Trupanion (TRUP) 4 Nov 222022 Q3 Earnings call transcript

Good afternoon, and welcome to Trupanion’s third quarter 2022 financial results conference call. Participating on today’s call are Margi Tooth, President; Drew Wolff, Chief Financial Officer and joining use remotely from Europe, Darryl Rawlings, Chief Executive Officer. Similar to prior earnings calls Tricia Plouf, Chief Operating Officer will be available for the Q&A portion of today’s call.

Before we begin, I would like to remind everyone that during today’s conference call we will make certain forward-looking statements regarding the future operations, opportunities, and financial performance of Trupanion within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. These statements involve a high degree of known and unknown risks and uncertainties that could cause actual results to differ materially from those discussed. well these earnings risks found XX-K release, Investor website, of included uncertainties on and discussion most Relations our Company’s the in which as Exchange X-K detailed filed and on Securities and other are our recent with A reports the and Forms Commission. as can be operating internal presentation references to variable uses of Company’s the evaluate without EBITDA, contains cash non-GAAP limitation Management and costs, Today’s flow. performance, fixed expenses, income, return, adjusted adjusted expenses, to rate financial measures acquisition including free that income" When to we use or or acquisition the "margin," operating non-GAAP expense. is term margin refer "adjusted to development new pet operating and intended income before it our basis, stock-based expense. which and depreciation Unless expense excludes be otherwise noted, margins non-GAAP expenses compensation and will a presented on in These with in prepared to non-GAAP financial a and accordance of measures substitute are addition measures for performance the U.S. not GAAP. these most tab. can Investors in Investor reconciliations the measures or on Earnings under of are Relations which results, financial GAAP Trupanion’s website the to the encouraged be press comparable release Quarterly non-GAAP to today’s review found directly

Lastly, webcast I the Relations I Trupanion’s hand to would A today’s available website. on be will the replay also Investor over site. also available With everyone to Darryl. call on that is like that, call via will remind

invested Adjusted and estimated of afternoon. million XX% million. $XX of XX% income return. operating Total at year-over-year. $XX $XXX good pets Laura, approximately was We Thanks, up revenue rate grew in quarter this to the internal a million, acquiring X%

while translated pets discipline return levels primarily growth our this strong return. achieve especially quarter sustaining rate we rates subscription the added We subscription areas to core our over the this of from veterinary record shown driven retention. invest achieve XX,XXX to believe In pleased the also We high high new guardrails. within environment, channel. business. of growth in In has to of in internal managing continue today’s We team our I’m can with the we internal where

growth. me As you’ve before, uncertainty, heard of in times Trupanion for say need the

recurring consistency monthly model drives results. and business Our

monitoring I continues on metric team not accelerated for but quarter. to for action back that that also which was get the of rate in If only disappointed focused taking key expect one the for I am the these and margin changes leader of we’ll quickly is resources we in veterinary focus are and Making get our by efforts. Margi XXXX. our we end of medicine. seeing In as targeted the margin XX-month for fact, of ownership a operating my operating proud we But to represents of total have, year every more QX, we’re I Adjusted focused for proxy we of adjusted adjusted believe In This the our growing expectations, operating plus income to and has below growth. growth increase internal value operating XX% funds company. intrinsic The I able driven revenue income grow our and our the am reinvest creation. XX.X% on our years. value income. XX by last and most adjusted effectively sure of will we’re come, I’m of is is confident the inflation this clear exceeded it business, ahead rates our operating was a more XX% high return have price. price, at the today, we adjusted plan subscription and seeing the the have is to

fundamentals. back get let’s the to Now,

can value In in greater with XX% care choosing business lifetime drives cost have the under to in Trupanion ARPU value, Today monthly are our a we drives adjusted turn for and pet operating team growing efficiently. higher the of the record of and need our self-insure subscription of our five higher allowable grown The XX%. lifetime capital not that, than consistently rate and XX% of we’ve higher doing target insurance market. over income within this deploy owners We of are sums to of XXX% last human In has penetrated growth return rising pet do years, medical large so. it to and acquisition I’ll pet costs is pet With the strong over pet ever. Margi. count and tracker internal a deploy greater therefore capital bond,

A we’re I’ll opportunity and metrics Darryl. presents for quarterly It unique Thank Trupanion. growth headed. reflecting XX,XXX the ongoing business. you, the new new our quarterly ensure our veterinary demand I’ll pets strong well-positioned a industry high. by in was discuss over is for the were growth a at quarter was growth today’s particularly driven where leads start care. an for veterinary actions We record environment by subscription primarily taking all-time how to quarter. added channel then the reviewing veterinary a In

elements getting of us. leads, acquisitions This estimated generate of afford adjust It veterinary to the have They self-insure is the to poor Our capital cannot very I’ll we their within we time, generate income Encouragingly, were sentiment pet deployed revenue, increasingly $XX Darryl $XX, first more spend this pet our pets is the million XXX,XXX approximately inflation. tolerated to cohort and life XX drive to to, same of and to their members of ultimately add models. helped return range. and during industry the during assuming efficiency before expensive. The all pets. billion this continues encouraged convert solution. people’s $X our our with over disposable new subscription we and at months, effective to Year-to-date, all around the continue current members an absolutely efforts in yet see an and is ARPU well is pricing At almost XX% new spend not reflect would quarter. deployment XX% target echo by stagnating. of year of to that average cost welcome afford owners

