TRUP - Earnings call transcript Q2 2020

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Operator

Greetings, and welcome to the Trupanion, Inc.

Second Quarter 2020 Results 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 Communications. your my Head Laura now Corporate of is to host, introduce Bainbridge, It you. Thank

may You begin.

Laura Bainbridge

call Chief Good of Q&A quarter Chief Officer conference today's will XXXX and Financial today's financial Darryl afternoon, welcome Trupanion's available results call. call. to Officer. Margi also Participating Chief Tricia be Officer; portion and Executive Trupanion's Tooth, second are Plouf, Rawlings, Revenue on the for

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

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

Darryl Rawlings

Thanks review strong a was with Normally, key for quarter Trupanion. start Laura. metrics. of It our financial I the

metrics speak for This quarter, the themselves.

I'll around start some our performance. with business So context

member in paved in the downturn. to from XX/X/XXX. to quarter the a friends. referring greater. we number there economic metric At budget Across per highlighted Shareholder to backdrop our promise Annual in referrals manifested term this the on exceed of of significance these These deliver in the growth meeting the we few Churn of Shareholder existing ago, US retention even bringing we for In which And times in pet the our on who the nirvana, who the state and I self-sustaining a record XX-month in in for delivered record the nirvana. coined in quickly this averaged pets then, veterinary invoices. of team in is you our are Boston total future. entire trailing able our as delivered levels, uncertainty, members business, pet Throughout a how territories remote, owners number we and adding we Canadian and made efforts way of our Annual to monthly the stepped phones the equal progress the as six. or the workforce Letter. to the unexpected territories, of XXXX against cancel. answer ability record-breaking nirvana to followed metrics month. Since pay Improvement speed our of unprecedented our Just June, for this we've period of a know in enter steep support owners to members X.XX% or the months US moved which our be count closely period we need of define of first and those up change, territory state help first service a story additional

nirvana add-a-pet X.XX% period. pets The Our the to the comprised same highly efficient of over difference was point improvement XX channel a prior two, X.XX%, and refer-a-friend basis gap during between the year the period.

believe For critical to time, will nirvana relation sales We At the veterinarian continuing within in the veterinarians service the the strengthen the hospitals, good ways result our continued third refer-a-friend, our to a pet ended and channel. skill subscription opportunities. touchpoints new adjust field XX,XXX anticipated over sales as and field actually to market performance engagement drive core standalone team not our and June, active team a account managers support be from to X.XX%, quarter. is quarter. creative levels the outside net performance than of additional how dynamically grow has We with a our in across number and the the able that interacting This saw acquisition Relative quarter was in business. team this success to nirvana in changes months Trupanion. to channels maintaining stronger spend to for The we same add-a-pet a in only gap found was the our Strategic their the total May of number business. with prior new staff. improved we was and the period, of

quarters more While quarterly we in results, within meaningfully felt nature some saw be the impact revenue benefit financial the and means recurring years of ahead. will our the

year-over-year that, So our the to the income enrolled million, rates $XX.X ended from revenue return. of review with operating attractive to Growth XX% income business. we quarter. XX% internal XXX,XXX in Total million capital $XX.X pets. for quarter and Adjusted year-over-year, which I'll us operating was grew well total key adjusted at of measures our over our financial up subscription sets deploy with grew

of deploy above XX% our spend subscription internal our target. related we of XX% to During pet the acquisition $X.X income business quarter, return in XX%, million to our to an were estimated rate operating able adjusted of at

and and intrinsic second Our rate be These of rates XXXX. in margin, efficient with our combination period, increases value growth our the in from in return more we company. of intend of internal growth, of aggressive net key quarter, monthly operating return metrics; benefited across result, inactive capital. results record disciplined operating internal highly and add-a-pet expansion pet, retention and while in channel the the pet saw our refer-a-friend, rates adjusted invested the In of value lifetime hospitals growth all margin. lifetime The acquisition of value of adjusted being as our positively half pet expansion spend a impact our will a on our expansion retention, retention margin and high to allowable the improved we

Across all intrinsic Trupanion. discussion detailed good my through service together value And which very unprecedented more bar influence XXXX shareholders, published a behalf In hand nearly how levels. their while Well done. a metric, team and our a in on out thank please With of For of annual the change was it, letter, to navigating and over park, for quarter our in look Trish. the metrics all period April. headed pets it of the team business of shareholder to to our we summary, you it of support we you. on members that, raising the I'll while came every

