Trupanion Reports Second Quarter 2021 Results
August 05 2021 - 4:05PM
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, 2021.
“Q2 was another great quarter with net pet growth up 60%
year-over-year, led by exceptionally strong retention rates,” said
Darryl Rawlings, founder and chief executive officer of
Trupanion.
Second Quarter 2021 Financial and Business
Highlights
- Total revenue was $168.3 million, an increase of 43% compared
to the second quarter of 2020.
- Total enrolled pets (including pets from our other business
segment) was 1,024,226 at June 30, 2021, an increase of 38% over
the second quarter of 2020.
- Subscription business revenue was $120.4 million, an increase
of 30% compared to the second quarter of 2020 (27% on a constant
currency basis).
- Subscription enrolled pets was 643,395 at June 30, 2021, an
increase of 22% over the second quarter of 2020.
- Net loss was $(9.2) million, or $(0.23) per basic and diluted
share, compared to net income of $1.4 million, or $0.04 per basic
and diluted share, in the second quarter of 2020. Net loss per
share was impacted by $0.11 due to an increase in stock-based
compensation and by $0.04 due to an increase in depreciation and
amortization when compared to the prior year period. The
remaining year-over-year change in earnings per share primarily
reflects our accelerated growth and associated acquisition spend in
the second quarter of 2021.
- Adjusted EBITDA was $0.2 million, compared to adjusted EBITDA
of $5.5 million in the second quarter of 2020.
- Operating cash flow was $(2.2) million and free cash flow was
$(5.1) million in the second quarter of 2021. This compared to
operating cash flow of $4.9 million and free cash flow of $3.1
million in the second quarter of 2020.
First Half 2021 Financial and Business
Highlights
- Total revenue was $322.9 million, an increase of 41% compared
to the first half of 2020.
- Subscription business revenue was $233.7 million, an increase
of 28% compared to the first half of 2020.
- Net loss was $(21.7) million, or $(0.54) per basic and diluted
share, compared to net income of $0.2 million, or $0.01 per basic
and diluted share, in the first half of 2020. Net loss per share
was impacted by $0.28 due to an increase in stock-based
compensation and by $0.08 due to an increase in depreciation and
amortization when compared to the prior year period. The remaining
year-over-year change in earnings per share primarily reflects our
accelerated growth and associated acquisition spend in the first
half of 2021.
- Adjusted EBITDA was $(0.9) million, compared to adjusted EBITDA
of $7.5 million in the first half of 2020.
- Operating cash flow was $(3.9) million and free cash flow was
$(9.7) million in the first half of 2021. This compared to
operating cash flow of $7.8 million and free cash flow of $4.5
million in the first half of 2020.
Revenue by Quarter
A chart accompanying this announcement is available
at: http://ml.globenewswire.com/Resource/Download/8ab25510-5602-42d8-9f42-2c75ecf13846
Conference CallTrupanion’s management will host
a conference call today to review its second quarter 2021 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: 13720129.
About TrupanionTrupanion is a leader in medical
insurance for cats and dogs throughout the United States, Canada
and Australia with over 600,000 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 proprietary software, Trupanion is the only provider
with the technology to pay veterinarians directly in minutes 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 StatementsThis press release
contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 relating to, among other things, expectations,
plans, prospects and financial results for Trupanion, including,
but not limited to, its expectations regarding its ability to
continue to grow its enrollments and revenue, 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, 2020 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 MeasuresTrupanion’s stated
results may include certain non-GAAP financial measures. These
non-GAAP financial measures may not provide information that is
directly comparable to that provided by other companies in its
industry as other companies in its industry may calculate or use
non-GAAP financial measures differently. In addition, there are
limitations in using non-GAAP financial measures because the
non-GAAP financial measures are not prepared in accordance with
GAAP, may be different from non-GAAP financial measures used by
other companies and exclude expenses that may have a material
impact on Trupanion’s reported financial results. The presentation
and utilization of non-GAAP financial measures is not meant to be
considered in isolation or as a substitute for the directly
comparable financial measures prepared in accordance with GAAP.
Trupanion urges its investors to review the reconciliation of its
non-GAAP financial measures to the most directly comparable GAAP
financial measures in its consolidated financial statements, and
not to rely on any single financial or operating measure to
evaluate its business. These reconciliations are included below and
on Trupanion’s Investor Relations website.