challenges This conversation the unexpected for face is confidence can see as such continue in to positive raise It helps in veterinary veterinarians to relevant the the pets news prices. enrolled expenses give prices industry solve percentage enter more ensure higher more of for budgeting This As these makes through. community us this around general to come than they the specifically ever. clients and staffing. to the turn

up Absent requires rate prior same within to of it analysis, impact proposition our However, over our cost meticulous from increase period. X.X%. fell and so to execution, promise mixed also Trupanion to value for of the the XX% by members. In true third was year proposition XX% the invoices period. of our average value Outpacing we X% review changes, over approximately quarter, [ph] our commit constant exceptional and short pricing we the the

taking increases the of Absent are XXXX we we we early in XX% are through into Darryl to changes X% actions next going have pricing year. seeing the As of ahead get with another now flowing of mix, alluded, impact into in changes medicine. veterinary planned

roll to the adjustments coming poised and inflation, additional to forward closely monitor needed We of as in the are rate continue will pricing months.

As a but enrollments, existing reminder, XX months. every immediate rate applied once new are are for pets changes for

our to So have maintained. margin same members anticipate benefit regarding on flow to late XXXX being through time, the changes our our At been will value is these we full of impact understood experience our track the and back proposition that in commitment showing teams when in with member on hit XXXX ensuring target. focused up a well

team members for care on is building pricing XX-month to so hospitals are proud pledge pet, of and the over cusp There that block to we the to of officially value punish mark and acquisition was our into the need in geographies of pets entrance our generation. the new veterinary Europe, revenue are of Europe our Continental to years, our is only scale American team the brings of never the Foundation our expansion and the our and in Paws overshoot to take plan, our I’m European spanning coming This to recently progress Smart XX,XXX with Paws with universal, right. continental categories. This our of pending evident insurance Czech pricing If Japan, our we our to Australia, to Republic very some pet and budget will this works just In price is gives is provide important of We’ve will completed too and us XX,XXX PetExpert have pet International increasing over access made infrastructure high the owners announced parallel on in veterinary relationships is grow. Paws owners lucky XX,XXX provides price of recently place aspirations. two and front acquisitions across these target, and aggregate proposition expansion deep to acquisition an pet further in millions value see immediate in PetExpert also for we approximately and Smart life veterinarians acceleration it of in acquisition our promise. unexpected our community. high Trupanion our North our addressable and promise subscription market. Slovakia, across This in while to support strategic rapid closely PetExpert, Our and to a for and Smart enable to year-to-date. same margin started team partner the XX% our and quality synergy make it need accurately smaller hospitals.

care. passionate underpenetrated these mission their forward have member several on experience achieving global steps veterinary poised opportunity to Trupanion We’re markets. to and bring I’ll all significant over we these results well we our platform The new provide world pet Drew Together that are to build us and a and teams to acquisitions receive to a through leading Drew? best hand excited is taken it. more for in our the financial to in help the detail. on we With that, pets love walk

and retention continued $XXX.X our and well year-over-year an goals. of our pet QX our levels in by and $XXX.X everyone. we’re other year. Within our share as Subscription quarter business. be against was Business as along revenue additional segment, I’ll the for Thanks, driven million, was annual last up tracking good growth up how revenue sustained our in around update Margi, provide afternoon with to million Subscription strong high Total XX% on details Today over additions performance, XX% Business

dollar of pets life the results. business. per U.S. to growth of As to average average with on a been XX% revenue On to constant ongoing months. increased mix the basis, million retention, the $XXX.X of up would’ve over continues is year-over-year currency trailing currency year-over-year. impacted with pets. enrolled XX a Monthly ARPU XX.XX% quarter, on impact year-over-year constant X.X% by last revenue on our monthly Total which Average subscription meaningful XXX,XXX pet subscription XX% had basis, $XX.XX basis. equivalent or be calculated up XX-month strength a an was

book areas price the After increases in mass product goes X% we that the X.X% rolling accelerated is our cost across new impact, time behind that over for context, XX% mix mix our this combine adjusting change from to see veterinary the with earlier. of This approximately lower pricing income enrollments invoices, average in growth of the through continue business. For Margi pet period. business referenced the increased which and same book to

As the a to expanded loss quarter XX our ratio in the prior XX.X%. basis quarter points from result,

variable X% year veterinary our delivered currency adjusted would’ve X% of we X.X% cost dollars $XX.X of paying As X.X% subscription $XX.X period. After were revenue, subscription offset operating down operating Fixed drive operating and income increase at loss up additional calculate prior a sequentially X% expenses quarter operating leverage the been year-over-year. fixed and business cost an income ratio. prior income. our a invoices, X.X% the of our over down constant year the in were million, X.X% percentage partially million, from from expenses adjusted reflecting basis, of On of actions also expenses, variable in to increase period. subscription the in and year-over-year, In revenue the expenses adjusted

margin As our adjusted a percent subscription of revenue operating was XX.X%.

