Trupanion (TRUP) 2 May 242024 Q1 Earnings call transcript

Good day, and welcome to the Trupanion First Quarter 2024 Earnings Call. [Operator's Instructions]Please note, this event is being recorded. I would now like to turn the conference over to Laura Bainbridge, Senior Vice President of Corporate Communications. Please go ahead.

Good afternoon, and welcome to Trupanion's First Quarter 2024 Financial Results Conference Call. are Board; Chief Fawwad Margi Financial call Chair Officer Qureshi, today's Officer. the of Tooth, on Darryl Executive Rawlings, and Chief Participating President; and

today's a of our on website earnings presentation we've ease quarterly Relations will included our For to made reference, Investor accompany tab. discussion, under available which be slide

and the regarding results references statements statements. on financial begin, X-K detailed of statements differ discussed. contains earnings risks historical opportunities statements company's limitation, to and These be compensation other operations, please release a operating remarks the basis, presentation of filed and prepared adjusted a These those before to XX-K to from accordance expenses review non-GAAP These Securities in company's discussion to Before and otherwise the variable are are of acquisition of performance, EBITDA margins performance remediate and on the for limited substitute management our and expense. than depreciation our uncertainties measures pet encouraged refer ability but adjusted with term development our non-GAAP as Commission. new these performance, U.S. advised of to most we return, will financial reconciliations future not Unless risks today actual Today's Investors are contain and free are margin in stock-based not GAAP. A in degree noted, addition a measures and expense forward-looking release today's be or other that be to or excludes forward-looking and Relations or expenses, website fixed rate the income include, which the tab. materially with non-GAAP uses under directly are statements. expenses. and which these and including, our on All is results, recent CEO non-GAAP the Earnings in When facts uncertainties as acquisition the financial operating comparable could Investor to operating financial to presented material without adjusted we most included found high reports that flow. known unknown internal GAAP weaknesses statements Quarterly expenses, the margin, intended and efforts. succession involve use to, costs, company's today's income, cash of press cause Forms evaluate and it non-GAAP can that measures income Exchange well measures to Trupanion's

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

CEO my Laura, in we afternoon. August as to I'm CEO. honored Thanks, good effective final Margi's speak and appointment you earnings call Today, announced X. as to

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Darryl. Good afternoon, you, Thank everyone.

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this Japan faster primary year-over-year with subscription growth. revenue even core Our grew our the XX% driver at brand, behind and

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at a As became was ARPU ago. Trupanion's higher increased revenue proposition. contribution for the largely brand, XX over public X.X% Trupanion actions pricing by has from business, members, into since ARPU through increase Within total the increases the this years core XX% of months. This Against highest yielded our monthly value pricing date, even the the significant revenue backdrop have subscription across our flowing level translated down doubled growth average past taken expected, year-over-year. was on of good efforts our we communicating XX outcomes. growth our quarter to in team To our

testament the and received ability last our provides, Trupanion to with the the strong this quarter months, of pricing up the XX within our Over XX% in monthly more. and increase or was over XX% group a has book of Average members communicate proposition along behind is This a our why our team's year-over-year. service value in value the the to actions. place retention

growth, adding new of component second the to revenue pets. Moving our

quarter. the enrolled total Our in XX% pets subscription increased

mandate The X-year our to team balance before subscription the expanded we against QX expect and quarter. our this down within the pace points to near ARPU year-over-year low maintained the basis our in continue making be consistently adjusted in of year, Compared as between last increases of restoring operating XXX pets margin increasing path in the We has as reflected subscription the been subscription in growth progress of results. our growth term business. in margins

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our necessary For of veterinarians, the deserve, alike. pets to rates parents we provide the and they pet stand veterinarians a is and needs with behind product offering designed care sustainable charging align to them