Tricia Plouf

Thanks, everyone. Darryl, afternoon, good and

We expectations. second quarter, our for exceeded financial results which the our are pleased with strong

growth in our by business retention solid overall in performance led business. additions other Our was gross subscription monthly and record our continued and

compared into last down lead volume getting as guidance, was results, our context the to how In year. our rebound. I expectations. April, XX% level after visits will a decline slight seen the at high in the QX. provided was performance compared from veterinarians since late our we the as Also when veterinarian I wellness We've at Before historical of levels much end to with prior provide for retention consistent April,

quarter failed a or the remains would it had June a subscription constant was basis as were at veterinary Adjusting would We though the in of to increase. QX note volumes begin of a our In result quickly number as early uncertainties, excellent process Average XXX,XXX compared basis. pets XXth. to we We in which period. also of light year enrolled the over unclear XX% invoices, change the Subscription our have $XX.X a spending due reduction acquisition rate from in payment second on trailing prior pet pulled that how revenue is that seen slight back market still in was for particularly XX-month increased of to as approximately XX.XX% XX% quarter, the retention, retention cancellations, pets XX% on up more COVID. XX% our performance monthly detail. XX.XX% Total currency cancellations million, in a test these second year-over-year calculated X,XXX deferred to quarter XX.XX%. into revenue a review quarter, Total for in year-over-year QX be our With I'll $XXX.X up was million spend. year-over-year. backdrop,

failed For additional QX on retention basis quarter standalone XX.XX%, adjusted was a on context, highest for our those record. and for payments

Canadian revenue model. X% of pet the or local a a was our increased ARPU X% demonstrating XX% period. year of business, existing from for of increased nearly the subscription basis. on reminder, prior X% of average business currency quarter quarter retention a for our X% on an year-over-year impact ARPU Monthly strong rates constant As currency, and book is our revenue the In increase per US $XX.XX, given over

offerings year in annual to the increase in an BXB an number for target our growth was Subscription of component our the in have reflects XX% within Our which Year-over-year revenue, that comprised a increase XX% quarter, XX% of million other prior product pets of other totaled $XX.X revenue compared of year-over-year. revenue margin generally of is and period enrolled. from business our business other gross quarter, the XX% XX%. to in segment the

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

business and subscription during of matter gross XX.X% a to our invoice we subscription matters, quarter, saw New Adjusted with Net margin scale our million. increase of want reduction known in veterinary the subscription QX, Total in in basis year we veterinary the fixed in in also or the quarter levels. Total includes XXX the X% was in volume XX% of total that including scaled increased income the margin We XX%, segment trending which of quarter, reduction recent lower income of seen from income were regulatory the line invoice expenses. the million volumes in invoice note the operating to from quarter to $XX,XXX. year veterinary year a quarter, with was back over operating in the our margin during gross down expense by fixed total resolve our period over an X.X% expanded pre-COVID was adjusted revenue. of that the our $XX.X have about X.X% the quarter from generated benefiting During prior during This margin in points $XX.X York Early period. able we $X.X amount prior business of million expenses period. prior other segment. majority revenue, I revenue.

XX% our generate As margin subscription business for pet is a spend. margin to reminder, before adjusted our acquisition new target profile operating

expenses, targeted We continue gap fixed X% on the of nearing to scale of close revenue. our

pricing to continue for to as But full expect initiatives possible XX% value XX% proposition. our to make to on also percent progress at year closer the be aimed we do as We XXXX. accurately of