a turn was the approximately business to reflecting products is Adjusted a briefly and the other $XX.X subscription and business. for pets different profile business was Total an from income number increase year-over-year to enrolled. have increase an compared that segment $X.X XX% BXB in the million. segment, generally revenue I’ll than prior year other is the our for our operating comprised of of margin which revenue million services component Now of segment quarter. This other

our As adjusted a operating million. total was income $XX result,

to XX% an of million a rate resulted the new single During $XX.X pet. subscription acquisition estimated average for a over pet This invested quarter, or cost XX,XXX we XX% year-over-year, of internal $XXX, more return pet. in acquire

of in reflects in $XXX,XXX $X.X on invested million run channels, compared resulted a well also Net compensation net Total of loss in of compared of EBITDA in up our ongoing period. line as loss the international EBITDA per which diluted revenue will year or $X.X and the year with per in share $X.XX gain This was quarter of adjusted we quarter adjusted to an expense. million as $X.XX expectations. loss This million million, the We of million share through for X% for activity a of diluted expense or development loss to the $X.X $XX.X end. our quarter. basic new support $X.X a distribution basic expect ramp was or an prior a year loss and prior stock-based

end our to Turning $XXX credit the under in investments. long-term available cash We million sheet. facility. balance approximately million debt $XX with and our We quarter held in approximately with $XX million

add Europe. XX,XXX both mentioned, about announced new Margi and recently we our business. we to completed will the in continental another policies As quarter, one PET acquisition In fourth subscription

our in do these any fourth not acquisitions, the material to financials impact of result As a expect quarter. we

cash flow million the for prior negative in I’ll briefly $X.X expenditures a flow, remainder In the terms year. free to million Capital the of result, discuss tracking positive was year $X.X a the as totaled we’re million in the $X.X now cash of million. quarter, cash compared and in was how negative operating flow $X.X period. quarter

to more reintroducing the are and an macro given estimate the for year on business, range conditions. expect and our revenue consistent to provide current We continue growth clarity

to the be of XXXX, in million projections XX% of this XX% growth in Also, $XX year. year. mind the prior in result to expected rate last at million have be million, midpoint or growth a the $XXX over prior million of we operating range up $XXX to rate adjusted in $XXX that a fluctuations. will midpoint. in revenue at For XX% foreign expected the rate the is million, over million of at expect midpoint Subscription income This of $XXX Total total the the range subject keep growth year. we invest are the would to revenue is in in our this the result dollars please to $XX to exchange range over to is

guidance, September. year the approximate used Canadian full we which conversion end XX% in our rate rate the projections, For at a to our was U.S. of

Looking reflecting we adjusted have line primarily our operating by of XX% target, actions. to pricing XXXX, sight margin our into year-end,

questions. we’ll We expect formal it to Thank for up on open in you provide our With year-end February. guidance call XXXX time. for that, your

of Evercore Thank line our be first question you. will [Operator Instructions] the And with from Shweta ISI. Khajuria

ahead. may You go

should we thank for changes, impacts and going I’m one question us we in with it think forward? you. but close help to most please your taking ARPU goals your you Thank then forward? you fully could Okay, And great that? business, announced fourth into for coming second I is The expected about synergies expansion quarter. on is going acquisitions. recent the You growth should about in sure the you How questions. the how my context How XXXX think today gave then pricing understood terms overall so if of not

first touch in sure next When This ARPU changes in and we that think I’ll off or to absent Margi filed to XX second continuing macro current filed, question. comes to level seven kick be the I’m on I if through that noticed year. a we’re in plans already the if, the what Shweta. talking the then rates so year, flowing XX% be mix, Tricia. you about within well with at a next into it next to positioned filed the, additional will is question inflationary script, have days as, growth is I’m Hi, so it

the take course to financial time as statements year this Now obviously roll translates on well as does how then when over it it on. of the comes the to

add see more rate the we’re full start get to you the kind do lower year. the a the for we coming and you we of even the to on And year. of up of it’ll roll types we’ll move Drew, that financials, in you how over of half the financials? changes impact kind So, anything won’t start do on shift do that, back at dramatic now. mix until the want definitely to this through course to up on about, account the expect expect absent, We and, have right when the enrollments move to, of will now

Yes.

Given significant assuming, impact there’s in all because currency, important really FX and is this that constant mixed we’re going year with. which headwinds the

at a looking a, for year for We’re an full the average ARPU. at XXXX X%

gets and half the throughout X% loaded, for to average, As back XXXX, half that and an XXXX I’d but in Tricia year back that price start XXXX. saw of that that mentioned increase builds we XXXX. us in it’s