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the Trupanion brand continue new aligned as are proposition. core Pets, the on areas represented value targeted In of growth pet that growth in focus our quarter we to in closely bulk most our terms to the of

from and and and powered XX% Furkin with medium gross new ARPU our of in the initiatives, over for suite our products XX% newer these our Continental our PHI products, Chewy X pet low quarter, products comprised the since up launched approximately and in buy products. and Our time Direct including we Europe first and of Aflac, quarter

deploy We and are in subscale. a these cycle early amount of these given will continue conservative life opportunities products their to capital against

to with made evidence in be However, Direct scale should and beginning progress noted manifest. that of encouraging Furkin we've it some PHI

remains ahead. this look With overarching expectations our will were our X supporting adopt pleased the provide this QX of opportunities summary, prudently, we our our testament so deploying As gradually solid second capital. about our more while that and the our with maintaining up execution. excited more a the through into This to I'll we margins aligned with In in half meaningfully hand I'm to lie team. to detailed market, year, which of that, our We're our over and expand will as results. spend future expand. of veterinarians. however, mission of scaling mandate, margins Fawwad and tremendous quarter pets and In the ongoing large assertive to approach I'm focus discipline delivered underpenetrated is do a results, overview it fulfilling our committed the this a to discipline acquisition

revenue we quarter are have year QX. invoices $XXX.X the Thanks, I in I'll million, period. per actions subscription year-over-year by subscription March year. as for veterinary pets cost the highlighted pets underwritten quarter up taken pet outlook was XX,XXX solid performance which XXX start a and up veterinary of margins, quarter, the approximately over was resulting XX.X% provides point revenue currently share that for underwriters. year-over-year. over of progress. our to X.X% third-party This XX. XX% period. business increased quarter a the percent as Due prior with business, year our This the was of it million, clear to includes first we this proposition a provide level, of cost up basis our year quarter of high paying $XXX.X $XXX.X echo XXXX. Total subscription pleased XX% Today, reflects a seasonality repair XX% we pets a increased the million, Total last Within as value around from to was are year-over-year. Marty's representation improvement average pricing improvement Europe, prior over to and and X,XXX,XXX revenue Margi. was basis a in our The for monthly of XXX will additional well of points details invoices At that the full the comments as the earlier Total and revenue $XX.XX second

target Our we proposition to XX%, remains the our target by expect value to our year-end. for subscription close and gap business

in our a technology veterinary from X.X%, our period of calculate additional expenses year increases incurred in variable up the remediation and material operating of expenses related variable XX.X% down due expenses, to expenses, expenses a percentage subscription the ago. revenue, fixed year G&A our weaknesses. and income. expenses from As a we percentage were paying Fixed adjusted as of After X.X%, X.X% were revenue including invoices, of to the cost prior

adjusted Our basis X.X% in year increase subscription points operating margin operating subscription up of an represents was XX% income X.X% of $XX.X year. business and margin This delivered adjusted revenue. expansion. of of prior million, quarter last XXX is year-over-year from from Subscription approximately the

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

from business Adjusted the XX% other an In segment was year. was decrease operating expenses margin. of gross subscription down this the adjusted by income XX% for the The QX XX% driven approximately increase and in is XX% QX. fixed from quarter, decrease was million our QX, was XX% $XXX higher-value up In increase total, income business our million revenue the a year, year-over-year. our from of QX, comprised XX% full million, last for was in operating from line with XXXX. previously operating in This lower in income adjusted of mentioned This in a expectations. up Our last $XX.X quarter. year for $X.X but

with pets our to We Pets continue expect business, as in our partners one their enroll other trend Best, underwriter. of continues to this new

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

quarter, translated period bets in $XXX Excluding in pet $XXX in down by the the an pet underwritten approximate that prior X,XXX $XXX party, year new per cost and QX. third acquisition of from a European are into average this the

quarter. during in development expense compensation the was million $X.X Stock-based million costs. the quarter $X.X invested also in We

