TRUP - Earnings call transcript Q1 2018

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Operator

Greetings, and welcome to the Trupanion First Quarter 2018 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Laura Bainbridge with Investor Relations. Thank you.

You may begin.

Laura Bainbridge

afternoon. good and you, Thank Welcome to call. financial conference quarter Trupanion first XXXX results the Participating Chief Darryl Tricia are on call today's Rawlings, Financial Plouf, Officer. Executive Chief and Officer;

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

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

Darryl Rawlings

and modes Thanks, everyone. good at our an Laura, Across deepen afternoon It’s organization exciting around and the to working competitive Trupanion. busy the business. time we’re here

partner to few practices. territory Just held weeks best and It a was event share ago, a inspiring our an great conference. we opportunity annual sixth

Trupanion our one our Express in competitive this Our to having Express focus on I pay and Trupanion year's The will our greater modes. at more it Express think discussed more detailed on read limited our These to to upcoming territory and about few integrates last detail about in encourage partners X. all that us shareholder be software letter. that allows want in topics I be we also Seattle give management with of hospitals our at veterinary without conference the we’re have of treatment. directly time say this practice at moment. of of Trupanion is would success value and some the annual veterinary would was touch you which a I largest today, annual shareholder meeting Also report business. I'll XXXX mention as software invoices published how highlights which my it to to a into a provides insight here operate includes week we June but our front upon

going our meeting most. reminder, entire for achievements with you months where importantly investors for direct will leadership challenges our the team thoroughly past the a care to Q&A strategy we questions cover will opportunity opportunity our XX Most As over the and is the our shareholder and forward. our understand attendees best have about

spent along spend our coming available strategic to deploy in these benefit’s funds the and in strong team from operating covered see now to Turning opportunity important key subscription on business ball to with In at quarter expectations. margin our business year-over-year pleased quarter, internal metrics be line subscription return. to Initiatives Revenue we our initiatives start with and with Within years. year also our XX% of we prior and on has meeting first initiatives. outperforming million key our of yet new encouraging other the core pets. and we our will strong begun business as significant return shareholder as our were or our the to strong a of continue results dedicate from discussing segment our to Once we’re piece test of of year to to move we traction. spend intend our across our gain to to increased this million results, the the see of corporate Expanding strategy initiatives. income of our our XX,XXX continue our approximately other an acquire in do funds some we’re the our year-over-year results grew forward part efforts around one not financial a rates operating this million is pet X.X adjusted in revenue portion our rates to so invest employee acquisition to discussion. we period. Adjusted again, area X.X X.X XX% We several achieved to test us our

visits approximately employees to additional continue We we increasing approximately X,XXX visiting partners had X.X we totals X,XXX the made over with in total, ended our the of have aggregate of with XX,XXX face-to-face unique year XXX end We veterinary our U.S. aggressively active team territory spend veterinary decade about XX,XXX ago. hospitals touch and this inside In the made sales clinics. a complements we have visits team from number since at XXXX. In up now time on approximately market estimate we XX that full XXXX territory XXXX, hospitals. entered which we partners million the during an points

As XXXX. previously end of clinics I from mentioned increase was modes one at the X,XXX Trupanion quarter the competitive of Express over of Express Trupanion XX% an and over QX, our first installed in is

Over we $XX the time directly to period, paid million over veterinarians. same

make as decisions regardless for hospitals is to minutes our veterinary five in pet exceptional us aided in at the pay Because to usually of under treatment proud are to Trupanion best pay facilitating we long. their customer results of left invoice minutes they five We ago Express collectively is pocket these many Years’ our crazy the think and cost. an a medical less in $XX pets customers thus component in to that help owners never of million directly minutes five represent a was critical enabled now time try thought experience. than it it too mission

For directly. the pay it automate multiple time working process hospitals reduce even to further this years, the takes to to we've been

