TRUP - Earnings call transcript Q1 2020

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Operator

Greetings and welcome to the Trupanion Inc.

First Quarter 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

pleasure your my Ms. now is to host introduce It Corporate Laura of Bainbridge, Head Communications. you. Thank

You may begin.

Laura Bainbridge

welcome First Darryl to Results and Chief afternoon, Good Trupanion's Participating Officer; Tricia today's Financial Executive Officer. Conference Quarter on call Chief are Rawlings, and Plouf, Call. Financial XXXX

Litigation we I future call, operations, within financial of make we opportunities today's begin, everyone the during uncertainties Reform discussed. a to Securities of statements Trupanion cause Harbor XXXX. the known like involve Provision Private from and would of results Before certain Safe statements meaning Act remind forward-looking to high and that conference will These the the those of actual materially differ regarding performance unknown that of degree risks and could

other our Exchange Securities included and forms found reports uncertainties A XX-K well can website be recent X-K of risks earnings the our which the filed detailed in and Investor Relations as on Commission. and on as these are release, most and company's discussion with

adjusted references we adjusted the expenses, company's Today's presentation without return, evaluate uses costs, rate variable including expenses, of to management that term contains operating intended internal fixed limitation, acquisition. income, use performance, to or acquisition flow. cash adjusted income operating is EBITDA our to margin, before the measures it non-GAAP to new financial pet free income refer operating and margin When or non-GAAP

which excludes accordance not GAAP. of in expense measures margins noted, are the a prepared on compensation expenses non-GAAP will stock-based otherwise performance in for and basis depreciation presented financial substitute Unless and non-GAAP U.S. expense. be and to addition measures with These a

Quarterly most to on can results, in which press be comparable Relations the of Investors Earnings or these are reconciliations GAAP tab. review encouraged non-GAAP directly Investor under release financial today's website found measures Trupanion's to the the

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

to over the hand will I Darryl. call that, With

Darryl Rawlings

Thanks, safe hope this call I you Laura. Good finds healthy. and afternoon, everyone.

I'll days Just to few ago, a highlights today, few we read letter. would its you our but it in entirety. annual review a shareholder published encourage

the advance length. in Sorry, for

to we headquarters hope to members discussion management a we our have on in at of but more years, to team Similar It you our past will moving join an to us. June format hope meeting Q&A We hold intend Seattle, XX. will available had We the this annual forum. a host focused been year. our will be fulsome at online in shareholder

well community were proactively early We XX% we March. days, support remote so. to of to At Trupanion, pet to remotely a just initiated owners, our environment. an transition a around able were was The world. employees COVID-XX working we've work concerns of since move handful to do been the and members In workforce estimated amid positioned

we sick transition of Trupanion, including designed pets provide that's holidays get to the XX% And workforce, know to At remotely. XX/X territory why we on our our worked support. that Prior weekends, XXX our partners hours. team and of after approximately workflow

a done tremendous stepping owners, our placed to in pet Throughout commitment job the trust change, has have of and period their team Trupanion. up this the reinforcing who

the to never been of move the I've length proud ever. invoices team. metrics and In as than experience pay answer better phone since time to been calls, customer fact, such have time more the of veterinary

behind can care several crises think of sick our become when owners here an times Trupanion their positioning for health Trupanion and every In of them. our one XX-year to is or even or are more pet they to to know important. This pets reinforce crisis. that opportunity help be budget so embodies history, new every I other existing was stand veterinary of our injured. we challenges assurance unexpected the let and clearly in to designed an but uncertainty, pet will not and hospital ready

do first plans total bit XX% a quarter. our momentarily, year-over-year, quarter so talk enrolled over ended first but about revenue the I'll with and recap highlights more we pets. Total XXX,XXX I'll grew to from a the few

XX% Adjusted deployed from where operating million subscription rate $XX in of million pet XX%. income adjusted acquisition $XX.X which spend to our was related of business grew to In business. return internal estimated of our total, subscription million income our we our was $X.X operating

by including of XX-year our X/XX, oil Our XXXX and our retention first market. results recessions in multiple great crisis highlight an the XXXX. system we've dot.com crash, recession, the quarter shocks regional the supported and Alberta and XXXX/XXXX rates high business nature the In induced reoccurring model history underpenetrated experienced including in

and these grown there becomes In more persisted pets care the through more has the owners, economy important. and quarter our of have periods disruption. pet budget not the change we only one has their help loving had than where and not responsible to Trupanion for struggles, been previous When revenue quarter. need history,