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

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

was flow $XX.X by discussed. cash Similar free million prior free our quarter. we million, result, $X.X impacted to flow our is negative It from cash first seasonal a for fluctuations is a the the an have AOI, As We free improvement the of have X.X% a such a our annual reason, given of set amount this and large is to position cash strength revenue. we in market. an believe at target prudent grow this global underpenetrated our year's flow capital desire

the more in of million. facility. our we maintained as the credit from $XXX.X held in weaknesses of have of business our requirement insurance quarter, balance In was our capital controls, to is investments insurance under SOX of $XX.X and we investments intensity quarter million subsidiaries, $XXX.X $XX than requirements Turning at surplus as and audit. an which response of our million capital compliance. slows We This the capital with other the Last the sheet. is estimated result of we million available to we ended X in the At short-term quarter, year-end reported investments. short-term $XXX.X million risk-based and growth internal with cash Outside XXXX the a $XXX.X our entities, million end and made business in this, material additional down our technology cash lowered.

We us these remediation these also material are hired the and progress weaknesses PwC we making have deficiencies. in in of assist addressing to

in We now efforts remediation throughout our fixed year in while will outlook. our look to our to efficiency I'll regain earnest. more turn expenses balancing continued the

to takes XX% the which the slight expected our range updating in overperformance QX. revenue This are $X.XXX at We to of now in midpoint. guidance, billion account or $X.XXX is into growth our full be year billion

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

million midpoint. the of to the to continue at XX% year-over-year total growth income range million to operating be in $XXX also $XXX expect or We adjusted

the we of about back year a think that we margin the to first XX% within lower subscription half and our business the of from by margin QX start the shape this a build As year. expect of operating will year, standpoint adjusted

range in Second, expected growth to or be to $XX range at income of $XXX million total to revenue midpoint. operating Subscription is $XXX is to year-over-year expected million adjusted million the in to expected $XXX to in the quarter at for the of $XX are second revenues Total of million year-over-year representing $XXX be XXXX, the of range midpoint. be the the million. XX% million, XX% growth

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

quarter hand we year XXXX, rate Margi. of the second was which For the March. at With the of I'll and it back to full our conversion that, in a used end XX% approximate projections, rate

Fawwad. I that many This Darryl you, personally for an long-term-minded year unique Hathaway's Thank This follow by and Omaha of investors. forward and with is every meet there. to in joined Shareholder presents Annual you to to weekend, Q&A be Berkshire annual one We opportunity Fowwad Meeting. hope event a to will look our I see

and many. his a I profound steps. has such so to be questions, the to before not years humbled XX to has coach the like Darryl. entrepreneur Trupanion team that moment a pay development to brilliant to Darryl nearly the to Since of foot appointed deeply ago, in a least idea significance also to we exceptional for lead successor company many, He to and visionary, proud am open me. I'm for leader. take I'd to Now been been tribute a an and follow or has

open early agreed develop around ahead, food we Darryl work our everywhere. support With and world On Darryl, to has pet expand Trupanion parents mentorship, our the we'll made further support of Health. initiative. up globally, the in continue products you've Thank your reach as to the of the it grow on impact of questions. that, Looking Animal you, to and behalf community for across

Jian Instructions]The with first Evercore [Operator's Li question comes ISI. from

Congratulations your we'll on you. appointment. Great. Darryl certainly miss

In on big priorities XX can you you about next how new the areas be with -- while the So sounds if would your for you've capacity, Like you. like in evolve? you'd this been for a that X like maybe on quite how focus Margi, just focus key first, to profitability months? Trupanion talk on does now. level, is It a the focused high

