TRUP - Earnings call transcript Q4 2021

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Operator

Greetings and welcome to the Trupanion, Inc. Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. to Investor conference Relations. like host, to now Bainbridge, Laura would turn over the your I

Laura Bainbridge

today’s Rawlings, Good for be quarter Wolff, calls, results today’s on Margi and of and Chief the XXXX are afternoon welcome to Tricia call. financial Q&A conference to Financial Officer. Tooth call. portion prior and and Executive available Officer; Chief Trupanion’s Similar fourth call Drew Darryl earning Participating will Plouf,

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

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

Darryl Rawlings

on XXXX the million. first year of Laura. revenue to Total a up strong was for plan. XX% business year year-over-year. XX% $XXX with subscription had brands, our across at X.X over Within million total multiple We increased Trupanion. wraps By our over XXX,XXX was up average with all Thanks months. enrolled it XX-month XX pets $XXX end the accounts ended pet valuable pets. we year XX months Lifetime us stay

prior improvement extremely our income growth year. operating am and funds from XX-month in on was most or proxy basis the in important friends point as we referring over is evaluating gap creation. pets plan. generated I operating XXXX. for proud XXXX X.XX, Our of and performance. this represents the what to performance I’m between adding XX of It out which metric period exceptional pets Adjusted is XX% given to operating performance. a In target income This a adjusted our measures XX% over value is laid also adjusted in pets income. a and our well single TruTopia our the members most the ahead our off understanding existing the and serves grew But difference focused turning

well. within of Our of internal result market, scale rates outperformance deploy possible. under high Within as us maintaining our of the doing within operating subscription was three a large things of growth, pet penetrated on Accelerating all In much short, to want cylinders. return we our our our targeted really business. adjusted and retention income fired as and sustaining levels team

capital XXXX, great of scale As while more a this work an more were and grow year-over-year rate In putting capital against XX%. We to scale. team our to them. internal operating return at doing XX% and able is estimated job we we we’re of do seeing the an opportunities and deploy

XX% scale, and or discipline. industry’s our proposition marks operating a eight basis we will operator our we further outlined fact, QX so target quarter in has the XXX as of so us the XX% efficiencies we years adjusted the so operate forward, by XX-month margin over very do cost we the reinvesting move QX. to encouraged plans with where every while size In margin narrowing takes around is efficiently to Doing to a low targets hard XX well which done as plan. owners. and our of offer future our quarter am remaining we hit in execution, in maintaining taken to I within in our any To the fourth do commitment around into talk pet back last and strong points cost Hitting the subscription business. range know were not it I in did inflation, the team. I shows we the target. But light me, of all for value

partners be the low IR cost it strategic new our found today attract great in is recent distribution interest of we is shareholder XX-month the plan can channels. what and benefit our and on brand Our One letter of into building Trupanion the operator potential that being most website.

their employee our can of made leaders available quarter, to recent powered and America. this benefits alignment Aflac value We’re who Later by to across the be and term long Trupanion partnership examples. humbled perfect field, Aflac brokers when begin we excited State expertise. and and brand, find work scale Aflac have our in our recognize are offering partners most insurance will are sites Chewy new to select North products this selling with Farm,

XXXX we component which are quarter. We through grow challenges. In the and of Aflac, of strategic an partnership gate our We flying to this but was our by plan. excited QX, and a In strong is out our enrolled X,XXX fewer pets the introduction Delta this channel year We saw variants in providing XX-month the driven a of in alliances overall. short, some reach fourth exceptionally QX. Omicron with the came was approximately slow increases believe growth than industry key

our for reiterate income underpenetrated remains year such So say we’re been of I’ll quarter, every Years the our have XX least. adjusted grow XX% for rebound not right humbling months by is leadership XXXX We far seeing our the to remaining activity goal market. QX by large this operating Tricia’s our the target measure the standard which to Results are to believe and plan. success. levels. this XX-month Margie as under we

of to towards in provide this Ultimately, way we work growth the the our remain most clarity a direction effective. is mandate. we that we align XX-month organized a organization we company As to to want around continue we’re plan, ensure and

I within assumed same this, Tricia responsibilities responsible the of day As and for XX-month part much expect of to changes drive Chief that, clarity, has of leading and our day Margie execution role accountability the remained plan. remained the to I’ll Officer Well, greater With call the Drew. recently Operating transparency, over hand to the President our organization. of these

Drew Wolff

commentary I of outlook Darryl. provide quarter will for some framework the XXXX well our Thanks, our fourth XX-month I also on results. will focus both as my plan. majority as today for

observations provide on year so another I It XXXX growth. I our was to of Before fantastic want performance. do few a

