10,000,000 shares authorized; no shares issued and outstanding — — Additional paid-in capital 578,293 568,302 Accumulated other comprehensive loss (715) (2,612)Accumulated deficit (227,371) (225,888)Treasury stock, at cost: 1,028,186 shares at March 31, 2025 and December 31, 2024 (16,534) (16,534)Total stockholders’ equity 333,673 323,268 Total liabilities and stockholders’ equity$837,162 $806,853 Trupanion, Inc.Condensed Consolidated Statements of Cash Flows(in thousands) Three Months Ended March 31, 2025 2024 (unaudited)Operating activities Net loss$(1,483) $(6,852)Adjustments to reconcile net loss to cash provided by operating activities: Depreciation and amortization 3,791 3,785 Stock-based compensation expense 9,830 8,152 Other, net 349 (202)Changes in operating assets and liabilities: Accounts and other receivables (15,965) (10,718)Prepaid expenses and other assets (204) 287 Accounts payable, accrued liabilities, and other liabilities 1,527 (5,131)Reserve for veterinary invoices 2,407 (885)Deferred revenue 15,712 13,998 Net cash provided by operating activities 15,964 2,434 Investing activities Purchases of investment securities (40,875) (19,193)Maturities and sales of investment securities 33,242 19,005 Purchases of property, equipment, and internal-use software (1,928) (3,065)Other 588 516 Net cash used in investing activities (8,973) (2,737)Financing activities Repayment of debt financing (338) (338)Proceeds from exercise of stock options 1,024 372 Shares withheld to satisfy tax withholding (915) (245)Other (230) (75)Net cash used in financing activities (459) (286)Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash, net (52) (313)Net change in cash, cash equivalents, and restricted cash 6,480 (902)Cash, cash equivalents, and restricted cash at beginning of period 199,530 170,464 Cash, cash equivalents, and restricted cash at end of period$206,010 $169,562 The following tables set forth our key operating metrics. Three Months Ended March 31, 2025 2024 Total Business: Total pets enrolled (at period end) 1,667,637 1,708,017 Subscription Business: Total subscription pets enrolled (at period end) 1,052,845 1,006,168 Monthly average revenue per pet$77.53 $69.79 Average pet acquisition cost (PAC)$267 $207 Average monthly retention 98.28% 98.41% Three Months Ended Mar. 31, 2025 Dec. 31, 2024 Sep. 30, 2024 Jun. 30, 2024 Mar. 31, 2024 Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023Total Business: Total pets enrolled (at period end) 1,667,637 1,677,570 1,688,903 1,699,643 1,708,017 1,714,473 1,712,177 1,679,659 Subscription Business: Total subscription pets enrolled (at period end) 1,052,845 1,041,212 1,032,042 1,020,934 1,006,168 991,426 969,322 943,958 Monthly average revenue per pet$77.53 $76.02 $74.27 $71.72 $69.79 $67.07 $65.82 $64.41 Average pet acquisition cost (PAC)$267 $261 $243 $231 $207 $217 $212 $236 Average monthly retention 98.28% 98.25% 98.29% 98.34% 98.41% 98.49% 98.55% 98.61% The following table reflects the reconciliation of cash provided by operating activities to free cash flow (in thousands): Three Months Ended March 31, 2025 2024 Net cash provided by operating activities$15,964 $2,434 Purchases of property, equipment, and internal-use software (1,928) (3,065)Free cash flow$14,036 $(631) The following tables reflect the reconciliation between GAAP and non-GAAP measures (in thousands except percentages): Three Months Ended March 31, 2024 2023 Veterinary invoice expense$247,450 $233,569 Less: Stock-based compensation expense(1) (763) (862)Other business cost of paying veterinary invoices(3) (79,269) (81,213)Subscription cost of paying veterinary invoices (non-GAAP)$167,418 $151,494 % of subscription revenue 71.8% 75.3% Other cost of revenue$43,422 $36,325 Less: Stock-based compensation expense(1) (482) (420)Other business variable expenses(3) (21,736) (16,498)Subscription variable expenses (non-GAAP)$21,204 $19,407 % of subscription revenue 9.1% 9.6% Technology and development expense$8,072 $6,960 General and administrative expense 19,892 14,673 Less: Stock-based