TRUP - Earnings call transcript Q4 2020

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Operator

Greetings, and welcome to Trupanion Fourth 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] Please note, this conference is being recorded. I would now like to turn the conference over to your host, Laura Bainbridge, Vice President of Corporate Communications. you. Thank

begin. now may You

Laura Bainbridge

and afternoon, today’s Margi and year-end call quarter XXXX Tricia Q&A to Tricia Trupanion's Darryl promoted the were to for Co-Presidents. be welcome results conference joining to Similar Plouf, and financial Officer; today's earnings Chief fourth Tooth, call. who Rawlings, recently call. calls, and prior Executive Good of Margi will Participating are and portion on Darryl

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

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

Darryl Rawlings

funds rate Good Trupanion. over prior approximately these Laura. within The business of year estimated million, fourth our off Adjusted grew quarter year. XX%. capped afternoon. of XXXX. operating totaled strong up Thanks, $XX million the an over Total $XX income XX% at return invested revenue We XX% subscription internal a of for

the market, Our uncertainty, our strength in the of of pets power love. consistency the the testament of backdrop unconditional In performance is and model, against large of our to importance of XXXX, XXXX reminded in business a and us a positioning of underpenetrated the pet. the shock

were and this to yours, For my the household. just year, Zoom not screen new to pets everywhere pets past

million, America, year, rise pets about ownership, pet in rapid pass in the away, suggests in million year, new with we've in population about to modest approximately million digit written pets pet been our be has single North X seen a born. context data new about this XX typical expect a and pets increase. XX To million increase. much the we'd While put million a This to grow XXX XX to

the has bigger increasing expect the increase over several that did we've past been overall of will pet the small COVID penetration this the is to for opportunity humanization Although been grow the years penetration remains come. trend do witnessing accelerate helpful, the rate category. decades. the the category rate What We'd help of

More in value of pet pet. the rates increases be additional operating deployment value category Our a retention we year-over-year The saw Outside increase should we're We're insurance source. channel evidence and data we're in and from Expansion as April. growing adjusted of brand. are more months a about growing also an suggests before opportunity spend board, to lifetime we in us up lifetime in pets available our we in up of and I veterinary in keeping XX our and upcoming compared broadly, than growth combination in my longer important while giving be allowable return. veterinary improve more medical revenue resulted across acquisition and to opportunities the our leads, lead months XXXX, ever letter acceptance, in aggressive pet visits XXXX. our shareholder internal XXXX were additional maintaining targeted income of the of increasing believe which XX XX% of is in the strong this result. share to the expect capital, providing that seeing impressive details

fourth our benefiting is which Our lead Net acceleration XX% conversion metrics to increased in Total retention. business. subscription XX% positioning XX% for is expansion quarter upon pets net us grew is retention Underlying new increase year the strong from in our ongoing of revenue indicator our in fourth in Maintaining and to first and the revenue an focus. This improving in by key enrolled growth, grow. investment sets up well quarter led increased a recurring with a a and leading remains subscription the results. evident this monthly quarter continue pet coupled area pets.

return, first Adjusted income more XX% subscription grew which invest these The to amounts in market. underpenetrated the among estimated midpoint that within within $XX.X sets year to reminder, I'll to funds up over team was the continues internal year-over-year a quarter. impress at of deploy Trish. to XX% The approximately with of opportunities $XX team they Please XXXX us shareholder of the million XX% into an to to ahead. ability large is for our we past capital our million As demonstrate my pets hand and against target. an Trupanion. call operating and rate details. retention able of as increasing in this see the With business see letters XX% in lower our This well

Tricia Plouf

afternoon, good Thanks, Darryl, and everyone.