With It return, the were flow our of we a rates guardrails. our creation capital we significant XXXX our partner drive as Aflac, limited shareholders. also more for full and by deploying past invest by internal for company In and products operating weren’t strong it that from our Instead, year, its to expanding the launch able strategic and year. short, and cash we marks value join addressable year at part to meant those this could are it investment this new be first total returns, result strong set a market invest of to our was in the including geographies, privilege over has adding a growth year. a been long-term incredible

results, to total year-over-year. fourth million quarter our revenue XX% up $XXX.X Turning was

XX% our over additions well subscription million was retention revenue year. as levels business, our pet other $XXX.X up was performance sustained business our business. growth in continued led segment, and strong of Within as subscription monthly Our in high last by

quarter. the period. million We Total as would the impact monthly basis measured. three is XX. have exchange, categories increased calculated of of retention foreign XX.XX% pets XX-month Average been the that XXX,XXX was enrolled year-over-year prior trailing XX.XX% across pets revenue subscription year compared year-over-year in which XX% we $XXX.X Excluding saw December, a subscription all on improvement to approximately to in

pleased especially given We’re retention year the with our improvement accelerated growth. in first

we’re growth means into more industry. and in values in expansion Continued our to the sustainable invest the lifetime able metric target this highest

our X% pet cost portfolio As increase the retention the was year-over-year high too time X.X% our per rates. grows, over pet Monthly revenue size of veterinary growing from an invoices, our ahead increased the created and value period. so of of same does of average which $XX.XX,

margin, are prices Now our our in proposition decreasing winning increasing of necessary. XX% with on reasonable competing value accurately That within or the target operating pricing we to range highest means a our proposition and focused subcategories, the including industry. that we are as value across

Year-over-year light areas accurately veterinarians we in as reflects need target. in raise to net For be pet inflation ARPU saw where and pricing. growth focus, an past broad as example, of well the This distribution. the the our Similar fourth our veterinary our we continue were portfolio. in strongest growth XX% of area in XX% of growing for to price pets will in medicine, in priced on particularly for conversation reduced quarters, this to to the dynamic we quarter, most

and As percentage our with XX% consistent member expenses subscription expenses expenses, last variable the invoices, Fixed expenses of last calculate adjusted were revenue year of year reflecting X% to over slightly a revenue. experience. veterinary fixed operating of revenue, cost at we in variable the investments increased income. After our of

our vast XX% to our operating me value subscription subscription encouraging the of in majority million, on prior income is proposition. business Trupanion ARPU is year quarter the noted, to target plus recurring subscription operating It’s business, adjusted our cost approach Once subscription is reiterating accurately target. intrinsic it margin a $XX.X again, increase X% our forecast. of delivered to the highlights pricing value over of of core of margin accounted back our our our quarter. adjusted hit our In XX% which for hitting income. us dollars, ARPU output of was XX% an operating an that from business It’s adjusted the period. enables and total to the In worth XX% As derived highly in our and increase

Now XX% Adjusted at virtually of was the from enrolled briefly acquisition and our this business of business pets other our $X.X time year incur margin while income turn a one end different compared is services expenses the products increase and for for data than segment, operating effect BXB from profiles and revenue other our the and within segment prior of million, to subscription an million, approximately the and reflecting segment I’ll increase acquisition Revenue was lower other fixed no margin adding have is comprised business. we scale provides which Total an in software $XX.X component XXXX. spend. the generally our of year-over-year and to that revenue

prior $XX.X As adjusted to operating was million. the income XX% result, a over total up our period year

$XXX, which COVID the single quarter a acquire XX% depressing pet for sequentially in were million average leads more internal This estimated up $XX.X invested an due Gross year-over-year subscription or approximately a recovering. is pet of return industry of we temporarily year-over-year cost rate XX% to to ads new acquisition resulted pets. down XX,XXX pet. During but

These We deepen of of competitive to $X.X are compared the year $X.X This assets prior million approximately $X increase to invested million This million in we resulted the quarter software increase million, EBITDA was XXXX. the and adjusted quarter. Depreciation amortization from amortization and year-over-year. of $X.X our related expect due primarily also the in million full an expansion, in year to which for to $X.X $X.X fourth product in an of XXXX moats. million development costs. our quarter acquisition was the primarily international and on

improving new reminder, As based a back was geographies stock this acquisition was processes, compensation talent. at million. end Total software and $X.X products, adding our aimed strategic

per a a share, million As of loss a result, $X.XX or basic loss net and basic loss the million net and amortization diluted basis diluted share $X a by year-over-year $X.XX. $X.X increased stock loss loss increased and loss $X.XX was per of depreciation by net or of to in the $X.XX impacted On prior impacted net a based period. and compensation the year compared

balance we and to with no sheet, cash million and short term Turning the our in over ended year cash, debt. investments $XXX equivalents