Trupanion and with conference number we in to processes XX As the are looking processed seconds. paid partner live this veterinary automated submitted in announced territory Express being next automate these at an first of just year, By April increasing time payments. recently veterinary invoice our we went

that of accelerated enabled and an we’re Express. of focus Today the third Trupanion coming over by seeing encouraged We’re the hospitals Trupanion results pet enrollments deployment in important by are remains XXXX. Express one new from

as these as into will well shareholder provide annual our at topics June. more insights in We strategic initiatives other meeting

to call could address Trupanion's be with want take regarding whether regulations. considered the some we turn moment a Lastly certain before relationship to Trish, inconsistent fielded with veterinarians I over hospitals I vet questions recently activities with applicable to

carefully these allegations have any We do they and we not merit. reviewed think hold

in veterinarians practices and of process their on invoices enrolled the developed the to matter and We based do cannot enrollments at our our Express. programs customer pet enrollments. All customer to requirements license not directive very usage sells some to lowering intend regulatory do insurance entity. respect staff veterinary on We pay not compensate aimed regulations through specifically enhancing With the or is Trupanion licensing clear. experience the unless modifier our this strategy. One we mind with for are is for of experience have cost that do for applicable

on have detail programs about We our these website. IR some provided more

provide pet insurance are We highest value more letter and highest veterinarians programs comply the the these regulators exceptional regulators. with owners proposition are we value the get fundamentally business things. of We and treated and customers the including we model the treatment. high same comfortable service we our regulations. our applicable with that payout commitment customer a with general want pet of ensure to provide fairly. customers In industry. goals spirit want the Furthermore directly that aligns transparency as target closely We the believe to with Combined owners to in have We believe XX/X at time available. paying the believe of

owner owners the with each pet fairest pet Our high having to transparency. the for one provides degree treat simple pet price we lifetime by owners with that a broadest specific pays coverage of product the subcategories ensure And most fairly their pet. pricing

And call regulatory to happy more regarding on at over with turn I'll will our and in-depth Trish. address today's facilitate we mentioned as discussion previously the a meeting. We’re questions shareholder topics any to call annual that

Tricia Plouf

Thanks Darryl afternoon everyone. and good

quarter results financial quarter strong exceeded business growth in of guidance slightly year-over-year. our in were up of slightly of end We line first ahead for enrolled XX% our the XX.X our and mentioned to Darryl high our pet was expectations. other million better-than-expected As to segment. Revenue range due largely the

to As year-over-year. XX% XX% of year Total a XX% over pets subscription as revenue to increased million XXX,XXX approximately enrolled increased XX. enrolled Subscription total pets prior was XXX,XXX. up result March year-over-year XX.X the pets approximately

continue from of the test returns see revenue XX.XX% As line and to average to from generate up per for encouraging our continue pet our was was historical Average year spend $XX.XX retention X% results increase Monthly Darryl year-over-year an monthly solid with prior the XX.XX% initiatives. we quarter mentioned, core from in we average. and in our period.

quarter to us comprised which than is being the us other last in a due results only year that we discussed relationship slower million we anticipated business this BXB increase of generally of of anticipated our with number higher increase coupled quarter The of Year-over-year of quarter. the year. offs of with X.X driver in and in small pets quarter primary was the in roll a that last than full new a revenue having with an was revenue strong this of to segment the compared business areas XX% us component started last with QX other pets of group to growth all QX totaled due our for year has a Our year-over-year.

of of rate now year, roll growth this other revenue Total year the gross Subscription end. the revenue approximately than for business we but segment discussed the to to margin gross little would XX,XXX growth enrolled I due our call, segment being last for total a expect XX% around was in pets XX% be year. quarter rate this pets quarter full in we margin XX%. full of anticipated XX% while full segment the to the between On be slower at was the the off was XX%

As are Once variability we we makes frequency customer see margin much Trupanion forward and invoices veterinary able this in pricing satisfaction. impact. to drive model. it longer-term typically typical this believe the since see a have increase trade-off worthwhile compared do we this to temporary a a included is easier basis reminder, quarterly we reimbursement to installed on our the going gross a is it submit believe software data, Express when slight We a to so invoices in of we we in the some