XXXX highlights, I'll the of quarter fourth our I it for majority of Darryl I provide our sentiment and As Trupanion. commentary on year XXXX. of focus outlook performance. my first some full financial Darryl that quarter was covered also strong our echo a quarter will the for

within attributed continued million, months, impactful Our have to The of be which U.S Average increase year of subscription through when X trailing XXX,XXX retention basis life the prior XX. a year-over-year. and extended in our by business was pets increased in net unit and for pet million can and we improvement as our last by December we a pets the year with growth Total prior ARPU the performance of year-over-year the calculation outperformance business, was Canadian improved increased subscription XX.XX% up $XXX.X continued levels, X% Trupanion for Within up increase our per focus year and is to rate period. subscription calculated look The our XX% XX-month quarter, single revenue internal the in spoke XX.XX% an X% acceleration pets is about currency, on local other the within compared approximately was and strong Total average increased average retention quarter service of was of our In year-over-year. $XXX.X over revenue XX% to a business. value revenue X% driven to was year. year-over-year. lifetime the XX% ARPU over the at $XX.XX, monthly approximately return economics the period. pet. average Monthly call on in enrolled our prior an quarter pet

We year. half and the pricing on in are progress continued deliver in our pleased acceleration the second particularly growth which ARPU reflects the of quarter, to initiatives,

Our the experience. our prior within revenue, subscription veterinary of quarter. member year X% was invoices XX% paying expenses at remained Variable the in paying and cost consistent on business of for includes compared prior was during to as we revenue The and in subscription to Subscription quarter gross period, cost continue target veterinary of expenses. XX% the invoices with XX%. of variable the to year cost XX% revenue the of annual our XX% of focus of the margin revenue

predominantly and services we This a acquisition revenue profiles different sale solutions. also software that our revenue end of subscription from business business of enrolled have on revenue other segment, year-over-year. Our our is was year-over-year. the $XX.X a the total, XX% in quarter, completed component other that P&L a now and and products of a processes and generally segment an quarter, this fourth the company of BXB increase than In business. products increased from revenue adding includes for focused software strategic within but other pets million comprised margin talent, XX% had was back improving impact. Growth In number small the of

to the quarter, period. of prior $XX.X was lines XX% and of other other year-over-year of revenue quarter. income services contributed XX% and Total both other the loss our in $X.X which was is business the The at the increase of adjusted The consistent of the million. were and revenue consistent operating year $XX.X from increase our Additionally, million with the are same over of million, operating of growth period. majority compared during the solutions subscription segment our fixed that our with business year period, in support the revenue. income XX quarter was million revenue prior in sale expenses, increase quarter in segment our vast an the shared $XX.X software subscription net Adjusted business X% X% over to subscription year generated revenue. million of was the for Costs prior with

estimated During million average return in operating adjusted the $XX.X for acquire This quarter, a of resulted deployed rate a single an income over of our to subscription internal XX% of new pets. quarter, in pet. $XXX XX,XXX the pack we

please on internal refer For financial our of more adjusted income, to Investor supplemental operating and materials of we the Relations how our calculate website. detail portion on return rate

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

our million Additional detail income within for EBITDA quarter loss Adjusted in was the the diluted as period. the year Net million basic diluted to compared $X.XX can basic be a year was found share compared million and $X.X million financial supplemental or per $X.X loss per $X.XX net period. of prior $X.X or $X.X materials. prior of and in share, to

a As to was $XXX $X.X $X million impacted Free well our $X.X case of strengthened acquisition long-term mentioned million pet of $X turn in periods used prior the in strategic the notably, was XXXX. credit balance cash the Operating a which a was lockup in obligations the quarter prior as received fund we during profitability from the under all million, cash compared were repay accelerated period. outstanding The our the now as X-year which as facility. compared Aflac to in the quarter net quarter. in I earlier, to meaningfully reminder, sheet, flow million with proceeds quarter. during strategic in I'll year is million to to company period. investment flow Most growth year fourth software the we

a we $XXX and with ended investments the of result, debt. cash million quarter and no over As

operating financial it make to that identify in amortization amortization depreciation results. to are Our expenses other adjusted and QX, the increased was we XXXX goodwill operating depreciation to and $X.X financially. end by Note per The at return. XX% expense compared have of lifetime expense increase adjusted and on our amortization to quarter. acquisitions prior year, pet of approximately balance a from $XX assets and summary, business, of result expected the our expansion separated intangible assets variances intangible recent in align the to reflects million adjusted depreciation and million able amortization increase growth. $X net in income income our year while better statements rates software view and of sheet in The the Beginning with in our or internal metrics, operating quarter and growth by key also acquisitions. related drive easier to of year-over-year In strong our including amounts increasing million deploying We at operating year strong was retention, margin, a of within operating a net XXXX. were pet value subscription XX% management's