Because of varying available valuation methodologies, subjective
assumptions and the variety of equity instruments that can impact a
company’s non-cash expenses, Trupanion believes that providing
various non-GAAP financial measures that exclude stock-based
compensation expense and depreciation and amortization expense
allows for more meaningful comparisons between its operating
results from period to period. Trupanion offsets sales and
marketing 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 sales and marketing expenses.
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, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
(unaudited) |
Revenue: |
|
|
|
|
|
|
|
Subscription business |
$ |
120,373 |
|
|
|
$ |
92,453 |
|
|
|
$ |
233,665 |
|
|
|
$ |
181,937 |
|
|
Other business |
47,887 |
|
|
|
25,467 |
|
|
|
89,280 |
|
|
|
47,284 |
|
|
Total revenue |
168,260 |
|
|
|
117,920 |
|
|
|
322,945 |
|
|
|
229,221 |
|
|
Cost of revenue: |
|
|
|
|
|
|
|
Subscription business(1) |
99,746 |
|
|
|
74,594 |
|
|
|
195,283 |
|
|
|
148,016 |
|
|
Other business |
43,969 |
|
|
|
23,459 |
|
|
|
82,017 |
|
|
|
43,486 |
|
|
Total cost of revenue(2) |
143,715 |
|
|
|
98,053 |
|
|
|
277,300 |
|
|
|
191,502 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
Technology and development(1) |
4,079 |
|
|
|
2,293 |
|
|
|
7,810 |
|
|
|
4,413 |
|
|
General and administrative(1) |
7,435 |
|
|
|
5,073 |
|
|
|
14,651 |
|
|
|
9,933 |
|
|
Sales and marketing(1) |
19,390 |
|
|
|
9,242 |
|
|
|
39,094 |
|
|
|
19,684 |
|
|
Depreciation and amortization(3) |
3,158 |
|
|
|
1,723 |
|
|
|
6,251 |
|
|
|
3,104 |
|
|
Total operating expenses |
34,062 |
|
|
|
18,331 |
|
|
|
67,806 |
|
|
|
37,134 |
|
|
Gain (loss) from investment in
joint venture |
5 |
|
|
|
(27 |
) |
|
|
(80 |
) |
|
|
(86 |
) |
|
Operating income (loss) |
(9,512 |
) |
|
|
1,509 |
|
|
|
(22,241 |
) |
|
|
499 |
|
|
Interest expense |
3 |
|
|
|
341 |
|
|
|
1 |
|
|
|
720 |
|
|
Other income, net |
(99 |
) |
|
|
(202 |
) |
|
|
(161 |
) |
|
|
(484 |
) |
|
Gain (loss) before income
taxes |
(9,416 |
) |
|
|
1,370 |
|
|
|
(22,081 |
) |
|
|
263 |
|
|
Income tax expense
(benefit) |
(195 |
) |
|
|
17 |
|
|
|
(412 |
) |
|
|
43 |
|
|
Net income (loss) |
$ |
(9,221 |
) |
|
|
$ |
1,353 |
|
|
|
$ |
(21,669 |
) |
|
|
$ |
220 |
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.23 |
) |
|
|
$ |
0.04 |
|
|
|
$ |
(0.54 |
) |
|
|
$ |
0.01 |
|
|
Diluted |
$ |
(0.23 |
) |
|
|
$ |
0.04 |
|
|
|
$ |
(0.54 |
) |
|
|
$ |
0.01 |
|
|
Weighted average shares of
common stock outstanding: |
|
|
|
|
|
|
|
Basic |
40,142,872 |
|
|
|
35,143,592 |
|
|
|
39,922,885 |
|
|
|
35,075,322 |
|
|
Diluted |
40,142,872 |
|
|
|
36,688,167 |
|
|
|
39,922,885 |
|
|
|
36,601,927 |
|
|
|
|
|
|
|
|
|
|
(1)Includes stock-based
compensation expense as follows: |
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Cost of revenue |
$ |
1,224 |
|
|
|
$ |
344 |
|
|
|
$ |
4,458 |
|
|
|
$ |
612 |
|
|
Technology and
development |
800 |
|
|
|
133 |
|
|
|
1,464 |
|
|
|
233 |
|
|
General and
administrative |
2,322 |
|
|
|
1,075 |
|
|
|
4,141 |
|
|
|
1,804 |
|
|
Sales and marketing |
2,181 |
|
|
|
675 |
|
|
|
4,912 |
|
|
|
1,231 |
|
|
Total stock-based compensation expense |
$ |
6,527 |
|
|
|
$ |
2,227 |
|
|
|
$ |
14,975 |
|
|
|
$ |
3,880 |
|