With level during temporary and and between each period When the normalize. by to a XXXX slowdown enrollments began which the a grew. people recession weeks at became new world veterinarians The changed we as messaging digested strengthened. shock, following followed shock uncertainty. of system saw months, Pet varied or shock the the recession, ownership busier veterinary was again

which during we to that behavior snowstorm. during period quarantine the likened this a I've pandemic the see of

care pet to particularly require need the regardless hospitals those deep is. they veterinary For the how ensure in with Trupanion will snow pets their out get pets owners, seek

wellness. not is Trupanion Remember

postpone exams non-urgent for We to pass. that need, sit be cannot who leverage they'll are for wait or or storm veterinary the email pets, accident for tight, in But will wellness immediate which phone cover We not routine those short, advice. In or and foreseen. their illness. owners are

that visits As the hold into pandemic took by April. quarter, about average veterinary continued the in trend dropped XX% a on

time during act a visits saw veterinary primary same period. in as for the As and source the we decline a lead a through Trupanion, reminder, wellness corresponding leads channel

increase and in recorded Lead record conversion high, is of we we've past QX, consecutive and the days early several in channels over efficiencies. lead several Interestingly, seen quality other volume rates. weeks, both

the product even in a and in to remains saw greater. which monthly I'll of need in unexpected with though In again. our period. retention, evident our is for ability say recent the it churn is This line increase small care even historical we a for budget times veterinary levels uncertainty, for two-week

QX. continue subscription the slightly Net, growth rate revenue our reduced at we exited expect revenue quarter Tricia within will But a respectable discuss, to growth in as run business. we

We are relation to well evolving PAC by including opportunities. our the in landscape navigate and channel adjusting to positioned spend market

capital. basis a new This to continuously of We allocation This operating Trupanion. critical skill how can per much our guardrails XX% while internal within rate is discipline is pet a of of evaluate we XX% a to the spend not on in our return.

highlight improves. stage, flow is will likely the spend It After months cash flow periods quarantine that and growth is an result enter that of are growth a linked. to this and the of In cash strategically unlike at one problem. of may profitability the recessionary unexpected slower But important or center This is last we revenue reduced years. medical PAC and our period prior recessions, wheelhouse. revenue

love, in understand bring like times and health pet at the owners unexpected an for the the joy, they of the these. family we veterinarians. healing pet, mind of and challenges Trupanion, At power and be that day, top of especially to the will crisis The every

the level our among owners strengthen value the software the pet We grow veterinary to messaging our even for the product to need to and greater. patented expect be at of

veterinarians to field Our at Today's team their challenge. to they and communities team pandemic of is interact of our they support serve. this efforts partners territory and Unsurprisingly, requires finding of to in have these be core the opportunities the and staff. veterinary with risen creative

XXX veterinary number across XX,XXX that America. of partners past the months had active hospitals XXXX least pet the the with in In We visiting Trupanion ended the nearly year during three year. the with XX,XXX averaged at one North territory in enrolled hospitals field those

X,XXX year same-store sustained with three the and of software to our per software managers. since The hospital encouraging of has account number over a managers in ended uplift combination deliver of that surpassed our XX%. sales number about and added results a hospitals with We account inside the month continues X,XXX per pets dozen with

cannot invoices XX% million the in understated, months economic pet lean software nor to pay coming into of over through replicated ability The behalf owners in financial this $XX and veterinary In to of expect veterinary uncertainty. our paid directly times we our estimated especially we on an messaging. be invoices which were XXXX In automated. of

XX% advantage pet and Like conversion your remain owners. invoice key provides claims proposition to the checkout XXXX. and value our across above in differentiator get the Paying instantaneously pushing when will competitive automating communicating to a rates at team organization benefits

goal continue overall to We prospective messaging conversion rates. of members test the to our iterate and with improving our

significant the remarks have noted shareholder letter, the did As more as do year-over-year. investment we during I Though move we to efforts in in despite XXXX my in not so detail optimistic. discussed our be to needle, reason earlier