Our rate was XX%. also estimated disciplined strong an full internal growth at of of return year

strengthened sheet to execute reflected for year and move of us on which balance quarter up the with full ahead year the first opportunities we Finally, our momentum, well the We sets as into us outlook is XXXX. entered strong in our of XXXX.

guardrails million deploy as revenue to within for development And operating of of we in year to expected to for year-over-year discussed in $XXX to acquiring the $XXX $X adjusted to income other million, adjusted the we IRR the from $XXX XX% XX%, year please being the expected $XX initiatives revenue midpoint, an expect likely over currencies. million expect revenue so. while Subscription at U.S opportunity in is spend the to For have subject of within XX% be an as range $XX additional midpoint. and the total in be $X operating and on to we our choose full $XXX operating are is Should our would be to approximately the business. projections million the the the be to the Also, first growth our million expected fluctuations, to year XX% subscription of income generated will we million. expect million over to pets quarter, the earlier, well do our to most invest Of XXXX, more total growth year-over-year for $XXX with Subscription rate of range representing around is million. expected the of XX% midpoint. the full that and $XX mind our subscription representing the total of range to million, business, revenue of in Canadian million, in $XXX between range to million the year at increase business. prior XX% million $XXX million, conversion to keep revenue $XXX notably is At

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

Darryl Rawlings

The Thanks, support and through Trish. of change XXXX was a year who unlike Trupanion. navigated any and team together in in their trust of veterinarian other. a owner placed came unprecedented every period pet

For are in seeing to Look XXXX. Trish we this, that, to I you With forward questions. thank together for what I say to and team. the can available accomplish Margi, want

Operator

Instructions] Markets. [Operator first Our Capital Mark from question with Lake is Argento Street proceed. Please

John Godin

I appreciate for everyone. Hi, taking is John question. Mark. on you my This

break capital areas of that where out if And pandemic seen maybe returns highest the you on could the First for looking at of of any year, investments. some kind you've of back has the all, changed, kind of just started? past since the

Darryl Rawlings

of rates the We in our break categories John. neither rates say Hi, the pet I particularly But channel conversion return half the is year. board, down the and don't geography. saw of back that leads of or we and of increased kind across by what by or internal can

John Godin

nirvana certain it pretty far and Fair big has your in question, experience points know early, ramping any the I takeaways of that you -- up. put kind couple guys or focus be enough. that goals customer as Has past translated know markets? over have for but would Then second data really as the a on I into quarters

Darryl Rawlings

offset of of looking Yes. cancelling. which that QX, existing started then tell this talking paths if are nirvana, and members and that metric you the can And that existing about in is rates. QX, output where We the retention first is friends we're at -- or amount our pets improved when add their about pets the talk

more more are than we year, But benchmark that we that hit our and the experience. shareholder investing more meeting. definitely the at had customer upcoming markets details we'll During in ever dollars about talk

of before is funds the of time really acquisition pet some So two into One or after, those at educating kind they it and down the either or or enroll, areas. shopping costs. breaks shortly client

we technology, trying we're more improve area around but investing, is investing can other to is recent automation. only are to that areas the happen. up task, of The all levels. places, keep to service. to to our people about and that sure areas to our really you of speed is Tricia more those make to to increase getting and challenge The kind Trying mentioned, bodies continue software, phones with service XX/X the expect investing a experience that growth. as customer make are we're XXX such we're The the we can in also big acquisition those excellence adding try that operational accelerated try from software answering that our And

Tricia Plouf

I of John. add just Yes, will a things, couple

as Darryl trying results. member the we're think, the going momentum thing can and main I keep really experience was said, our that how with that to impact retention the

in a that's experience so us. focus that whether also experience, more general to team or And experience, our want for invest it's just And the the dollars claims the member we provides. big

retention. the is -- what on to rather XX% contemplates And we And income, so, reason the see XX. for we on is focus experience. our focus member why for adjusted of operating in in XXXX it, target our that's the really, if year subscription we've results learned the that for than that guidance, it business closer like And that's can

down us And going. to double as numbers keep this slightly, it's and to that a driving will some that -- on big focus this momentum of other be XXXX. want then mentioned that's And and the those a QX. really key Darryl thing, for also takeaway we and so into of And going

we the is automation area scalability, in that experience investing we're main way number we have long-term and technology, through great the of And well. of some more technology, through as investments made that a

John Godin

guys helpful. and you and Thank congrats Okay. That's nice the on quarter year.

