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Trupanion Reports Second Quarter 2022 Results

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Trupanion, Inc.
Trupanion, Inc.

SEATTLE, Aug. 03, 2022 (GLOBE NEWSWIRE) -- Trupanion, Inc. (Nasdaq: TRUP), the leading provider of medical insurance for cats and dogs, today announced financial results for the second quarter ended June 30, 2022.

“Revenue growth was consistent in the quarter and we saw a modest increase in our profit from existing pets before investing in growth,” said Darryl Rawlings, founder and chief executive officer of Trupanion. “Based on our 20+ years of experience building this category, we expect periods of inflation, uncertainty and recession to drive even greater need for Trupanion.”

Second Quarter 2022 Financial and Business Highlights

  • Total revenue was $219.4 million, an increase of 30% compared to the second quarter of 2021.

  • Total enrolled pets (including pets from our other business segment) was 1,348,145 at June 30, 2022, an increase of 32% over the second quarter of 2021.

  • Subscription business revenue was $145.8 million, an increase of 21% compared to the second quarter of 2021 (22% on a constant currency basis).

  • Subscription enrolled pets was 770,318 at June 30, 2022, an increase of 20% over the second quarter of 2021.

  • Net loss was $(13.6) million, or $(0.33) per basic and diluted share, compared to net loss of $(9.2) million, or $(0.23) per basic and diluted share, in the second quarter of 2021. Net loss per share is inclusive of share-based compensation expense per share of $0.21 and $0.16 for the three months ended June 30, 2022 and June 30, 2021, respectively.

  • Adjusted EBITDA was $(1.7) million, compared to adjusted EBITDA of $0.2 million in the second quarter of 2021.

  • Operating cash flow was $(3.1) million and free cash flow was $(7.1) million in the second quarter of 2022. This compared to operating cash flow of $(2.2) million and free cash flow of $(5.1) million in the second quarter of 2021.

First Half 2022 Financial and Business Highlights

  • Total revenue was $425.4 million, an increase of 32% compared to the first half of 2021.

  • Subscription business revenue was $285.6 million, an increase of 22% compared to the first half of 2021 (23% on a constant currency basis).

  • Net loss was $(22.5) million, or $(0.55) per basic and diluted share, compared to net loss of $(21.7) million, or $(0.54) per basic and diluted share, in the first half of 2021. Net loss per share is inclusive of share-based compensation expense per share of $0.39 and $0.38 for the six months ended June 30, 2022 and June 30, 2021, respectively.

  • Adjusted EBITDA was $(0.5) million, compared to adjusted EBITDA of $(0.9) million in the first half of 2021.

  • Operating cash flow was $(6.7) million and free cash flow was $(14.2) million in the first half of 2022. This compared to operating cash flow of $(3.9) million and free cash flow of $(9.7) million in the first half of 2021.

Revenue by Quarter

A chart accompanying this announcement is available at: http://ml.globenewswire.com/Resource/Download/3c09f24c-bca1-4e81-8eca-da75e48a4722

Conference Call
Trupanion’s management will host a conference call today to review its second quarter 2022 results. The call is scheduled to begin shortly after 1:30 p.m. PT/ 4:30 p.m. ET. A live webcast will be accessible through the Investor Relations section of Trupanion’s website at http://investors.trupanion.com and will be archived online for 3 months upon completion of the conference call. Participants can access the conference call by dialing 1-877-407-0784 (United States) or 1-201-689-8560 (International). A telephonic replay of the call will also be available after the completion of the call, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (International) and entering the replay pin number: 13731132.

About Trupanion
Trupanion is a leader in medical insurance for cats and dogs throughout the United States, Canada and Australia with over 700,000 pets enrolled. For over two decades, Trupanion has given pet owners peace of mind so they can focus on their pet's recovery, not financial stress. Trupanion is committed to providing pet owners with the highest value in pet medical insurance with unlimited payouts for the life of their pets. With its patented process, Trupanion is the only provider with the technology to pay veterinarians directly in seconds at the time of checkout. Trupanion is listed on NASDAQ under the symbol "TRUP". The company was founded in 2000 and is headquartered in Seattle, WA. Trupanion policies are issued, in the United States, by its wholly-owned insurance entity American Pet Insurance Company and, in Canada, by Omega General Insurance Company. Trupanion Australia is a partnership between Trupanion and Hollard Insurance Company. For more information, please visit trupanion.com.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to, among other things, expectations, plans, prospects and financial results for Trupanion, including, but not limited to, its expectations regarding its ability to continue to grow its enrollments and revenue, implement its alliance with Aflac and otherwise execute its business plan. These forward-looking statements are based upon the current expectations and beliefs of Trupanion’s management as of the date of this press release, and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. All forward-looking statements made in this press release are based on information available to Trupanion as of the date hereof, and Trupanion has no obligation to update these forward-looking statements.