Customer time content our does with along key at become our not to and reinforcing We goal new education need of nirvana. add-a-pet channels stop this to retention to which enrollment. at increase of is help building proficient first-year the members refer-a-friend to

X.XX% month the Churn to over or In overall represented X.XX% was monthly XXXX for gap of nirvana improvement per pets pet two an our X.XX% average difference a the adding year referring book. of owners the friends averaged the XXXX. between

disciplined. solid is our our deployment our financial position and summary In strong positioning capital

is Execution rewarding. operating rates retention hand yet are We high in And difficult that an to underpenetrated call I'll market. the with Tricia. over with

Tricia Plouf

hoping afternoon Thanks the our our heels On provide echo and trends our the exiting today's guardrails how safe like to and quarter will lines saw detail we results Darryl managed call sentiment business these pandemic. we and I'll more you including including to in the levers I in I'd of financial Darryl's discuss well. all today's into model first quarter Along on everyone. good are COVID-XX context environment. the that

for full the discuss and quarter second XXXX. outlook I'll Finally our year

Turning to visible a was in expectations, highly line high at results, performance our and with our level revenue our quarter recurring model. our highlighting first

our instability. underpenetrated during COVID market rates While immune not high the and of consistency we presents help deliver challenges economic retention to the are pandemic periods

year-over-year first year-over-year. XX. million, enrollment XX% pets up quarter consistent both Subscription enrolled business in revenue Total Total was for over March revenue million segments. increased as subscription subscription the year-over-year up the by pets our $XXX.X pet quarter to other led XX% XX% XXX,XXX in and of and $XX.X was

was was Darryl the channel over as veterinary enrollments improving to time high within wellness visits. start in new in slowed the period. about Overall lead slowing but with our thousand this year, pandemic mentioned due impacting to strong the fewer in quarter. estimate a same growth the mid-March conversion resulted We Lead quality

our strong of retention quarter impact demonstrating highlighting rates of revenue existing worth the our book XX% of model. was from the subscription our on that It's for business, further business nearly

XX.XX% Average was compared monthly year retention in the XX.XX% prior to period.

rates in about very a small retention strong related XXX the at COVID see pets in QX, but cancellations to of of did quarter. continue We see uptick the end

We seen of with rates consistent have retention averages. as this today trend QX not into continue historical see and

impact Net the of historical an $XX.XX, we for X,XXX COVID-XX in on average increase the estimate quarter. X%. to per our X% and enrollment our in was the revenue Monthly line average of X% pets year-over-year with at pet quarter pet subscription of approximately

offerings number revenue, Our which a is growth revenue product the saw year-over-year. within Year-over-year the of increase increase totaled have that generally component other segment BXB of all segment. reflects in our in in product this pets business We comprised growth million offerings other quarter strong for business enrolled. an from $XX.X XX% of an other

quarter was within prior of in margin the annual XX% the in period. to gross XX% year to of Subscription XX% our compared revenue XX%, target

was comprised a and invoices veterinary X.X% as expenses revenue. margin paying gross of percentage of XX.X% Our variable

Absent our day included invoice of period just this leap activity with by margin reminder, and day a been We margin have at this February would an in compared day under XXXX. veterinary a estimate extra impact, X.X% of year, our percentage revenue. which veterinary of a additional as to As XX% invoice impacted prior QX line expense means the this revenue.

not in want expenses. I wellness to did that invoice meaningful to decrease visits result Darryl any impact mentioned the in veterinary note Additionally, that

as unexpected such accidents costs product rather and but not illnesses. does Our predictable the wellness, cover

them. still expense two past when been have the While or and needing decreases some have this for Trupanion any we seen in sick we in we've our are here injured not invoice are over significant veterinary expense they pets fluctuations seen months, as

the year X.X% quarter Total income which gross fixed business the was includes lower prior an scaled in down loss year other Total $XX segment. of margin from operating quarter, total generated increase We in X.X% prior quarter expenses Net million our margin during to $X.X XX% XX%, the the of period. the of was total revenue over in adjusted period. million.