XX% For margin annual near accelerating year, target are the of of we to of as to XX% end full Trupanion gross expect Express. the lower rollout be range we the our

quarter year general the represented from departments. X% the expenses our in and For total and fixed period in X% revenue administrative technology down reflecting prior of scale increased

progress this to and are these pleased is with X% to the scale Our quarter. target continued very revenue of departments long-term we

spend. million expectations spent on the we right pet period, of resulting LVP-to-PAC for line our an above in internal of year of acquisition In ratio to a which X resulted X.X X.X This LVP-to-PAC rate was $XXX pet our PAC ratio first of an in Turning million our X. return. to $XXX. our In to prior in targeted spent PAC with X.X acquisitions and X we the the for quarter of

adjusted As past, of to have in we more discussed growth. funds provides the expansion invest in operating our available income

incremental spending the in compared income which to higher acquisition totaled the operating from to to of funds new over due Our quarter from X,XXX. XXXX is X.X pets this period. XX% prior QX This increase quarter XX% prior was year. was of a subscription increase spend our the first Adjusted number up the by million year

a operating XX approximately points As adjusted revenue X.X%. percentage expanded basis margin year-over-year of to

a While is strong relative to this fell the gross of the primarily due discussed I little expansion to This it that short is year our period expectations. earlier. lower prior margin

had the net million quarter, of the or diluted prior million now EBITDA short-term cash, a million of cash for flow in $X.XX we At X.X operating X.X loss our cash EBITDA million of X.X basic outlook to This X.X adjusted including free and the investments Adjusted per the of of flow XXXX. second to XXXX for million million million million cash During and full X.X equivalents compares year share. was was of we Free the in loss X.X compared long-term had X.X XX.X year first period. quarter. and debt. XX included to which turn of flow cash and I'll XX, March quarter in million. quarter cash operating flow

million we XXXX, breakeven. revenue of of forecasting expect adjusted in range growth year-over-year at million XX representing quarter the midpoint. around XX% EBITDA revenue XX are these would to second the At For we levels, the

our For visibility over to into performance our range increasing and the segment. other slight business full in guidance we revenue our year, are QX better reflect

year-over-year spend million of growth in for million adjusted midpoint. XX million result, million year levels, At to XXX income expect XX% revenue revenue XX a we pets. and full the our the we As representing between range forecasted acquire to expect at now new to the be our operating XXX of to

our in do EBITDA opportunity if of we and we rate mind pet conversion fluctuations our the IRR strategy in shareholder deploy our Canadian will a IRR acquisition the to and as long Please detail acquisition also are this in cash recent are growth and projections discussed operating our more keep we incremental to revenue new our flow targeted as positive. As letters. We currencies. overall drive achieving between most that reminder, and U.S. subject to income adjusted we're have on

a I over back quarter for the XX% was second year at our For and now projections full end Thank turn in you rate your used which time guidance, March. conversion approximate the rate our today, will the Darryl. we call of to

Darryl Rawlings

Trish. Thanks

the investors open Q&A we questions that weekend up Omaha. our want Before for I be in call this Hathaway hosting to Annual will remind the second Berkshire Meeting Investor event to follow Annual

to call And Technology and opportunity connect in And hope York. there. Steifel we’ll excited this an conference Dental We’re investors platform we’ll few use and and be like-minded the a in media both for weeks to questions. long-term New open telecom to see at Cowan with Conference with that you the Veterinary as we up

Operator

from comes your Block with line Please Our [Operator Jon first question Instructions] proceed the with question. Stifel. of

Jon Block

territory the one the first just on maybe partner. Darryl

the ago alluded of the was seems the most letter now you XXX Maybe more letter past. right team do can XXX sort see the are inside number we at initiative that an and yours And increased to recent XXX. like you to during went to that in I of you for then shift resources it So sales retention, know about earlier? the some to you shareholder from a from XX you talk couple if years