compensation expense(1) (5,396) (4,258)Development expenses(2) (1,406) (1,178)Fixed expenses (non-GAAP)$21,162 $16,197 % of total revenue 6.2% 5.3% New pet acquisition expense$20,516 $16,843 Less: Stock-based compensation expense(1) (2,873) (1,857)Other business pet acquisition expense(3) (3) (13)Subscription acquisition cost (non-GAAP)$17,640 $14,973 % of subscription revenue 7.6% 7.4% (1) Trupanion employees may elect to take restricted stock units in lieu of cash payment for their bonuses. We account for such expense as stock-based compensation according to GAAP, but we do not include it in any non-GAAP adjustments. Stock-based compensation associated with bonuses was approximately $0.3 million for the three months ended March 31, 2025.(2) Consists of costs related to product exploration and development that are pre-revenue and historically have been insignificant.(3) Excluding the portion of stock-based compensation expense attributable to the other business segment. The following tables reflect the reconciliation of GAAP measures to non-GAAP measures (in thousands, except percentages): Three Months Ended March 31, 2025 2024 Operating Loss$(1,473) $(6,138)Non-GAAP expense adjustments Acquisition cost 17,643 14,985 Stock-based compensation expense(1) 9,514 7,397 Development expenses(2) 1,406 1,179 Depreciation and amortization 3,791 3,785 Gain (loss) from investment in joint venture (305) (103)Total adjusted operating income (non-GAAP)$31,186 $21,312 Subscription Business: Subscription operating income (loss)$1,065 $(4,525)Non-GAAP expense adjustments Acquisition cost 17,640 14,973 Stock-based compensation expense(1) 7,772 5,882 Development expenses(2) 958 774 Depreciation and amortization 2,584 2,487 Subscription adjusted operating income (non-GAAP)$30,019 $19,591 Other Business: Other business operating loss$(2,233) $(1,510)Non-GAAP expense adjustments Acquisition cost 3 12 Stock-based compensation expense(1) 1,742 1,516 Development expenses(2) 448 404 Depreciation and amortization 1,207 1,298 Other business adjusted operating income (non-GAAP)$1,167 $1,720 (1) Trupanion employees may elect to take restricted stock units in lieu of cash payment for their bonuses. We account for such expense as stock-based compensation in accordance with GAAP, but we do not include it in any non-GAAP adjustments. Stock-based compensation associated with bonuses was approximately $0.3 million for the three months ended March 31, 2025.(2) Consists of costs related to product exploration and development that are pre-revenue and historically have been insignificant. The following tables reflect the reconciliation of GAAP measures to non-GAAP measures (in thousands, except percentages): Three Months Ended March 31, 2025 2024 Subscription revenue$233,064 $201,134 Subscription cost of paying veterinary invoices 167,418 151,493 Subscription variable expenses 21,204 19,407 Subscription fixed expenses* 14,423 10,642 Subscription adjusted operating income (non-GAAP)$30,019 $19,591 Other business revenue 108,911 104,987 Other business cost of paying veterinary invoices 79,269 81,213 Other business variable expenses 21,736 16,498 Other business fixed expenses* 6,739 5,555 Other business adjusted operating income (non-GAAP)$1,167 $1,721 Revenue 341,975 306,121 Cost of paying veterinary invoices 246,687 232,707 Variable expenses 42,940 35,905 Fixed expenses* 21,162 16,197 Total business adjusted operating income (non-GAAP)$31,186 $21,312 As a percentage of revenue:Three Months Ended March 31, 2024 2023 Subscription revenue 100.0% 100.0%Subscription cost of paying veterinary invoices 71.8% 75.3%Subscription variable expenses 9.1% 9.6%Subscription fixed expenses* 6.2% 5.3% Subscription adjusted operating income (non-GAAP) 12.9% 9.7% Other business revenue 100.0% 100.0%Other business cost of paying veterinary invoices 72.8% 77.4%Other business variable expenses 20.0% 15.7%Other business fixed expenses* 6.2% 5.3% Other business adjusted operating income (non-GAAP) 1.1% 1.6% Revenue 100.0% 100.0%Cost of paying veterinary