period. segment $XX.X expanded income subscription from This or basis prior our year revenue. the of over was XX% operating during the subscription points XX margin Adjusted business quarter million

As for XX% of in pet to amount generate a scale Achieving profile a target reminder, in cost goods operating before X% a will well is as incremental expenses. revenue margin X% of of business our new profile percentage our XX% our a to of target margin subscription margin as spend. improvement as adjusted small our required acquisition fixed

the continue as our by possible. to end to accurately fixed close on will expenses at XX% expect on gap ball as initiatives aimed proposition We value move year pricing the and to forward

prior new period During XX,XXX pets pets, the of new resulting acquisition $XXX year This a income to in to subscription million acquire the our a acquire in in quarter. $X.X the XX,XXX $XXX. million of subscription we resulting quarter, approximately of operating to PAC deployed compared adjusted in pet $X.X cost over

we moment we current take within and guardrails our rate market PAC operate ensuring opportunities. to I'll continuously a our reiterate of spend, to are internal evaluating return that reflect

monitor to our continue market as real-time We down and up the needed. or are spend flexing

will capital our within in targeted on internal depend growth to to available revenue return. of us the part deploy opportunities rates Our

we measures flow growth generation. would As back strategically free linked. as flow cash these dialing and to view we're In greater periods a cash reminder, expect revenue spending, see where we

XX% most we is cannot through do our returns. pet effects capital we we value of deploy if XX% intend acquisition, to believe cost achieve the the not While compounding created effective to targeted

a internal single to In XX% end subscription business quarter, XX% for rate return our our estimate first the was we top pet average of at XX% of the target.

rate noted of spend. economics are is believe our it focus return. call, we prior acquisition internal of business is this we our in As subscription We the appropriate on now the isolating calculation since unit our of

profiles segments supplemental Additional and our margin our be for the found Relations materials business can details on website. behind Investor two this our in calculation

Operating million for was the Free in up to $X.XX cash in prior per was $X.X flow million a $X or $X.X Adjusted cash quarter was flow the of a period. or the in million $X.X EBITDA the prior loss share net was year compared million to compared loss period. loss quarter. million the share period. year during Net loss million year $X a prior million quarter, the in $X.X $X.X from $X.XX per

existing with strong on had availability million of we Trupanion's At $XX.X cash of investments line March and ample credit. of balance long-term sheet million approximately XX, remains $XXX over and the company's debt.

an outlook turn I'll for XXXX. year now to the for the second the and update quarter of full

cannot most. these times, a business with we the during While of future, into of predict our recurring performance degree higher visibility uncertain nature model provides future than the us especially our

full impact the is million revenue remain dollars consistent year was the end in Our year. the being This approximate the through at Canadian rate a subscription between $X and has of the U.S. rates XX.X%, foreign on revenue at of the January a which exchange end change impacted XX% from end negative to March. of rate by the if

monthly widened guidance we account COVID-XX for around Although to also our revenue, we impact. overall recurring the have uncertainty range some have

full updating As for of the a $XXX revenue or range the million XX% total now result, to year-over-year year $XXX growth be to we midpoint. at million are the in

or midpoint $XXX quarter, representing are million, the revenue we XX% growth foreign exchange million at in excluding For XX% expecting the of impacts. range to the conversion $XXX second total growth

to $XX our expect for year This income guidance of million for our full subscription year million million approximately around adjusted business. coming business. coming revenue million updated operating we our operating $XX income levels, subscription $XX the At of approximately with from with from prior these be total $XX to the adjusted compares

are year Including for to XX% $X the foreign and of growth million impacts. impact or updating our COVID, range some midpoint in FX uncertainty be revenue accounting we around million now to the $XXX conversion full subscription excluding at the growth guidance million, XX% exchange $XXX of

good year got million. to $X.X this start segment be expecting full million business we're to income segment operating the to and $XX and adjusted a for be around from approximately year revenue off other Our now to the

At spend allowable our equate per earlier $XXX opportunities. $XXX would earlier, acquisition to mind, rate our for is within pet XX% flow mentioned response total pet this we down around this With in market of this outlook in to internal the to to spend I $XX XX% guardrails flex and for year. profitability up to our midpoint, as needed pet or full the cash acquisition As higher million in compared acquisition will spend return year. resulting of year total the slightly our estimate

through our with the and landscape. current In ability navigate performance summary, we're to pleased QX our market

position is in capital. disciplined be Our financial our allocation we of continue to the will and strong