Darryl Rawlings

partners currently on calling veterinary over We clinics. have about XXX territory little XX, about XX,XXX

grow which to have have that two number XX account XX is three the and of we going added to expect visit inside years. the trying next every them We’re days to over addition about about managers we

about have expand that still XXish would can markets multiple those XX-day they to. in between interval. to we like that There's touchpoints So

field. many not number that of has additional two challenge partner adding have only new ultimately to about with the them touchpoints through been territory expansion So and half region we've a helpful an of year the in first doing the we've territory the as of of We partners that still been it in want we make increase regions. the and lot been years. been partners that the last inside increasing territory XX% the A the existing adding is

want think So to our do lower person. territory through. do make to we is can capabilities quickly to bar to partner. to every be as the there. try and don't want is What respectful to think have the We increase we want of we’re to goal the if it that XX% to I don’t going quality make I a year it miss as we to and

mentioned some it we our people weeks XX events. the So Seattle tools, And about four was remarks, at another couple about me partner be had on partners really office. capabilities ago working some conference territory strategic we I'm the opening think and continue progress rolling I had feel We out initiatives meeting. really We the I the to happy a just about we'll the attend I days best practices spent quality inspiring made. field XXX that new territory good increase. over shareholder with talking in from was and to the

Jon Block

ask or I’ll to the I want about I’ll more follow others, online but one and up do then And with the regulation accusations. the ask offline

sort overhang been think the clearly I on stock. it’s of

me initiatives a and internally past in at not sense, it you did take run or makes just and let that your some fresh lay the changed. this regulations you So marketing hopefully is some nothing's look follow did out it of

and it if within Thanks So you the maybe you letter clarify appropriately? the law can everything Darryl. remain that laid hopefully is out confident of and that I

Darryl Rawlings

company a able issues as we exceptional is we The great had doing cooperation that with brought had very for we've proposition written much we're the And to in what experience. these last remarks got of Department to these things believe alignment high and at we've Insurance. be I of fair level any merit, value had were mentioned days. an to related to they closely territory any with XX general the trying the do having allegations allegations up opening on do not have a been and XX, So that we high veterinarians what need have of in reviewed experience the from my all were related things up that in – do is we believe hold some and are issues transparency, Most about we but we have so partners strategy veterinarians, that years amongst we're customer What is customer reason have all the work over XX veterinarians. to policyholders. and being

So hospital monitoring and pay able being their what using Trupanion allow to us sharing and to when we're to able do with clinic savings veterinary be that, to a means our at which we're they have pay it and experience process record, those to we're doing veterinarians. time medical ultimately through the invoice. going get of directly a the we directly money save of but we're measuring able needs Express, that be And is customer entire being to expenses in to some the backend

is So XX our And for regulations those the Insurance. of believe we time consistent strategy that changed doing in the tactics everything and years. last but has time, been we overall that from have line Department with we're to very

I happy to have that any the answer if anybody does So more those. hope answer else question, you

Operator

CL line with comes question Westenberg Our proceed of Please the your question. from with next King. David

David Westenberg

some look to Is retailers the opportunity insurance and wellness Wal-Mart than other Do of copy and in of retailers these Banfield. sort PetSmart what plans we’ve – and like? any of from opportunity you've would rather been new seen in sort there what that attempt seeing

Darryl Rawlings

is inside worked in happening put I Petco there's some question Banfield PetSmart locations of as have those or the their or and so opportunities David, ago with clinics of talk years and veterinary asking walls such of think you're other Wal-Mart. things

and Our I makes it best overall able sure goal quality more it in money owners location on the for to that work care. pet support to that the frequently with We're the problem extra pet any to budget more life veterinarians is get the mean owners we $X,XXX very of for know is an we're veterinarians solving of make and our to to help spend difficult are average the any clients unexpected. pet. over visit happy about help

tell happy think to not trying go. care regardless people veterinarians So we're to we're the where work to of I but with where are, them dictate and

in an Our we hour a of XX pay invoice location. it’s of the XX% your regardless coverage from is place specialty corner or around if a or actual the bigger house

support that think here us, partners. for pet veterinarians good be we can however, So we're we and evolves owners and and just to