So then talk a that if macro that's bit? question you seeing on Anything second environment And the a retention can the through impacting for you're your the and the the year and impacting kind environment. little in macro full kind what pricing into of you trajectory margins? your I of baked flow through? is guess, assumption also And you. Thank can the, guide your the -- linearity of

priorities, ensuring growth at that came within ensuring initially be pick really the our can said, think such side the we're company, just size continue with every on the market. focused point, started the for for mainstay to at to website of your over to of focus. about very element has the during kind heavily makes very scale always our think partners. a really highly maintain underpenetrated and that long to it's in core I of close on and get their focus territory up the haul, that come. on our to in for kind guardrails we will been They're things So scale we kind are Trupanion P&L, That time unique. years of my foundational the And of company and the pillar now, of of That core where what also that where operating both working and Trupanion I I really I

able what the move and I'm being team been to by forward in forward So so excited very that look has direction. far to create the business able to

Yes. Thank question. the you for

as what's the the the and on think components about focused we're into team. leadership X So that guidance we key really is baked a way annual plan

first as is The mentioned. pricing, you

related to then costs and embedded remediation of is, that second about we course, some management in expense retention. work as think The we've of the higher

forecast baked was validated. a would QX that was macro assumption we at a So XX% at into yes, I least And inflation. say perspective, what from level, our

we end target. to So much of came when were we where in at subscription on look our up cost going voices pretty on pain expectation we for

our about out or guidance, proof us I the QX, point point so model If and is endpoint that the then to a think of the the sort gives income us to objective subscription at the our rest course, target the So of cost And then, data XX%. is year. guidance a from subscription to XX%. margin a of the adjusted get revenue operating North at Star for of

of half, of beneficiaries have build margin a vigilant see the into possible. that we're course the able second data gradual were year. we're of and half was of as through. having the over year to about last saw very to the QX of for in price QX. modest as be what predictive both lot guidance, that's but then is those expansion the where in And back assumed comes Obviously, year, and So when in as increases, margin a flow to put from full there the then similar Typically, macro of then effectively company in improvement thinking acceleration and modeling we and first one to try QX we what for where that we QX, use that will we it a to our to so

pricing the much of efforts, data so that in pricing when our think about efficacy we we're seeing. And it's grounded the very and

not as say, the so far come good, so surprising, seeing anything progresses. more obviously, but would I we're to So year

of Shanker next with The America. Joshua from question Bank comes

ratio. loss on items few medical A

should seasonality annual ratio of normal first loss about the talked in of when patterns, you in quarter you how quarter. seasonality ratio a You loss much the be year, do elevated year? you Can about medical think first the the talk the versus remainder the the think about

take Yes, Fawwad. question. this that is I'll

as I increase QX think to that sequential the X.X% the we've baked see you QX. from can actual in, assumption is from about

we've historically, patterns. back you to terms what I of in not think look go if that's and dissimilar seen

that free I is would grounded thing other ground in is or we that flow. The -- cash

So second when talked than look in projection, it half. back at flow is Generally, half about QX. first we higher free we cash

you QX peak ratio margin Generally, to it P&L. QX. modest see it to typically in we model So is gradually From really flat bulk our reduce see improvement then half. and though, of expectation that the as the will the does second QX a then and in loss happens perspective, XX% down

that I well. as can add to

the are about Just that for rate go to we in invoices. And through, margin actually expansion quarter of then vets starting flow typically that think what is the going the comes see the because first and to year the level. prices the as and the it reason visit rates, people That flow slightly those veterinary year those up the year. and little delayed of of invoices of a in through is the happens time takes so realizing the to patterns, bit at

really get you time as the by seeing visit of to So peak you're QX, kind that pattern well.

getting So little there's with as start the slope a ratio the see that from to up you bit then of to loss until come half we're of start and invoices. the a year in it matches the prices

XX.X% and 'XX, ratio now medical In it's loss XX.X%. was subscription the XQ

XXX past years the and increases with lot price X and about squares at years through inflation that lot much loss of you've by prices. cost Can what it's look action of expanded points followed trend whether past about the a a basis X you taken. So over over you the how as talk by

Yes.