I Thank the your you for will Darryl. call now time back today over turn and to

Darryl Rawlings

Thanks, Tricia.

feel executive highlight maintain hosting Before to relation around like few only. shortly though be years, to is Shareholder of the website conclusion to up the upcoming will team. feature to a we we the the our event, intend and it Meeting. weekend I'd virtually space the and Q&A the hosted our This of event time events. Q&A, event investor after will To a prior open our IR available Unlike be a replay we'll Berkshire-Hathaway short for post limited Annual annual

intend relations webinar for Berkshire, space Paws be June virtually Stifel's in In our May, event mark on remember investor the participating and our Conference. portion to Similar the live shareholder XX, in to meeting. do but Jaws limited, your will be stream we'll And annual event website. calendar of the to we

be forthcoming. details Additional will

questions. open we'll for Operator? up that, it With

Operator

comes your Thank Lake with [Operator proceed Mark Instructions] with first Your Capital. Street from Argento you. question. questions Please

Mark Argento

quick questions. couple A afternoon. Hi, good

in about full kind you some of terms type in what are home? stay a of year decent what terms in or channel normal break expectations what specifically And you're return pretty part have the of in to currently? In anticipating vet and given visits terms of of when do guidance did the terms of you you guidance, customer of kind of there that's more particular at acquisition thinking more and your traffic vet expectations of

Darryl Rawlings

Mark. Thanks

in we guidance, in So thought few it a about ways.

April that in saw two-week One to update a about end two-week at period visibility it period we've about that and only one the We maintain of of of rates the the high we XX%. with a and was retention quarter about wanted we was visits or it. appropriate to for beginning kind down strong thought got guidance of the reasons for by vet

We an that have last of we some is in type to weeks. It has obviously or to long the not weeks put how going into XXX%, to reached guidance seen three don't for there be would going it's if hesitation. two months we're for continue know number on the leads in of uptick but the yet on getting. fully go We something

last few up. of the because adjusted But back the was as most weeks impact times we've uncertainty outlook on operating is important we cash. investors the kind think are us vet guidance I our The visits important for showing of understand was seen starting in income in tick that to shareholders thought and really really to for

have million just in our $X reduction. income lowered her if of EBITDA. remarks, we $X million growth, additional from would we million we mentioned $XX million, so about about with $XX operating about guidance So to Tricia slower would an have as But opening adjusted a our

just wash. kind So of it's a

in park. of customer kind places We're from we're we're as rates strong So but not sure it the mentioned rates, our long that's really has of I also the growth veterinarian. -- how in to the lower like continue, slightly out remarks, and the or hit some going leads seeing opening seeing growth Add-a-Pet experience as conversion and anticipating or referral retention team

Mark Argento

It's a very helpful. follow-up. And just

in pet a and additional at up not of environment, cranking for down of just media channels, ad other environment pretty is maybe terms Have the traditional right In we're acquisition ad lot from hearing that? terms the the of of potential social looked it dramatically. companies spend? Or guys you media CPMs some

Darryl Rawlings

than month We'll is quarter for really mean, any certainly different or be quarter the opportunistic. no company. I this

just as the deploy return. impressive. a Our goal QX internal can we big in of much between absolutely is What our a shock free capital of maintaining and is as hitting did a getting a last for rate with XX% of of XX% return month kind the rate XX% internal and I to team think

going opportunistic We we're try can, will stay We're our going we be within not we to faster than to to. need but where guardrails. grow to

our We cash. are going to be very on concentrated

this The We'll how more If in buys will mode, we a into opportunities them some typical spend will focus acquisition on there loss the money continue team really move would that we on has they've and been be be in there conversion be areas where moving spend is some on. to week-to-week. DXC. been dynamic lower recession like and can rate

Mark Argento

Great. Thank you.

Operator

you. Thank

comes proceed from line Genuity. Ripps Our your next of Maria Canaccord with with question Please the question.