our and operating in flow $XX.X December were XXXX. result, on plan. At expenditures ended of Capital for business. model into a $X.X transparency XX, Trupanion flow million. specifically in cash $XX.X in the how offer XXXX In year degree We the was metrics million as high we to terms of a year and the and cash $X.X the million cash was free our million XX-month a totaled we XXXX long-term negative focused flow, compared financial

adjusted our the that to guidance, manage to with intrinsic ability Turning information is growth and evolving provide forward-looking our high in per Within to a adjusted year. mind, and with made due aligned plan the we adjusted of believe We increase by large in business we’ve we from of income. value a subscription market, slower, will we being and for to we the With used to business remain XX% we we we’re talk to profitability software as value not as able under are in best about in of our XXXX, way outlook. have much segment, this XXXX and represented deploying we flat, decision added largely expect making -- last period. strategic income. as growth XX-month if to grow take acquired In the with cash share how XX% our our you our adjusted we the Likewise, in creation. operating to particular to this as degree opportunity our new income operating want consistent continue hit year, by With by we this and operating revenue year, penetrated our the other in business. want our QX long-term our confidence run to plan, grow income We’ve enter per the trade-off operating increase. worth the is driven we value not flows, metrics profit timing of

success We’re well veterinary the a positioned this combined This growth. after for rise, provides in expectation a large of runway that the under will penetrated to market industry Trupanion and cost with continue long proven in our quarter. quarter care

that progress. back in to of every is build We XX% Trupanion over I’ll strong growth to fact, decade. Darryl. have past in hand the to from, apprised a revenue keeping deliver the track With to our company only look over you We record the calculation S&P XXX by for our year forward excess in per of year it

Darryl Rawlings

Thanks, Drew.

highlight want the as road Blair’s be In activity. annual upcoming BMX Q&A, investor shows. weeks we’ll Raymond the conference. participating Before coming open growth I it as in up our James William to well we non-deal several for Q&A outreach

For those learn of good story, to are you the these opportunities new who to are more.

take attention place looking deeper will a our that marquee to investor those in business, dive I’ll your facing events do two our point to For into XXXX.

XX, annual April Margie, Q&A Berkshire be I to meeting and in Omaha. our annual Trish will on the First, shareholder follow Hathaway hosting

to investors informal with Over found goes likeminded type environment. a the in to an have years any great event be we this question connect

participation this for in person Omaha. planning We’re year an in

hosting X, our at shareholder we Seattle our in annual meeting will Second, headquarters. person be on June

to XX-month in is the meeting and including our shareholder the of plan initiatives with to on venue and Our provide connect the updates business leaders annual Margie Trish.

intend questions. We to We time to you allow to team with see event engage this for up we looking real hope opportunities the design live around year person travel optimistic the that will And connect there. encouraged experience. in Seattle. are And for call we’ll that, Q&A in open the Those and attendance. are with to the for to

Operator

a time, go At John we Thank first be with question will from session. Sandler. this Piper Instructions] [Operator you. Barnidge Please is conducting question-and-answer The ahead.

John Barnidge

inflation I for between the opportunity. service price your you Thank X.X% Vet XXXX? as talked about that the January invoice then you. you spread vet about think Thank increases then quarter last and CPI. talk was you and Can increases? outlook for it well in

Tricia Plouf

of we’re through, sure may our pricing, a add there multiple and John, we little because come others this are it’s seeing bit think color start what is invoices I’m value XX% and general, facets in proposition. targeting that it. your to Trisha, based to about on question In I’ll when our want

we’re So that’s frequently. on rates. And what’s it very staying our driving top of

we X.X% increase, for total For the of year saw, the at year, about increase. vet X.X% cost our invoices and of our full kind pricing the a was

Now, can that and where was invoices X.X% about pricing through we fourth you about cost us as that saw bit, our X%. coming did soften a to the see quarter, of little in

And so top a what stay do at level. of ahead is we’re granular trying stay but to it, on it, very of

on you to proposition. decreased others where But to in So needed where is one Palm the there XX% coming Springs, example closer were through vet heard of areas then goods to do we are we in call, actually XX% value like we cities, some some lower. saw that get our prices invoices cost and

targeting is, on granular looking point very XX%. a it the the at So And we’re we’re basis.