In particular, the following factors, among others, could cause results to differ materially from those expressed or implied by such forward-looking statements: the ability to achieve or maintain profitability and/or appropriate levels of cash flow in future periods; the ability to keep growing our membership base and revenue; the accuracy of assumptions used in determining appropriate member acquisition expenditures; the severity and frequency of claims; the ability to maintain high retention rates; the accuracy of assumptions used in pricing medical plan subscriptions and the ability to accurately estimate the impact of new products or offerings on claims frequency; actual claims expense exceeding estimates; regulatory and other constraints on the ability to institute, or the decision to otherwise delay, pricing modifications in response to changes in actual or estimated claims expense; the effectiveness and statutory or regulatory compliance of our Territory Partner model and of our Territory Partners, veterinarians and other third parties in recommending medical plan subscriptions to potential members; the ability to retain existing Territory Partners and increase the number of Territory Partners and active hospitals; compliance by us and those referring us members with laws and regulations that apply to our business, including the sale of a pet medical plan; the ability to maintain the security of our data; fluctuations in the Canadian currency exchange rate; the ability to protect our proprietary and member information; the ability to maintain our culture and team; the ability to maintain the requisite amount of risk-based capital; our ability to implement and maintain effective controls, including over financial reporting; the ability to protect and enforce Trupanion’s intellectual property rights; the ability to successfully implement our alliance with Aflac; the ability to continue key contractual relationships with third parties; third-party claims including litigation and regulatory actions; the ability to recognize benefits from investments in new solutions and enhancements to Trupanion’s technology platform and website; and our ability to retain key personnel.

For a detailed discussion of these and other cautionary statements, please refer to the risk factors discussed in filings with the Securities and Exchange Commission (SEC), including but not limited to, Trupanion’s Annual Report on Form 10-K for the year ended December 31, 2021 and any subsequently filed reports on Forms 10-Q and 8-K. All documents are available through the SEC’s Electronic Data Gathering Analysis and Retrieval system at www.sec.gov or the Investor Relations section of Trupanion’s website at http://investors.trupanion.com.

Non-GAAP Financial Measures
Trupanion’s stated results may include certain non-GAAP financial measures. These non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in its industry as other companies in its industry may calculate or use non-GAAP financial measures differently. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on Trupanion’s reported financial results. The presentation and utilization of non-GAAP financial measures is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. Trupanion urges its investors to review the reconciliation of its non-GAAP financial measures to the most directly comparable GAAP financial measures in its consolidated financial statements, and not to rely on any single financial or operating measure to evaluate its business. These reconciliations are included below and on Trupanion’s Investor Relations website.

Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a company’s non-cash expenses, Trupanion believes that providing various non-GAAP financial measures that exclude stock-based compensation expense and depreciation and amortization expense allows for more meaningful comparisons between its operating results from period to period. Trupanion offsets new pet acquisition expense with sign-up fee revenue in the calculation of net acquisition cost because it collects sign-up fee revenue from new members at the time of enrollment and considers it to be an offset to a portion of Trupanion’s new pet acquisition expense. Trupanion believes this allows it to calculate and present financial measures in a consistent manner across periods. Trupanion’s management believes that the non-GAAP financial measures and the related financial measures derived from them are important tools for financial and operational decision-making and for evaluating operating results over different periods of time.