Maria Ripps

business question, Thanks do is your near-term everyone could modes a of your like aggressive to more competitive were these you shareholder adoption and COVID, allowing pricing. you benefit for three I you near in sort safe. the the my of to margins pillars pay to be Maybe any outlined go hope and direct which automation term? pursuing beyond taking Darryl, if three feel and sleep the in broad wanted in are to looking letter, back just in I the

growth secondly, in What's you active this out view your hospital in the hospital year then of XX% light called XXXX. on active growth And approximately pandemic?

Darryl Rawlings

Okay.

areas to the questions. there's that of and bringing There's a thanks outlined I that areas So up. letter a that number for shareholder couple in

value proposition, chance customer differentiate those believe to that I what products a our only For We not that the highest it, read do. the is experience. having by best we haven't broadest the would they coverage recommend had

the you their automation, amount pet layer the time going of on pay at installed standpoint that is and ability from experience owner claims to standpoint. when of concerned and software our our a when are hospitals customer veterinarian you about getting increasing about finances be important both an directly top think to look that I more people and

is that of to biggest leverage I be the area going strength. of think

puts been fixed operating the in is XX think one we've get if a long strong that at our to recession. The over last variable cash other really we position us really I and able scale expenses a and enter years,

I areas the the and are two those obvious are So think to that helpful Trupanion. most

For if on budget the a a to and we pet The for way for it even see need entire having the sales not veterinarians and the relationship, when becomes a will having higher category, but calling because or consumer understand this message, think a the or force insured is that demand just injured sick I a base. of enhance to is fact have veterinarians are and client national the greater. going need

the So couple what in but we've we've and seen the will what volume several even not fare historically, well that next conversion confident extremely months next over and the weeks of we rates, seen lead very of only of we're because last year.

see to opportunities planning might just where COVID have lie. our and for are otherwise than we'll be we slower We able grow to

of tough part growth We talked about last hospitals. XX%. year your a last grew The active one. That's question in about

about value and of number Our impact adding of to similar it's in talks the be goal grow one the the it and of underpinnings something shareholder company. letter the the major the in ultimately how of would stores

the COVID. grow veterinarians. demand to or would little I a need to higher or to XX%. for side, another the with I say like think it is able one going to So early be It's be On XX%

able hospitals. it into side, the partners back quickly get other how to the on think I territory the depends On are

and text do both them because interacting we've voicemail, We've with relationships. that, have We visits over to message, on been historically we face-to-face made email. million a are able strong

when the the So earning hospitals, expand we take going number it's at to look trust. trying of to

webinars and veterinarian facing. point. both consumer that had data number of been We've kind had there. of Another We've a attendance record have

that on there's might places accelerate. think be number I of So, clinics and I active the some could growth would say bullish

other or be lockdowns with it might quarantine harder. the side On more

see So it plays wait we'll have to how to out. just

Maria Ripps

Great. the Thanks very for much color.

Operator

you. Thank

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

Shweta Khajuria

follow-up that on have I Great. comment sales the Thank made. a you. same-store you

hospitals by XXXX shareholder So the sales the helped. you number was active software. in letter, that increased same-store Well of in growth driven also the mentioned have installed hospitals leads. Benefiting in that

in XXXX. X,XXX So

this the and to more What's managers. as have you. goal XXXX. over face software that have for install more you remind account hospitals process? that ability also you Now some you headwinds What and year in accelerate us, could are Thank the

Darryl Rawlings

to have all with no-cost the able don't existing it's veterinarians. client that software integrates that those install have five an paying we're in If details way to invoice cases, in being with XX done adjusted a is practice software click many the needs typically software of installs And hospital manually it's in under us. button Trupanion to our -- a an it's free be a as sent seconds. for under the it It with to with minutes. Well, in management

the to and biggest the Can getting if on timing do will headwind We're be got busy. increase lot COVID it's we We've month? the is see going and more wait The have of go. have urgency. more a we'll more It to that really interesting see. But That it next the veterinarian. will customer I from we to experience is unique important. believe become Trupanion. to installed

early. think I a little still it's

All were to adding we make hospitals equal more wanted did to else prior being sure COVID, the than we prior we year.

So would in getting X,XXX to software X,XXX to result good be a with hospitals XXXX.

