Trupanion Reports Fourth Quarter & Full Year 2024 Results

SEATTLE, Feb. 19, 2025 (GLOBE NEWSWIRE) -- Trupanion, Inc. (Nasdaq: TRUP), a leading provider of medical insurance for cats and dogs, today announced financial results for the fourth quarter and full year ended December 31, 2024. “2024 was a milestone year for Trupanion. Strong execution drove 20% subscription revenue growth, the doubling of our subscription margin in Q4 from its quarterly low in 2023, and a record $39 million in free cash flow,” said Margi Tooth, Chief Executive Officer and President of Trupanion. “As we look to 2025, our focus remains on sustainable, measured growth while enhancing the member experience and improving retention.” Fourth Quarter 2024 Financial and Business Highlights Total revenue was $337.3 million, an increase of 14% compared to the fourth quarter of 2023.Total enrolled pets (including pets from our other business segment) was 1,677,570 at December 31, 2024, a decrease of 2% over December 31, 2023.Subscription business revenue was $227.8 million, an increase of 19% compared to the fourth quarter of 2023.Subscription enrolled pets was 1,041,212 at December 31, 2024, an increase of 5% over December 31, 2023.Net income was $1.7 million, or $0.04 per basic and diluted share, compared to a net loss of $(2.2) million, or $(0.05) per basic and diluted share, in the fourth quarter of 2023.Adjusted EBITDA was $19.4 million, compared to adjusted EBITDA of $8.5 million in the fourth quarter of 2023.Operating cash flow was $23.7 million and free cash flow was $21.8 million in the fourth quarter of 2024. This compared to operating cash flow of $17.5 million and free cash flow of $13.5 million in the fourth quarter of 2023. Full Year 2024 Financial and Business Highlights Total revenue was $1,286 million, an increase of 16% compared to 2023.Subscription business revenue was $856.5 million, an increase of 20% compared to 2023.Net loss was $(9.6) million, or $(0.23) per basic and diluted share, compared to a net loss of $(44.7) million, or $(1.08) per basic and diluted share, in 2023.Adjusted EBITDA was $46.1 million, compared to adjusted EBITDA of $6.4 million in 2023.Operating cash flow was $48.3 million and free cash flow was $38.6 million in 2024. This compared to operating cash flow of $18.6 million and free cash flow of $0.4 million in 2023.At December 31, 2024, the Company held $307.4 million in cash and short-term investments, including $35.4 million held outside the insurance entities, with an additional $15 million available under its credit facility.The Company maintained $288.0 million of capital surplus at its insurance subsidiaries. The largest insurance subsidiary, APIC, maintained $245.5 million of capital surplus, which was $140.2 million more than the company action level risk-based capital requirement. Conference CallTrupanion’s management will host a conference call today to review its fourth quarter and full year 2024 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 1-877-300-8521 (United States) or 1-412-317-6026 (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: 10194900. About TrupanionTrupanion is a leader in medical insurance for cats and dogs throughout the United States, Canada, certain countries in Continental Europe, and Australia 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 December 31, Year Ended December 31, 2024 2023 2024 2023 (unaudited) Revenue: Subscription business$227,783 $191,537 $856,521 $712,906 Other business 109,524 104,320 429,163 395,699 Total revenue 337,307 295,857 1,285,684 1,108,605 Cost of revenue: Subscription business 181,614 158,631 706,851 613,686 Other business 102,770 97,162 400,035 363,903 Total cost of revenue(1), (2) 284,384 255,793 1,106,886 977,589 Operating expenses: Technology and development(1) 8,172 5,969 31,255 21,403 General and administrative(1) 