Darryl Rawlings

Thanks, John.

Operator

from Our Canaccord. next question proceed. Ripps Maria with Please is

Maria Ripps

my in thanks roles. Margi, And your Trish, and expanded afternoon, congrats for Good taking questions.

First, are revenue this and you product we on should new mentioned think of can to expand what how you sort any about initiatives those and that? investments that please related

Darryl Rawlings

last Maria, the this, shareholder and letter meeting about talking year. in you details started first following upcoming we can more at shareholder the our shareholder Yes, expect meeting. And

out in it. XXXX, Tricia start really, we our of see and will investing territory we expands, adding will out hospitals help first the our channels. national XXXX growth designed years in of the new partners, next to products our markets. are other we the force, sales But service. software directly any only category call new be and material As impact scale. a to built And distribution take anticipate exploring get are are the of expanding data, of around XXXX XX specifically as foundation us doesn't of really you acquisition that customer know, that operating pay the to to company the the going able to provided spent of in experience time really Foundation trying be guidance It's our But XX to we into around having company company those areas. international on any be investments. foundation. We've going The to these that when years, X, the long-term look additional XX, we're P&L, channels for those advantage at lot 'XX,

Maria Ripps

we some in subscription, that last outlook look is which of normal have considerations Can for expect process? in think. mentioned where initiative do all you to then with you I may sort increases? percent quarter, above you necessary it. Got of are regulatory versus in place color the for that expansion? give where secondly, price your at share if maybe helpful. terms need us I very XX%, maybe they And you you X-ish range. pet you for -- And grow year ARPU what which of growth believe price full And ARPU sort Can implies your That's us

Tricia Plouf

for we something question, mean, as as and accurate possible. monitoring, the Yes, constantly Maria. Thanks is pricing sure Sure. I that are making is

previously, granular about down to really As neighborhood as try the we've as to price talked level. we possible

neighborhood And is pricing at that level so a that continuous. something is particular

team X% year, in I to particularly we we in into half expect large the And of it. that expect moving a focused change. in and to highlight have XXXX. XXXX and good focuses that that to second I closer versus and don't We on that job the did that would a on remain think In we X%. we'll pricing going continue pricing, up

pricing XX see before, that increases As corporate projects mentioned With guidance. we're that X% But years ARPU we of so then as guidance in The well of trends in dramatic the on being foreseeable the We're analysis And over some closer improvements to this have we've historical XXXX. consolidation those of been the our comes growth pre-baked of in do to we be pet X% But to to getting haven't space. remainder the have really, X%. future, past and And in X%, X%. our kind as X% that's be to not should general, that. possible. focused closer some obviously, things, targeting into other in as our initiatives we obviously can to initiatives we retention. We resemblance. lot think, in a accurate and from projecting as data closer the is that,

So that it's currently we that momentum really maintaining retention have.

Maria Ripps

Got you both. it. Thank

Operator

Please Westenberg next Securities. from David Our is proceed. question with Guggenheim

David Westenberg

pets reconciled course, new sense? for adoption. Can reconcile and is or that curious know pet at Does around robust how that I'm new Thank make data great on if think clinic? the versus quite pets says XX. about help you million to with, year just Hi. has maybe and practice. my taking industry wondering that, growth of at been accelerating of new the lost kind the helped am congrats you in I you year us at that I was around patient XX here. question mentioned maybe And you patient veterinary growth because a

Tricia Plouf

It does make Hi, sense. Dave.