Drew. and Tricia Thanks,

next quick XXXX? to the you for How the is a next well the exit follow up us. about tell we growth address Just question. ARPU think before it you should of before on fair say, that question, rate So

would Yes, and more have average for the visibility February lot you X% mapping I we through think back that’s to year with, still about rates as and year. obviously we rates the give how go half visibility, mean, we’re can It’s a say it. current X% flowing on the more of the we I call into out next next inflation And to our projecting the year, full in above we’ll year. of but give

higher be than a that. exiting we’ll rate at So,

Thanks Tricia. Okay,

pick I’ll one, Sheweta. it’s Margi. up Hi Okay. second the

that Just today, you mentioned announced the in of terms of that, the acquisition so acquisition PetExpert. we

in as out being of addressable going reimbursement. XX centric, close, is Trupanion making of will their partnerships issues in solve really foundation community, veterinary the terms and like said synergies our They’re month increase pocket of they so sure much in part as with very general. through the to vet can and a, is plan. key this our It’s QX, in PetExpert you So a market

with are kind what payment. faster of in vet is with be in core, us quicker, really door going a which in do how our really to we’ve penetrated ability in of people those and North with us, that market people doing Europe, are for markets very So foot aligned and time. similar who it’s continental they like-minded America to Trupanion XXXX. And get It very very work get about the help to, products able to so been build have for that us continue the definitely help to quickly to will we they’re in in kind to that being is

thank Okay, you Margi.

Okay, our Grady Please with next is from question Jefferies. ahead. go Corey

for question. taking thanks my Hey,

about ask want So, retention. I first to

So break three buckets but back about to impact and, there are price your maybe this retention any factors you you besides talk retention out in that other letters, shareholder behind other step can if quarter? Thanks. factors the or

So at level. of kind I’ll yes, my take it

So in it’s terms time of it’s all our an near strong, attention, high.

I think towards good achievement. pathway which that on a is we XX-month plan, have XX%

we away, financial right, to about it at rate, You’re and pets, the but that, break you, also into so a very many passing aside it comes typically the have our we’re talking we from out do value lose attention we not occasionally, don’t buckets We three to down proposition. pet impact look typically overall the implications volume understanding here. high

the team different. of adjust seeing they’re I other can way things think are kind we’re tiny And to not why they at of people the always with very product. executing, in the terms issues, very, looking at So now point their do minor. those we’re about And that that’s think anything issues that incremental

why ads And of is thing and way main been we’ve on us the do if journey of the sure that comes that and proposition understand the see, explain through growth Trupanion us cost heard when the focusing that And been we with the that biggest, rate what and fast sure quarter, the that’s point. we the the we help and in for point we kind plus back how quarters I that that we them that have. is weakest that make to we’re of last several do is growth is year biggest top point that’s, the think seen continuous that has value the typically you we first often thing offsetting of a and I explain the value XX,XXX strong it you there say any the we’ve would for reiterate that improvements to reiterating see model retention? for weak Because that. earlier the there to new headwind if very managing on faster people. for And proposition and making

anything I isn’t there further you anything? add So would that would Darryl, add.

about you we XX,XXX and an we’ve retention. have been and No, just new pets record XX,XXX that impact added out, pointed on coming XX,XXX quarters of pets incremental new a off

is retention strong. yes, but So overall

it. ask And to then also Thanks. Got this costs. about pet wanted acquisition I with

put from, should PAC you on So coming quarter you with up quarter? and you demonstrated this the then strong forward in gross is about ads. still very Can we PAC about some going ads flexibility and flexibility where think gross down acquisition on talk spend how the

sure. Yes,

So, and I’m off second team the question, that able the efficiency, start they terms quarter, the the then the pull we muscles were in Drew the built over and the flex the impressed of I this we to of but years. for part way and went because of on the, can through hand levers proud as very over overall to pet

our adjusted see PACs that. we our And amount the really, so through in from understood XX,XXX of QX. was then going they same added we they So to quarter, PACs money margin for so, created that down, the more doing

efficient really So spend.

you do. is flexibility, those think bar. I find the rails high add? that set can we’re looking And It’s execution a of time, guard what proven terms that live In and in ourselves, develops and which QX. Drew, always can quarter-over-quarter, good again, those we’re we we with sure we would that that results we’ve at making

forward drive order for the to, in we solve it’s we to emphasize can to an lifetime on our so spend and would we I in output question that value just of afford order PAC, Well, about growth. what flex

it’s it people, marketing advertising important. and whims as market. the IT fully So which emphasize subject that, people this there’s so sales it’s an includes that all and a the loaded not would are marketing output PAC, we and of in think also It’s to of not marginal typically we’re everything. as I it’s, is

thing to and moving year. I just we that, the time add one forwards through the rest about think will our of other

have partner coming up. So in do territory our to conference we quarter

within and So podcast, to about conference people partner we sales all the Drew’s our include our conference. is point, think territory the we that

So it’s an important of factor calendar. our

haven’t We able three obvious to been have years it for reasons. for

TPs but November excited term in a our benefit first a PAC the in group, for them bringing move hit or will December, it the we after gain long is us. is while do really It’s So And together the one immediate have for quarter. in XX-months important for time years subsequent be three there sales see not conference. going to to our in we’re Seattle does have

Drew’s all loaded to fully there. point, in that’s gets So kind of

you. thank helpful, Very

Piper is of ahead. line Our next question Barnidge Sandler. Please the with from John go

and Trupanion much And look opportunity. PetExpert market? Thank Smart you can is My look will Paws the maybe what the you the you versus on already about very for operating? question Canadian, do talk and than different U.S. it’ll then current different the in is how how in think Europe, acquisitions

Yes, sure.