16,828 13,390 63,731 60,207 New pet acquisition expense(1) 18,354 17,189 71,379 77,372 Goodwill impairment charges 5,299 — 5,299 — Depreciation and amortization 3,924 3,029 16,466 12,474 Total operating expenses 52,577 39,577 188,130 171,456 Gain (loss) from investment in joint venture 2 (79) (182) (219)Operating income (loss) 348 408 (9,514) (40,659)Interest expense 3,427 3,697 14,498 12,077 Other expense (income), net (4,773) (1,256) (14,374) (7,701)Income (loss) before income taxes 1,694 (2,033) (9,638) (45,035)Income tax expense (benefit) 38 130 (5) (342)Net income (loss)$1,656 $(2,163) $(9,633) $(44,693) Net income (loss) per share: Basic$0.04 $(0.05) $(0.23) $(1.08)Diluted$0.04 $(0.05) $(0.23) $(1.08)Weighted average shares of common stock outstanding: Basic 42,402,323 41,716,527 42,158,773 41,436,882 Diluted 42,903,536 41,716,527 42,158,773 41,436,882 (1)Includes stock-based compensation expense as follows:Three Months Ended December 31, Year Ended December 31, 2024 2023 2024 2023 Cost of revenue$1,337 $1,478 $5,523 $5,279 Technology and development 1,160 861 4,934 2,846 General and administrative 4,261 3,269 15,696 17,717 New pet acquisition expense 1,536 1,693 7,279 7,319 Total stock-based compensation expense$8,294 $7,301 $33,432 $33,161 (2)The breakout of cost of revenue between veterinary invoice expense and other cost of revenue is as follows: Three Months Ended December 31, Year Ended December 31, 2024 2023 2024 2023 Veterinary invoice expense$245,663 $217,739 $949,148 $831,055 Other cost of revenue 38,721 38,054 157,738 146,534 Total cost of revenue$284,384 $255,793 $1,106,886 $977,589 Trupanion, Inc.Condensed Consolidated Balance Sheets(in thousands, except share data) December 31, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents$160,295 $147,501 Short-term investments 147,089 129,667 Accounts and other receivables, net of allowance for credit losses of $1,117 at December 31, 2024 and $1,085 at December 31, 2023 274,031 267,899 Prepaid expenses and other assets 15,912 17,022 Total current assets 597,327 562,089 Restricted cash 39,235 22,963 Long-term investments 373 12,866 Property, equipment and internal-use software, net 102,191 103,650 Intangible assets, net 13,177 18,745 Other long-term assets 17,579 18,922 Goodwill 36,971 43,713 Total assets$806,853 $782,948 Liabilities and stockholders’ equity Current liabilities: Accounts payable$11,532 $10,505 Accrued liabilities and other current liabilities 33,469 34,052 Reserve for veterinary invoices 51,635 63,238 Deferred revenue 251,640 235,329 Long-term debt - current portion 1,350 1,350 Total current liabilities 349,626 344,474 Long-term debt 127,537 127,580 Deferred tax liabilities 1,946 2,685 Other liabilities 4,476 4,487 Total liabilities 483,585 479,226 Stockholders’ equity: Common stock: $0.00001 par value per share, 100,000,000 shares authorized; 43,516,631 and 42,488,445 shares issued and outstanding at December 31, 2024 and 42,887,052 and 41,858,866 shares issued and outstanding at December 31, 2023 — — Preferred stock: $0.00001 par value per share, 10,000,000 shares authorized; no shares issued and outstanding — — Additional paid-in capital 568,302 536,108 Accumulated other comprehensive income (loss) (2,612) 403 Accumulated deficit (225,888) (216,255)Treasury stock, at cost: 1,028,186 shares at December 31, 2024 and December 31, 2023 (16,534) (16,534)Total stockholders’ equity 323,268 303,722 Total liabilities and stockholders’ equity$806,853 $782,948 Trupanion, Inc.Condensed Consolidated Statements of Cash Flows(in thousands) Three Months Ended December 31, Year Ended December 31, 2024 2023 2024 2023 (unaudited) Operating activities Net income (loss)$1,656 $(2,163) $(9,633) $(44,693)Adjustments to reconcile net loss to cash provided by (used in) operating activities: Depreciation and amortization 3,924 3,029 16,466 12,474 Stock-based