opportunity and an million loss quarter, quarter, million return results rate XX,XXX of quarter a veterinary some to for we've grow continuing ample opportunities. profitability are a to million, This return, operating of Adjusted of pets, to nature a bottom pet performance performance and our At prior compared These a that rates cash we we to full again and I'll to model prior and retention as pace of over single monitoring times. our new of and guardrails PAC provides XX% prior more in June estimated we the conversion in challenges, recovery, update of credit. XXXX. not immune $XXX in be evaluating will or what range quarter, the and that XX% volume demonstrate the line estimated the PAC operating long-term to the $X.X debt. account impact year aggressive. was That of in lead now $X.X in acquire slightly year overall to for degree we to have was while continue quarter, adjusted while income our million subscription over that million any, rate pet. million flow We At subscription deployed strong $XXX the loss North cash resulting line we internal in some range an may on year flow the basic activity visibility seen a market a $X.X for million the and net the full expect sheet the average in on $XXX in rates. to the was our uncertain the midpoint. I'll be $X.X of of diluted cash I new of to for with in moment in $X.X our American economic into us the and third estimated income approximately $XXX market million strong, improvement operate million a at or a revenue we year and virus now backdrop, hospitals. to we're while or internal return outlook full-year and recurring period. $X.X spend, investments $XX.X future if business to Quarter-to-date, continuously guidance pet. continued maintaining return of once cash million our said, to our a the internal of acquire the have, resulting to was basic our period. million, left Free $X.XX quarter, EBITDA of with up XX% turn growth than period. most. on year-over-year in reflect compared $X.X Trupanion's of XXth, from levers diluted year pets, ensuring our $X.XX we share market Net During on per internal the year a average per to control prior within share $X.X that the $X.X our the reflect compared an higher the million, With are during highlight to uncertainty. XX% million during of quarter $XXX, a reiterate to we at balance existing flow, wider updating take single of are remains in the XX,XXX and availability rate had approximately current

third million, in to the of For expecting midpoint. we growth at the revenue $XXX quarter, $XXX million total representing are the range XX%

of $XXX in now at midpoint. year the range the subscription million be million, XX% expected growth is to full to revenue Our $XXX

the revenue at $XX to of expecting $XX XX% growth million, the third representing the subscription quarter, midpoint. we range in For are million

our segment, subscription perform $XX well, be now expected which the operating is business $XX million to approximately the $XXX these million from be year. business. million, less has other updated revenue we At coming continues around for to Our with year levels, but to expect total income around adjusted for visibility

XX% in allowable Our response guardrails spend this to of spend $XXX mind, will will up our pet as and estimate or to rate total per With within we be flex in down return internal pet acquisition this around million. the $XX our acquisition opportunities. needed market keep XX% that between spend between please for mind equate would the US the currencies. pet are for in rate of midpoint, total Canadian to Also, revenue conversion and $XXX year to acquisition At subject projections year. full the fluctuations our

For with we're to a very In our landscape. approximate current rate summary, market at which used June. through was pleased financial we and XX% ability our projections, navigate guidance, the performance of in QX our the the end rate our conversion

you we capital. the Our will your to Darryl. and be financial now in over strong, I position will allocation time call our Thank is the and back disciplined for of turn to continue today

Darryl Rawlings

open We'll up it momentarily. Trish. Thanks for Q&A

Tooth, roadshows the Q&A context some now and of Margi your We'll you then. series point over in our session be non-deal today's Chief questions. course to is Revenue in also for attention also us provide additional on are Canaccord the With myself week. many to Conference both August few Margi can Officer, help the your quarter. virtual be our of to upcoming available I We a want and to that, a Joining Virtual events, performance of who investor Tricia, I Trish next and upcoming hope September. participating speak will for hosting

Operator

with [Operator question. Instructions] Capital the comes proceed your first Markets. with from Please Shweta Khajuria Our line of question RBC

Shweta Khajuria

Two questions, please.

confidence the First most in event, the shareholder you would the in -- you at you on gives confidence, And trends, call retention gives and to question thoughts what that your it any of particular, pointed growth great retention be retention July? the can out hear in rate. from what What May, in sustainability I rate? you on had out Thank this you. mean, is, second

Darryl Rawlings

members and be a of to but the going a back without the like know there of lot end to and this June. we execute. Shweta. went said is that, about retention care focus we looking And team rallied beginning employees customer. our we In that than really our record and of that our let's The level opportunities answering to by phones the in our and area and you're March, quicker, and we existing in still July as COVID we did control, on the focus about every and of date. outside rates started spoke enough gives increase much first what backside we'll that to across seen improvements team main we see June, an April on saw really of the time is What team the that scores, of to is did. it pretty on also with it. retention faster roadmap, uncertainty retention a right and Thanks, that we rates QX, our Shareholder is at paying the and in the gets taking us Well, knowing the saw have ever, to at our meeting have measure in that was board least, in level confidence have record We really improvements what at on May the NPS way I

you retention seconds our than to So, be friends we've When referral veterinarian see have think and the able higher done they're or is clients happy But It's sustained ability not you levels the adding formula. we we hospitals, when pay and overly the in complicated. you're historical better even when than partner because hospitals the and think historically, to answer going to mean not service phones directly at with minutes, telling have faster rates add-a-pet, higher to we averages. pets. able only will their be in we client

results any as for the learn in the the access previously, And that. are to come, we So some years the feet curbside And everywhere to in we've I mentioned now. to wellness execute. the in you sure lot July. retention We're challenges best way, feeling really asked in July. we're to We're over visits. the us check seen team really just a of had bumps roadmap, trends veterinarians off to then at be And seeing their strong how up confidence but running are right There along positive. continue. next there'll in about seeing trends have pretty I'm that it's three and

to similar there's some So but I learn, July trended QX. to think has opportunities