Trupanion, Inc.
Consolidated Statements of Operations
(in thousands, except share data)

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

(unaudited)

Revenue:

 

 

 

 

 

 

 

Subscription business

$

145,808

 

 

$

120,373

 

 

$

285,647

 

 

$

233,665

 

Other business

 

73,603

 

 

 

47,887

 

 

 

139,763

 

 

 

89,280

 

Total revenue

 

219,411

 

 

 

168,260

 

 

 

425,410

 

 

 

322,945

 

Cost of revenue:

 

 

 

 

 

 

 

Subscription business(1)

 

122,440

 

 

 

99,746

 

 

 

237,703

 

 

 

195,283

 

Other business

 

68,388

 

 

 

43,969

 

 

 

129,230

 

 

 

82,017

 

Total cost of revenue(2)

 

190,828

 

 

 

143,715

 

 

 

366,933

 

 

 

277,300

 

Operating expenses:

 

 

 

 

 

 

 

Technology and development(1)

 

6,396

 

 

 

4,079

 

 

 

11,625

 

 

 

7,810

 

General and administrative(1)

 

9,227

 

 

 

7,435

 

 

 

18,593

 

 

 

14,651

 

New pet acquisition expense(1)

 

22,982

 

 

 

19,390

 

 

 

44,609

 

 

 

39,094

 

Depreciation and amortization

 

2,707

 

 

 

3,158

 

 

 

5,424

 

 

 

6,251

 

Total operating expenses

 

41,312

 

 

 

34,062

 

 

 

80,251

 

 

 

67,806

 

Gain (loss) from investment in joint venture

 

(42

)

 

 

5

 

 

 

(111

)

 

 

(80

)

Operating loss

 

(12,771

)

 

 

(9,512

)

 

 

(21,885

)

 

 

(22,241

)

Interest expense

 

1,193

 

 

 

3

 

 

 

1,272

 

 

 

1

 

Other income, net

 

(365

)

 

 

(99

)

 

 

(679

)

 

 

(161

)

Loss before income taxes

 

(13,599

)

 

 

(9,416

)

 

 

(22,478

)

 

 

(22,081

)

Income tax expense (benefit)

 

19

 

 

 

(195

)

 

 

(5

)

 

 

(412

)

Net loss

$

(13,618

)

 

$

(9,221

)

 

$

(22,473

)

 

$

(21,669

)

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

Basic and diluted

$

(0.33

)

 

$

(0.23

)

 

$

(0.55

)

 

$

(0.54

)

Weighted average shares of common stock outstanding:

 

 

 

 

 

 

 

Basic and diluted

 

40,738,738

 

 

 

40,142,872

 

 

 

40,660,797

 

 

 

39,922,885

 

 

 

 

 

 

 

 

 

(1)Includes stock-based compensation expense as follows:

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Cost of revenue

$

1,830

 

 

$

1,224

 

 

$

3,666

 

 

$

4,458

 

Technology and development

 

1,101

 

 

 

800

 

 

 

2,009

 

 

 

1,464

 

General and administrative

 

3,066

 

 

 

2,322

 

 

 

5,489

 

 

 

4,141

 

New pet acquisition expense

 

2,637

 

 

 

2,181

 

 

 

5,019

 

 

 

4,912

 

Total stock-based compensation expense

$

8,634

 

 

$

6,527

 

 

$

16,183

 

 

$

14,975

 

 

 

 

 

 

 

 

 

(2)The breakout of cost of revenue between veterinary invoice expense and other cost of revenue is as follows:

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Veterinary invoice expense

$

157,616

 

 

$

118,282

 

 

$

302,542

 

 

$

228,152

 

Other cost of revenue

 

33,212

 

 

 

25,433

 

 

 

64,391

 

 

 

49,148

 

Total cost of revenue

$

190,828

 

 

$

143,715

 

 

$

366,933

 

 

$

277,300

 


Trupanion, Inc.
Consolidated Balance Sheets
(in thousands, except share data)

 

June 30, 2022

 

December 31, 2021

 

(unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

101,615

 

 

$

87,400

 

Short-term investments

 

141,420

 

 

 

126,012

 

Accounts and other receivables, net of allowance for doubtful accounts of $355 at June 30, 2022 and $342 at December 31, 2021

 

204,249

 

 

 

165,217

 

Prepaid expenses and other assets

 

15,248

 

 

 

12,325

 

Total current assets

 

462,532

 

 

 

390,954

 

Restricted cash

 

13,472

 

 

 

13,469

 

Long-term investments, at fair value

 

7,716

 

 

 

7,061

 

Property and equipment, net

 

83,041

 

 

 

77,950

 

Intangible assets, net

 

19,758

 

 

 

22,663

 