thing good to. a that's to think anchor I

XXXX. an in model I that don't on that like achieve know your So basis, if to QX. obviously The to coming that. look call going peak situation margin earlier point calendar think higher drop model to a right more the that you get the we it to different same a a look year, cite point, extent is accelerated if we of more and bit eventually annual then half. a the to at I second is off would I the This it's target year the data and look would to We hitting expect and think little we're -- level the get at thing normal to XXXX, we inflation. you're -- by us

successful So the to But equilibrium get our might normal the right with now, we're mid-single it's in to up. Ultimately, context have to take we're of inflation. going historical or price, been XXXX is us XX% catch digits. determine a playing because back for index from if we'll just rate time obviously, the we'll into increases, new more

a XXXX. to back Josh, just And go in quick if that we QX time, of

was between in bets. pricing in was with in it seeing -- everyone's normal. our within where the QX, everything and again usual increase in eyes that coming into X% we didn't What QX. X% our anticipate from So QX year We of entry QX saw and a

we So in the was to a time culminated playing year-over-year year XXst XXXX. of the got were the total the what midpoint we prices December, that through started by nice increase the of XX% of end we catch-up. But year, those by to through the put

didn't by we We of started the again, and to see off went QX back to get that assumed new up XX% huge year. shift the which, prior point, then consistency It playing now double And that XX%. at was we've through to seen now inflation, again. price We XX% catch again average. of So year 'XX. the a the

rates the is asking of behaviors for. any it and our than good pricing really we're cadence the So thing pricing in about that pattern consistency doesn't the volatility and create

we starts in So now there's then to one's to less point, loss of jump if one place consistency. overall get ratio we've over We're other. XX% a it where down a come got time to as the the holds from the -- at

from jump a by have still You QX XXX points. to QX basis

of ratio taking the expect what by that's shift, quarter as year, we're XX%. we So in through but come the Fawwad to at we expect that to first end be in our into and QX, mentioned, loss account

for indulging that, to just me. And underscore thanks

over been months? compound XX% that over years. So that's tape, XX% about on price last earned XX% Is XX%, X to it and wrong XX% increases the XX say have about XX%,

the the pricing No, way is I business, of in mean Yes. that's that the of flowing yes. about book terms through right.

comes Canaccord Ripps with The next from Genuity. question Maria

and luck congrats chapter. all there role Margi, new your your on next of best with

First, just sort follow I your pre in quarter. of income to the wanted on adjusted up

delta, marginally OI it's it a this mean, are the of sort guidance. quarter. slightly on given with investors of your metric that midpoint revenue so higher now. So seems the in big focused like not below subscription I right but was Adjusted a

seems that that can guidance, Sort line sort color your inflation kind of delta what of like was versus drove any in on expectations. your you given with share especially of

that higher was the had really principal to and for do question. Thanks one costs. There Yes. technology with driver,

on from we quarter perspective. when that platform. our needed were There's forecasting more for our work digital vision the So was technology sustaining a transformation,

driver. the So principal technology cost was

it from CapEx. It perspective, was So lower a higher same cash OpEx. the was

you prepared about a remarks, rest will the the on year, In expense that PwC. of the remediation. As I fixed my factor bigger think perspective, the be had of brought cost we from mentioned

and impact significant QX. So expenses impacts taking It of our at roll higher. P&L that's our And margin seriously mentioned the the and investment inclusive get onset, something big entirety the our across to the have is year. through an extremely will as behind, bigger as obviously obviously target as is have of putting fixed we're didn't It on that driving we we objective to AUM. which

surgical about trying So be to efficiencies before, productivity fixed largely company news going technology. but to we're many it perspective, additional we the to was QX good in we're the from times find The efficiency those spend. very done -- where expense and have a and is our drive within has that

lot sort What you a recent of this share trading expectations? recovery. of investor driving insurance. insurance then dynamics. and makes relates price you it and with letter, with gap drawing auto sort Progressive and perception it. or your of -- of And as sense That are inflation a to this similarities shareholder your maybe of little share do of differences question. sort while Could sort between expand sort in of Allstate a think of bit investor kind factoring is key sort at bigger parallels In all-time auto and is prices on to Got picture highs, you pet not