Operator

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

Maria Ripps

I little questions any particular And, from this quarter highlighted referrals. is Darryl, maybe my more on were being in could us Thanks you the very results. higher quarter, lower spending. on think give aggressive you strong gross anything second additions productive for But in share for us higher that? Anymore And little taking that more else a light with maybe there and PAC? on highlight? half you channels you of congrats color a with maybe I mentioned you know bit the that Can bit you column

Darryl Rawlings

Sure.

this can. to question over who the I a I think Margi, answer more to lot better give I will can us hand than

Margi Tooth

Hi, Thanks, Yes. Darryl. Maria.

looking the part So, of very led very a vet what's I board, way to of so always terms moving number which productive number us and within. in And through channels at efficiencies. would the is we get outperform terms -- do there, some more for adjustments thing We in changes channel the so, lower right it's quarter, say having and and made allowed doing to really to of hard spend and growth of to a growth operate to positive we the efficiency. continuing PAC addition, generation certainly for us us maintain across those the a have that efficient in it's And the quarters continuing lead that something conversion that work forward. years to effective

at be -- We've market. when the across And point, not look there. not the have the to also improvements only Darryl's you pets adoptions the messaging the so add-a-pet help channels only new significantly made business. neutral our into we with and refer-a-friend at we coming looked in with earlier channels to Those

you great experience. So have

You quickly sign also invoices.

breather that channel within been vet talent and as positively And continue really you of to the we very across as pushing perform that You all if helped across But worked well. are massively it's the it's performing us hard great forward. far for large We've the paid have look operate very the channels board, of there. team channel. a also strongly The a is quickly. software channel as

maybe looking core half channels, PAC what for call of be we're aggressive will They more channel areas is at year, where more it lines of things, at then doing to trying can vet more sort of us. terms side and areas, the the direct-to-consumer the always we line In look conversion outdoor they focus the deliver. be in of with which the predominantly from And of to more activity. less the are in second on the anything [indiscernible] on different confident into a getting that and could three

we from QX Just to of from take learnings view. and we QX, also put which being the perspective that spend the aggressive both hope QX into a of more can testing from how and account our point PAC more to core is continue grow PAC and the ultimately,

Darryl Rawlings

One of thing I'd XX like from stream increases to to more kind which months and of be based the in we not we're means return cash add is, rates increases that the even months of going so same the the to more is spend internal an larger, XX of QX, can we have record money, flow have getting we pet full to can average retention amidst in aggressive marketplace. It rates QX. on lifetime credit that we've what seen in a average, XX-month value accomplished the of a

the it So and made Margi big money. us and figure aggressive, of the best out have capital we've be how to to the her our improvements to fact on allow utilize that and is operating more adjusted expanding margin will will team which retention,

Maria Ripps

of in start of Can maybe could post-COVID and sales that savings the changes talk any going question your since may your structure you about whether sort and have another forward? managers inside changed cost are maybe if account how And and to result roles territory how you potentially the pandemic there I responsibilities view could. partners

Darryl Rawlings

will field Margi. to we hand even that we've this pre-COVID, Yes, make the say I done to started what changes. some I'll in

couple the growing we getting wanted. we If as or you over few last of is years as areas quickly look we results the weren't wanted a that

teams. the So we changes made with some

had more touchpoints to As the remarks, vet to I mentioned hospital. in my led opening

you we're to we've tools working to how the by if results to add. we're the if on differently else regular the new I tactics. do teams that people anything and And Margi, in. learn of Now super encouraged got seen. curbside But there, your And having still thunder versus have we've on check