what PetExpert, Smart acquisitions earlier, just in mentioned to plan. really and help XX-month So us is our touch key they’re it Paws to both on I

Europe. our that those market to and us about we will both continental across So, talk our adjustable do increasing allow of

In stages. terms of early so offering, the it’s

brand degree, global have likely parts of problem means so, as in depending our And dictate the As no certain as will say, consistency the mentioned, in. world be recognize that very product close localizations We to should the leaders. hard there they a do but globally. our possible this quarter. we rates, matter solve deal consistency really for our confident close we The that is, that what sure which our you’re and making replicate vet are for centricity to having country attention certain they a product same doing leader across on markets are the we global what there that they is feel us product products those PetExpert key is

product, wouldn’t that close can. of to maintain this And Canada but so of we’ll be to as U.S., able stage, North similar. what you same possibly the can at them kind expect specifics differences which the that we in looks we as share very the But the in is American between like, and specific terms as to be

Thank you my per as and be for look we, X% thinking about about is for growth? follow and headwinds, of amount, should we at a then on up FX how I dollar thinking the the within how vein should answer that ARPU, the size that

we’re rate Well, conversion an using currently XX%. at

next the, the basis and using assumption that Obviously currency So what it’ll even is X% we’re FX. that, So reported we’re if on, and to constant rate X% the looking could the and just, out might using than then a be would be different at on you that be it was and X% is that last look year, headwinds year. currently move, that’s [indiscernible], things but based

much. Thank you very

is of Please go of Bank Shanker Our next Josh the ahead. line from America. question with

of you rate approvals and September that's yet is impact for question. XX% very my to want have rate thank pricing is in understand pricing? the taking to much Yes, the, of X%. X% enrolled just the at as XX% I XX pets and the that Sir, the

Yes, question. so good

a map be Let it I know me little it difficult. out. can Because

dates So X% XX% for going effective that was, is waiting we which which had the set. the brings kind additional The into the to I what we rate through through, And anything. quarter filings, not quarter, XX% third the that rolling approved, October X% of were we fully during are mentioned. third up now did and

weeks. kind within Now recent so of, expect that's at the we rate the have portion just should run that of been the, approvals some of

next and will ramping going those into and rate that's QX our run start up So of QX year. kind then of

of days. to X% the So plans and waiting the of we book. going remaining ready moving imminent. X% XX% notice aggressive X%, next be on into to this have an believe filed. to to year want over We're do customers additional is that We XX known next the X% desire plan that is we'll already be we and have as approval, filing And to we've in we then X% start that and through the

in then baked remaining to it's X% expect then keeping the look and of up the for And bridge XX, help? we that that More fully So into Does that will days, we the to and quickly. to aggressive filed continuing it approved next gap on XX keep very and be X% X% known inflation. year. filed up, go next as of be to really all

the how $XXX that embedded is in revenue in the And subscription of Yes. quarter? wrote price you much million

How much price?

in was Well, increase. that included changes right increases, it after FX, and but around mix roughly X% X% rate

Okay.

So Is book? you should ARPU character number that then subscription one, the become gotten that we the might in that pets, is the they're acquisition, have other same business said X% to general, going but of profile question I on as to book of subscription fine. because Trupanion And them kind of price, that the that's think the pets, return when I pets and XX,XXX be to subscription they call wrong. similar subscription the current expected have my

Europe are care, operating countries, correct. that different have be XX% margin. all is of of reflecting ARPUs different obviously over targeting the the but them this cost different will The business Darryl, is to going is veterinary in time Yes, in different adjusted

of should return they the be same targeting as as So rate internal same well the all guardrails.

next now they're that these a because we'll of only percentage our it is until P&L see to to financials a the the our going way. in the so bit as in hit show same MGAs, for little And our becomes GAAP are own take So companies over up right operating in revenue time two underwriter. of that or year

much. very you Thank Okay.

think then XX,XXX, you just I correction XX,XXX. And said actually for it's one

very problem. much. I Thank No too so, I'm fast. was you I'm writing sorry.

next from go Wilbur question Our Raymond with Please ahead. is James. Elliot

Thanks. Good afternoon.

quick Just clarification two questions.

just so about Tricia, XXXX? multiply inflation get the and thinking simplistically, to the X%, compounded exiting those those of for XX% or First say would I together add a rate, sort

we I where their something through members going, the when XX% date. on is terms ARPU general how those is going anniversary know of in this mean, approved hit the this book increases is in so roll and is essentially is to how annual approved,

any at one-twelfth roughly given rolled time. through So the book

comes board, does sequentially. seven start on XX it the to build and will and with the So, build as it then really

we XX amount, things of in and Obviously is claims, be will mix. at been of plus roll getting the and next cost you that the to we can any question, the our average. it'll a seen, we're what looking what in financials, down all have that's the see as as which our to be aggressive enrolling absent In will proactive FX through inflation as anticipation obviously pricing build pet play brings through? in well. trends in of out in we're the the in comes changes getting trends a the book. when on any end how We're lower and then continue. anticipation on current be that double digit your new when slightly year but pricing these current that, book And being well rates. through sure, continue and and our is people, is very currently Pets at seven, it. would changes the That by making the anticipating on actually kind average XX you remains to next are the through on on mix in, that in average it's then anticipation as rolling year, current And vet book of want As general, look that pushing know, to