have have with the insurance around my which a companies, opinion, been recoup their for all in of time, happens time, long base lines and a that auto they'll investor if up, margins. that It credit their cost goes From insurance. their period of understands

fact, In it. bodies require regulatory

QX continue And may cost remain years. natural or coming be back Historically, most I auto of think and But investor is cost that X% the to and our swings. that as of the the to inflation at we the that our When base of veterinary of you and seasonality earlier to for hits by XXX we and as maximum driven go are XX% XX% inflation the QX X% basis points, why been insurance, thought QX multiple between inflation heightened expect at have should well QX, our of as questions. this QX difference to about and combination that basis is to at out when and the primarily the world inflation goes XX%. going of of bumper a of labor, has down. in shape is XXX the a was to in XXX it as some COVID for inflation bed their difference materials, category and between it XXX levels margins is stays be a the cost labor long point the about kind for newer hit cost of that year to

margin fact up If that subscription you look the went at our XX% year-over-year.

on If ARPU up we're subscription those that the And that a of all just and fully through. the of gains it's matter starting Trupanion the investor XX%, rates time to you the confidence. at our impact our fact expand flowing look see margins base until is

Stifel. from Block The comes next Jon with question

XX start, the to by used MLR? plans growth What close for to don't gap be LTM think the 'XX. you thought the year-end. year-end said the improves. on there's I are XX% scrutiny X% that the thought on you get on until would now there deployment basis. MLR I I I heard by that PAC it, Just think get I any down greater adds, XQ an year-over-year. I been gross the And

is change? in will I'll time? And which And company think my So goal, share if do And XX%. did, recapture follow-up. did then going then the is when to about that you ask interim, we it the that call market that during importantly, a just significant main it, lose,

about make in that. clarify to But the -- for let to I'll speak nothing on others Thanks just question. I market no, chime Sure. share. just can't has changed.

Our not satisfied hasn't and with because about expectation is half but a that's to hit year, XX% by talked that everything first QX. second our we're we've typical half versus changed. objective Obviously,

growth the share Jon, on things. to of side it's market the of touch oyjust

point, as has come So at gone to our has down yes, year-over-year, it PAC down X%. XX%. growth your we The look

terms out growth of the So from significant the All a was overall, under have efficiencies in category which total reports come out indicated there. category Trupanion recently, that have But growth XX.X%. of just XX%.

in So huge terms share, there's ultimately, of I there. market think a out market

we'll purely a overall penetrated. the where over of be is our expect start there's there margins everything opportunity are for right We the a crossed will point, to that direction. massive as demonstrates number year. it to as first time, out exactly for expand, billion acquisition, time $X just foot we category And which At start pet accelerator great is at our We the we X% us. and see in of see terms on moving this the the this we'd to in put

over apologize But it. the is the get was President, TAM Okay. I time, I a Look, maybe for a to second there it. pure I do market other And question, But you taking plays the but big It's don't compare I fair, clearly, during time advance has -- the been the is question, X%. again, painful there's to the think Margi, what think to sole I I no gap, and X%. to a get that Margi, important. There since up. a and for guess just for is as XX, XX%. XX%, really shift been inflation -- shareholders. heard Sam, I next but in stock's be just headwind. SAM I close and off clean not And are this on that over it's up down the taken

is share stubbornly losing You're they MLR just high. mentioned the

taking X-month longer to just that launch. much plan under products New

are granular X should things or So CEO, investors front on that you X get or X isolate of as over turning when have the X the top pretty think months? congratulations. about XX you priorities What the just can we focus around we Let's top things? in that just next

yes. sure. Jon. Yes, No, Thanks,

So the and continuing which doing margin year, work I has teams have doubling been the last been really think, it's the focus. for down the foremost, first