we the traffic the coming those the of veterinary people in terms his through as we that there remarks, that to see at people and opposed seeing taking with change The as COVID. mentioned see is to industry, up of more going the as their there is, pets are general, home in Darryl while visiting pets issues you in new in. mentioned pets pets, in So -- their bulk are most data their is of during vet They're frequently. definitely with

So there's an increased visit pattern there.

the data conversations way taking with you're that is, us pet veterinary the the naturally, having For reconciles you're into the pet of going we're care. care for as channel seeing the more, you're your those and But us we've value Territory that kind that allowed with events over has insurance. the relationships of high quality is Partner mode our call pet to them Network that years those those through the of appreciate developed really

at attention think see pet. of n we happening crisis. more of new coming markets. slight of and but to power taking level, in the care And rates The their down their going that in, puppies times up see people vet Overall so the crisis, increased the so we they're pay about that of better as conversation pet that the people household times to care we them well it's general, in slightly pets increase in in penetration generally are pets kittens. of better And can as that with coupled in taking

David Westenberg

it. Got

-- it. got So no -- yes, I

because more the veterinary aggregate the help the is target did channel quarter. the was than channel and new veterinary aggregate -- robust. help you pets. the it So you in Its itself But

No, … Okay. that’s

Margi Tooth

value particularly moved growth just see strong lead the many as as well. the the think VAT I know, as to reinforces and is the of is to you curbside for of industry. the When Because But think particularly I there. would industry curbside, use answer insurance the volume, general that as veterinary that that to good. really have about we appreciate was the challenging it relationship having in of promising us

David Westenberg

increase giving increase still and think got and of it. of for help is you second I said kind And I it pets sorry, to in though, out. expecting in previous or mean, you've expect and questions growth? a an retention and new historically. missed Trish can pet I me, little new a ARPU that to X% indeed catch said I increase phone kind again, X% versus cutting the are it in I calls, X%, to up, So out are new bit, it. up to still Got that cutting is When Thank to in it's commentary, grow guidance, you you. should And expect do expecting? up? of with kind XX% you rates ARPU why pet think you growing ARPU And ratio be still or something new -- not you're to we any headwind should a growth we you was

Tricia Plouf

to Yes, -- let me I'll try cover everything.

and the based ideally and well very year-over-year. Let data, we're see in were we X% to missed executing me in on trends industry of we know closer on general, costs in going mean, and increases what's if ARPU I anything. But, yes, what getting I and

we're increases between this X% value have where mind, Now X%. keep and is increases in been mentioned. proposition you as targeting them we our that XX% Historically, and need

over The targeting in we a stay year that And we're that X%, closer because to to spot immediately. where need say, guidance get kind to so, be we of to X% won't full and includes we're of be targeting. X%,

in I do moving being you side X% the want the we And Margi, to think at with now right to a X% from of to target data and closer XXXX, about with the then XXXX, have So year X%. the we're growth in talk going full get needle really it?

Margi Tooth

Yes, happy to.

our XX new is we look and growth, past at So over the our pay the months, headwinds, when rate and up think the our I about retention up. performance are rates business think conversion and we believes and that

are that, XX value All as retention the as into months. they rates taking would the of that being proposition suggest strong

that So value is through it year is significant in there the the and means product the what product do. increase to doing needs

be so to headwind any does ARPU it'd And not in present increase us.

David Westenberg

so you Thank much. Great.

Operator

proceed. Block with question from Stifel. Our is Please next Jon

Jonathan Block

as -- XX% we really afternoon, Great. in were probably everyone. are quarter. calculating somewhere the one the less gross on earlier, this the in quarter. XQ. they're Thanks build Maria's and think in between might the in year-over-year We're for strong Maybe the And but adds and XXXX. XXXX XX% good of than first half just question over They the first

just think how how the dramatically a XX% gross that about XXXX, as number. do plus cadence So about adds is we of fair when different then the we throughout year-over-year think comps about And were XXXX? the