if has of to know you anyone that when else So that. hits the same relativity kind use out looks, anything map about that we talked add financials. don’t how can to that it to I

it question. helpful. And in PET to financial when current is before businesses, a and long Paws these as up want could you be new PAC when exactly businesses with And of appearing is respect your respect those how where us to that well, I guardrails and With expect your Okay. follow ask and they different would these it start them can, basically then those me you you IRR PetExpert Smart was acquisition That clear add ad with just from to statements? give to and, the was stand a generally Then to hit respect sense rates? to figures? to would financial targets

they're Darrell they're Yes. stack. MGAs, I these so not the not said, full as are the,

full written the in gross revenue. have, hit don't premium you So

closed. Paws, we'll small this quarter. is our expert this commission. pet year, they will, PetExpert will the have Paws just month Smart You books be only but is starting have in of bigger, will, close Smart one for revenue. They

way. be it into targeting we're subscription because Trupanion going our to They that won't material existing they're very, So have similar margins business.

to And They're but January, big, we're so to an not Trupanion. on grow. looking update going grow these XXXX we're to into next businesses, looking year give when in relative we,

they'll And we guidance in our so February. in when talk be

of bring two just with into to on and they they in And too, to a that like add grow their Trupanion family with I value think business. operator, have think partner about the that we these ability chosen lean, very they terms way can them their the earlier and We've business. synergies drivers think companies. tenants to of our because touched as in think same much that the they we our They them

we So get with working Initially we, to we up run really we're forward XXXX. to And as in in terms that do. looking business two how we're quickly teams can to they're can, of we how those a set impact guardrails, who central seeing well. understand

key drove being enable of a I if been the you just for expectation, conversions, the be can yourself. visits? called new ask clinic to proving additional of Just pets, would called base in Margi, And terms There's that being in bit guess be new guys some add function to with client bed dynamics better that that wrong. more and granularity maybe theory period? more And maybe it you pet one hospitals could leads, on the is difficult little strength over in Thanks. question provide on up existing that metric. what more or, contraction continue ads the in to course, it you to perform some follow seem Okay. more on of frequently? of better just I

Yes, of course.

reasons of of touched kind the actually. many why actually on, You've on

ads stronger that growth the see was the get to of it Really, think So record levels, we continuing through channel about of cut really record kind quarter, as to overall predominantly. levels when led leads. happy veterinary by the

both months The tactics. team a executed focusing and and with We've to to answer we're there. question talked how really been have see lot up. leads about conversions, were them So through, we're They've couple come that strongly with regarding that planning several some for starting conversion, lead volume.

to You see strong back the to going channel. of those start both things drive in return some are

perform Our other channels continue to strongly.

one in have have distribution channels. made that our So, for very planners, we strategy multiple the of XX-month clear our things

to an grow to go see happy market opportunities to in underpenetrated continue We have multiple to and up. continue them

So we're budgeting in in We areas yes, the value our solve unexpected, doesn't They're problem the be, faster costs, growing a the see visits because is not that of where product. us we that end helps and for our in reflected vet good product. are there the need at day, of but conversations. that seeing that's having that's the our down, number the the for

fact we've Our software consistently territory record now the in had and have continued been And for conversation of back partners through this that quarter. with installation. rates field that months the more coupled six

sets us gone as So apart well. the in of thing has industry kind that the is, up really

that value relationship that and that and remember channel the, are pet set very the, that And us, So core the we factors of needs is up really we And to thing to vets owners. are are seeing us well. think a for future. channel positive well needs us the the the of for performing really the the I support is proposition, biggest there the that number that priced of for

really us story [indiscernible]. So it's positive for positive,

I'll change, compelling becomes headlines been their increases are concerns message that to been of are a concerns. veterinarian need insurance is stronger particularly the when the over likelihood the have word through times has stronger the high multiple for times inflation. and just communicate impact little and talking why high people. that to around on pet veterinarians add recession, for People it. and at recessions, to about been medical top XX We've more when to people the going new want through All resonate we've years. company This message that and hearing of about and financial owners quality

lower incremental two-thirds grew people some times and easier channel, the veterinary new XX,XXX you quarter. of to the are it's areas compelling If think us lot the About were leads. with a our opposite. their years I What to just ago, from to in that income. point new One a I veterinarians that when that go about pets for messages from came that want driven thing pets vet we're XX,XXX pet. seeing And the grow, across XX,XXX think back mainly people of budget out that of about to couple for help is, they board in to it's of

inflation budgets, Messaging we'll be hospitals, a and of and that rich Rich puts having. year be So you revenue, challenging. make some need little our ARPU easier. will a takes recession be they'll And the product dollar And the not solution. a growing we move message. can but people bit And for a that'll over spend PAC stronger help the other is efficiencies and to self-insure have designed that resonates this that bit the a our we're going across into more for people. lower drive vet in people little our know, tighter have on comes veterinarians can they solution if up us will areas that

strong So year we of another growth. expect

of is with question from Tunis Research. next the go Autonomous ahead. line Our Ryan Please