compensation expense 8,294 7,301 33,432 33,161 Goodwill impairment charges 5,299 — 5,299 — Other, net (1,294) 2,481 (1,748) 1,347 Changes in operating assets and liabilities: Accounts and other receivables 15,303 10,153 (6,717) (35,440)Prepaid expenses and other assets 817 854 3,215 (1,907)Accounts payable, accrued liabilities, and other liabilities 2,433 5,476 2,084 1,644 Reserve for veterinary invoices (4,841) 1,788 (11,310) 19,485 Deferred revenue (7,890) (11,412) 17,199 32,567 Net cash provided by (used in) operating activities 23,701 17,507 48,287 18,638 Investing activities Purchases of investment securities (26,118) (56,547) (133,493) (165,936)Maturities and sales of investment securities 45,886 42,905 127,653 190,270 Purchases of property, equipment, and internal-use software (1,858) (3,970) (9,716) (18,280)Other 548 165 2,099 1,585 Net cash provided by (used in) investing activities 18,458 (17,447) (13,457) 7,639 Financing activities Proceeds from debt financing, net of financing fees — — — 60,102 Repayments of debt financing (338) (337) (1,350) (1,717)Proceeds from exercise of stock options 36 1,374 752 2,655 Shares withheld to satisfy tax withholding (1,142) (240) (2,519) (1,536)Other (230) (228) (840) (378)Net cash provided by (used in) financing activities (1,674) 569 (3,957) 59,126 Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash, net (1,826) 1,254 (1,807) 424 Net change in cash, cash equivalents, and restricted cash 38,659 1,883 29,066 85,827 Cash, cash equivalents, and restricted cash at beginning of period 160,871 168,581 170,464 84,637 Cash, cash equivalents, and restricted cash at end of period$199,530 $170,464 $199,530 $170,464 The following tables set forth our key operating metrics. Year Ended December 31, 2024 2023 Total Business: Total pets enrolled (at period end) 1,677,570 1,714,473 Subscription Business: Total subscription pets enrolled (at period end) 1,041,212 991,426 Monthly average revenue per pet$72.98 $65.26 Average pet acquisition cost (PAC)$235 $228 Average monthly retention 98.25% 98.49% Three Months Ended Dec. 31, 2024 Sep. 30, 2024 Jun. 30, 2024 Mar. 31, 2024 Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023 Mar. 31, 2023Total Business: Total pets enrolled (at period end) 1,677,570 1,688,903 1,699,643 1,708,017 1,714,473 1,712,177 1,679,659 1,616,865 Subscription Business: Total subscription pets enrolled (at period end) 1,041,212 1,032,042 1,020,934 1,006,168 991,426 969,322 943,958 906,369 Monthly average revenue per pet$76.02 $74.27 $71.72 $69.79 $67.07 $65.82 $64.41 $63.58 Average pet acquisition cost (PAC)$261 $243 $231 $207 $217 $212 $236 $247 Average monthly retention 98.25% 98.29% 98.34% 98.41% 98.49% 98.55% 98.61% 98.65% The following table reflects the reconciliation of cash provided by operating activities to free cash flow (in thousands): Three Months Ended December 31, Year Ended December 31, 2024 2023 2024 2023 Net cash provided by operating activities$23,701 $17,507 $48,287 $18,638 Purchases of property, equipment, and internal-use software (1,858) (3,970) (9,716) (18,280)Free cash flow$21,843 $13,537 $38,571 $358 The following table reflects the reconciliation between GAAP and non-GAAP measures (in thousands except percentages): Three Months Ended December 31, Year Ended December 31, 2024 2023 2024 2023 Veterinary invoice expense $245,663 $217,739 $949,148 $831,055 Less: Stock-based compensation expense(1) (800) (885) (3,335) (3,450)Other business cost of paying veterinary invoices(4) (85,378) (77,572) (324,720) (287,858)Subscription cost of paying veterinary invoices (non-GAAP) $159,485 $139,282 $621,093 $539,747 % of subscription revenue 70.0% 72.7% 72.5% 75.7% Other cost of revenue $38,721 $38,054 $157,738 $146,534 Less: Stock-based compensation expense(1) (476) (386) (1,955) (1,544)Other business variable expenses(4) (17,336) (19,301) (75,050) (75,756)Subscription