Trupanion (TRUP) 4 May 232023 Q1 Earnings call transcript

Greetings and welcome to the Trupanion First Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Laura Bainbridge, Investor Relations. Thank you.

You may begin.

to conference quarter call. welcome XXXX full and results financial afternoon Trupanion’s and first year Good Chief Participating Chief Tooth, Wolff, Executive today’s Officer; Officer. on call Margi President; are and Darryl Rawlings, Financial Drew

of would Before risks we of of operations, These the the of call certain XXXX. opportunities, like we financial make Reform Private begin, to everyone Securities of today’s and will the that regarding known statements a provision meaning performance involve Safe the high remind Litigation and be actual of Forms forward-looking and and from Harbor conference these Commission. that with during future on Act statements within I Trupanion website Relations found degree earnings are as to discussion those risks filed the other Securities differ our and uncertainties our company’s on Investor uncertainties materially reports could well most cause recent and included XX-K as detailed can discussed. the Exchange X-K which A and in results release, unknown

presentation income release or fixed cash of Today’s performance, measures results, and Quarterly on variable expenses EBITDA, most tab. these of not in Investors refer the for the Earnings will free we or use the of or Unless noted, encouraged reconciliations stock-based comparable GAAP. and margins non-GAAP limitation to it measures pet compensation expenses. in press otherwise adjusted Trupanion’s depreciation term substitute expense adjusted our acquisition management expense. found that income, are be without is including be the measures expenses, on to to measures intended the and new non-GAAP GAAP a the are prepared U.S. return, financial evaluate in adjusted non-GAAP accordance which When Relations costs, to Investor under financial uses internal company’s today’s review operating These and website non-GAAP addition before margin, financial operating to acquisition to performance rate margin which can directly with non-GAAP income excludes basis, operating references a and flow. expenses, development contains to presented

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

Two Thanks, plan. off Laura. our we ago, years kicked XX-month

XX achieve double growth in extending remain to provided my levels more of detail pet addressable in seeing foundation approximates strong and and pets. We that published nearly shareholder are rates and Since goals number half of through in time, set. to paying by now friends of The XX%. consistent added letter have track and growth hospitals also we've above these income decades. channels our revenue XX,XXX. grown in laid increased strong. around We're months annual and in software, annually, on to the of new we've XX% adjusted active runway now for brands referring conversion veterinary America adding new and many invoices operating nearly North highlights We're retention owners our the market, our March. by We've our I

over pet the veterinarians of cost of the core care, We of by to care it and The veterinary pets' this lifetime. model making owners. their to rising a our for earn easier do business solution to providing is trust for budget their pet owners

grow. veterinary the and with of multiple veterinarians year. the need for demand Last continue cost care insurance unprecedented Over throughout long the term, to raising times increased rate, at an year, high-quality prices will the underlying

fees to industry to the form on years will take require pass veterinarians early saw for this the higher we in our is it year, expected, long-term additional sustainability of price and belief of the come. veterinarians the As that inflation veterinary

veterinary of Trupanion that is of average the mind invoices received in invoice cost size. increase in for care veterinary combination the the and Keep number a our of

rate with As pets imagine, will more challenging on-going to to compared prove uninsured rapid insurance. increases one these those can

answering veterinarians of As inquiring and or concept result, pet from when will their a questions staff introducing have greater owners. insurance high-quality urgency the

and meet this to are category Trupanion up set very the Long-term, well demand.

will we Importantly, care. dictate not the do cost not and veterinary of

granular XX We simply our our pet, inflation, cost-plus cost pricing. and not the we try appropriately cost, do monitor the XX X, job model. out are the years care in life months. of predict to and trends project the of We through Because cost It and to the the XX understand a the for to XX, year-over-year is product is the the risk share to out. to next a approach

rapid I letter, software, inflation. in the in of and throughout and post-pandemic and Namely, some costs the accurately XXXX. the staffing forecasting shareholder challenges on-going my of faced our the challenges, veterinary COVID of the rates of and increase course impacts business, of the the near-term temporary mix in unprecedented veterinary In of the our deployment detailed we change