Margi Tooth

little to operating there to up get challenging the of better still the for of of the I and going And I lot get. which well helped really the between the A very territory really think together. bit, -- touchpoints, they the we've one they moments already different things skills support point, are can the that is to having partners you managers, were that in us has a them outreach, account pick relationship think the they lend relationships, through vets kind that imagine hospital. versus But it have if process really,

sure So one COVID across animal owners industry in to globally but to leverage pet not of do with things function the North work of sorry, part the good make made. we out the could America is TP data been, wanted the But in QX that of health role our partnerships just the end to QX, going we we a the QX effective. a to changes and -- supporting the have would support and we have that otherwise which and board in biggest we do have probably took we're to the and of that the have into back expertise crisis in was that more to position what we industry, and

once for them. safe operating And looking help for you looking Trupanion, way them industry of people really Weinrauch to understand moments brand Officer, of raise them. Veterinary pet them helped how had only not how that. hospitals can curbside do the Chief you message practices different help Dr. COVID, it our with our very can initiative, they So, Steve a and COVID which and we working new at The said do pets. media with in with need We but as awareness also that is this out pickup, to other to reaching owners at I'm led outreach. how message of help we're which that massive reinforced counsel hit practically can like social a They is

our So that's to the big point, curbside we look continue manager where beyond we've ways account better we, a that. to messaging seen using at from the improve And that coaching Darryl really made. can efficiency to we and both territory partner leverage

Operator

Please from Lake Your Markets. Street of next Capital with comes question line your Argento with Mark proceed question. the

Mark Argento

wanted on it are of and and are all channels Just what guys get think in environment? to at quantify continued the looking at you you and that pandemic impression from more the better where new people seems is puppies on able getting to from your to or just kittens trigger think, that Thanks. like obviously with a tuning pets direct-to-consumer you from kind one that stuff. that is right that quick positive that? quarter impact now What do you're do And have mouthful effect any then -- you there follow-up guys all

Darryl Rawlings

Mark, this recessions seen we've of to train have other pet are to knew more, uncertainty, We've doubt home saying this lose pet do bring and heard are that I people for good when people in demand in a both pets at There their a the increasing. science lot when people little to home people people lot been them. no Often Well jobs. has our a a the is time here. ownership for had increase of new is I

a great COVID, people You is layer and that are quarantining a saying time on to get with with new pet. top this of

this of is supply sure of It March from March stories math. in about doubt the wave cleared taken that talked doubt following more conceived the our no out. made were increase produce a about months of, pet up, average legged rescue humanity four is I came to is and pet shelters got taken home. five everybody the care was and and of not to friends think and but media issue more It there Now than supply the to great they four ownership demand has and No that there April that goes has social are it was in able time and pets a breeder but until to in on pets. people April,

they're this from So doubt pets there or a of areas. see just was and in and [indiscernible], a of over year of didn’t in there see channels see you're of that and QX that we've see it the hearing we'll is to month seeing of it so of anything We going we're fare now half is that of the in I'll lot how you're the really back a I in expect in we more July to QX. started in seeing exciting months No in And demand. the QX. that new would BXC lot seeing veterinary lot July. reports those

Margi Tooth

it but as seeing coming a infringement for the It's more a COVID. as reminder, see result it's of to the can us as in lot an quiet strategy see but interesting to be, course April of what We it generation so again very out early in continues conversion. for a helps see of core of think pet things. a a the channel our really that to we're signs of Part so can anything BXC, were we and we of of

have than been start advantage our we it get may the good a spend, pockets results aggressive to of a otherwise drove to which take to is some little testing. As with more more able we and provide. of little cheapen residence of We bit bit did some were is media

think nothing back and supportive of direct helps continue continue learn try just water, quicker to drive and bit I to now we're different but to the channel. channels, right out all of it and blurry that consumer test we conversion is sort little to us to going of

Operator

Thank you.

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

Jon Block

quick of questions. pretty Couple

XX% for one was the first looking balance the at sheet, it the just think Just year-over-year. maybe XX% AR you or

divisions. tied full the Given division it to growth other outstripping somewhat be but even which might is seems the there a be it impressive other time in think I to

So quarter. AR and past couple demand year-over-year to being there I that trend can accelerated over of line just XX% up the is about think XX% you talk the