variable expenses (non-GAAP) $20,909 $18,367 $80,733 $69,234 % of subscription revenue 9.2% 9.6% 9.4% 9.7% Technology and development expense $8,172 $5,969 $31,255 $21,403 General and administrative expense 16,828 13,390 63,731 60,207 Less: Stock-based compensation expense(1) (5,277) (3,797) (19,742) (19,869)Non-recurring transaction or restructuring expenses(2) — — — (4,175)Development expenses(3) (1,322) (1,683) (5,624) (5,100)Fixed expenses (non-GAAP) $18,401 $13,879 $69,620 $52,466 % of total revenue 5.5% 4.7% 5.4% 4.7% New pet acquisition expense $18,354 $17,189 $71,379 $77,372 Less: Stock-based compensation expense(1) (1,482) (1,567) (6,908) (7,000)Other business pet acquisition expense(4) (8) (77) (39) (200)Subscription acquisition cost (non-GAAP) $16,864 $15,545 $64,432 $70,172 % of subscription revenue 7.4% 8.1% 7.5% 9.8% (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 and $1.5 million for the three and twelve months ended December 31, 2024, respectively.(2) Consists of business acquisition transaction expenses, severance and legal costs due to certain executive departures, and a $3.8 million non-recurring settlement of accounts receivable in the first quarter of 2023 related to uncollected premiums in connection with the transition of underwriting a third-party business to other insurers. (3) Consists of costs related to product exploration and development that are pre-revenue and historically have been insignificant.(4) Excludes the portion of stock-based compensation expense attributable to the other business segment. The following table reflects the reconciliation of GAAP measures to non-GAAP measures (in thousands, except percentages): Three Months Ended December 31, Year Ended December 31, 2024 2023 2024 2023 Operating income (loss)$348 $408 $(9,514) $(40,659)Non-GAAP expense adjustments Acquisition cost 16,872 15,622 64,471 70,372 Stock-based compensation expense(1) 8,035 6,636 31,940 31,864 Development expenses(3) 1,322 1,683 5,624 5,100 Depreciation and amortization 3,924 3,029 16,466 12,474 Goodwill impairment charges 5,299 — 5,299 — Non-recurring transaction or restructuring expenses(2) — — — 4,175 Gain (loss) from investment in joint venture 2 (79) (182) (219)Total adjusted operating income (non-GAAP)$35,798 $27,457 $114,468 $83,545 Subscription Business: Subscription operating income (loss)$2,995 $1,300 $(1,118) $(35,994)Non-GAAP expense adjustments Acquisition cost 16,864 15,545 64,432 70,172 Stock-based compensation expense(1) 6,263 5,006 24,985 24,488 Development expenses(3) 893 1,090 3,745 3,281 Depreciation and amortization 2,650 1,961 10,970 8,021 Goodwill impairment charges 5,299 — 5,299 — Non-recurring transaction or restructuring expenses(2) — — — 218 Subscription adjusted operating income (non-GAAP)$34,964 $24,902 $108,313 $70,186 Other Business: Other business operating income (loss)$(2,649) $(813) $(8,214) $(4,446)Non-GAAP expense adjustments Acquisition cost 8 77 39 200 Stock-based compensation expense(1) 1,772 1,630 6,955 7,376 Development expenses(3) 429 593 1,879 1,819 Depreciation and amortization 1,274 1,068 5,496 4,453 Non-recurring transaction or restructuring expenses(2) — — — 3,957 Other business adjusted operating income (non-GAAP)$834 $2,555 $6,155 $13,359 (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 and $1.5 million for the three and twelve months ended December 31, 2024, respectively.(2) Consists of business acquisition transaction expenses, severance and legal costs due to certain executive departures, and a $3.8 million non-recurring settlement of accounts receivable in the first quarter of 2023 related to uncollected premiums in connection with the transition of underwriting a third-party business to other insurers.