our on estimated of over members veterinary XX-year of rate operating at margin would we track historical by the total, to was of Entering cost elevated our twice veterinary year-end. XX% care plans pricing increased would of history. sufficient get be that our to persist it us In XXXX, expectations target our in veterinary our care XX%, by for and of back inflation the XXXX, our that our cost rate that adjusted

impact cost-plus actual We've of on operating of saw to means we account add ahead QX, to previous our income us a additional operating outlook veterinary our to inflation margin to an year-over-year. in our X% Within cost need our In invoices adjusted XX% adjusted updated the for in get with by track targets. increase veterinary At our the step-up model, rate, has year. our year-over-year, revenue our back for income million run this on pricing this assumptions. $XX we XX%

insurance how can models, we and Rapid Drew provide inflation to we direct-to-consumer changes industry, the implement our momentarily. limited other to continue our pricing. within ability for in will price will in adjust Unlike challenge details more are accurately members. subscription quickly

Over will order members veterinarian it across and implement U.S., months XX and in receive period, our the outcome. a book. our an is entirety this first, pricing this time proposition. in file members come us a where take on value In world receive to of okay for, approval, higher-than-usual Typically, average, the will, new

and well-managed and a as the restore insurance to stronger providers long sticking Over hard out prudent Between our team values compression. growing then of now, margins their is the haul, and as diligently following margin it's practical. to where and years come when the soon energized working in period

provide our performance plans Margi discuss to With our to that, I'm key and context over call our financial results in will and more the hit around our then to to going outlook Drew QX greater hand targets. detail.

as and well provide will Today, second afternoon, good Darryl, our first-quarter and our I Thanks, quarter around for full details the of additional as everyone. year XXXX. share outlook performance

our driven quarter, year-over-year growth Total revenue up ahead Within million performance revenue business pet in our and for our business. of other by $XXX.X expectations. the retention XX% Revenue high up was XX% and in additions monthly continued $XXX.X in subscription the was million, strong and business, sustained primarily quarter year-over-year. our was levels of subscription

to XXst. on year-over-year currency $XXX.X million. to to have our constant subscription of or March XX.XX%, year across the Calculated been American period, XX.XX% subscription XX% XX-month XX% months. a equating average as trailing year-over-year of On average XX prior an retention monthly increased Total all North over pets in would our subscription basis, life a XXX,XXX pets up compared products was revenue basis,

to period. of basis, the Monthly basis. also Using cost from reserve increase revenue increased the This number higher quarter the for both was data, On average an we invoices which primarily X.X over veterinary pet same QX. is for time currency for increase a well invoices a constant flat pet that pet prior received $XX.XX, size X.X% of in per as invoice attributable average largely veterinary QX veterinary by per was increased year-over-year same per on of periods, size. million insights the invoices as our

subscription business a offset X.X% elevated the to out percentage loss a X.X%, reflects expenses continued points percentage XX.X%, down were were ratio. in the Fixed revenue, expenses as period. subscription year and This prior initiatives shifting prior revenue to from member the development. team year our drive of As our year-over-year of of our throughout slight XX period up maintaining increase experience as investments in variable basis from efficiencies

cost the income. adjusted variable invoices, veterinary paying of and After expenses operating calculate our fixed we expenses,

operating adjusted delivered business million, or subscription revenue. up subscription to of X.X% income Our $XX.X

As Darryl noted, veterinary in the quarter. invoices expectations outpaced our

have I'll turn our services revenue subscription Now and to a component, comprised than segment, BXB from is a products our which of different profile other generally margin that business. other and business

revenue in other million our business increase to pets primarily total, an XX.X% due In quarter, of for the $XX.X to an increase year-over-year enrolled. was

as the our for pets. transitions income segment we the quarter, last for year our an in other segment operating throughout quarter. additional slowing their As growth discussed $X.X business was to anticipate new million in Adjusted the underwriter partner

million operating adjusted the of income QX, XX% over decrease total, prior period. In year $XX.X was a in

to XX,XXX During deployed we the $XX.X over new subscription pets. acquire quarter, million