David Westenberg

off, with you Henry future? insurance maybe [AVImark, prescription is and with prescription there us and Trupanion just And remind work software with Schein to saying you an work management offering how Express with could management then it well about which can do or management systems think work spinning that ways practice is opportunity there with that in that leverage there and to then the with any InfoMed]

Darryl Rawlings

which part first of practice question your management The is software.

or those. XX different XX% So that XX% for about believe industry aren't of kind of are the XX clinics of in XX sprinkled – We software with there's to as actually probably but about America. North we concurrently amongst close softwares, to that that versions compatible different XX,XXXish the are those

mentioned certainly of were that you So bigger compatible with. the ones all

of treatment that our to B as on clients the to is one our vomiting, cheaper and mentioned And that's happening to is Jon's the the to in are visit more of your veterinarian is go diagnostic A clients to the relates of of question, have The ultimately some veterinarian, frequently one day other or question of might spend level and reason they course higher day second or and likely the – cares. veterinarian of their which limping two part courses animal they Course which and of the more clinical treatment. our like preferred when acquisition Course do money. do symptoms clients mergers go I And health. more

ultimately the best pet the industry aligned for we're well So their we care owners the and with want clients. overall think

industry owners, I out, veterinarians to the services those stay with plays that think benefit if pet are Trupanion. we see good in however, that I they the and will work think of alignment and supplying So the veterinarians,

David Westenberg

And increase I channels your with pet different experimenting order LVP PAC acquisition. just you've within one expectations in to was more mean what been to

terms can think been what to more expectations spending, you in of us year? of in you back give channel channels half color have of in working for So just going specific and some be you’re more terms the our where the

Darryl Rawlings

expansion is reasons, open markets, expect and the and into the we'll that We We're the there like, increasing it's we're more more to if a like frequent that I results probably of to we'll about as much will also a and have we AOM with Well increase margin not PAC consumer the on go, would up going off quicker the testing but all strong to The more answers we more to continue previous and the initiatives adjusted probably for in lever returns. year expansion, period and competitive just test do think touchpoints. building operating allows pull going few back That's therefore but out payback there, not time calls that’s, as while we frequent operating to as we're I'm for account adjusted in a our touchpoints. that allows a we're turning more process. spend expansion pure us we've in managers income account about inside dollars, as have been about a be the the having on number three running harder there. talked probably we've more still seeing different it's managers to well direct year us it and DXC

Operator

Please line comes your question. Michael question Genuity. Graham Canaccord of next the with Our with from proceed

Michael Graham

this your to wonder just to are any think that proactive situation – like how taking of you that I'm you came perspective. increase try is aware could of the taking wondering I is us but like sort of on staffed give – are legal public. an you reach of contacted authorities, I'm I think How, And sort been a company the need do haven’t just impacted by and legal you since if has measures your first to investment you you’re this out. so you Darryl first there update it one from really you sort sounds

little more it terms context dealing Just, with with maybe plan a in how and how it? dealing of you on you're

Darryl Rawlings

of areas more would amount we we three becoming of had articles is years for it few the ago marketplace over five insurance when the these conclusion was are the that I on we more just have greater and to none last brought invested company up materially the and time hold internally. have Recent legal entered provide to to those of money is and limited. resources mean So context. an XX resources in any years first we merit. before I in part to spend have as first issues, in that we issues reason those I say come a think the The mentioned

have we've we full more made as mistakes the investing we number of some quickly time more company. inside over inside three those Department Today, needed. slower we're have last we about, we a contact attorneys historically of not We the have as pointed have What to react we needed reacted fines Insurance. of had Insurance we've the should not so those of But and been rightfully as licensing lawyers than out fall being the in overall we same made talking up didn't of we and from that have for people category we've center think from some the did and of our as previously. Previously, and use to outside think learned brought us few experiences I and do what’s mistakes years. that Department recently we

we're basis one a have everything also get challenging better, is is continue this we copy. that not that of doing to in regulatory a to a reasons is We're we're on but broad the that We a and category. team reviewing company easy

the have we different XX company and jurisdictions deal with. are that line model We only we