February January does so that are a early, not looking very seen so through. would and data of up. January, much past different it, than at we’ve trend we’re seeing we’re we say coming early at of mentioned seeing tick still a the we’ve our You to see quarters. say data far looking start it’s been would But couple I I

in is, pricing neighborhood The but a monitoring overall, only we as doing but totality, terms make of on our need. top targeting good you can we that it I sure we that only So results, a that job not very think not more at level we’ll better hitting the news be XX we’re of it, stay in can to granular see a can good through from granular get level. consistently, on

financially? stay comment to operating. how to want going and have what that just forward really at that we’re looking we’re So drive on Drew, you going do we’re on really, more focused

Drew Wolff

saying I’ll so is emphasize Yes, increases. Tricia what just for we’re is, pricing

we a actually part of pricing us we’ve by and portfolio if we you forward, based will quarters, come on growing Now we price we to to, our and But see in through our change shown, decreasing areas, continue we’ll that’s broaden a and little refining we’re math we’ve But mix don’t what continue distribution, cost on trends lower price now, those we as mentioned our looking as bit changing. also, don’t that for prior pricing. in see, see know it. in do,

Margi Tooth

And can Margie, John, it’s to I just this. if if I can, add

a vet In highly terms [Indiscernible] they are in Tricia the industry. all and of their Trupanion at pricing under rate. mentioned are currently by at is both the that thing that they our do We to pricing And a And stretched they’re offer. overall, appropriately. very stressed, the we for priced vet granular can looking services increase level. sure best that they Drew make to their believe believe

that that, the increase to for rates demand Trupanion, confident they the but because it’s need increase So and of we can industry, of top they on to. good the we the also stay better feel for

John Barnidge

I about on operating Chewy my that And shift? I adjusted didn’t launching the maybe follow hear then guidance new you’re shift about. revenue. talking in, fit you is you’re with now how and Aflac within talk Can maybe that the anything partnerships believe up maybe income question.

Drew Wolff

margins managed how Drew. given our similar income, so rollout with we the operating long-term and is is focus we’ve on this as a done like for metric, targeting and because Sure, initiatives, approach, we’ve evolve guidance to XXXX, income. and in are specifically we that’s to line adjusted adjusted XX-month bottom what plan, operating Yes, we consistent then

then and metrics you targeting. and a that that to can So way back guide consistent thought other at to scale, we why margins that’s into the with we’re it now was better we’re IRRs

evolving up. top embedded already at line guidance about. talked and So we’re in at going initiatives that the just all the line going from starting is But we’ve bottom to and the starting down our

slowly XXXX. As that the ramp more year impact during will up then and meaningfully

Tricia Plouf

it’s sure as business, business, around is speaking just is we very looking this here a to in general, and little I’ll or a know always calls bit and consistent targeting transparency metrics and a running a also evolution. of add change. in geography. shareholder But the have our the don’t more want we to we how In provided more whether we’re for we’re the way intend of we’re on make that lot we because letter the shift that philosophy at And have with a products more we transparency,

into I adjusted then and back haven’t, As very of launched about as plan our the growth new yet, have can in is XX%, target they our term, not confident have Longer top great And ramp slowly of that as more rate into achievable initiatives, the the they Drew because the don’t the close to achieving them, by well. we’re growth more year-after-year income, them goes mentioned, XX% we’ve many talked XX-month honing not. while they’ll year is in and on. these us level operating on that likely on, really up overall margins which think that give we visibility line, on

time, for that. it long execution. a focused not it on it’s While done And good easy, takes we’re we’ve

that helps bit how of to we’re about hopefully, So it. little thinking a just color add

John Barnidge

Thank does. It you.

Operator

is question Evercore Khajuria from next Please with The ISI. ahead. go Shweta you. Thank

Shweta Khajuria

Okay, thank you.

it just were I surprise, you? And same should provide any to that we there marketing Thank that for a for to of And really meaning about particular, Chewy were QX, ones Let some you. on that well generally, holiday of opportunity, just basically opportunity marketing try crowded you me year think question some environment framing Could XX channels magnitude disappointment is in and as please the please. terms to, the possible those? then about context that was second whether on provide think now you worked the channels please how months marketing two partnerships the And/or next there guess? and you a context that what saw, environment. some this question in were which a environment, and like are right market? we off were season, what’s negative looking And then now? the on

Darryl Rawlings

answer. plan. And in you on it for. a to we at quality over of help from that And at Chewy to initiate looking more over looking expanding hand partnerships, kept to lead new Margie. layering Shweta, authority them of single all okay. is an details. hand have I’ll we’re of to get new lot benefits, going distribution XX-month there it’s people household? all products, retailer that’s but owners That’s It’s the insurance are strong lens consumers the of questions or it pet I’m front be comes that when end, kind they new inform kind Margie of etc. about But the And we’re it educate new for to get focus. I’ll bringing give and have the a medical things all our is to why on partnerships at geography, or a budget. we’re But us a when you high or can or that’s worksite way of being meant conversations us online veterinarians for the details to to important as How pet and breeders the about that on generation the down to households being educating really Aflac channels, that thinking to the