for For for North a an estimated return of quarter, resulted $XXX a rate the acquisition pet pet. internal cost this of average and America, XX% in single

million $X.X invested costs. development also We the in quarter on

our points in a variable, XX some and development basis of shift down reflects to within the was of XX basis As to our expenses This fixed, pet year compared the points new step expenses percentage business. initiatives prior revenue, of period. acquisition subscription

million in year million $X.X a increase the the for was $X.X year and period. the from was million $X.X quarter amortization as of EBITDA prior the period. Adjusted million to of $X.X compared loss quarter, an during Depreciation prior

of was Total compensatory stock million expense inclusive the compensation base departing during quarter, for arrangements officers. $XX.X

X compensation around base We million the stock the to expect year. per for of be quarter remainder

million per loss As loss per a the loss year period. million basic a and delivered share a in of $X.XX to Compared or loss delivered was and $XX.X a basic net share. result, $X.XX prior $X.X net of of or

$XXX credit million our with yearend in our million sheet, under quarter We year. $XX approximately from over around facility. ended with debt, investments, the Turning $XXX to up million $XXX balance was million at last in long-term available held which we cash

$X.X of flow prior cash year to $X.X was million negative in period. In in cash the operating terms compared flow, quarter, the negative million

totaled quarter, as $XX million $X.X a free negative was will expenditures I a cash million. the result, turn in our Capital now outlook. to flow

million, range after adjusting midpoint. full representing at other $X.XX for updating the XXXX, our grow $X.XX business This expecting forecast, our performance XX% million to the year out in were For reflects and growth segment. the performance QX we to revenue in of QX of

revenue This at grow We million. continue to in expect $XXX million to of growth the subscription $XXX is year-over-year midpoint. XX% range to the

flow now to $XX Darryl range invoices total million This largely adjusted to of outpacing actions in of range, expect in reflective of meaningfully expectations book midpoint as pricing the the margin cost be of implies through second year the $XX our At as half this business. is discussed. in the veterinary the the million. operating expansion more earlier of adjusted We income of our our operating

in XX% XX% quarter second expected the to $XXX growth XXXX, million $XXX of the million expected million, $XXX to revenue midpoint. at revenue growth or to the of year-over-year the to of be midpoint. the is range in total For Subscription be $XXX range million at representing is year-over-year

Total to income be $XX operating range million. in million to expected $XX is adjusted of the

a As our predominantly U.S. movements, and rate revenue reminder, between conversion projections Canadian currencies. to are the subject

second and in at a was full March. rate rate of which we our XX% year XXXX the For used the the quarter end conversion approximate guidance, projections,

seamless an over call to what I honor wanted chance with have team. my been look successor you this to the forward will team for I grateful last Thank of Before this help had transition. take together a to I the and moment with as am at earnings recruit be Trupanion, a work work to handing incredible has it to my mission. the your a the to call express part to time be continuing to today. Margi, ensure to

now over will hand the I Margi. to call

everyone. afternoon, Good Drew. you, Thank

will quarter, We results was X,XXX the new more pets, Trupanion. key plans XX,XXX Following pets financial Europe. another QX our from acquired including our quarter our against targets. recap I strong pet for growth to provide for context new subscription of over and It the deliver of

primary the are including to we remains behind international While are excited reportable that markets, performance, the product initiatives, our our impact new our engine Trupanion growth. positively starting

the average activity, efficiency than throughout was cost a an European especially am encouraged which at by basis, $XXX, quarter. we impressive our less Excluding per-pet enrolled given period. which is the $XX I margin more spend, on XX% prior headwinds of year the overall of the faced subscription pets,

remained product Trupanion the core, our by within channel. Growth again led once robust, vet

the and to healthy We strong XX-month average levels pets and for see also pets referring doubling roll to on to our book, their deliver at remained from growth and continue family. promise. their on to our stayed With the quarter proposition Member necessary communicate training adding our our members on us pricing basis, a retention Trupanion with for down XX are our value approach pricing months. continuing friends we through

total so the through year I but our remain sustain our of do encouraged revenue price by to work, see far retention increases high pressure. expected book. foundation than expect pressure the ARPU our throughout we That ability are take effect. said, of within After Trupanion more levels finally several as any to should of some our pricing this from seeing impact rolls offset product, quarters