|
|
|
|
|
|
|
|
|
(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, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Veterinary invoice expense |
$ |
118,282 |
|
|
|
$ |
82,049 |
|
|
|
$ |
228,152 |
|
|
|
$ |
161,689 |
|
|
Other cost of revenue |
25,433 |
|
|
|
16,004 |
|
|
|
49,148 |
|
|
|
29,813 |
|
|
Total cost of revenue |
$ |
143,715 |
|
|
|
$ |
98,053 |
|
|
|
$ |
277,300 |
|
|
|
$ |
191,502 |
|
|
|
|
|
|
|
|
|
|
(3)Depreciation and
amortization expenses have been reclassified as a separate line
item and prior period amounts have been reclassified from their
original presentation to conform to the current period
presentation. The Company has elected to present depreciation and
amortization expenses as a separate line to better align with
management's view of the Company's operating results. |
Trupanion, Inc.Consolidated Balance
Sheets(in thousands, except share
data) |
|
June 30, 2021 |
|
December 31, 2020 |
|
(unaudited) |
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
117,332 |
|
|
|
$ |
139,878 |
|
|
Short-term investments |
102,089 |
|
|
|
89,862 |
|
|
Accounts and other receivables |
139,966 |
|
|
|
99,065 |
|
|
Prepaid expenses and other assets |
10,535 |
|
|
|
8,222 |
|
|
Total current assets |
369,922 |
|
|
|
337,027 |
|
|
Restricted cash |
6,322 |
|
|
|
6,319 |
|
|
Long-term investments, at fair
value |
6,226 |
|
|
|
5,566 |
|
|
Property and equipment,
net |
74,405 |
|
|
|
72,602 |
|
|
Intangible assets, net |
25,120 |
|
|
|
27,134 |
|
|
Other long-term assets |
16,476 |
|
|
|
16,557 |
|
|
Goodwill |
33,495 |
|
|
|
33,045 |
|
|
Total assets |
$ |
531,966 |
|
|
|
$ |
498,250 |
|
|
Liabilities and
stockholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
4,863 |
|
|
|
$ |
6,059 |
|
|
Accrued liabilities and other current liabilities |
22,530 |
|
|
|
22,864 |
|
|
Reserve for veterinary invoices |
35,856 |
|
|
|
28,929 |
|
|
Deferred revenue |
126,614 |
|
|
|
92,547 |
|
|
Total current liabilities |
189,863 |
|
|
|
150,399 |
|
|
Deferred tax liabilities |
4,259 |
|
|
|
4,705 |
|
|
Other liabilities |
3,639 |
|
|
|
3,207 |
|
|
Total liabilities |
197,761 |
|
|
|
158,311 |
|
|
Stockholders’ equity: |
|
|
|
Common stock: $0.00001 par value
per share, 100,000,000 shares authorized; 41,164,220 and 40,231,055
issued and outstanding at June 30, 2021; 40,383,972 and 39,450,807
shares issued and outstanding at December 31, 2020 |
— |
|
|
|
— |
|
|
Preferred stock: $0.00001 par
value per share, 10,000,000 shares authorized; no shares issued and
outstanding |
— |
|
|
|
— |
|
|
Additional paid-in
capital |
453,950 |
|
|
|
439,007 |
|
|
Accumulated other
comprehensive loss |
4,063 |
|
|
|
3,071 |
|
|
Accumulated deficit |
(113,029 |
) |
|
|
(91,360 |
) |
|
Treasury stock, at cost:
933,165 shares at June 30, 2021 and 933,165 shares at
December 31, 2020 |
(10,779 |
) |
|
|
(10,779 |
) |
|
Total stockholders’ equity |
334,205 |
|
|
|
339,939 |
|
|
Total liabilities and stockholders’ equity |
$ |
531,966 |
|
|
|
$ |
498,250 |
|
|
Trupanion, Inc.Consolidated Statements of
Cash Flows(in thousands) |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
(unaudited) |
Operating
activities |
|
|
|
|
|
|
|
Net (loss) income |
$ |
(9,221 |
) |
|
|
$ |
1,353 |
|
|
|
$ |
(21,669 |
) |
|
|
$ |
220 |
|
|