Margi Tooth

Shweta. hi, Yes,

obviously, to So finish and honestly off to just partner. be the partnership, be to excited their humbled very Chewy on we’re

the year. expand controlled In with beginning the of and that for the together. at that terms feel going we fairly we comfortable pace throughout slowly off then we’re And of XXXX magnitude year, a of start will throughout the midpoint to grow and

we an opportunity Darryl’s people a front to that online And have in think of it’s with with aligned We connect great fantastic of support Chewy. partnership are the well to environment on I start partner a us some to great brand and has them. in point opportunity

the second the are a A in What of your terms in quarter marketing seeing in In of QX? we couple there things there. happen. couple environment question, questions are of

year. last saw pandemic, drive deliberate continue it pandemic us going a sure saw saw we was happening. We the into continue really at a the in that happening, weren’t through that to saw of So the spend XXXX. up pretty our softening, throughout we really volume and in very slow our the we to a be with we the up space aggressively volume. Started saw we started start the of and made The unlike terms a quarter of the start to didn’t as We a to lead we good of lead a to at solid had beginning the with when went spend the we decision We pandemic little the back help really as we really really quarter. that saw bit, the what hit end and to Omicron to aggressive was world pocket also coming, give in to happen. be year

of channels, of saw terms we across a similar very In our trend all channels.

So there which will had say we well. wasn’t And in performing we And it’s in identify to we are when great issues problem. spotted them. Execution, we I’m always can say can We fixed one particularly one wasn’t the through of performing the challenge particularly have was quarter. to that was a of able terms there noticed was we challenging. and we that said happy rectify we’ve where terms that there were it’s execution that. badly, fix them. I conversion,

we face. back in we’re it’s QX, in into growth up terms QX my time sharpen seeing of to moving up rate. to And saw levels overall, that that So the

to as quarter well. QX strong and positive and think to start the I So really

Shweta Khajuria

Darryll. thanks, Thanks, Okay, Margie.

Operator

Jonathan Thank Please go you. next from question Block is The with Stifel, ahead.

Jonathan Block

Hi, guys, gross the is thanks first to start afternoon. the and just one Maybe adds. good

you think all have about it does of first like come XQ, for mentioned they a headwind. then fourth But the time and you quarter I’m get just words, do Q-over-Q think were other talked cadence I down the and way of good back about XXXX I the that XXXX specific a the about COVID adds, it, the that queue? the since to in normalize, quantifying start in down step do and when if trying you then X,XXX know, quarters gross which was In adds? think I You want then to can XQ out we you how there. into to about a X,XXX that in we coming how XXXX? number throw think to And impact the don’t back what year after? or subsequently starting we about of gross think year it and

Margi Tooth

kick add. Hi, Yes, obviously John. can off Margi It’s I’ll others and

of, of So about we between right, are was in X,XXX you the was difference anticipating we thought the what headwind. the impact and were what terms COVID

In of terms midpoint the started see that really to since January, come of recovery, we’ve we back. seen

things us got time. we’re monthly of that look variability, overall we pandemic, typically One at basis, when such of in a times about a we at especially into it think the in the a of going when quarter-over-quarter, look don’t given for market period on opportunity key you’ve we’re thinking any month, we

use the data we we to So all available use that’s us. data, Google

the So term see many for searching we how insurance. are people can pet

So insurance, we unless the in time. believe that they pet don’t market at for look People are in markets. people to be typically

where so XXXX, on of when remember, QX a the we started really at time looking on the back search member since experience. that QX in what sure a we because beginning hit same the go. of was weren’t so which searching the had what And was QX the of There in March we pandemic control, recovered to at our going When XXXX. it we down. came the similar I’m we April is XXXX, we we back you focused volume the which dipped so down, doubled people periods we pandemic. volume were And at spend really sure to same beginning is found pull could level It of and to

from aggressively, our to were decision was hard to a And and the mind made told us that us brand front we hard market wanted to conscious keep softer But had and perspective. push for veterinarian to not it could we return. been. because a pet so than So add also lot that going it a confident of push we we was very only

the team’s got turn and have off we doing at need we’ve that immense ability confidence also on to levers to in We sharp really that.

a As in, year. some the so of year as top coming good mentioned of seen I part top half the the far, result at that we’ve of growth really

So with we’re volume. lead happy the

back view. corrected from execution with execution be there but we confident issues the an up We’re that happy feel have right we overall at in will going conversion February I’m seeing to to momentum think of and some I and be so anything rate. expect of we with happy that We’ve Darryl point the come I levels had other where far. we’re sure issues that will would point to an it now performance view, from add?