XX.X% As through XX.X%. and a the March it February, we reminder, in flowing pricing approved, it was business. had was and in January, In XX.X%

June We at and April XX% expect flowing May XX.X% with to through. approved exit at and XX.X%,

pricing by successful, the veterinary invoice actions. of in additional to QX through the would well store as as expense We is proactive X% pricing we reflective in pricing also flowing have an end if for which, This action equate additional action XXXX. of some step-up XX% additional filed

pricing a new to period, approval reminder, on are existing our a applied timing. state depending As pets, changes to flow XX-month immediately XX book over but through

not the for we accounting impact mix business, of benefit this get do the and pricing action full of to on-going ARPU. expect reason, this in For of

return to continue as ahead will the care in cost to veterinary proactive of We to increases soon take to sense a feasible. of as targets margin our get future

within the allocating and and acquiring we our team accurately a disciplined now, well fixed where pets efficient priced and to variable remain then Between cost channels, will a in value operating most structure. to proposition, capital are

year, team line to year. additional hold far worked The at fixed in efficiency our during the has over variable the team of improve expense quarter, executed year points operational combined So this to expense shifting the basis despite margins of well and XX well development. out

precision. speed steps approach approach, real and our to our to and on A greater decision important collection expect strengthen and changes decentralized build our of regulator are the time. data, closer structured. us XX-month for plan, PNLs Already up trends us and we way to our approve teams component from to to identify our pricing and these expected we with relationships, greater of bring took us set provide few with core weeks ago, This one multiple reorganize quickly a into visibility emerging is insights improve inspection greater our with more providing act far needs data our us process, We to further making. to is this level and and forecasting, much with reporting allowing

increased with As we and Drew recent prior our for current noted, approximately our in-depth by reserves of periods million. analysis data, $X

a of the to ahead, in on growth. come months, solid approaches achieving this coming to loss ratio pets and the expect revenue, growth subscription target growth pricing will We and continue more for applying both this and categories In of XX%. year build with bulk refined from we our to

pause brand offer the Darryl’s we growth, a promise. value pricing to intention trying cost until have Conversely, consistent or veterinary load, our to categories care. rate and can of adjustments no echo I’ll we our with that the where proposition will early of remarks we necessary yet of achieve have pace control confidently

will cost-bus seen past We the times has that especially is in environment XX maintain we that challenging amounts vet where the current haven't increased approach our years. at in in and inflation

alignment the in veterinarians. sustainable higher always the proposition with and high-lifetime have industry, will highest We and value attention, target drives value, which greater

of We stronger are period confident this we'll entered come we than out inflationary it.

will continue not become parents ahead. serves years for market, only care has injured. sick that challenges, need it greatly in their grow budget or Trupanion to pet its if the in the also the is environment to This and they helping operating Today's but pet reinforces without need and

at I more As I be look long-term, excited. business couldn't our

a and on veterinary caring savings As unexpected ordinary per biggest is the under with letter, higher care of cost our details the owners for is pet going our shareholder escalate competitor accounts. of to recent cost the than outpacing inflation. to accidents continue Self-insurance, illnesses pressure rate

doubling along market, values to decades, most for we is addressable have The by pets of constituents. expansion the we both building with can resonate the international our we and our live with the that in help. continue been Our veterinarians number

and with to what bond strengthen family. Our of target loving we the members. our our part can customer, responsible for We the four-legged a pets, parent do continues our family pet

by it thank transition respected role the So, CFO including Darryl, step on with We of reins moment back the is to and and will who hand Xst. for over of the leadership, to his well over a ensuring before great I man take want I a team. Wei and is him character into June thank a recognize assistance to handing Drew Drew for finance Li, him finance time Trupanion. to to interim in smooth his

in comprehensive are a permanent We search CFO. for a conducting process the of

in Wei However, finance to the again replacement team ability utmost in named. Darryl meantime, until have and the you I confidence and is his a Thank Drew. lead permanent the