Other long-term assets

 

19,246

 

 

 

17,776

 

Goodwill

 

29,405

 

 

 

32,709

 

Total assets

$

635,170

 

 

$

562,582

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

6,477

 

 

$

8,952

 

Accrued liabilities and other current liabilities

 

31,175

 

 

 

28,162

 

Reserve for veterinary invoices

 

36,637

 

 

 

39,671

 

Deferred revenue

 

185,292

 

 

 

146,911

 

Long-term debt - current portion

 

609

 

 

 

 

Total current liabilities

 

260,190

 

 

 

223,696

 

Long-term debt

 

53,623

 

 

 

 

Deferred tax liabilities

 

2,480

 

 

 

2,827

 

Other liabilities

 

4,123

 

 

 

3,859

 

Total liabilities

 

320,416

 

 

 

230,382

 

Stockholders’ equity:

 

 

 

Common stock: $0.00001 par value per share, 100,000,000 shares authorized; 41,773,422 and 40,745,298 issued and outstanding at June 30, 2022; 41,408,350 and 40,475,185 shares issued and outstanding at December 31, 2021

 

 

 

 

 

Preferred stock: $0.00001 par value per share, 10,000,000 shares authorized; no shares issued and outstanding

 

 

 

 

 

Additional paid-in capital

 

481,818

 

 

 

466,792

 

Accumulated other comprehensive loss

 

(1,171

)

 

 

3,077

 

Accumulated deficit

 

(149,363

)

 

 

(126,890

)

Treasury stock, at cost: 1,028,124 shares at June 30, 2022 and 933,165 shares at December 31, 2021

 

(16,530

)

 

 

(10,779

)

Total stockholders’ equity

 

314,754

 

 

 

332,200

 

Total liabilities and stockholders’ equity

$

635,170

 

 

$

562,582

 


Trupanion, Inc.
Consolidated Statements of Cash Flows
(in thousands)

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

(unaudited)

Operating activities

 

 

 

 

 

 

 

Net loss

$

(13,618

)

 

$

(9,221

)

 

$

(22,473

)

 

$

(21,669

)

Adjustments to reconcile net loss to cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

2,707

 

 

 

3,158

 

 

 

5,424

 

 

 

6,251

 

Stock-based compensation expense

 

8,634

 

 

 

6,527

 

 

 

16,183

 

 

 

14,975

 

Other, net

 

5

 

 

 

(315

)

 

 

(74

)

 

 

(545

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts and other receivables

 

(15,312

)

 

 

(21,991

)

 

 

(39,127

)

 

 

(40,796

)

Prepaid expenses and other assets

 

(761

)

 

 

(761

)

 

 

(2,821

)

 

 

(2,092

)

Accounts payable, accrued liabilities, and other liabilities

 

2,509

 

 

 

(907

)

 

 

703

 

 

 

(872

)

Reserve for veterinary invoices

 

(1,785

)

 

 

5,691

 

 

 

(2,998

)

 

 

6,870

 

Deferred revenue

 

14,491

 

 

 

15,632

 

 

 

38,463

 

 

 

33,956

 

Net cash used in operating activities

 

(3,130

)

 

 

(2,187

)

 

 

(6,720

)

 

 

(3,922

)

Investing activities

 

 

 

 

 

 

 

Purchases of investment securities

 

(24,476

)

 

 

(31,216

)

 

 

(47,368

)

 

 

(43,373

)

Maturities of investment securities

 

19,013

 

 

 

20,102

 

 

 

31,212

 

 

 

30,580

 

Purchases of property and equipment

 

(3,926

)

 

 

(2,887

)

 

 

(7,479

)

 

 

(5,770

)

Other

 

(1,497

)

 

 

(33

)

 

 

(1,502

)

 

 

(73

)

Net cash used in investing activities

 

(10,886

)

 

 

(14,034

)

 

 

(25,137

)

 

 

(18,636

)

Financing activities

 

 

 

 

 

 

 

Proceeds from debt financing, net of financing fees

 

(32

)

 

 

 

 

 

54,431

 

 

 

 

Repayments of debt

 

(150

)

 

 

 

 

 

(150

)

 

 

 

Repurchases of common stock

 

(5,751

)

 

 

 

 

 

(5,751

)

 

 

 

Proceeds from exercise of stock options

 