Darryl Rawlings

pet have huge new net comp QX that XXXX, QX rebounded. and we context, of in marketplace that the of of challenges just of growth I a XX% over all with grew the of XXXX mean

team and So the looking degrade player. forward to I seeing think XXXX a

Jon Block

colour. helpful. that's the Okay, for Thanks

The the second question might of most different recalled. have it, maybe parts to a couple

in component saying partnership, add a a just structured, joined second, there again components sort dated perspective how the guidance. the we at the to email Chewy equity up on for equity Chewy all going Just in is know of and when pack a backing questions you guys an words compensation think that around other with then from about I'm that

numbers. second? here XX%. rate breed. maybe number, of all just few commit IRR to you operating number, an companies in this XX% you to straightforward can adjusted did of in to about be still numbers respect, revenue have are just just on You due revenue out with expected So you S&P not XX% that the were that how income the is operating your XXX rare flat adjusted of the subscription a in for you're adjusted one to And most very talking income clear help other, The growth me then, are

Thank just to at this from revenue you explain number. better the back sort you any of providing can So you. why away point-in-time decided

Darryl Rawlings

type was same run reminder it's Well, greater on we rates alignment, business. margins of subscription Chewy. a meant as We of the got think and type our first the about core to as of same the question internal return

that they spend have taking if earlier Chewy would up tax option of otherwise to of the mentioned that choose be We stock will have when some cap. in a certain

So we long-term we've got great think alignment.

And Your is. the of companies give easy do because flow spend, of are our are income, understand for of opportunity. is cash to meaningful revenue to to as business. able the if but it's they other operating the areas much to our relatively guidance out Lot revenue adjusted income what giving when of questions, margins more why figure guidance are very math operating stable, down that contribution margin we doesn’t talking investors give shareholders it about somebody can you or margins without the a to adjusted impact

is committed between rates XX% to return. The other And are staying of guardrails internal part our to of we XX%.

Jon Block

you. Thank Perfect.

Operator

Maria next The Ripps from question with ahead. you. Thank go is Canaccord. Please

Maria Ripps

I Great. Thanks partnership expanding my the follow-up and on just questions. Chewy taking to the of some wanted questions. Shweta's for on just maybe

see look et if the XX in could opportunity portion near you that have age, about for by sense base share a million, you admitted pet at you customer we more addressable of of Anything the of here base sort by sort of So do term? around be what can maybe cetera. their a of

say two be four here this of years let's would taking plans. of of to successful mix one of five now a what sort terms customers outcome And in from you consider out

to understand this across trying sort insurance of could this Just accelerated space. if option partnership potentially of debt

Margi Tooth

Maria, Margi it's Hi here. Yes, sure.

point benefits mean, are of million help they the of I formal in pets its base, Chewy about for it's that we working XX -- So insurance. are the we're high really that educate and critical medical us, with to in partner quality terms having

In the the We terms we have believe don’t that reality. know not of rate any opportunity and to more penetration immediate they or reason addressable population. average don’t what than have is less our

to the is owner be but share to whether that do pets there's awareness. the the very with think pet any do we that for owner hopefully counted on every that place to to believe fully where And with together bring excited drive we'll we're make decision we're get be available penetration they them on should believe information need. lot should a we work to under to of a together, aware So have that. veterinary market insuring into light the are every something that increased and we us us, hopeful Chewy is we a And an get help can that the more I is once to take. the for is as I eager we insure something adoption increase we're we outcome clients the think That's for well. can pet. just education market awareness care and sorting and into believe it's is making of sure X% that part honestly a penetrated, We that alignment able to [promises] there And they have product. Successful good their

Maria Ripps

U.S. your And Furkin the around maybe there that's updated launches it, point? very in Thank you, Direct for colour Margi. is of helpful. any of this last an you Got then year. sort can PHI at share and secondly, Canada timeline And

Margi Tooth

paying them. just feel six our U.S. to within same journey and Trupanion in the case to to centres in with on PHI reaching overall that lead thing but Yes, to When the happy that XX% can two on converting level refining see Furkin not the going continuing future. really business not do is still rates. as operate the it's when core having for we sure the Direct know the get that our us on for We on of back the and focus timeline as the trigger process to it a with PHI in coming still really we Canadian we guardrails to looking that are can them into way. that core with for that's hopefully refining IRR now still to made will subscription within market. is We're be of XX%, to a we from our we without do The work and than we distant Say we're we're not to pet those market. refine comfortable say and volume product. for making We're to Furkin forward to conversion right conversion business. hard terms lead teams the and subscription looking months we're in determined working plans that in too Direct healthy. launch this leave the opportunity U.S. to really about definitely area the to the The We're

Operator

Gap] [Audio

Unidentified Analyst

afternoon. Good Thanks.

but variable getting I the and cost question, level within relatively subscription the the the upward closer First of because in ask closer the increments just revenue to it about to full-year. want obviously small and trend for XX% keeps quarter X.X% this business, in

is metric there of to I trying Just a mean that upward there get say sense of else progression, that is mark. is first or move possible there little it is better ceiling think actually cost see above to in driving bit we what's and something going sort XX% retention it That’s a it that on that there are there the which question. is you is this level to some possibility or hold there or