that, to the call Darryl. Darryl? I'll back over With hand

will open promises. join weekend, and At your is transparency. forum pet Omaha. you placed our importance at trust their Xth, With of us in year we investor-focused in two from shareholder our with meeting headquarters Seattle. investors. we the These and host directly and events. will regulators, to annual members, value a to annual Trupanion, We This like-minded our Margi. hear Thanks, is June interactions great once on upcoming trust opportunity annual values On registration, Q&A you there. details, to event are following shareholders With our recognize it leading This to meeting for a you, state Hathaway's long-term form open we'll the team this the in connect investor-relations in with our plan up forum. Q&A website. and be XX-month see the of we included staff, delivering us More stakeholders, We including have of the Berkshire veterinarians our our invite including questions. hosting Margi owners, value execution on shareholders. all basis hope team in for our mind, and our I an This members that, you

Thank you.

We will your Sandler. session. now [Operator proceed with question. conducting first Barnidge be from comes a question Piper Our Please with question-and-answer John Instructions]

you signs industry the Thank in retention any Trupanion products there price to Good afternoon. are Can in wide? of you opportunity. and decline in about experience talk and for the not lower increases but Is quarter? insurers just the face that price shifting the

Margi. John, Yes, sure. Hi it's

retention saw quarter-paying at our call we encouraged short. close very business. retention a XX-month flown of book still XX.X% We We've through worth feel for In We overall, subscription minor in of a adjustment terms really the some of XX% end saw We performance. saw strong book. very QX, a now We rates. of average the We of think on and a have adjustment degree poll slight rate seeing other got now and any haven't that. that there. signs not given flying through talked I about the overall to increase we retention anticipating lowering, to this degradation the that We're by ARPU. about saw in additional April increase an so seen to we offset rate we've based

don't the is a can't rate really I whole say think category category that we taking always the I as large on visibility even haven't but increases.

the and you follow-up. Thank

knew business? the Thank about that other update other you migrants [Ph] Do You on timing talked you. of that capital underwriter. in any the or partner have who

reiterate, this for is working been transition paths And on true. Sure, years we've this past. to something is many

really XXXX. add us. new underwrite to with to how agreed They came out. happy with would can business a back We're continue would that go underwriter. calls they is they that What or think we transition I

to that's line of revenue. raising that we're We have and more sight why

margin. It and business with to lots continue we stays up for new amount in with us the updated kind that significant our there three walk and the us of us free we of outlook. does years business book think of at us for have that's capital are in a So with higher they and that

is how on positive data So will our reflecting and overall, enough look. guidance that really transition

answers. Thanks for the

Ripps from comes with your Please Maria Our Canaccord. with next question. proceed question

to shareholder much Great, reasons letter. thanks questions. you sort go outline the so wanted of back in I your my to for taking

has the high-than-expected in terms frequency, processed a more sort of of impacted claims loss in on-going being why term, been through In shift mix business including software. the your ratio near the and

could seem factors of frequency you're of COVID in to you to any coming and changes nature, strategy going While pricing whether making talk out enable kind one-time be of this about manage sort you terms to framework forward? of adjustments maybe in in

Yes, sure. Hi, Maria.

just taking through provide piece by to that So piece more context.

terms right, period of shift, software, on the to the you're mix with we a the of months are one-time at that as kind Really was take In right the end of less moment, patterns of takes time. the we we roll XX before. our really by more a person invoices. XX.X% of business now there terms and the noticed I our in where of seen in and in gets price or We through. terms was the hadn't arrival when getting in through of take during ARPU. influences QX, COVID frequency, of kind that remarks, frequency it we is impact through period of impact price, rolling early we're And at walked But

end is XX%. at that's will of the We through year, the this which an year at average staggered of XX% be

mix business there are you things of an have a average that, If when happen with that the with that. couple what we see? that of happens XX%, of So increase

thing first a you The have buy-down.