pleased really And pushes come into goes sure margin, which is with QX growth. that I a that to AOC at year-over-year, on So continue think sure will subscription always making that that that's talked we've fact making I'm our see understand value a which retention. experience expansion hand-in-hand us, we and absolutely testament as how focus that continue on is to to top which Member we're level. members our margin we're to XX% focusing. And that about through you we're priority the the our do of helping is expansion. priced effectively, And sacrosanct proposition,

focus. that continue we'll So

point, it that deploy In where to that comes effectively terms at of we do growth have. most we the capital down

expanding, best set, those before in a be -- product. And that new on and a really pleased now. dip business, those at the we have we that It margins didn't America, North channels in get internal turn might be As just Europe. that overall that eke could on that make suddenly from opportunities the may X-month we're everything allow of across to ensuring just then also of sure more operating Each our pool we loss one we have within Doing but before. might that those going ensure we that be expenses. into our once. not to be out ratio, and margin We'll able we that it that growth right to just has be starts to grow, also And metrics, part rates our fixed return. for that diligently, are were scale. us plan our distribution the really in to expenses, have to the guardrails that of which done than spot opportunities not our to operational

we ready as Hopefully, us be continue think us year. I ultimate getting be answers moving the forward the where the need expect we priority rest the it to long-term about that for it's sure question. growth. is through for to your margin is it But So that of making and

comes from Piper The question John with Sandler. next Barnridge

business? retain for the other expenses those first My Darryl. going will a flow that about as food What control? can talk the there? the initiatives through be you you do question, Is involved to in view XXX% And opportunity you'll TAM

we It's health to insurance, food. XX-month early position how on talked understand pets market when large we focused unique get eating it to or first TAM. we're days. in about a -- believe initiative very on our we penetration the going food the but Well, flowing it's very we're in still hit outcomes. will have XXX% our any where it plan. That's is to And If we what are think We XX% of through. P&L a promises on, don't be

So days. it's early

about progresses? the growth growth talk quarter? then build as of And follow-up like Okay. slowing, year capital the XX.X%. continue to went you should in from It XXX.X% it looked the With -- to during can this excess the question, minimum my in

by Yes. we for capital look or things. the question. the Yes, insurance way the so at it's with entities, driven Thanks excess X overcapitalization it, the the

As I perspective, a think of And Pets is, to as from subscription grow other continues one capital. pool dynamic that then we to off. the business bets of rolling is the contribute the

business in is about the of past, the talked capital been it's and Best that Pets So intensity higher.

-- as up growth that as then rate -- frees that it into so business goes to begins And diminish capital. ultimately, it decline, secular and

again, due positive the to requirement capital, was look a at it for a portion million minimum good that of increase the couple as of above a $XX reasons. We dynamic. So in

think, policies. it to I gives one, the us capital add more

subscription the opportunities we business that now guardrails. we grow to So have meet wherewithal financial the our where see

cash. rates an you historical accrued saw interest took a the We've we interest productive requirements. York is attention least DFS. is third as pay that where elevated, is, say, dynamic RBC very, were the had close a Those things to ordinary that on then now all they and that seen that in continue And QX, conversations obviously, are to. was from that year, New we second it that's last And we've remain to that cash. generating the just think I'd perspective. The dividend over And contributes at requirements I with

discuss having utility DFS. us So in We've continued there's New that. to York with

the I they're us continuing idea to of dividends. take ordinary open think to

but would grow of our diminish. the to rate to it growth the proportion roll-off capital best of of because the So I business, certainly, in pet's expect intensity that will

Research. Sakys with Katie question comes from Autonomous next The

and pets. Margi both clarify the to on across congratulations ratio things invoice want some on your both roles. subscription other I respective new first

any talking to see in with point I invoice guys that of in to on ago, ratio. were check more similar appreciated. year's X And broadly, that year development to like you're revision quarter's color this much field invoice past degree of how you just about included could give the if wanted be if you feeling a adverse think of about about I there's picks in, we the ratio? And somewhere some as in would us loss holding

we Sure. so the answer that to we can want make right, I question just it. got sure