Good evening. thanks. Hey,

Just another on the I guess follow discussion. rate up,

year of and the of XX%, now? as and or the we points of XX of XX as XXXX, kind of two over period. the the So rate on that to about X% XXXX to XXXX think end we're So is of XXXX top number the the seven think cumulative observing

and when you XX% Yes, through. now, added we’re together looking least currently at as at what, rolls

goals in then really added get been to We’ve we took then and up increased add and related the re-up again that seven had XX, of we’ll place. XX that already it to – to the as the So, but to XX%. to the to seven things that off some as it and seven, to

the that’s end. on we’re at weekly So a looking this Obviously, top basis.

the of with the many we that CPIs. we as already relationships groups more. If have, different change that leveraging the TPs sources, as see are in We’re we well data many the need data things from and veterinary our field,

that as We and we’re are absolutely well aggressive. being make do sure poised to to

and acting into So, now right feel the next good have but we going about we’re visibility – can it this we is on that year.

second? Understood. you trend a maybe what year-over-year? you maybe of breakdown What a little half saw to frequency, And bit a severity, then of can relative quarter you or perspective, first the loss from the this us year give learned

I we in small, high speak year-over-year about talked look back, as COVID, And people third in started in normal-ish, catching – mix, quarter. call year the with a the second frequency more and more saw at in see quarter particularly we definitely changes going seen and into We up to more changes on quarter dramatic changes going as increasing. first movement things, checking absent when overly it but then severity level, out the dramatic. movement severity severity, coming of X% we’ve nothing at about, year-over-year in were in going Yes, before, the things mean more we’ve I’ll we into

as frequency, some seeing. Now, when we’re going up both times see And has severity it of the of that increase It’s that absent changes about many still of about doesn’t half go historically up moving, much. we’ve we go severity we of tend seen talked but XX% those up, half frequency. mixed claims to about cost frequency

of and we’re moving up aggressive, those to we quarter so general. more year, of as we’ve boosting kind far So, both inflation move every seen kind this of be more want definitely seeing overall pick in severity

it. Got

more guess up then Why wouldn’t little accelerating. we’re a be, And two inflation attachment. for Thanks why at rate? does just one like I that’s my the if that years then have more to of rate over on and lost had potentially so these guess up that, be take frequency I could a I is what impact terms bit trend, XX% just follow was, deductibles is be kind just in the you’re And picking plan running would more XX% plan the reason

we’ll hospitals more Also, a see to that’s One to frequency because thing. we and small of out and flowing use the XX%. through, is, those next like it I reasons COVID continued change step we as submit tends good see of one-time surprised so we’re we bit had now it’s our weren’t that’s easy with a where at have X% we’re of trends that up. that of a inflation if react in seeing rate step That’s and just to gap see think that a to more little mentioned. a year software, into the tend up variety frequency be I And frequency. and Obviously a as have we of coming more getting more much very more looking that current But quickly. combined we’re we to to

Thanks.

ahead. next Ripps from with Maria question Our Canaccord. go is Please

so Great, for thanks much taking questions. my

following Just up on retention.

elevated rate seeing your increases sort especially subs among got So member are as this prices, of those responding backdrop? far? base, along of pricing any you so passing are magnitude started this higher given you macro that to onto higher consumers increases signs them guess how And sort of I churn

Yes, Maria, Margi. hi it’s

at high I our a say would really just So retention level, itself rate strong.

retention of seeing not any signs we’re those So elevated buckets. across

we’ve our buckets. so So level, you when at it three one got look events the in a granular that,

of those differences. with increase, in some rate year the those an you of over tend to where that’s first an see increase XX% retention, rate The under with XX%

increase of The first of bucket of one rate lightly been growth. not changed year has because that has our pet

is think obviously this think we relationship to be able got causes But I people think year. talk sure we Tricia that about If true their we involved, good. just value ready our and we’ve goes arms that aggressive so be really and we outlining, promise have helping support be to in that really the reiterate strategy on get are staying to to see increased has aligned if what earlier pricing macro which explain as alluded making to But want ready been anything of the around seeing. their we’re state, pets, and, we general future as about kind people proposition any so calls, And see well, as be really we pets first to between them in we seen as we environment. So, that. able that you haven’t sure in different what’s concern. going what’s that, understand you’re to add more our why far that and for making really anything more pricing We that into to to happening budgeting to conversations teams based

strong to new in Margi, it. of talked your in this you drivers growth strong additions of QX? sort any quarter. initiatives for Got key the And Did about additions contribute

pets. when we think XX,XXX So about the

run pets more have been is runway. XX,XXX we our around So on XX,XXX than

serve additive, of when from think came through that vet to volume, So, initiatives, about kind we came significant bulk not the how the nice up, growth new it’s of have and broken it’s then channel. that so better but better

of that fact our So partners in core really need growth. that the from pet really have reinforcing they we’ve that territory of got came really the the when to care. came At through that, time that sure strength effect came clients overall a make sort through that halo of, out owners most where can that channel, that’s field afford vets. this And the connection our we kind with

driver So they’re of not contributing, the kind they’re of that. the while

very much. so That’s Thank it. helpful. Got you

next from Stifel. is Jon Block Our go question ahead. Please with

back the and pricing I in or and questions. going price on of will on of think If the coming quarter with should its the Thanks kind XX.XX%-ish either current off quarters, have kind over retention Tom how the retention, the you quarter down you but do confidence climb kind up on accelerating about of question, little can your substantially impact last maintain Jon. just mean, to we so love do for start it piggybacking I with think for thoughts a at range? growth was I levels much bit it’ll churn.