XX%. team ask, typically X% I for them. it increased may which hold can a that of will is will that, there the mix what And shift, then in they beyond about someone XX%. which that work adjust will my will So use deductible? you a and We up about I have monthly with means So and they'll us. get is, basis, paying what contact call And they I'm us

shift specific geography. to products, that make So relate strategy, distribution,

also to into international about as play think start well. you that's if that to going So business,

monitor means that geography, we're we So ensure appropriately to curve number XX. going by to that we coming findings is you're that forward, to of doing through. is making category as moving see pricing what more we that regulators, we're manage the of sure and by pricing hit say on at frequent that can with increase that can a ensure And top I'm we are we see

have at that are are We data, coming it sure and will I XX% If for in which of we we answer looked some those operating get make sure having top the make we year-over-year reviewing that say And looking touch questions that previously, of to all there? now ways we assumption, of And that assumption that on us see operating adjustments data. that of that in that are allow at years. constant we've to ahead that level different ratio. will an terms changes. right a on inflation something with We're it Did of at lost the your can more. XX% required

may And you very or thoughts margin expect you return for margin you your And your by That's your then you the guidance, business? secondly, helpful. Thank given think core to any when when XX% very sort of do of on this lower much. subscription end year?

inflation is rate XX to assumption XX% XXXX, months XXXX, is level, at of flat reprise. to us year-over-year takes working it in our XX So that the that inflation If XXXX.

we're assumption, original XX get to months that our target. to to our to with So looking back XX

very you Thank both. That's Got helpful. it.

Our from Bank America. comes Josh of with next Please question your with question. Shanker proceed

come rate. impact expectations really year. have seeing the in of year in the you inflation. the It half any now. were retrospect, back certainly definitely that ago back was the really ratio of would of the year. in there spike are country, you inflation numbers. now? come inflation In of we it about present the Why not If you. loss the lot well above starting thank They're Give the the lot a to have a things that in to bit actions year. half investor you and rate It we of day, Yes, looks time a a first saw June go The of the the really are taking of XQ numbers. around there was back in have a like in didn't would been half managed in the back And through lot really acknowledge

the didn’t Now having through loss see we it is you're why the going ratio up getting in XXXX? and XQ it the rate of back and half is in

Right, yes.

we just started take the we first of when right, So little in because XX, of a you're half happened back step business pressures to to that recognize the kicked of acknowledged back, the there really what so end inflationary some a the think, was said The XX, that bit midpoint off when QX. was XX. data, in in and inflation the at back of

we was that periods what saw seen never XX So a series before. had we of in inflationary

through see X% inflation So later a inflation. and again. average, again saw you'll We typically on We come it March. and in saw three months

four pressure high those inflation of stages the So book. to put started through

at a to team were increased we one And the right, get time. reacted number filings and quickly. you're We of month The the we approval we putting through. got point, rate the

XXXX, a start into our in started to that we inflation. increase at impact. period as a pricing we really rate to volume in QX, were year. a see to XX% this In vet QX coming takes good anticipating also, it were in So We so strategy

basis XXX up to were we XX. went playing catch up still points that from XXXX. And another Now

as XX rates, to between look months file you XX our impacts it, forward we to somewhere So the before need business. that

So you've got the compounding XXXX impact and of XXXX.

arrival So that we acknowledging is we and a was rates to we because in because saw were We fact XX% it doing. saw saw through that that. assumed we our we're looking see expecting going ratio XXXX in got it's catch higher and XX%. the inflation from time coming in on that up, us We're actuarial that, the biggest reflected our our QX take is today because which adjusted And claim seeing shift rate. for see And rate know meant the we the reserves team that the came reserve of to up XX% what now at pattern where our we which XX%. then the software now catch you really could to loss primary and inflation were

both April in with us action, And on-going forward, and same now I we is think the those top anything is can we the so seeing we're the to to rates bring that surprising back books that on they're looking this see end right of the rhythm we're it in making that taking changes seen the data the now not We're April increases rates with our affecting and that analysis expect we've confident of strong. staying through we back margin we're year to how doing. maintain XXXX. are sure into filings, expansion taking, looking fully that the

that said working time. prove will continue of of of was XX% this period inflation your than At and than the turns you it. XX into that XX, inflation be may lifetime price you'll PETS out, XX%, in going is this level for XX, assumption, value lower better the inflation, it to of that Earlier, which is it