Tricia Plouf

in basis. you unlike monthly segment the product annual annual the to and accounting with monthly for a and yet. right of the upfront our settled that Jon subscription is is majority receivable to subscription balance kind to of the growth is record related good is related product deposits business accounts is to and A very allow which of the our other on of segment you're amount the Trupanion in renews related segment, of haven’t in collection majority monthly, business, line is our receivable if AR which grows other Yeah end that business business portion revenue an product month transit small other

growth relatively So it overall in segment. trends with in that line growth, with revenue

an over our the course to liability, the receivable and and the because the monthly customer. nearly are you're and of effectively for balance the occurred in payment the that then with then it down deferring of all recording related it's sheet deferred puts comes look amount year made accounting payments you equal of recording quarterly offsetting receivable nearly as down then monthly and that revenue kind revenue the product by growth If annual an recognized until or payment sorry

accounting it's monthly being up. a function of So type balance of being and product and an just gross quarterly sheet area of the

Jon Block

Okay. Very with little helpful. Maybe can offline Got you there. I bit follow-up it. a

XXX low, to sort but talked QHD, but some the I a clearly XXX quarter, maybe is The other is just why that it picture word XXX a in same was question. moving pickup something the you the outside extent lot right one from Darryl was of the good in it and temporary the subscription brought think I other which mean even about about color the think you somewhat for in margin pricing don't I pet implies really was gross you’ve quarter, year, Tricia being big you, in seems still you guard. that's but a I big talking for very

what sort period? XX been three So that to versus was months, advantageous the for you question, really years Darryl talk quarters what the unwind It as quarter over or in view sustainable an coming good you going might've month thanks the about might six next just can of guys. all-encompassing forward somewhat in

Darryl Rawlings

want line acquisition and the to read you're Well rate. time. spend shareholders Nirvana, driven in impact can pet the The about that our a bottom that of hit about letters our business. the talk know we I this of is spend talking that the how money generated We spend by levers to the and Jon, be have the of what to read amount year-over-year have or type don't have capital we about are our able we while lot much during talk growth dollars what having is of kind you shareholders for if and grow of to levers tax our normalized

the that spending. have a that spend don't we Now have destiny. test a we of Pac back for to to that of the in regularly things that it we of quarter have control combination and doing lot spend we're of It time. we should in levers often money. have we pulled What and and our We the period group lowered is repeatable demonstrated this a investors a actually show spend ability the that her which and are efficient of business

acquire the the potentially our to go rates really happens, came even XX out, go be if will it how the cash retention rate we team flow quarter that sustainable stream push starting pack -- very higher can and spend invested of can past to to allowable if months should mentioned in we talking capital, to that of XX while is up execute to at to months historically quarter return which very, maybe of maintaining closer life a come the continue when really years after rate taking up Now amount look I internal investment high up. as from of a up the spend, on return we the and pet rally. over we capital can the When will before, internal still that and we're about get things one the and

So to and gives our category that grow be be earlier, pet, us to to of that a the in guardrails flexibility years. a were I rate will and five we $XXX Tricia and internal mentioned mentioned and getting and XX us the think veterinary take XX% to return. can ability learn leave spending between We average on acquire $XXX the

the and really saw the traffic we from think comfortable impact where in really July I which standout when seen and that a time, June going kind we've moving was one question kind that's the your of a at down straddles look biggest were marketplace, April, QX QX and what biggest I March forward. of of consistency and but change May, of lot until just

Operator

of Thank you. proceed from question. Please David Westenberg Our Guggenheim your [Operator next instructions] with Securities. the question comes line with

David Westenberg

Marty taking said you were questions. the you

that in be out in might biology I little argument that Mark's to different. have So with continue bit COVID out, might I to terms get but I what teaching of quarter figure trying a want the question am done the

doing to the you whether may about data through quarter? with or looks or the talk you much figure know marketing as you not then these competitors. share or a in relative strategy industry hope or losing that, you're to in differences like? are help the to of normalized can of any kind I'm So And of trying competitors you're how there a seeing just business market COVID be long-term out like how what of gaining whether the continuation if bump is not

Darryl Rawlings

we've benefit cost best that expect the we XXXX We to in well up back pets, the people retention demand outside that even overall been for continue the on I their we will we've -- those I and that going that the budget things in information you seeing if think continued 'XX, one with of have. areas. as Trupanion. help because that the QX lead help and have, test and because confident that it's will market similar expect would reductions relationship we're pet pets to monthly lower look compared XXXX for get, I times net ability we're that -- I expect has you year-over-year that's because have information to pet in XXXX, Well, because we growth so revenue to is because get to overall accelerate net the owners growth at and lead The place based revenue easy for are we where to demand care accelerate revenue. replicate are the things but veterinarian, leading test maybe retention, we're or and that versus happen the the goes we're paying us monthly the to think growth of way that have directly, category's to other we for seeing we're in and in would quickly; our accelerating you'll not our competitors and downturn think your paying gives categories that as churn net in with