Adjustments to reconcile net
(loss) income to cash provided by operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
3,158 |
|
|
|
1,723 |
|
|
|
6,251 |
|
|
|
3,104 |
|
|
Stock-based compensation expense |
6,527 |
|
|
|
2,227 |
|
|
|
14,975 |
|
|
|
3,880 |
|
|
Other, net |
(315 |
) |
|
|
29 |
|
|
|
(545 |
) |
|
|
102 |
|
|
Changes in operating assets
and liabilities: |
|
|
|
|
|
|
|
Accounts and other receivables |
(21,991 |
) |
|
|
(14,405 |
) |
|
|
(40,796 |
) |
|
|
(26,102 |
) |
|
Prepaid expenses and other assets |
(761 |
) |
|
|
(249 |
) |
|
|
(2,092 |
) |
|
|
(444 |
) |
|
Accounts payable, accrued liabilities, and other liabilities |
(907 |
) |
|
|
(806 |
) |
|
|
(872 |
) |
|
|
516 |
|
|
Reserve for veterinary invoices |
5,691 |
|
|
|
1,439 |
|
|
|
6,870 |
|
|
|
3,264 |
|
|
Deferred revenue |
15,632 |
|
|
|
13,539 |
|
|
|
33,956 |
|
|
|
23,234 |
|
|
Net cash (used in) provided by operating activities |
(2,187 |
) |
|
|
4,850 |
|
|
|
(3,922 |
) |
|
|
7,774 |
|
|
Investing
activities |
|
|
|
|
|
|
|
Purchases of investment
securities |
(31,216 |
) |
|
|
(14,971 |
) |
|
|
(43,373 |
) |
|
|
(26,550 |
) |
|
Maturities of investment
securities |
20,102 |
|
|
|
15,704 |
|
|
|
30,580 |
|
|
|
20,804 |
|
|
Purchases of property,
equipment and intangible assets |
(2,887 |
) |
|
|
(1,743 |
) |
|
|
(5,770 |
) |
|
|
(3,239 |
) |
|
Other |
(33 |
) |
|
|
98 |
|
|
|
(73 |
) |
|
|
107 |
|
|
Net cash used in investing activities |
(14,034 |
) |
|
|
(912 |
) |
|
|
(18,636 |
) |
|
|
(8,878 |
) |
|
Financing
activities |
|
|
|
|
|
|
|
Proceeds from exercise of
stock options |
1,120 |
|
|
|
1,108 |
|
|
|
2,358 |
|
|
|
1,667 |
|
|
Shares withheld to satisfy tax
withholding |
(870 |
) |
|
|
(120 |
) |
|
|
(2,751 |
) |
|
|
(441 |
) |
|
Borrowings from line of
credit, net of financing fees |
— |
|
|
|
(9 |
) |
|
|
— |
|
|
|
3,735 |
|
|
Repayments to line of
credit |
— |
|
|
|
(2,500 |
) |
|
|
— |
|
|
|
(2,500 |
) |
|
Other financing |
— |
|
|
|
— |
|
|
|
— |
|
|
|
(78 |
) |
|
Net cash provided by (used in) financing activities |
250 |
|
|
|
(1,521 |
) |
|
|
(393 |
) |
|
|
2,383 |
|
|
Effect of foreign exchange
rate changes on cash, cash equivalents, and restricted cash,
net |
178 |
|
|
|
375 |
|
|
|
408 |
|
|
|
(434 |
) |
|
Net change in cash, cash
equivalents, and restricted cash |
(15,793 |
) |
|
|
2,792 |
|
|
|
(22,543 |
) |
|
|
845 |
|
|
Cash, cash equivalents, and
restricted cash at beginning of period |
139,447 |
|
|
|
28,621 |
|
|
|
146,197 |
|
|
|
30,568 |
|
|
Cash, cash equivalents, and
restricted cash at end of period |
$ |
123,654 |
|
|
|
$ |
31,413 |
|
|
|
$ |
123,654 |
|
|
|
$ |
31,413 |
|
|
The following
tables set forth our key operating metrics: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Total Business: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total pets enrolled (at period end) |
1,024,226 |
|
|
744,727 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription Business: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total subscription pets enrolled (at period end) |
643,395 |
|
|
529,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Monthly average revenue per pet |
$ |
63.34 |
|
|
$ |
59.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Lifetime value of a pet, including fixed expenses |