Tricia Plouf

a initiative it's Sure, see expenses member variable beyond hi. members cost are did did to expect decision I This we really would after here through the at the early to designed invest see XXXX I our mind our retention retention and to metrics. we other in our servicing overall from and on is on with this during first which Tricia. it that go rates, year in make care experience. wouldn’t Yes, very help the effort had particularly reminder heavily strategic year retention our say this And XX%. more we're customer to which we retention strategic particularly that associated as a initiative we improve successful

of to that maintain anything longer terms as them we in was a that but to as play we results as giving member and be with goal [worthwhile] out the in is been But year that payments We this in as retention. our possible. continue drive the saw throughout able because the invoice looking to are metrics that scale to back the term much we've ultimate

Drew Wolff

add the bigger is the adjusted gets, we're that margin. with our add so each more I'd investment. portfolio basis And I Drew. XX% would worth And good operating then that this is a the targeting retention also points

So XX%, quarter at was delivered even that. in it the when we

the going running that's forward. So business our how

Unidentified Analyst

just maybe of more to start of see down year-over-year. the clinic a a year And of that terms and thanks. in little question. we bit are some so numbers of kind visits the the vet Obviously Okay, route suggesting services macro

different volumes curious channels? any or not Just the whether within lead your has rates how there's impacted on lead conversion total overall been that impact

Margi Tooth

Margi. it's Hi,

In terms that recognize they're picking of so happily we're having one of seeing the to back out but we and the of about rebounding channels that weeks vet just being months markets oversees the again been volume, for joins the the not lead think mainly have 'XX, volume our vet for [indiscernible] serving, still appointment some really up for people make many is up us vet the vet the across industry. back themselves launch that’s visits, half all and suppressed definitely we're that visits

ones. that we've work mean lot but a but also the I still the still and momentum have rates, quarter. from not instant should It get got conversion happy ourselves we to of doesn’t that improving we In process of made conversion about three into rest before do terms going stops like mentioned there, adjustments managing about some we're conversion opportunity rates the way the we that corrected the

Unidentified Analyst

been you're noticeable your question. you out increases seeing sort of last wondering if that with in business. the increase by inflation? bucket of just I'm previously and basically disproportion in any sure how may fact in greater variation see respect seeing perhaps may in much look and in pricing a debt the of inflation overall not your And there, but And levels changes With terms pricing it overall we distribution how highlighted XX% buckets in there's Okay. terms impact to than you market you're

Tricia Plouf

like in COVID the been overall some would I Tricia. than more impacts general of is areas then care there mentioned, certain the through, others. and behind I say the care also variation in in there's this of Yes, coming scenes large utilization costless which is is prices

I decreases get we've could And to like accurately areas so, settle our general certain as out an I we value where had And the large we're that That bucket fall targeting the XX% better as getting think increase not many we're we to into we value as at as price say get proposition mentioned, fine which to prices variability. been around. said, we very needing members more-and-more in granular. being do seeing have right equal increase we're been. information if needed If level. granular proposition that I comes enrollment because push agile more it breed do that thing that's opposed would at through is then Also closer the neighborhood future mean, increases in will to level. which to haven’t a I through for that, through pushed as see necessitate we we people

we increase increases more everything better I together I get really and their we the I on So at where with to pushing mean particularly more think we're there's also year whether guess one spending areas, we much priced needed area of or if accurately we're when past say growth better comes an would a better the can reasons resources those are going this. over needed in this getting see do particular messaging decrease forward. have

Margi Tooth

to the understand critical. product key and what whole the sell it retention level look markets at experience. if value a for from to there in $X in The is granular can pricing and teams that the business ability thing XX% to price difference as specific across is getting. the doesn’t I that proposition a well. that people is product. very we in point think good and about you long answer is the a to point came our the Yes. price the make from people is our amount, whole end-to-end member journey Tricia's When that the they in mentioned difference and is value point, they're as no value appreciate There have so as Tricia sale where the And that what

accurately, It's don’t making we and by we that do. what So price is product there price And if doing solving to we can sensitivity, shifting about problem. sure isn’t we see the a it do all market. that set know out

Darryl Rawlings

more just I'll color. bit of Yes, one add

are than market, referrals market is new of have of digit that market. pets is coming cancels. over got greater a in that in from are that In TruTopia double than that XX% we for So the year-over-year and hospitals In example enrollments mature and is of market, and the a greater directly. is meaning state added inflation. one market growth rate XX% high percentage market paying referral That we that we're

perpetual value the super those customer So rates penetration we've low have to we growth proposition we and such got right a exciting that's because right things. have a see got experience, we Hello? machine and when

Margi Tooth

for ready We're next our question.

Operator

you. Thank

is question Research. with Ryan ahead. next the go Tunis Please Autonomous So from

Ryan Tunis

Good Hi, evening. thanks.