Shweta Khajuria

Darryl Thanks,

Operator

you. Thank

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

Jon Block

Thanks. Good Great. afternoon guys.

gross one The adds. on the is first just

by think we gross about up our X% year-over-year. adds I calculation, had

have around you tune Tricia also think pets. more of the you conversion might a been depressed gave to improving that mentioned X,XXX why But reasons recently. couple rates I

that Should the XQ So, how should watermark number we should trend terms think line? for about the a as in percentage that gross year? 'XX year the adds low gross for Darryl of the the add be

Tricia Plouf

I'll the little more on can pipe of numbers then Jon. a give in color and the strategy. just Hi, overall Darryl bit on

so XX,XXX, estimate We was there last just was right on little actually impact a about QX a in of QX. mark. X,XXX-pet the X% that adds the gross So, weeks under quarter in couple

out was on prior QX from any kind for some million you like about That added conservatism the FX. is the of faster the back particularly for we business, slower. recovery conservatism the to account guidance only three uncertainty in really With like subscription or of when

ramp QX within opposed guidance, then currently a numbers. more and in So, low as terms point up our of is of the to the QX

Jon Block

Okay. one for Darryl is maybe Got then And it. you. this

that working that that do to better pay for as the I'm the believe initiatives like of a mentioned convey that curious several in Express? any advantages focus hope direct many guys. just terms so to being ability well seems you the you're you that be times. maybe with do of going you or on veterinarian convey And to Trupanion. is responsibility the solely that's Trupanion's It company. of or of Thanks resides Just able

Darryl Rawlings

-- ecosystem. I we our that expect communicated in the by is Well, everybody benefit

on veterinary clear So XX/X on should team sales it here it that's our We should owners. pet It it devices. in our communication. talk seeing to should press. be should online. be It mobile to in happens be seeing We be

historically. rates made of should existing believe that are do online, there's friends clients job seen we opportunity of seeing And be still and impacts those We it have their particularly progress to from a I all better we've upticking have our year-over-year. seen but conversion we telling lot neighborhood. in the their a

the strategy. by encouraged we're So

Jon Block

guys. you Thank

Operator

with Our from with the Please line Westenberg of proceed next Guggenheim question. Securities. David question comes your

David Westenberg

Hi. between taking calls apologize my Thanks today. hopping ask been I've I if for question. I anything,

an what you're lot on So that was doing. I space a a kind to entering got competitor a today adjacent question actually of

national the you've market because before dozen be competed about This for you've or moment. a I and Now would bit at a large there's companies different, have given a a sales on with know might it how always in the call so force. competitors this any little lot addressed years one and

So the did address want to that to ask just call you volume just question. maybe given I

Darryl Rawlings

what I Zoetis historically. From to a is kind believe from it. We've had combination And Sure. of press added David. illness is about and standpoint, a press with illness that of a XX plan for against it that and and The that's Thanks innovative release has component being third-party accident integrated that have the talks they marketplace about an about you're reality been have it and product. came illness talking accident an competed accident an companies a underwritten many plan. wellness they a about years in the release plan company. out how by talking existing new wellness

accident and rates. that much integrated Typically, as retention reason wellness typically wellness sold if The illness market return plans and on watch have for are lower plans is you with trends, a investment.

a So it's cash buy for if outlay than going was because wellness be says, home. to to to me to the on it I consumer cheaper I'm going my buy plan a

to that it's being a third-party it's hard up offered very by when promise. live to company, Now

press the it the quick $XXX about in think math worth of on I wellness. is release

it's Costco to or vaccines $XXX out Amazon added the similar and or bought went worth you exam fee and If products about Chewy and value. on the the wellness of

consumer return So it's hard going be it's for on a to similar the to scenario feel where the investment.