The difficult. intent. do every companies very the perfect So with perfectly. going in largest every and different not coming problems it's but trying jurisdiction to it's have to because in hard it, day things of moment because will we times, very, very of very, be is problems have It's

strategy on or us tactics veterinarian. broad the anywhere review as and we basis of before good monthly very about be with to pricing they On could Department to strategy. feel they're on a we customers daily, a basis questions communicate we weekly, contacting I've our mentioned other tactics broad how on from Insurance regular And

invest area. a the in So good we we're comfortable feel continue that on we in shape to it and

Michael Graham

another sort bigger you United States. the of happened human Just at if health picture what's look in an question insurance in

where allows insurance owners of this sort You've seems lot pet escalation in to, same has product in and things can spiral. And their to your research ARPP helped sort we're you that to starting escalate and had fund with in a and of of it see starts pets and things get of of see your happen thing cost just done to then can the what's like of metrics to kind covered the the to vets study more pet that. terms sort upward that of that allows like the you

sort could for we do just like pets cost planning care about and wondering a how it? could accelerate, lot have thoughts Just on this thinking you like see you are accelerate health any of that for

Darryl Rawlings

to from scans emergency XX-hour it ACL, have like more of six to working days ultrasounds includes larger x-rays expansion that cost and clinic not of of to to is a a specialty because means X% level has testing having referring The care clinic been and a been to diagnostic three year-over-year. veterinarians there's because it’s typically is makeup cases in X% have a of out and is clinic we've veterinarian one that x-ray Well as been business. talk close the we've that's going regular care in seen over The there veterinary I years X% that changing an of ACL to two outpacing up last We It’s CT the it’s been average types in to year this think averaging. X% moving about five different from going an week cost TPLOs. veterinarians XX hospitals. inflations is to that the and

the or again, shareholder budget letter to and you is of breed for an over it’s budget know I'll solving to obviously to the our have But cost they're backdrop difficult escalate the we very of unlucky for continue veterinary is increase if what is and years in don't the is. It's very very, we're increase reiterate the pet. care. difficult and mentioned demand to an the the care problem only But owners live XX believe pet increase. for not in to cost going case will where next veterinary and going continue is the average product. care to owners pet expect to the and I be able the to care going continue We that that to for

consumer X% availability XX% expect dependent or, have XX owners ahead North come do not The over past in to penetration We beyond XX% And seen and what quality any next care market of the we pet look XX and we will will more insurance. pricing clients just assistance needs the don't be have America. the nor believe we to going on in years. not the so are will of any of able to there to wallets If XX high signs be – have to to years and be and medical frequently. having penetrated we bear be is the our signs going be the of expanding rate cost veterinary

veterinarians So go do owners we typical to to faster and pet than expect continue more inflation, the want we going inflation. hope think to the it's more I do

Operator

RBC question. Our next with Please with the proceed Markets. Dylan your from Capital line Haber comes question of

Dylan Haber

to the you have revenue Where do there color Thank over guys from in normalize your course had learning’s expect year for on and far line marketing do you. partnerships initiatives the the you more outlook do see XXXX. TV there any to coming you other XXXX. so growth spend and And provide more expect of online? then can you you What ramp the in

Darryl Rawlings

which and Trish. hand second the is DXC the I’ll part more answer then over of part the first question the about to

more of doing I if It those it's our and way actually and a on of – continues benefits not leads. high results. really rates conversion to expansion brand the money good more driving we to What is is seen necessarily pretty it's up more aggressive quality but quality many margin DXC does play leads. our think dependent increase us DXC the What leads, not On high increase we on more like the with. is and helping have us it's intuitive on awareness gives increase it to be would not that strong going be DXC to is