And spend one. That’s pack that potentially hold couple going is for of pet First like the then deal. expected anticipation we're of year? of From partnership or that we subscription. more in seeing Chewy $XX the to going spring, some is perspective, the also, on be we're assume I back the kind month should guess is the other Thanks. in closer the there half to back to questions launching to of per an Chewy that the in $XX ARPU

Margi Tooth

Margi. Ryan, Hi it's

designed So especially off on is to that's Chewy. for products can say Chewy I the kick this

to that me, stats. closer products but the similar excuse will comes are launch. there teams be ready in as So share proposition, overall to more There go the we of different refining value product kind at be the -- would

about core we're to kind of have thinking run within guardrails think products products with we terms and are -- here, the like will anything In to margins way any the pack difference spends, run run holding of been same side we're the growth Trupanion the and we think there. I about of similarly back products how is we the we other the the business it's other back not at way when changing honing as then IRR the business, look going we think of would Chewy that the the

Ryan Tunis

margin asked I reserved could Is guess for about, you're something think new you the investment cut that about into I worried Got big to you'll guess, numbers in pets. the it. profit that be is have that able reason we I when question you pretty thinking seemingly meet from that Chewy, that? start

Drew Wolff

will This there, investing have. the returns that a are problem for is sheet strong a in money. we Drew. invest be as good Yes, growth, and would to we We're we have think balance

Ryan Tunis

then, follow-up any contribution any it. my the Does the Chewy Got is operating guidance from on gave income. contemplate just aspects you that plan? the And of multi-year of or adjusted for

Drew Wolff

initiatives in guidance the up. all embedded keyed that plan. hitting us that into XX% our we've greater It Yes, year around just XX gives months this and also confidence

ramp slowing will during up and XXXX. As we really impact mentioned, year it the

Ryan Tunis

you. Thank

Operator

Thank Northland go from Securities. with is ahead. last Gibas you. Greg The Please question

Greg Gibas

thanks taking the Hey, for questions.

timeline your to you works initiative financial the I'm a there America. and the you Aflac talked the that expand I across the we might could if impact target beginning comments just think that's it. in maybe about on wondering partnership of prepared of when deployments see begin from North

Margi Tooth

Yes.

So hi Greg.

it's here, So I'll Margi. pick up

quarter. that within this launching be to excited so timing, Aflac the of terms In

expect the rolling are of honing in sure is make a through [authorized] initially and to slowly that small out We that year. build built number any that or began We brokers everything we will rest that effective have don’t this meaningful we then out we're of controlled contribution just anticipate XXXX. on and really

Trupanion's of the of As second alignment through make plan They that well us July with perspective. that hand sure and the that checking enrolment to and at remains become real really goes. typically And phase to the January. an launching and through a and work hold we're we're we very in point-in-time we're chance does ahead to our and feeling confident. helped the They've say boxes this shareholder in running smoothly are all We're a it's reminder, make other they're sure where and the really to an employee excited first side periods, in far build right way. incredibly the environments in see that has we're help so allows benefits Aflac aligned partner. it

Greg Gibas

on the time about. experience to Great, Margi. expenses recurring or more in expect a be Are with you just it's -- increased follow-up investments should kind that QX? variable member those one talked of nature that we that's the in relating And in helpful, regarding

Margi Tooth

drive we seeing I do our run initiatives forward the -- stop those we're would will Yes. want rate we be or I current don’t working with to well. moving to Obviously can initiatives hoping so. but we'll that that doing say, scale mean that's anywhere be

Darryl Rawlings

in our are having be XX% on line. additional event pretty want and those get any the back the just savings proposition. on to planning I we we value reemphasize, margin target that much to QX giving we savings, going right hit In better consumer to

So modeling XX% of most referral the help pet. to important percentage can and business, only rates consumer for the more back to which those retention model a acquire then allows us the we going what's money margin give is rate spend that higher pack value and to to lifetime the our to is

we've to So last was that target. ago our years of margin that remarks XX% the around expansion from We that been get quarters. not we're eight to opening said four our said much we We directly XX%. experience can. to trying in as time inflation, paying concerned the balance a hit it we customer give customer And when In we as back and and about XX/X hospitals to trying QX, were people between perfectly. narrowing

Greg Gibas

in I address Any one Darryl. initiative? I which developments that you a guess helpful could food pet offering. sneak Great, there along didn’t if your I last know

Darryl Rawlings

We're still testing.

with can great have it launches, be it, not doing But that data we could tune we're and think where We about product yet. a trying to we're the supportive. anything consumers any our around we think we're fine not doing are very still we be excited things initiative business

it's So scenes. all behind the

Greg Gibas

Okay. it. appreciate I

Operator

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

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

Trupanion (TRUP) 17 Feb 222021 Q4 Earnings call transcript