Margi Tooth

this can off. kick Jon, Hi, I

difference courses, flow the the the In that were terms sort if is in was look happening of focusing and of a with down the saw lot XXXX that of control. in you back of we the year, things what doubling we back you the we we in they In us. growth can experience, there when member the year, what on, pet was our be making were for the sure on that it members focused wasn't can needed middle

the and on skilled skilled that into did the front, effectively, helping it do conversion very the maintaining the normality, increasingly started Focusing digital became as partnerships, we is think How rate. the of toe to to I focus we the member, that our We to it, very back water we how number we as We I experience, us more focus on what let's did and deliberately opposed on suppose. a growth. -- we start see as so COVID on team well get veterinary focus gradually decided the dip improve are to as growing. and okay, to started on can which

to pet help consistent, cadence forward And growth, growth continuing speak the to As to to can. I'll XXXX, where year can over asked where about. to expect conversion somewhat specifically Trish of we the and you and we that in volume we drive of lead the the in XX% hand look rate we be

Tricia Plouf

building just year said, are echoing, the Yes, lower last I'm and Margi QX expect year-over-year momentum To direct back of question, yes, the good half the than the comps on through. year. going what of in QX your moving then we year into consistency and

then the visibility the we yes, got be So year, we'll probably growth we definitely different and costs now. little further comps when -- get they trends impact your question, look the to into rates you'll then see and lower have that than answer that'll out, as To we’ve a calculation. update higher can in we model if that

Jonathan Block

you mean, the that, the quarter, SaaS if a might ahead And The revenues, bit. contribution, in can the what you was contribution contribution be what XXXX, subscription then as missed Trish revs. year on with that Thank and that contribution right well. for you from on in the acquisition I I Okay. helpful. will in acquisition little in revisit the And the have full curious from the I'm line XXXX? guide just us was but

Tricia Plouf

us Yes, company. end thanks We're to provide name because just of systems about question. this quarter acquisition, can can it's and to million team. past they the Software back we're operating highlight be minute company classified to so additional And great take I'll X the really is that a excited And was Aquarium the happy top sold in the is this the other segment in. within and solutions about as in of segment months the for as And and small, this that well of acquire, excited the about revenue, it. really we've externally. an been that very excellent business margin, a is XXX,XXX, the line contribution to They're far

terms strategy of to of being system, better really that they to this can them chances us much our with able execute -- improve back and is so strategy, we are working build with primary Trupanion better solutions team have. the end In our out,

products that terms mentioned things to Darryl the about of of and lot it. software this excited a in we're support So initiatives,

focused is we integrated, But the longer on other we have of term do getting so contributions on there. team working so also execute that more with And and some fully. revenue this can strategy. primarily that And XXXX all

on other the profitability, come from focus to our So then of it's in that in primary growth segment, X% this that operating there business With system. business. about X% obviously, in modest segments mind, income all adjusted and the to XXXX being from with projected revenue is the of

Jonathan Block

And allowable Retentions increasing increase you great. last a also that’s for for one good will. amount. pet Okay, the if to acquisition, spend improved me, ARPU,

you've your higher one of guys. very a gross and can the on LVP. accelerating year the will, levers bar, here? there. really, improve in you've about especially high it So further, get gotten can if from two Thanks, past. retention churn kind adds? Or You've talked point, a thoughts to light your further you improved had the of to love in Darryl, We'd

Darryl Rawlings

our year-over-year, would the improved as about same, which value up going I a Yes, retention is ARPU. a value XX% normal of same lifetime be the lifetime stays average the pet where mean, pet. staggeringly for number high In situation the a

in to level last X%/. So lot rates a high created we do around growth we that. to to able to we X% question your ourselves. we're could our is, execute can retention and where with increase try We're I can perfectly. higher XX% ultimate retention be do it's sustain from water rates, going XX to months could rates? we question retention moving is XX the The investments to that go? to a believe new But making of if year, the those Unless for get or ultimately

to how I expect really of try to to teams a not our growth the that impressive think the But going I achieve get XXXX, money with model don't think we be. soon. anytime where the we're put were on over that. the result. behind have in get it roadmaps accelerated be a resources can And going would to perfection think couple to in XX months we there would I there. years we and speculate or that next XX internally, we the maintain if that's would XX, But