571

 

 

 

1,120

 

 

 

1,171

 

 

 

2,358

 

Shares withheld to satisfy tax withholding

 

(632

)

 

 

(870

)

 

 

(2,930

)

 

 

(2,751

)

Net cash (used in) provided by financing activities

 

(5,994

)

 

 

250

 

 

 

46,771

 

 

 

(393

)

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash, net

 

(835

)

 

 

178

 

 

 

(696

)

 

 

408

 

Net change in cash, cash equivalents, and restricted cash

 

(20,845

)

 

 

(15,793

)

 

 

14,218

 

 

 

(22,543

)

Cash, cash equivalents, and restricted cash at beginning of period

 

135,932

 

 

 

139,447

 

 

 

100,869

 

 

 

146,197

 

Cash, cash equivalents, and restricted cash at end of period

$

115,087

 

 

$

123,654

 

 

$

115,087

 

 

$

123,654

 


The following tables set forth our key operating metrics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Business:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total pets enrolled (at period end)

 

1,348,145

 

 

 

1,024,226

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscription Business:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total subscription pets enrolled (at period end)

 

770,318

 

 

 

643,395

 

 

 

 

 

 

 

 

 

 

 

 

 

Monthly average revenue per pet

$

64.24

 

 

$

63.34

 

 

 

 

 

 

 

 

 

 

 

 

 

Lifetime value of a pet, including fixed expenses

$

713

 

 

$

681

 

 

 

 

 

 

 

 

 

 

 

 

 

Average pet acquisition cost (PAC)

$

305

 

 

$

281

 

 

 

 

 

 

 

 

 

 

 

 

 

Average monthly retention

 

98.74

%

 

 

98.72

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Jun. 30, 2022

 

Mar. 31, 2022

 

Dec. 31, 2021

 

Sept. 30, 2021

 

Jun. 30, 2021

 

Mar. 31, 2021

 

Dec. 31, 2020

 

Sept. 30, 2020

Total Business:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total pets enrolled (at period end)

 

1,348,145

 

 

 

1,267,253

 

 

 

1,176,778

 

 

 

1,104,376

 

 

 

1,024,226

 

 

 

943,854

 

 

 

862,928

 

 

 

804,251

 

Subscription Business:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total subscription pets enrolled (at period end)

 

770,318

 

 

 

736,691

 

 

 

704,333

 

 

 

676,463

 

 

 

643,395

 

 

 

609,835

 

 

 

577,957

 

 

 

552,909

 

Monthly average revenue per pet

$

64.26

 

 

$

64.21

 

 

$

63.89

 

 

$

63.60

 

 

$

63.69

 

 

$

62.97

 

 

$

62.03

 

 

$

60.87

 

Lifetime value of a pet, including fixed expenses

$

713

 

 

$

730

 

 

$

717

 

 

$

697

 

 

$

681

 

 

$

684

 

 

$

653

 

 

$

615

 

Average pet acquisition cost (PAC)

$

309

 

 

$

301

 

 

$

306

 

 

$

280

 

 

$

284

 

 

$

279

 

 

$

272

 

 

$

261

 

Average monthly retention

 

98.74

%

 

 

98.75

%

 

 

98.74

%

 

 

98.72

%

 

 

98.72

%

 

 

98.73

%

 

 

98.71

%

 

 

98.69

%


The following table reflects the reconciliation of cash provided by operating activities to free cash flow (in thousands):

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net cash used in operating activities

$

(3,130

)

 

$

(2,187

)

 

$

(6,720

)

 

$

(3,922

)

Purchases of property and equipment

 

(3,926

)

 

 

(2,887

)

 

 

(7,479

)

 

 

(5,770

)

Free cash flow

$

(7,056

)

 

$

(5,074

)

 

$

(14,199

)

 

$

(9,692

)


The following table reflects the reconciliation between GAAP and non-GAAP measures (in thousands except percentages):

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Veterinary invoice expense

 

$

157,616

 

 

$

118,282

 

 

$

302,542

 

 

$

228,152

 

Less:

 

 

 

 

 

 

 

 

Stock-based compensation expense1

 

 

(1,022

)

 

 

(672

)

 

 

(2,195

)

 

 

(2,971

)

Other business cost of paying veterinary invoices

 

 

(50,378

)

 

 