(3) Consists of costs related to product exploration and development that are pre-revenue and historically have been insignificant. The following table reflects the reconciliation of GAAP measures to non-GAAP measures (in thousands, except percentages): Three Months Ended December 31, Year Ended December 31, 2024 2023 2024 2023 Subscription revenue$227,783 $191,537 $856,521 $712,906 Subscription cost of paying veterinary invoices 159,485 139,281 621,093 539,746 Subscription variable expenses 20,909 18,367 80,733 69,234 Subscription fixed expenses* 12,425 8,987 46,382 33,740 Subscription adjusted operating income (non-GAAP)$34,964 $24,902 $108,313 $70,186 Other business revenue 109,524 104,320 429,163 395,699 Other business cost of paying veterinary invoices 85,378 77,572 324,720 287,858 Other business variable expenses 17,336 19,301 75,050 75,756 Other business fixed expenses* 5,976 4,892 23,238 18,726 Other business adjusted operating income (non-GAAP)$834 $2,555 $6,155 $13,359 Revenue 337,307 295,857 1,285,684 1,108,605 Cost of paying veterinary invoices 244,863 216,854 945,813 827,605 Variable expenses 38,245 37,668 155,783 144,990 Fixed expenses* 18,401 13,879 69,620 52,466 Total business adjusted operating income (non-GAAP)$35,798 $27,457 $114,468 $83,545 As a percentage of revenue:Three Months Ended December 31, Year Ended December 31, 2024 2023 2024 2023 Subscription revenue 100.0% 100.0% 100.0% 100.0%Subscription cost of paying veterinary invoices 70.0% 72.7% 72.5% 75.7%Subscription variable expenses 9.2% 9.6% 9.4% 9.7%Subscription fixed expenses* 5.5% 4.7% 5.4% 4.7% Subscription adjusted operating income (non-GAAP) 15.3% 13.0% 12.6% 9.8% Other business revenue 100.0% 100.0% 100.0% 100.0%Other business cost of paying veterinary invoices 78.0% 74.4% 75.7% 72.7%Other business variable expenses 15.8% 18.5% 17.5% 19.1%Other business fixed expenses* 5.5% 4.7% 5.4% 4.7% Other business adjusted operating income (non-GAAP) 0.8% 2.4% 1.4% 3.4% Revenue 100.0% 100.0% 100.0% 100.0%Cost of paying veterinary invoices 72.6% 73.3% 73.6% 74.7%Variable expenses 11.3% 12.7% 12.1% 13.1%Fixed expenses* 5.5% 4.7% 5.4% 4.7% Total business adjusted operating income (non-GAAP) 10.6% 9.3% 8.9% 7.5% *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 goodwill impairment charges, 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 income (loss) (in thousands): Year Ended December 31, 2024 2023 Net loss$(9,633) $(44,693) Excluding: Stock-based compensation expense 31,942 31,864 Depreciation and amortization expense 16,466 12,474 Interest income (12,411) (9,011) Interest expense 14,498 12,077 Income tax benefit (5) (342) Goodwill impairment charges 5,299 — Non-recurring transaction or restructuring expenses — 4,175 Gain from equity method investment (33) (110) Adjusted EBITDA$46,123 $6,434 Three Months Ended Dec. 31, 2024 Sep. 30, 2024 Jun. 30, 2024 Mar. 31, 2024 Dec. 31, 2023 Sep. 30, 2023 Jun. 30,2023 Mar. 31, 2023Net income (loss)$1,656 $1,425 $(5,862) $(6,852) $(2,163) $(4,036) $(13,714) $(24,780)Excluding: Stock-based compensation expense 8,036 8,127 8,381 7,398 6,636 6,585 6,503 12,140 Depreciation and amortization expense 3,924 4,381 4,376 3,785 3,029 2,990 3,253 3,202 Interest income (2,999) (3,232) (3,135) (3,045) (2,842) (2,389) (2,051) (1,729)Interest expense 3,427 3,820 3,655 3,596 3,697 3,053 2,940 2,387 Income tax expense (benefit) 38 39 (44) (38) 130 (43) (238) (191)Goodwill impairment charges 5,299 — — — — — — — Non-recurring transaction or restructuring expenses — — — — — 8 65 4,102 Gain from equity method investment — (33) — — — (110) — — Adjusted EBITDA$19,381 $14,527 $7,371 $4,844 $8,487 $6,058 $(3,242) $(4,869) 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/1313fc50-df34-432e-8f6b-7dd236de3476 PDF available: http://ml.globenewswire.com/Resource/Download/361c6270-7516-4b4f-a8b7-51c217d753c3

Trupanion Reports Fourth Quarter & Full Year 2024 Results

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