Jonathan Block

I will Thanks, rest guys. Okay. the offline. take

Operator

James. from with Please is Our Cooper Raymond Andrew proceed. next question

Andrew Cooper

bit a question, just go for way to guys. XXXX. Maybe Thanks little thinking different about the

peers in One of not limited clinics. we've from lot space, necessarily of was health the access the insurance animal things about to heard a

software the bit so in as those clinics, of think or appropriate, we that bit access existing what is have growth you limited year, to in the assumption to new been little a about terms just more drove the to Express installed maybe forward? about going whereas having think, looking tougher growth think just stronger we because where then consider potentially relationships, Trupanion installations, there this how And do XXXX, the is did a that's XXXX do and at little you more and already I that of anything had

Tricia Plouf

It's good a Andrew. Yes. question. Hi,

in I a one of say the rate XXXX, So that we for very had slow back on our obviously areas we our strong we year. did pointed look would did if -- And software. down you install was we out, as

of we an is in look seen we've as to XXXX, usage increase what are, forward it. We

had to and adoption it in really of a it, those there. of There that the started use happens. bottom couple ways slow sort then So rate are that which

going phenomenon can the around, community. is burden conversations within you pets. how they the how having One you deal removes naturally do we're today, that it members deal having for the also but with their curbside, Veterinarians of of do that care them them with experience, on take and through because

us business. gives because So the driving that natural the still with the that we are have to know our is And installing overall. also of we hospitals it's that are get the despite something able that you hard ensure a seeing, hazards experiences to it not into benefit there, we being clinic, member focus

anything we've from see nicely. come be got one XXXX. So a you starting the get And that of word to recommendation, install mouth of lot of do in in learned lot how else? pipeline tactics a mystery the And to through exploring, rate we're we've higher XXXX. Darryl, which

Darryl Rawlings

No.

Andrew Cooper

it's trial you seen typically little the asked, maybe lot in add like little or at quick to potential bit happens that? while already or Anything update. other? you've just for the the a you has like feel that confidence Great. one given of the a different market now. other anything out of some That's point, to that about way tweaks helpful. year? the Florida Do first And plan or program been been you're so then, point broader Do you where a in The churn while that feel rollout at results a a like give that you're

Tricia Plouf

great Yes, question. it's a

broad a simple signs. strong new and the highest built higher products improve level, And some have see product to as it's looking out on a lifetime positive better simplify we're veterinary give sure use So increase there as hospitals and we retention therefore product, conversion, volume, if and are and so in going go what broadest as increase longer to distribution, value. increased We're and make a ARPU coverage, lead with our possible for in have I'll a the as we can always and can that's seeing product.

We're a that, as what We encouraged need keep of have get this just And it we'd we position more in it product and marketing to there to the don't year, it's takes there'll that to We share stable case just is and anything not about on out has business share in want we're complicated, long-term as do We be year a monitoring putting sit. meantime. we'll we that. March. see. can a soon where and it watching but it But by so just of a point. shy keep Our wise the right, time letting it been at data. in metric

Andrew Cooper

Appreciate there. questions. the stop I'll Great.

Operator

from Please Gibas proceed. is Securities. with question final Greg Our Northland

Gregory Gibas

and the Trish questions. taking Thanks Darryl, Hey, Margi. for

they around where Sorry, assumptions your regarding what volumes, of or channel? are thoughts if go I your expecting are QX What to missed lead this, levels? that maybe guidance, you but kind lead growth from with respect volume from that

Darryl Rawlings

QX, talk I not pets leads across pet board. enroll, year-over-year, We the when growth, just Well, was the big XX% net growth. you mean, we the new super number At about a pet that saw it's in conversions increases of high but standout the and number. net

have channel go leads in from maintain these their increases we they And saw higher to guidance how retention growth going of see to we'll try more and to out into be existing to retention. conversions telling to the year. play expect the we're the as our also And back we XXXX, friends. And dollars members in during We continued rates. investing

Gregory Gibas

mentioned potential. but we that don't this, reach partnership too deal previously to Okay, progressing? how's a think Aflac, on I good. much sounds while regarding with that touched to taking You kind ramp of its the full

partnership? for we'd noticeable an impact timeline that a from just So guess see on I updated when wondering