invoices 72.1% 76.0%Variable expenses 12.6% 11.7%Fixed expenses* 6.2% 5.3% Total business adjusted operating income (non-GAAP) 9.1% 7.0% *Fixed expenses represent shared services that support both our subscription and other business segments and, as such, are generally allocated to each segment pro-rata based on revenues. Adjusted operating income is a non-GAAP financial measure that adjusts operating income (loss) to remove the effect of acquisition cost, development expenses, non-recurring transaction or restructuring expenses, and gain (loss) from investment in joint venture. Non-cash items, such as stock-based compensation expense and depreciation and amortization, are also excluded. Acquisition cost, development expenses, gain (loss) from investment in joint venture, stock-based compensation expense, and depreciation and amortization are expected to remain recurring expenses for the foreseeable future, but are excluded from this metric to measure scale in other areas of the business. Management believes acquisition costs primarily represent the cost to acquire new subscribers and are driven by the amount of growth we choose to pursue based primarily on the amount of our adjusted operating income period over period. Accordingly, this measure is not indicative of our core operating income performance. We also exclude development expenses, gain (loss) from investment in joint venture, stock-based compensation expense, and depreciation and amortization because some investors may not view those items as reflective of our core operating income performance. Management uses adjusted operating income and the margin on adjusted operating income to understand the effects of scale in its non-acquisition cost and development expenses and to plan future advertising expenditures, which are designed to acquire new pets. Management uses this measure as a principal way of understanding the operating performance of its business exclusive of acquisition cost and new product exploration and development initiatives. Management believes disclosure of this metric provides investors with the same data that the Company employs in assessing its overall operations and that disclosure of this measure may provide useful information regarding the efficiency of our utilization of revenues, return on advertising dollars in the form of new subscribers and future use of available cash to support the continued growth of our business. The following tables reflect the reconciliation of adjusted EBITDA to net loss (in thousands): Three Months Ended March 31, 2025 2024 Net loss$(1,483) $(6,852) Excluding: Stock-based compensation expense 9,514 7,398 Depreciation and amortization expense 3,791 3,785 Interest income (2,835) (3,045) Interest expense 3,211 3,596 Income tax expense (benefit) 39 (38) Adjusted EBITDA$12,237 $4,844 Three Months Ended Mar. 31, 2025 Dec. 31, 2024 Sep. 30, 2024 Jun. 30, 2024 Mar. 31, 2024 Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023Net (loss) income$(1,483) $1,656 $1,425 $(5,862) $(6,852) $(2,163) $(4,036) $(13,714)Excluding: Stock-based compensation expense 9,514 8,036 8,127 8,381 7,398 6,636 6,585 6,503 Depreciation and amortization expense 3,791 3,924 4,381 4,376 3,785 3,029 2,990 3,253 Interest income (2,835) (2,999) (3,232) (3,135) (3,045) (2,842) (2,389) (2,051)Interest expense 3,211 3,427 3,820 3,655 3,596 3,697 3,053 2,940 Income tax expense (benefit) 39 38 39 (44) (38) 130 (43) (238)Goodwill impairment charges — 5,299 — — — — — — Non-recurring transaction or restructuring expenses — — — — — — 8 65 (Gain) loss from equity method investment — — (33) — — — (110) — Adjusted EBITDA$12,237 $19,381 $14,527 $7,371 $4,844 $8,487 $6,058 $(3,242) Contacts: Investors:Laura Bainbridge, Senior Vice President, Corporate CommunicationsGil Melchior, Director, Investor RelationsInvestor.Relations@trupanion.com A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/af9a2ab5-2802-4ca8-8a90-199e1c54b91a

Trupanion Reports First Quarter 2025 Results

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