(31,029

)

 

 

(94,714

)

 

 

(57,173

)

Subscription cost of paying veterinary invoices (non-GAAP)

 

$

106,216

 

 

$

86,581

 

 

$

205,633

 

 

$

168,008

 

% of subscription revenue

 

 

72.8

%

 

 

71.9

%

 

 

72.0

%

 

 

71.9

%

 

 

 

 

 

 

 

 

 

Other cost of revenue

 

$

33,212

 

 

$

25,433

 

 

$

64,391

 

 

$

49,148

 

Less:

 

 

 

 

 

 

 

 

Stock-based compensation expense1

 

 

(754

)

 

 

(552

)

 

 

(1,385

)

 

 

(1,487

)

Other business variable expenses

 

 

(18,010

)

 

 

(12,940

)

 

 

(34,516

)

 

 

(24,844

)

Subscription variable expenses (non-GAAP)

 

$

14,448

 

 

$

11,941

 

 

$

28,490

 

 

$

22,817

 

% of subscription revenue

 

 

9.9

%

 

 

9.9

%

 

 

10.0

%

 

 

9.8

%

 

 

 

 

 

 

 

 

 

Technology and development expense

 

$

6,396

 

 

$

4,079

 

 

$

11,625

 

 

$

7,810

 

General and administrative expense

 

 

9,227

 

 

 

7,435

 

 

 

18,593

 

 

 

14,651

 

Less:

 

 

 

 

 

 

 

 

Stock-based compensation expense1

 

 

(4,085

)

 

 

(3,122

)

 

 

(7,311

)

 

 

(5,605

)

Business combination transaction costs

 

 

 

 

 

 

 

 

 

 

 

(82

)

Development expenses2

 

 

(2,012

)

 

 

(1,121

)

 

 

(3,270

)

 

 

(1,942

)

Fixed expenses (non-GAAP)

 

$

9,526

 

 

$

7,271

 

 

$

19,637

 

 

$

14,832

 

% of total revenue

 

 

4.3

%

 

 

4.3

%

 

 

4.6

%

 

 

4.6

%

 

 

 

 

 

 

 

 

 

New pet acquisition expense

 

$

22,982

 

 

$

19,390

 

 

$

44,609

 

 

$

39,094

 

Less:

 

 

 

 

 

 

 

 

Stock-based compensation expense1

 

 

(2,601

)

 

 

(2,181

)

 

 

(4,929

)

 

 

(4,912

)

Other business pet acquisition expense

 

 

(186

)

 

 

(118

)

 

 

(295

)

 

 

(289

)

Subscription acquisition cost (non-GAAP)

 

$

20,195

 

 

$

17,091

 

 

$

39,385

 

 

$

33,893

 

% of subscription revenue

 

 

13.9

%

 

 

14.2

%

 

 

13.8

%

 

 

14.5

%

 

 

 

 

 

 

 

 

 

1Trupanion employees may elect to take restricted stock units in lieu of cash payment for their bonuses. We account for such expense as stock-based compensation according to GAAP, but we do not include it in any non-GAAP adjustments. Stock-based compensation associated with bonuses was approximately $0.2 million and $0.4 million for the three and six months ended June 30, 2022, respectively.

2As we enter the next phase of our growth, we expect to invest in initiatives that are pre-revenue, including adding new products and international expansion. These development expenses are costs related to product exploration and development that are pre-revenue and historically have been insignificant. We view these activities as uses of our adjusted operating income separate from pet acquisition spend.


The following tables reflect the reconciliation of new pet acquisition expense, previously called "sales and marketing", to acquisition cost and net acquisition cost (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

New pet acquisition expense

$

44,609

 

 

$

39,094

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

(4,929

)

 

 

(4,912

)

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition cost

 

39,680

 

 

 

34,182

 

 

 

 

 

 

 

 

 

 

 

 

 

Net of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sign-up fee revenue

 

(2,454

)

 

 

(2,524

)

 

 

 

 

 

 

 

 

 

 

 

 

Other business segment pet acquisition expense

 

(295

)

 

 

(289

)

 

 

 

 

 

 

 

 

 

 

 

 

Net acquisition cost

$

36,931

 

 

$

31,369

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Jun. 30, 2022

 

Mar. 31, 2022

 

Dec. 31, 2021

 