$ |
681 |
|
|
$ |
597 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average pet acquisition cost (PAC) |
$ |
281 |
|
|
$ |
222 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average monthly retention |
98.72 |
% |
|
98.66 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
June. 30, 2021 |
|
Mar. 31, 2021 |
|
Dec. 31, 2020 |
|
Sept. 30, 2020 |
|
Jun. 30, 2020 |
|
Mar. 31, 2020 |
|
Dec. 31, 2019 |
|
Sept. 30, 2019 |
Total Business: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total pets enrolled (at period end) |
1,024,226 |
|
|
943,854 |
|
|
862,928 |
|
|
804,251 |
|
|
744,727 |
|
|
687,435 |
|
|
646,728 |
|
|
613,694 |
|
Subscription Business: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total subscription pets enrolled (at period end) |
643,395 |
|
|
609,835 |
|
|
577,957 |
|
|
552,909 |
|
|
529,400 |
|
|
508,480 |
|
|
494,026 |
|
|
479,427 |
|
Monthly average revenue per pet |
$ |
63.69 |
|
|
$ |
62.97 |
|
|
$ |
62.03 |
|
|
$ |
60.87 |
|
|
$ |
59.40 |
|
|
$ |
58.96 |
|
|
$ |
58.58 |
|
|
$ |
58.12 |
|
Lifetime value of a pet, including fixed expenses |
$ |
681 |
|
|
$ |
684 |
|
|
$ |
653 |
|
|
$ |
615 |
|
|
$ |
597 |
|
|
$ |
535 |
|
|
$ |
523 |
|
|
$ |
511 |
|
Average pet acquisition cost (PAC) |
$ |
284 |
|
|
$ |
279 |
|
|
$ |
272 |
|
|
$ |
261 |
|
|
$ |
199 |
|
|
$ |
247 |
|
|
$ |
222 |
|
|
$ |
208 |
|
Average monthly retention |
98.72 |
% |
|
98.73 |
% |
|
98.71 |
% |
|
98.69 |
% |
|
98.66 |
% |
|
98.59 |
% |
|
98.58 |
% |
|
98.59 |
% |
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, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net cash (used in) provided by
operating activities |
$ |
(2,187 |
) |
|
|
$ |
4,850 |
|
|
|
$ |
(3,922 |
) |
|
|
$ |
7,774 |
|
|
Purchases of property and
equipment |
(2,887 |
) |
|
|
(1,743 |
) |
|
|
(5,770 |
) |
|
|
(3,239 |
) |
|
Free cash flow |
$ |
(5,074 |
) |
|
|
$ |
3,107 |
|
|
|
$ |
(9,692 |
) |
|
|
$ |
4,535 |
|
|
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, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Veterinary invoice
expense |
|
$ |
118,282 |
|
|
|
$ |
82,049 |
|
|
|
$ |
228,152 |
|
|
|
$ |
161,689 |
|
|
Excluding: |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
(672 |
) |
|
|
(245 |
) |
|
|
(2,971 |
) |
|
|
(423 |
) |
|
Other business cost of paying veterinary invoices |
|
(31,029 |
) |
|
|
(16,019 |
) |
|
|
(57,173 |
) |
|
|
(30,471 |
) |
|
Subscription cost of paying veterinary
invoices |
|
$ |
86,581 |
|
|
|
$ |
65,785 |
|
|
|
$ |
168,008 |
|
|
|
$ |
130,795 |
|
|
% of subscription revenue |
|
71.9% |
|
|
|
71.2% |
|
|
|
71.9% |
|
|
|
71.9% |
|
|
|
|
|
|
|
|
|
|
|
Other cost of revenue |
|
$ |
25,433 |
|
|
|
$ |
16,004 |
|
|
|
$ |
49,148 |
|
|
|
$ |
29,813 |
|
|
Excluding: |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
(552 |
) |
|
|
(99 |
) |
|
|
(1,487 |
) |
|
|
(189 |
) |
|
Other business variable expenses |
|
(12,940 |
) |
|
|
(7,440 |
) |
|
|
(24,844 |
) |
|
|
(13,015 |
) |
|
Subscription variable expenses |
|
$ |
11,941 |
|
|
|
$ |
8,465 |
|
|
|
$ |
22,817 |
|
|
|
$ |
16,609 |
|
|
% of subscription revenue |
|
9.9% |
|
|
|
9.2% |
|
|
|
9.8% |
|
|
|
9.1% |
|
|
|
|
|
|
|
|
|
|
|
Technology and development
expense |
|
$ |
4,079 |
|
|
|
$ |
2,293 |
|
|
|
$ |
7,810 |
|
|
|
$ |
4,413 |