the because add veterinarians. is for force It being to And in are actually, to accident and coverage. to a interesting to it, by when lower view, should national plan see their wellness they sales consumer plans product existing being competition then is direct offered you buy has plans offered that the I would the a be wellness would see, it veterinarian. by only use an wellness time my want if illness And that

provide a do the for of the give a stuff will veterinarian worth I you $XXX $XXX for that discount and Now is, it at can reason reason. it actually the owner. for they a monthly it's the benefit into because to payments creates a That come you is veterinarian, it pet back to a benefit break and sticky me. to it if client

are a capable than veterinary proposition. offer same and wellness with parallel by plans third-party a to the they company retention the supportive the marketplace, offered driven do would is existing cases what certainly rates we veterinarians. it's about it's harder I So company by But when do sure and Zoetis many I'm will very think primarily something industry in different being well that and offered value completely in strategy over is work wellness time. in but we in

David Westenberg

But to conference of discussion a similar for topic had five it answer question today. like was type a you've realize the of yearly on last call a years. I

Darryl Rawlings

you I'm it brought glad up.

David Westenberg

in stopped. about cancellations, you the and So of it the at you little Five-hundred How behind? theory that to the then me more of you happened quarter kind a why had said impact turnover? the change of seems It conceptualize terms COVID that in it no can the just Can and cancellations to I explanation of at the like end later odd bit give end quarter? just think this talk for that.

Darryl Rawlings

Yeah. discretionary. wellness can with A Wellness lot plans of also people often be is or -- disposable similar this and considered plans.

a high product recessions, consider An They turn we maintained times, why budget people on and our rates. don't discretionary. them to for through for way other target off. very plan or accident disposable and particularly previous market. illness have and You our That's retention can

an dramatic little we strong when, And would And you'll What are any weeks a two actually like cancellations increase saw we short otherwise was or week dominated of see typically have last time, retention spike happens about seen. a very, rates. other a X.X spike. that we that change X/XX period. had for we're the that about XXX very In since headlines is not very seeing

I coupled treating answering our faster think that's paying today We're are faster the we customers than being done. that, ever the we've we by have. than phones ever claims fact

I right the customer top team. a think so our So experience to out now it notch, demographic. underpins call But the also is

price, the value If are a not that you're with. selling on based start to product product these people

you product and expect customer experience, a the selling you're proposition broadest has If best retention the would veterinarians the recommended that rates. coverage, high best by value

David Westenberg

Got much. you very it. Thank

Operator

you. Thank

Securities. proceed line the Our your question. with next from with Please question of Gibas Greg comes Northland

Greg Gibas

Good afternoon, Darryl. Tricia Thanks and my taking for question.

XX% you because in of in two percentage the quarter? back could you in in And total did that compare mentioned starting tick how adds if the the March I you or maybe to March. quarter? at next April despite terms in saw other break them months Just of to saw guess the additions end of up that that so First, down you the pet decline

how declines? XX% relative that seeing you're to those wondering just the maybe would currently about So think level you

Tricia Plouf

the I say net going Greg, than obviously was in about would what February Hi, that rate pets into March. additions and we net higher had we January run XXXX experienced a

net I the the impacts X,XXX within about month. couple were mean it I last all The think that way. of So weeks would

a obviously how week we that's seeing little entered QX. things as we've And every then, bit kind better we're seen week-over-week. And of trend then,

I was intellectually think, April our our the volume into and definitely, enrolment lower of week-over-week. been Going ticking lead part and up then it's

Greg Gibas

card And between bit helpful. That's looks in like referrals. okay. nirvana. your little the report XXXX. the has to a achieving reduced it, And solid spreads churn And Got towards you mention annual compared it progress just did then,

should that I So could where categories the maybe I XXXX? in we between guess, difference elaborate and churn if success. improvement was just territories on you to you XXXX then wondering referrals how the think about maybe saw or relative And

Darryl Rawlings

what I'd the doing able actually excited there's I format us. address we around I'd real teams that the the for I'm And Greg, it. really like be to nirvana is is share. are it to about when to share, that talk to think a meeting team at like and The shareholder can lot implementing

way. at territory at it regional it looking very and in looking are on basis. both We're a we granular But

the making important ask what been tactics teams some So at directly, the they’re we've most doing. the part shareholder the progress meeting focused. you can of and We're is

Greg Gibas

thanks Okay, guys.

Operator

Thank you.

call. end today's the and of of reached for participation. have session Thank question-and-answer the you the conclusion your We

your have And may a day. wonderful You lines. disconnect

Trupanion (TRUP) 30 Apr 202020 Q1 Earnings call transcript