Sept. 30, 2021

 

Jun. 30, 2021

 

Mar. 31, 2021

 

Dec. 31, 2020

 

Sept. 30, 2020

New pet acquisition expense

$

22,982

 

 

$

21,627

 

 

$

19,845

 

 

$

19,708

 

 

$

19,390

 

 

$

19,704

 

 

$

14,809

 

 

$

13,344

 

Excluding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

(2,601

)

 

 

(2,328

)

 

 

(2,136

)

 

 

(2,112

)

 

 

(2,181

)

 

 

(2,731

)

 

 

(801

)

 

$

(741

)

Acquisition cost

 

20,381

 

 

 

19,299

 

 

 

17,709

 

 

 

17,596

 

 

 

17,209

 

 

 

16,973

 

 

 

14,008

 

 

$

12,603

 

Net of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sign-up fee revenue

 

(1,252

)

 

 

(1,202

)

 

 

(1,162

)

 

 

(1,268

)

 

 

(1,260

)

 

 

(1,264

)

 

 

(919

)

 

$

(827

)

Other business segment pet acquisition expense

 

(186

)

 

 

(109

)

 

 

(76

)

 

 

(134

)

 

 

(118

)

 

 

(171

)

 

 

(201

)

 

$

(265

)

Net acquisition cost

$

18,943

 

 

$

17,988

 

 

$

16,471

 

 

$

16,194

 

 

$

15,831

 

 

$

15,538

 

 

$

12,888

 

 

$

11,511

 


The following tables reflect the reconciliation of adjusted EBITDA to net income (loss) (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(22,473

)

 

$

(21,669

)

 

 

 

 

 

 

 

 

 

 

 

 

Excluding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

15,819

 

 

 

14,975

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

5,424

 

 

 

6,251

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

(394

)

 

 

(172

)

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

1,272

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-operating expenses

 

(1

)

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit

 

(5

)

 

 

(412

)

 

 

 

 

 

 

 

 

 

 

 

 

Business combination transaction costs

 

 

 

 

82

 

 

 

 

 

 

 

 

 

 

 

 

 

(Gain) loss from equity method investment

 

(131

)

 

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

(489

)

 

$

(935

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Jun. 30, 2022

 

Mar. 31, 2022

 

Dec. 31, 2021

 

Sept. 30, 2021

 

Jun. 30, 2021

 

Mar. 31, 2021

 

Dec. 31, 2020

 

Sept. 30, 2020

Net loss

$

(13,618

)

 

$

(8,855

)

 

$

(7,042

)

 

$

(6,819

)

 

$

(9,221

)

 

$

(12,448

)

 

$

(3,502

)

 

$

(2,558

)

Excluding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

8,462

 

 

 

7,358

 

 

 

6,808

 

 

 

6,443

 

 

 

6,527

 

 

 

8,448

 

 

 

2,602

 

 

 

2,430

 

Depreciation and amortization expense

 

2,707

 

 

 

2,717

 

 

 

2,770

 

 

 

2,944

 

 

 

3,158

 

 

 

3,093

 

 

 

2,301

 

 

 

1,666

 

Interest income

 

(297

)

 

 

(97

)

 

 

(80

)

 

 

(85

)

 

 

(84

)

 

 

(88

)

 

 

(83

)

 

 

(74

)

Interest expense

 

1,193

 

 

 

79

 

 

 

9

 

 

 

 

 

 

3

 

 

 

(2

)

 

 

337

 

 

 

324

 

Other non-operating expenses

 

(1

)

 

 

 

 

 

 

 

 

(1

)

 

 

3

 

 

 

 

 

 

1

 

 

 

2

 

Income tax expense (benefit)

 

19

 

 

 

(24

)

 

 

1,034

 

 

 

(312

)

 

 

(195

)

 

 

(217

)

 

 

44

 

 

 

26

 

Business combination transaction costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

82

 

 

 

522

 

 

 

 

(Gain) loss from equity method investment

 

(131

)

 

 

 

 

 

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

(1,666

)

 

$

1,178

 

 

$

3,499

 

 

$

2,170

 

 

$

197

 

 

$

(1,132

)

 

$

2,222

 

 

$

1,816

 


Contacts:

Investors:
Laura Bainbridge, Vice President, Corporate Communications
Investor.Relations@trupanion.com