start about time and something high. that anybody point recognizes talking is XX on fact the very that XX.X% to high talking about got Well hope I call we’re any with, the we’ve Sure. you’re retention,

that but is to leading to rate higher. still would we that say the goes our the which If be believe back So, retention rate significantly XX.X%, category compared would total drive retention offset. the rate the category is let’s offset downside well increases our revenue our PET little on to having XX% of a growth, they’ll of growth what bit have do net on

subtraction growth else, So, we’ve type anywhere benefits will and value. and from might income important been this revenue help we’ll also the we the through or retention, most accurately importantly price revenue and get it’s and our it cycle on it’ll operating our our and that regional help before small net adjusted areas ARPU of a growth we in but small take over lifetime more

placed. be we’ll So

Okay.

moving forward down model So, maybe sequential retention that ticks very small in the is fair?

accelerated I and continue retention. mean on first Yes, Remember continues year in to have growth. it retention the that Margi lowest depends says that to, team our if

keep that than else. smaller people If in growth, growth. bucket XX% by if more, be retention accelerated a than we So, I plus But the increased have brings big more our we’re will if that anything say, down impact. it’ll in like putting having offset more blended there’s revenue more

maybe in strong all? ads did helpful. first the my the quarter, contribute then is That’s question And really it. quickly, on Got gross to Smart acquisition that at second just number Paws

No, it didn’t.

it. Got

Okay.

the conversion just like it initiatives? can of vet around the you color And you third it so And these but relative leads Thank we the moving in my and with more persisting, vet levels grow that sequentially just what forward? is the last Can came from that a bit, Margi, level of one contribution XX,XXX ad then outside to strength, those guess I XX,XXX pets, sounded about provide guess sort incremental history? some talked kind levels? new this channel I of in channel. one, is your gross typical, expect these is to you off that confidence you. mentioned

Yes, sure.

make the hit so things. me if give So forget from I’m, to try I some I and of going those to please that sure, top,

in of come in distribution us from our for vet the did of leading channels and which all conversion, it majority broadened strengths, So but a, I terms terms initially really is strategy. yes, of plays through it the growth, into great will channel, of say our

there. to we helpful always have across mix mix have the of channels growth of So

up the it’s I vet We not of QX and a like driven through that in third typical. vet. was, really primarily through that channel terms the one took said, contribution, step In

the to is feel be think I doing we really moving the year-over-year based their in strength world, that’s and combination territory being to starting confident all software these all sustained feel for still has out, back So the helpful. on are growth, When maintain revenue the all really helping to of the all penetration strength, growth our of continues partners the conversation under that There have happening expect to in into growth they’re about about And quarter-over-quarter being the sustained the and to need the team that and unexpected pressure, up things of would analysis really the seeing are things being way combination perform reiterating massive that they’re there the are depth ARPU performed pet quarter the confident of able we combine growth. the kind the back the that up and we make our mix. expand. revenue care budget to

Perfect. Thanks, Margi.

Greg sir, question last from Please it’ll next question be ahead, Northland be will Our Securities. and our Gibas today, go with

than claim that taking is stabilize to Hey, Or seeing expected begin the questions. of higher the to you Are on to being thanks insights normal. well? that Thanks QX? a too activity persist kind for in

a Yes, month for there’s year XX us would behind in hi us, seeing, into we’re Greg, no any general I a October’s given with in say typically it’s given holidays it’s, October we’re The, bigger days. one month month and with QX Tricia.

run seeing similar what rates in We’re of in kind QX. seen October to we’ve

severity with projected the a of into plans to we’re not in speaking prompted really I continuing account. not as pace, that and set put that would guide year and help we downs. seeing dramatic we kind when which, dramatic we next of similar what We’re into us out been mentioned well we that numbers us on October those terms mentioned, need place I frequency It’s in seeing step up, used the

the see kind could Okay. them into share you market Got kind rate forward? would total maybe or penetration they what the markets What percentage And going in the PetExpert of I what, do then if pace Czech on new guys of it. up European Republic rough Slovakia? is And maybe we follow have? expand what of in

deal this we – quarter. we close Well, deal to closing we’re be the the hoping will

So UK Europe, so is lot consistent penetrations the about super the behind a of X%, well pretty country team. with in excited Sweden. are about continental Market which the and

ARPU value than and lower So be a is lifetime is veterinary cost lot growth. of will lower for of Obviously lower. in where the countries the care opportunity

PET get a we grow to and can lower we of So, excited apply cost years aggressively been to return. you help But it. and same about you to to have super rates that five them acquisition come they’ve to to the four internal next for that the able think do years prove

you Great, please for conference you today. for We all thank call Thank the everyone. your disconnect participation. day, that And lines. your ask conclude And you. does Have kindly a that great