|
|
General and administrative
expense |
|
7,435 |
|
|
|
5,073 |
|
|
|
14,651 |
|
|
|
9,933 |
|
|
Excluding: |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
(3,122 |
) |
|
|
(1,208 |
) |
|
|
(5,605 |
) |
|
|
(2,037 |
) |
|
Development expenses1 |
|
(1,121 |
) |
|
|
— |
|
|
|
(1,942 |
) |
|
|
— |
|
|
Business combination transaction costs2 |
|
— |
|
|
|
— |
|
|
|
(82 |
) |
|
|
— |
|
|
Fixed expenses |
|
$ |
7,271 |
|
|
|
$ |
6,158 |
|
|
|
$ |
14,832 |
|
|
|
$ |
12,309 |
|
|
% of total revenue |
|
4.3% |
|
|
|
5.2% |
|
|
|
4.6% |
|
|
|
5.4% |
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
expense |
|
$ |
19,390 |
|
|
|
$ |
9,242 |
|
|
|
$ |
39,094 |
|
|
|
$ |
19,684 |
|
|
Excluding: |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
(2,181 |
) |
|
|
(675 |
) |
|
|
(4,912 |
) |
|
|
(1,231 |
) |
|
Other business acquisition cost |
|
(118 |
) |
|
|
(191 |
) |
|
|
(289 |
) |
|
|
(354 |
) |
|
Subscription acquisition cost |
|
$ |
17,091 |
|
|
|
$ |
8,376 |
|
|
|
$ |
33,893 |
|
|
|
$ |
18,099 |
|
|
% of subscription revenue |
|
14.2% |
|
|
|
9.1% |
|
|
|
14.5% |
|
|
|
10.0% |
|
|
|
|
|
|
|
|
|
|
|
Technology and
development |
|
$ |
4,079 |
|
|
|
$ |
2,293 |
|
|
|
$ |
7,810 |
|
|
|
$ |
4,413 |
|
|
Excluding: |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
(800 |
) |
|
|
(133 |
) |
|
|
(1,464 |
) |
|
|
(233 |
) |
|
Technology expenses |
|
(2,158 |
) |
|
|
(2,160 |
) |
|
|
(4,404 |
) |
|
|
(4,180 |
) |
|
Development expenses1 |
|
$ |
1,121 |
|
|
|
$ |
— |
|
|
|
$ |
1,942 |
|
|
|
$ |
— |
|
|
% of total revenue |
|
0.7% |
|
|
|
— |
% |
|
|
0.6% |
|
|
|
— |
% |
|
|
|
|
|
|
|
|
|
|
1As 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. |
2These one-time
expenses related to our acquisition of a software business,
primarily related to legal and transaction costs incurred. |
The following
tables reflect the reconciliation of acquisition cost and net
acquisition cost to sales and marketing expense (in
thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
expenses |
$ |
39,094 |
|
|
|
$ |
19,684 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
(4,912 |
) |
|
|
(1,231 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition cost |
34,182 |
|
|
|
18,453 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sign-up fee revenue |
(2,524 |
) |
|
|
(1,546 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other business segment sales and marketing expense |
(289 |
) |
|
|
(354 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net acquisition cost |
$ |
31,369 |
|
|
|
$ |
16,553 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
June. 30, 2021 |
|
Mar. 31, 2021 |
|
Dec. 31, 2020 |
|
Sept. 30, 2020 |
|
Jun. 30, 2020 |
|
Mar. 31, 2020 |
|
Dec. 31, 2019 |
|
Sept. 30, 2019 |
Sales and marketing
expenses |
$ |
19,390 |
|
|
|
$ |
19,704 |
|
|
|
$ |
14,809 |
|
|
|
$ |
13,344 |
|
|
|
$ |
9,242 |
|
|
|
$ |
10,442 |
|
|
|
$ |
9,212 |
|
|
|
$ |
9,255 |
|
|
Excluding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
(2,181 |
) |
|
|
(2,731 |
) |
|
|
(801 |
) |
|
|
(741 |
) |
|
|
(675 |
) |
|
|
(556 |
) |
|
|
(547 |
) |
|
|
(577 |
) |
|
Acquisition cost |
17,209 |
|
|
|
16,973 |
|
|
|
14,008 |
|
|
|
12,603 |
|
|
|
8,567 |
|
|
|
9,886 |
|
|
|
8,665 |
|
|
|
8,678 |
|
|