I think you're talking about loss ratio and the trend.

to the one -- what would said of back refer think subscription. I I things we on

loss now I And we think didn't The our same things the subscription to through. the it's in pushed And business from that's ratio QX where other of to perspective. loss less one we've that's to rates talk is our of that due phenomenon business now related was that Pet's agreement about Fespest. in is elevated are sensitive. within ratio nature related been a being a manifesting higher the seeing

concerned we're perspective, Trupanion about a from So that. less

that same I and a we thing the So ratio we're they're loss that that result putting pricing response say as increase seeing would that, is effectively through saw, in that. in to

which we've been model reserves did lot reserve in was the the your we're and And older pay that invoices where think able little a aiming. that less could just in question is reserves having for to of much that Kate, reserve, of quarter over those terms release we we the see the be we our I a where back our ABR, in vet development related beauty to claims just holding directly direct time, release those pay and

if on And the I give a it's you can Yes. more bit little context helpful, reserves. specific

elevated so But book, revenue it if sequentially it look some paid -- look that down it as of a So year claims percent elevated at there reserve were total to if that you you year-over-year, a from ago, It at XX.X% $XX.X across QX in claims in the QX. XX.X%. from were was million was were down. was paid

million X.X% $XX.X count. pet of down. in increase a feel that we comfortable had versus indexed the reserve you with But So bringing XX.X%

reserve feel or unchanged. good So and relatively revisions we reserve that to

helpful turning And to then clarification. Thank a metrics. growth you maybe

in enrolled I changes. wondering, think the pet are is deceleration are business But that the other trends of segment there the best any pet I agreement that context expected shift? being pet's just growth the was in be to positive in masked

they're pass comments I ARPU on mean, to is my only back the consumers. there seeing ability to price increased refer and thing ARPU. to that to think probably I the I earlier would

very say similar So what to seeing. we're I would

operating that is now If why down, revenue new there's it you're under for margin that. has about agreement and the asking tiers. adjusted One different agreement. reasons overall X went we're the change new And

other, the fixed the business related we're is was those no part some of higher mentioned to as I kicking tiers. so the declining, technology in in And And as earlier, remediation costs. longer and revenue expenses

driver, would between for If that normal is thinking the -- in to is X.X X.X you forward X.X% of thinking were the balance that we're you look it that going is and so at of for those what somewhere new if business, terms conjunction, that's in that QX. year. forecast the in we profitability about saw the I expect of

comes The Raymond James. next Wilma with question Burdis from

to and Darryl. A also questions guys. Margi couple for Congratulations quick of to you

million about XXXX. for $XX million guidance year? implies in the second in the track second income there First, Can level you higher half operating operating of half just adjusted 'XX. can to million hit to about $XX the of $XXX adjusted Trupanion $XXX in year, half the to for the pieces of you first which that of appears throughout about million talk the income get the of year trajectory on talk the of the to

pricing pricing primary flowing and through driver The book. is Sure. the

compare So about margin, range pricing. it's driven the $XXX in if I improvement. margin sequential by of expansion And at would up is entirely and that to you operating XXX. adjusted expect just look through

margin an to the comment, acceleration QX then QX half perspective largely flat to and back of earlier the in my I think from a year. the

in business? forward? similar about pricing rate then question, could expect other And Okay. going we higher the second growth ARPU you in a talk Should the

Yes.

it to the business, all I XX%, year-over-year so at almost increase XX.X% was ARPU look ARPU, contribution related. the you was think other of revenue, If XX.X% up in

So total are we're small getting annual down, trail that a pet very are these but amount because contracts, enrollments months we'll see through off.

by driven I would ARPU. largely say that's So

the Earnings question-and-answer today's now XXXX attending Trupanion session concluded. is Conference our Quarter concludes This for you and Call. First Thank It presentation.

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