We or where tend work don't XX% so Trupanion benefit Trupanion Trupanion or have Trupanion might conversion in a in market or of we clinics XX%, we having where veterinary a new and clinics market about XX%, how Express. or of different to recommending Now X% don't higher get a having full we have that XX% a market, see outcome. understanding about learn recommending of But actively rates. hear the client, have are we

we do go that and And be to effectively. many. this are is about the issue really this a is which able increasing awareness once think able again think conversion based intuitive to not cost don't we DXC an is So we to rates broad don't

that and category. a follow-up you the going to On into Trish coming hand don't conjunction. to it of also relationships practical back We I'll somebody expand done to to With to tell be be come this way have if it it think the We veterinarians. deep but has in will it's have other has doesn't marketplace you me. pockets, over that with think that, side

Tricia Plouf

slower that of expectation. partners, is call which to business expect With roll and we we from anything about forecasting When in increased look rate prior also on. mentioned pace to related that primarily I at but to not segment dramatically basis the expect your how pace. same of to regards on of a quarterly from it change And all That’s do we're of averaged year at other XX% the about the continue for the the growth be the now. to We're that to it for pretty you on parts one as full our our business would we year-over-year right between well offs question, XX% performing growth to are terms we we comes do to XX% quarters, sequential XX% the And expect saw be for decline three expect then, you XX%. this that year. the to quarter next peak

Operator

from of Instructions] Capital Markets. your with next Please line question. Our [Operator comes Mark the Lake Street proceed Argento with question

Mark Argento

of bit lifetime been have One and pet down acquisitions. but the terms we a particular. look that see to or the in a got you I had follow-ups little more drilldowns. just as I LVP be trend over is asked questions value aggressive steady couple have couple fairly thought last answered, maybe lot see in would quarters the would of

talk a could would would know and impact more cranking negative would the XX% talked better was there bit Trupanion And up secondly, question understanding explains you then rates and down you how So, gross about you lower end little are that Express have year. it Trish work? first bit be about margins of little the get for that a there. know drill range dynamics XX% of maybe the - kind Could I penetration down to talk Trupanion - said us a I Express you

Darryl Rawlings

been last Mark over LVP trending your was about first of and the it’s how quarters. question number

reminder of in So of most about $XXX. QX $XXX it recently it was it’s was been it XXXX and was a and QX XXXX as $XXX

we’re is foreseeable combination a which X% same. of retention have expect for if of the to can will coming that increasing relatively maybe year. X% stays in so mix couple that at a running it year-over-year to as drive our balance and things increase are flat at the we the positive for would it, retention rates having LVP. the Like the the I stay that we’re With there business ARPU in do the the and obviously that margins running

have margin as that accelerate the so of but tell adding as quarters be had more then last not our up expansion, much The we pets. dramatically. would more business margin we've We me going flat in we’d three been as wanted new quite growth expansion mix to likely it’s that going

referral its sources that general in You is lower is to a bunch average will little general, a out the And smooth I’d of a mention depended on are P looking backward bit. thing but probably so it other and slightly right things. tends calculation XX-month things LVP that in last

most expand or stay forward to similar maybe recent the it over been quarters. what moving So will it has

TriciaPlouf

And on Mark color provide Express. to some more Trupanion

exactly using smaller step-up invoices slight are added matter seconds which more that don't value we how is that good of and that to frequently we going or at Express hospital in be just all. it. invoices what experience. willing is trade-off cost so number its a know of dollar maybe through in make. those process. when in emphasizing now What thought we That that submit So the to provide Trupanion because be we we’re as too we cumbersome lot we the the really the that move generally the is received though that which don't can go is providing a now we at the that we It’s times we’re see had reimbursement they happens to to a owner as it was to going see And fall cracks installing customer think to it of towards of previously paid all through being

that wait day then our forward. have we We and into to to going come into incorporate for pricing it us can

general do And so our pricing is like we our data and coming another just into through pricing. updating incorporating at as needed that looking we’re always and this thing in we’re that

the of think level it versus now. where Express As a we about this pricing X% seeing Trupanion of magnitude of increases year-over-year stays is need we X% if we’re matter

it's impactful acceleration little as mentioned that that it but short-term do more in the this is because through and approved we’re just and things on Trupanion that. dramatic So that’s bit we our to remember we And just that book. $X.XX it XX worth can to about we’re more benefit working those get to because for Express through instantaneous bring. of roll impact aren’t the definitely a ARPU But take XX working we then it installment, think always that of