Darryl Rawlings

under our there's going Trupanion to closer with and Japan. long, to And exploring, is take do of Aflac now I'll of Aflac any than it talk I to tell in the Aflac that's you overall, from She's -- it the am. our XXXX. bringing in look into reminder, one markets going nothing we're be years there's largest a But two a as well has let ownership XX% I Margi we in can that to Yes, impact us long implies Japan really American North at shareholders to that. And side, company. guidance just history several it. in in

Margi Tooth

Darryl. thanks, Yes,

U.S impacts the that could, specifically in stages. So time see We about kind line. talk really wouldn't I we got direct-to-consumer. this really have expect first be different side, North the American will any when the first particularly. be will three market And think we've market, that If about we of year one to to

be that going on So just would aflac.com straight the website.

launch a their XXXX, partner of businesses. expertise will with have and who work kind Beyond with and Aflac small XXXX. we'll army work? well, small they They're market, be large that markets, is and from the from we that? to that execute and third after launching do the that that, in strong something then two one So the small What the core until how a wouldn't of maybe other initially the looking sized medium rollout have go we businesses benefit see at the across power working the doing And we would specifically 'XX. XX,XXX see of businesses be It which They're then agents, Aflac with we relationships if them leveraging the in does how we're some successful, part in American see as and working of XXXX. soft of we be broker through a do technology infrastructure. at soft their from

for I'm And great have building very the with so benefits really and work and working with the seeing tiered partnership skills. they're a well. good understands signs right of competency really developing really that is in that really some that the the roadmap kind we right partner a have, team, So which program. good closely believe a a product release We're team, the we on we core channel of site terms

some stages and of built by solid yet, So we really line early but encouraged what see time developed. sort out

Gregory Gibas

the helpful pre-revenue in it. to Trisha, it for Last relating those just initiatives. $X.X I was think Got quarter. million said me, That's Margi. one you

that point. pretty going this how And there? But the increase talk fall at initiatives in a we expect can those So forward? to small you about maybe bigger much initiatives of some

Tricia Plouf

any. Yes, Darryl when In timing and high initiatives, level if they then and highlight I'll things of will start to I'll specific let flow general, arise as talk the want Margi, every launch. opportunities to or ebb this year and

strategically the available the X really of With more starting X as think execute have here. to targets. years, business, lot hitting the the partnership is with initiatives. have to what to to want invest look funds particularly the Aflac, the broadly. ramping and we margin and in next now to last up, we these other And spent on, more we're a we've thing things opportunity And focus scaling time we And focusing we and on years, one

how $X to expense when well initiatives, development internal have XX%, a of return, generate subscription operating new XX% products and just of business, just it than related the marketing doing. in the $X year, what expect the or at kind the combined range. really And quickly the on a other to to a adjusted quickly picture though, targeting with core more we're business. of that's million to we million XX% they go So be the typically similar to of that to In -- sales timelines our big not current to and they some the depends these like make launched million of -- rates next Margi part so these we as opportunity from want mentioned. as perspective, product sure How they margin

So we're Anything to all highlight, looking at Darryl? those lenses. it through

Darryl Rawlings

Yes.

proposition, paying got us partners the P&L. think making Trupanion. don't include years, the we and same to Just ahead as need lot products specific Meaning distribution hospitals where expansion, a years for But the powered the And we've these next our those into access XX, but couple be hit they broken be making working about of can to seeds value going meet for out see for directly, goals. XX that next it they need impact doing be the designing meaningful the we're just we over international data, us to planting of our distribution we're because now of of opportunity investments the with impacts those channels. to growth couple X, range. by in business, on And P&L to our to these the year they

be we'll Over shareholder to the why business investments to and with that making they're next those rate returns. targets what But my to or would about investments. forward April those short-term able we're XX% letter look year to start I two, expect talk like look more. we more in margin and act to of XX% long-term, like to internal provide XX% a subscription going

Gregory Gibas

you. Thank helpful. That's Great.

Operator

does that today's conclude And conference.

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

Trupanion (TRUP) 11 Feb 212020 Q4 Earnings call transcript