Net of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sign-up fee revenue |
(1,260 |
) |
|
|
(1,264 |
) |
|
|
(919 |
) |
|
|
(827 |
) |
|
|
(781 |
) |
|
|
(765 |
) |
|
|
(730 |
) |
|
|
(790 |
) |
|
Other business segment sales and marketing expense |
(118 |
) |
|
|
(171 |
) |
|
|
(201 |
) |
|
|
(265 |
) |
|
|
(191 |
) |
|
|
(163 |
) |
|
|
(152 |
) |
|
|
(94 |
) |
|
Net acquisition cost |
$ |
15,831 |
|
|
|
$ |
15,538 |
|
|
|
$ |
12,888 |
|
|
|
$ |
11,511 |
|
|
|
$ |
7,595 |
|
|
|
$ |
8,958 |
|
|
|
$ |
7,783 |
|
|
|
$ |
7,794 |
|
|
The following
tables reflect the reconciliation of adjusted EBITDA to net income
(loss) (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
$ |
(21,669 |
) |
|
|
$ |
220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
14,975 |
|
|
|
3,880 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense |
6,251 |
|
|
|
3,104 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
(172 |
) |
|
|
(471 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
1 |
|
|
|
720 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-operating expenses |
3 |
|
|
|
96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit) expense |
(412 |
) |
|
|
43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business combination transaction costs |
82 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss (gain) from equity method investment |
6 |
|
|
|
(117 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
(935 |
) |
|
|
$ |
7,475 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
June. 30, 2021 |
|
Mar. 31, 2021 |
|
Dec. 31, 2020 |
|
Sept. 30, 2020 |
|
Jun. 30, 2020 |
|
Mar. 31, 2020 |
|
Dec. 31, 2019 |
|
Sept. 30, 2019 |
Net (loss) income |
$ |
(9,221 |
) |
|
|
$ |
(12,448 |
) |
|
|
$ |
(3,502 |
) |
|
|
$ |
(2,558 |
) |
|
|
$ |
1,353 |
|
|
|
$ |
(1,133 |
) |
|
|
$ |
636 |
|
|
|
$ |
782 |
|
|
Excluding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
6,527 |
|
|
|
8,448 |
|
|
|
2,602 |
|
|
|
2,430 |
|
|
|
2,227 |
|
|
|
1,653 |
|
|
|
1,771 |
|
|
|
1,845 |
|
|
Depreciation and amortization expense |
3,158 |
|
|
|
3,093 |
|
|
|
2,301 |
|
|
|
1,666 |
|
|
|
1,723 |
|
|
|
1,381 |
|
|
|
1,274 |
|
|
|
1,181 |
|
|
Interest income |
(84 |
) |
|
|
(88 |
) |
|
|
(83 |
) |
|
|
(74 |
) |
|
|
(134 |
) |
|
|
(337 |
) |
|
|
(516 |
) |
|
|
(411 |
) |
|
Interest expense |
3 |
|
|
|
(2 |
) |
|
|
337 |
|
|
|
324 |
|
|
|
341 |
|
|
|
379 |
|
|
|
375 |
|
|
|
340 |
|
|
Other non-operating expenses |
3 |
|
|
|
— |
|
|
|
1 |
|
|
|
2 |
|
|
|
44 |
|
|
|
52 |
|
|
|
(22 |
) |
|
|
122 |
|
|
Income tax (benefit) expense |
(195 |
) |
|
|
(217 |
) |
|
|
44 |
|
|
|
26 |
|
|
|
17 |
|
|
|
26 |
|
|
|
157 |
|
|
|
18 |
|
|
Business combination transaction costs |
— |
|
|
|
82 |
|
|
|
522 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Loss (gain) from equity method investment |
6 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(117 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Adjusted EBITDA |
$ |
197 |
|
|
|
$ |
(1,132 |
) |
|
|
$ |
2,222 |
|
|
|
$ |
1,816 |
|
|
|
$ |
5,454 |
|
|
|
$ |
2,021 |
|
|
|
$ |
3,675 |
|
|
|
$ |
3,877 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contacts:
Investors:Laura Bainbridge, Vice President,
Corporate
Communications206.607.1929InvestorRelations@trupanion.com
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