or you'll go right? it's at to with ahead there Is decide, the willing You XXX continue assumption of that XXX. acquire when that grow you the a in and working than guess and eventually I the IRR new strong rate. at XX% a lower very, at assumption Is the time balance? working because improves pricing you're let's get yes, some your lifetime it very value acquire you're PETS to

value on margin the It's ARPU the way lifetime value. previous operating lifetime XX is tried it number to the which of adjusted create that our transparent and about great point. look income, a multiplying the the to and is a rolling The be taking we've months by months based at

anticipate six we months life today previous expect we're entire of see are lower PET. over in that we the next margins six than we'll and months much that The receiving a that would the the

historically is say think of what would. our of or are estimate on have that to inflation methodology consistent. prudent very return, the That but a important the we methodology future, has and It underestimate in calculation rates has estimate do a getting the margins been lifetime been strong best our value for that it focused been And PETS? very we we would So very internal it staying is past. previous in

the answers. you All for Thank right.

your next with [Operator question. comes Instructions] Katie proceed question Our Research. Please from with Autonomous Sakys

do ARPU. to with afternoon. My you. Good Hi, has question thank first

moved of first but per talked average revenue XX about all about through quarter, having PET that You hasn't really rate flowing in points the much.

is that that metric. something why offsetting if there's wondering I'm that's So and

Yes, sure. Hi, Katie.

if further through at this hand and the to book. and add year, well. But context the example, by right, of end flowing got, to Drew XX% we'll close kick this so we I'll we've the as level, highest have this just over for to you're off at look So year,

So of the that would hit December. at end

little bit would got XXXX. to increase people their cost their a full an either offset little are bit You've monthly get That or be take of changing it that XX%. same the for higher year average to deductible a a X% by means lower.

so it So mix. takes down X%. that that Then have XX% takes is XX%. The that XX% chunk, the it bigger to mix you to

new And geographies, not new only not seeing what's we so have distribution is included before. penetrating geographies We're also in mix that in been products. new

a different working very products XX-month that they on ARPU our the themselves been profile. have coming as we've part of the So market, into and plan

see you the that's together, all them ARPU put you where that up. when downwards ARPU. So ends Ultimately,

XX% to transfers X% by the of So the year. end the up

we're bit is to the that at itself. more want think a we consistent absolutely Drew, end on trying why about filed basis. to about there difference realized. a through talk our get the hard But a little of work to That's we rolling So year? the ensure of a on the between and kind do prices how basis, you manifests

past, we back pointed rates just to I updated talked just year, consistent really, the to the November. for what assumptions. that you'll we've into view, what the for in Sure. mix, translating mixed mean, we've rate February. And full talking view, about flow said are our been which that financial the And with in we've for positive this just about consistent see

the You'd average that obviously, about through full constant X.X% see for year, of an the currency. And year. builds

So that figure QX, starting be what for the of kind throughout from builds where are but year. today, would you can we out it

Right.

improve second And to in driving you Okay. regarding the invoice sub-XX% half there's can of expense then any there. there's color management's the wondering seems question It if starts Thank provide kind is operating a view you. other but my to your second of be that going I imply that outlook. to ratio, margin What's was that year?

a year-over-year Katie, is we increase for year our that in assuming Well, the the main goods. entered thing cost XX% of us,

XX% next In seeing is on prudent data, XX% well we looking we for our their of earnings our rates increase, the we said than QX years. us analyze four that gives even as are our XXXX, we hoped a veterinarians like a thought we our back the If at confidence days you would consistency I AVMA. saw go data XX% that increase three analysis, as to to and the third-party appropriate call, that today additional in assumption XX. What and to sources had expected XX, and with as we going the into new ago was greater XX

rate assumption we our start get the extension. margin true that's XX%, through to holds if flowing the it's we'll book, know So that

you. Thank

with Our Please next question Stifel. comes question. Jon from with Block your proceed

one XX-month afternoon. a plan initiatives. guys. of Good just Darryl, The is has interesting of Thanks, sort the lot first strategic.