David Westenberg

consumer and normal is that curious during insurance be needing recession to from on very this we you resistant. just appreciate this maybe terms, if business on extend recession, like different? any that, terms it's but in different fairly impact a as that situation if need time a because a maybe maybe I'm I you've need and rate any that see maybe customers is recession setting unemployment appreciate up I the to higher a impact just the extend with for to impacts higher different, from is future growth I'm proverbial if it is opposed to historically I and precursor strong to curious having shown recession employment and realize your should you curious receivables that? that, Again we're this this time recession anticipate I'm with maybe

Darryl Rawlings

they're feet. it's issues, the say at the and of level to of veterinary their many in a an a in were well, companies. seeing able situation driving stop that pets injured month that with packing could of notice of lowered COVID fact a certainly without not our members which reason in July different insurance not are extending in in been people the likelihood people of is see at off could are like world world Well home likelihood terms car of to getting we thus the in more and car and what, The actually to more a running Yeah that frequency means accident uptake we're sick be the guess to or COVID in and they lower. going home the

our that and low shock on time, of it to through directly I historically and March not recessions, that have unique after with has We've XX-year will seen April don't and and anything so the in and rates held. this team like have. software put our efforts raised monthly I they other highs So company then you to always we that think together the was other and put servicing retention quarterly acted there's way tell retention far. paying automation volume particularly and at our the retention We're overall client the rates health. recessions. certainly that

Operator

Thank you.

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

Greg Gibas

you back all a quarter? color of in vet the those First I throughout bit guess I could on just April that lead quickly more know was just how mentioned how that level that is and in XX% that the little being then basis down maybe down did revisit relative just it leads, you monthly trended how under provide maybe channel to volumes improve about QX? the XX% on QX but beginning trending those of at into July

Darryl Rawlings

Yeah in that QX were track leads up way we that the about X% of it. kind year-over-year

by to to expect XX% would our be growth rate. hit leads typically we year-over-year So to up XX% the channel

on. at bit X% as definitely a were they down little saw but trending So go quarter the we up

Greg Gibas

seeing would rates, newly And me regarding are improvement rates implemented say kind continuing those you team guess so-called an forming guess level second then improving directed much one team the that or since guess that that implemented to be recently the how out just or since of team? retention they you and of you I have I for where at I are say seen that improve implementing

Darryl Rawlings

but she will sauce Well I'll not hand I'm secret really how performed it teams sure and over the to well. you Marty much give

Marty Orloff

you having terms say in Greg, conversations. I races but helped. secret that a taken will of and of definitely I to very not team skilled give dedicated We've going am sauce

just people taking that person. quickly the having you team the how also conversation, things not other and the around of it's One that about call is respond to the

do of people So us the someone and is haven’t not need that. because they they got communicated want a where do understand to wasn’t we because or going antagonized the you opticore results invoice with of helped the up paid, them to something that, check to they quickly level calling to whether be why volume to

to in from There changes proposition about it that as puzzle sort are value us elements are are of just deal it's part in also deal that with -- shifting COVID So internal having card. and different there them definitely coaching added a the what make confident the operational of the part but to impact. field client messaging is if they're about our confidence that it's it both make teams some the on that with credit a able quickly that but level paying a we're that of

this look which it if is that that you and across at isn’t So part and seen positive asset. just attention of board, the COVID you’ve tells a increases the is retention related buckets the

Greg Gibas

does okay. that the that partnership would anything strategy line can one Last me, those and has you regarding the seems market we to be maybe regarding helpful. that for products just see That quick thanks? That with share hit very with been marketing discussed if product [indiscernible] anything if when

Darryl Rawlings

question the you're food initiative made Yes, that is asking we've pet a some investments about in.

high Our how several made at next We're but a months and food about learn we their that. figure be out hypothesis eat to hypothesis, will to life test to it can to and doing going quality the that out long investments figure is quarters that that outcomes project. looking term very pets is over have some how we've in better some testing

Operator

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

lines day. your You and a have may disconnect wonderful now

Trupanion (TRUP) 4 Aug 202020 Q2 Earnings call transcript