Mark Argento

key up number hospital additional increase a on story kind it the back me markets. here as so hospital obviously I new was growth that pivoting anticipate Do like these just availability exposure materially And move either that bring breadth same-store, awareness be here of and nice you doing driver hospitals a think I actually but year then we some It $X,XXX XX you’re seems you to ago. a would job XXXX forward? with of is of going that’s seeing same

Darryl Rawlings

us inside same difficult Mark it we’re relationship time. having I and on but be to managers new that’s having very, for you very is more historically deeper Trupanion up with account some And Express. frequent been deep and our touchpoints lined being agree and with success better nice the wide at going in

how really the So well fine do I kind think increasing is of and job year need that. to likely I build here. probably for same the a tune there to two then would and to both hospital after do muscle love breadth if start next it of you or that you to time know able waiting and at be for we

Operator

Our proceed next Penney with your Please Northland of line with Securities. the question. question comes Paul from

Unidentified Analyst

and Paul. Most what spend for How been are year? you taking about mine as given said on forward in what my do for planning going Thanks earlier markets of This BXC your but you you marketing. the expanding have answered questions. spend BXC is the expect Greg on new this BXC trend

Darryl Rawlings

our we our Well kind to teams maybe it as a QX similar the of the increasing quarters than year closer it’s this the BXC and will not unless initiatives to other QX we provide of or telephone or look directly to the a to detail. expect would with is expanding three probably is then build us. be initiative not at than take would meeting ability really to balance shows greater the I higher probably do going suggest not our some well of over to account years are level in say I I current would for more the specific BXC as happy two you increase questions number we’re coming get that markets able it we scale desire who going and out. shareholder be the of to last driving year which manager I’m expansion can several the is to visibility just But margin in yet and increase to going that answer call. nearly at to as detail where us

Operator

of and Our final question comes your question. Please Company. proceed Champion Cowen line with with Tom from

Tom Champion

for hospital you of base just don’t have what the Thank you Express. the Trupanion remind know system your us comments I wondering portion using on of if quarter. looks you. correctly I'm curious like to choose numbers to do that over But you I'm wouldn't a get time. And about where a if could just it think number why hospital Thank is use? could I the

Darryl Rawlings

our they’re we're mentioned deploying two right was earlier back holding deployments this The would and it number I the clinics getting years it I XX% do those using were ago to in cost my a of of until we year-over-year. like Trupanion up Express combination we say ability felt it. remarks as of

to that absorb could the ability fill so having a on put we the up cash operating large grow. flow to and adjusted Our gas enough margin

numbers all it those experience have XX% that of to have clinics from XX,XXX where across with customer be believe XX%, could can to Express to long-term we we us get get would ability XX%, Trupanion America that the clinics. our believe to understand can able the I on where we as market really maybe been we seen and well As and benefits communicated hospitals. long-term get our North

our and are It’s we not about X,XXX those active is be wanted going And and foot to XX%, happen Express. goal clinics XX%, right more have to first is the way going overnight, to then grow. after of XX% it those wide putting only to accelerator get but that doing this Trupanion stage going continue on clinics we to second so first. definitely on active the about currently Now the

and going to all claim fact we automate and we the started that that a So without Trupanion We Trupanion continue you for Express. deploying automated testing information can't without us we provide how of or at it’s initiative announced can to of a Express. compound Trupanion the claims with we’ve improve look the We service level started that major think that’s Express.

So toes fast we want we pretty getting without to we think a rhythm. stubbing can and into good our go as as we’re

your a would to I want only I it. good not use part to have hospital question the why think answer is was why any other not hospital the reason want and short would of it use don't

deploy greater I we think we to than it. have our have demand ability

hospital more are than the demand. the side So constraints on our

Operator

session. we the conference. gentlemen, and This have end of today's Ladies the question-and-answer concludes reached

your this you You participation. for lines time. may Thank at disconnect your

Trupanion (TRUP) 1 May 182018 Q1 Earnings call transcript