other plans going inflation. and there's But has right? a I You've mean, channels. business got food international, you've and new got lot the on, core

off trying You're to move pets best.

a that got just it from business outside turnover. flux. that's You've of And really in a the lot it's seems management

and So this else do is time? arguably you months' house these right a the in get time to pursue Or in step you all then pursue back, XX XX, take everything order, initiatives? XX, the

context, XX I Jon, I've in rapid this in years. for been put change in think inflation, the business to

such rapid years, go veterinary XX never has you inflation had back a to XX and If change. or

pricing been core right a the So making will inflation. remains by the XX% rapid to. easier great the And years, with price that. team. XX book. focused States us is challenge be now It But years, that consistent get to It's include industry, that on a breed, if by with to next data just that field would is the changed rate now change. we just the for at the we've much United That's three veterinary also pricing right sources through the consistent for the from said, accurately that that which price neighborhood, have for information a how takes to be core for challenge additional us of to we in XX months sure we're a is primarily single that What's help getting competency. dealing us more along XX are as

change If months, inflation from of you look gone XX%. the X% to last it's at XX consistent our goods, in cost the of

think anybody I with challenge. to a understand be that's can So that our business that model, going

I to plan think long-term. set If that business the for a the add us well, about XX-month for is to kind of as this general, And we in can is plan think XX-month designed up I the our long-term. as

hugely Canada no take products our it have more underpenetrated We veterinarians. take has a more support or globally vets to brand We product other and globally. to across United in both here to been where the no market in we States, that can believe able other help

doing us us to interruption business. to our for do things these core to we business And decentralized allow this without today, have the

that to once market of be market double seeing we're remain in across able to we move, addressable able be So term long to XX-year the confident a space. international for while and plan this leverage we Darryl's globally to this addressable lot the as point, about a a and incredibly the have add have the

again, kind to weren't in really progress little And the longer build just to on taking earlier touch This opening talk able that kind those in of to add steps internationally. remarks, new for help able it's lot us Belgium. that, making the we're a incredibly on growth bit, we pets, X,XXX term. QX, that around a in added good We've good so to in it of but about baby we're itself, really those And markets.

the the might slip was was I with his negative sheet, I think alone million into, free try million heard The so on the I next cash the That you. ask Thank Okay. color. first, to And draw question quarter. balance debt. flow, I this Drew a $XX But $XX to I'll question great maybe maybe last believe, call.

a is, estimate confused for there. Is into guess as this asked we mentioned balance to last rest So they the question should XX? of I'm And year? of of a in recently, on there underwrite question XX California an we part And is I And But I the for regs working B there quarter, think until as with exit has cash this about underwriter. best. pets able because the pets a raise new sheet? disjointed been burn and how not California get best potential you

a So the there it underwrite that handoff just was seems if can't me unusual cohesive to in state. they biggest

the to you regulatory from stipulations Thanks standpoint of actually So end your guys. March underwriting that were for as there of of XX? a had time, stop that

quarter a with the of Sure. our was draw only delay in our million. plan certain this was because for is The That $XX lenders time. long-agreed amount facility open draw draw

That's in the As from at $XXX I got million said we've on in $XXX balance cash remarks, and million the year sheet. investments up end.

clear pretty about We of Best this agreement Pets frees and strategic that up. have capital been the nature much how

behind put He XX. In out also starts it fact, wrote that. letter, Darryl's he in XX to some in shareholder quantum

strong a So we lifespan. our history current embedded is doing of have in operating which funding, our our within outlook of most for

California. that Best that with out applies agreed just been Best Trupanion, We that new in increases this about stipulation worked it about actually would and this company, was Prop not to the every speak and them our nicely. well the Pets can't agreed in this, back we this XXX find talked there to weren't talking transition, that On I underwriter make call we pricing Best they November Pets We've California, needed. that to to why a that this is was able up insurance before Pets in so fall. but holding operationally

offline. with appreciate follow I time. the you guys Okay. up I'll

you for today's session. end This We question-and-answer have reached Thank concludes conference. your the of participation. our

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