TRUP - Earnings call transcript Q1 2022

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Operator

Greetings, and welcome to the Trupanion, Inc.

First Quarter 2022 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 Trupanion would turn over the your I Inc. Please go ahead.

Laura Bainbridge

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

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

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

Darryl Rawlings

touch on I'll on few you today, I Thanks are yourself encourage business. afternoon, Laura, we but we a best educate our in run entirety. it information published would my explains Trupanion. annual to read everyone. my intended of way this source of Earlier the to be about the and the letter. shareholder of letters meeting, and its Outside week, good think It our annual highlights to

from off increase to operating income, is Turning to $XX shown pets, the XX% of existing Adjusted QX, in or as the strong our our results. million. year approximately generated financial to a portfolio start funds

This our of subscription was from our generated it's before value core represents is vast say business. You've Trupanion’s XX% or worth of growth quarter, operating heard me majority approximately this XX% business. subscription adjusted the In of income derived repeating. from our $XX The intrinsic year-over-year. million but

acquisition nearly internal XX%. more estimated rate the of to subscription were to years, Improvement XX,XXX $XX in we of a our of the our of in As letter, time In the approximately trailing line front quarter, in XX,XXX with the another COVID Since XX us the especially with within XX,XXX get of I to remains are with points subscription shared end past are their disruptions XX% use impressive products in pets in over value a adjusted $XXX With of month hospitals to Trupanion grow all channel. of was veterinary pet, to accelerated key added experience to In quarter, XX strong XX hospitals short, primary subscription metrics active we the drove above then, over year-over-year In our ahead. we lifetime are expanded the around in light our able back X% an million have visits member which and been average the lower at end to months. benefit behind strength face income. the adjusted expansion shareholder that the In market, optimistic many staying year-over-year new the face in we operating staff. hopefully us, my quarter. before XXXX. brand. continues at at be the topped ever of our number a pet two operating subscription Active quarter. income first return. our to of two growth and veterinarians basis from XX% the excited increase retention, business Members in road This expectations, years funds our with than operating In our totaled our deploy and longer past Though has performance or continues of growth. underpenetrated branded adjusted margin, continued coupled revenue, high. highlights percent our on a large our exceptional of

of opening penetration key With trust trailing a back value product partners and XX again provides individual with of the doors XX a build in veterinary effect our points. momentum excited within self-sustaining experience flywheel beginning month the are are pathway their to in customer basis, clinic, increases both the and owners, staff. confidence to we On to pet proposition As markets, rate was where our and veterinarians increase members to we continue some to growth continues Trupanion witness minimal metric. our its and basis field, territory TruTopia of the acquisition TruTopia gap on the spend. veterinarian to this new

details on our international channels, new additional partnerships and shareholder For Achieving including is state our letters. of markets key as component our TruTopia refer is month products, distribution and TruTopia, please a plan to Chewy. through of XX Aflac with a

term play to for us these the of we such days, of excited how key out. both these, increase of initiatives, at as sustainably periods longer early Long see higher it’s are growing odds While partnerships strategic will time. rates

at be all creation in constituents value maximize shareholder ways In my track provide For fund intend a constantly meeting, reinvesting our very growth. creation, At our companies easy transparent a of want to shareholder letter, way. laying value that annual to progress more at the out our provide I of while the it to difficult. degree growth, recent we Trupanion, value in our thoughts making we including around high At are month directly members our for looking same creation, our better tracking annual meeting into can our the Seattle time, we be XX our and attendance our headquarters. strategy our plan. to shareholder held it would for I business encourage an to highly over for that This optimized our that, This team is through those an understand event attend. business, I'll transparency culture to Drew. in-person With hand are execution will and the June year, responsible with Q&A extensive Xth of on

Drew Wolff

for year-over-year enrolled in million, business increased on our quarter business. over XX.XX% segment, with year-over-year, revenue Thanks, everyone. month to growth was driven retention, strong continued to business the along and XX% our Darryl, XX.XX% last the high and period. basis, pets in retention within trailing Total up monthly calculated continued year. Average afternoon, of to our prior revenue $XXX over levels year which subscription other was pets. was is pet subscription million, Total XX% $XXX.X subscription XX good Within editions compared by a XXX,XXX XX% over up

Given growth, see to year especially a year-over-year continue first basis. pleased our we're on improve accelerated to retention

able growth sustainable value our lifetime average expansion means of we're more Continued invest our industry. monthly target highest in the to the in and rate retention

the was $XX.XX, pet is of cost portfolio and size so pet inflation. the our intuitive per of increased grows, not headlines same probably around year-over-year, period. increase our growing X% our This from created time high revenue does of value which given veterinary too X.X% As an the Monthly average rates. of over the invoices, ahead retention

Let me explain why.

is proposition reminder, pricing ARPU output proposition. we of delivered an value in quarter, As our And accurately to of on our value the XX%. a

million subcategories, necessary. increasing target to our hit refine approach decreasing our across X continue prices aggregate, While we we over or in as including

was leading hard less impacting year, Over to too too some where more growth loss areas pricing, positively the the worked in past some is our ratio low high. growth mix areas previously overall was where in business. it we've of This and optimize to our

growth well of dynamic, geographic category higher as reflects we rates ARPU are distribution. growth seeing the pets. younger example, within in For of Year-over-year broadened as this our

experience. calculated were As cost invoices, in of accurately revenue. increased variable investments our and to as at as investment, is XX%, the Fixed variable benefit veterinary revenue, our retention. reflecting our of expenses, X.X% We a well we income. were expenses subscription with this value our adjusted operating member expenses of in consistent fixed reflected proposition, expenses last percentage the pricing year After believe of

and adjusted target margin XX.X% our in period year the points operating within Our the from up prior XXX basis for subscription of quarter, margin. was XX%

annual target to business income accounted the of in our business next $XX.X year XX% variable subscription operating to of our subscription continue income. over resulting prior XX of In scale fixed an our We XX% the over million, being adjusted operating quarter, an dollars, increase expect adjusted XX% our In to margin adjusted on closer for months, expenses see in total the our basis. our delivered period. and operating

for Compared year $X.X quarter, an revenue different services BXB is business. that was Total products briefly the turn million. year-over-year, subscription our from other an and margin operating approximately than reflecting and XX% was pets profiles a I'll of generally income $XX.X have in segment, this increase increase business prior segment the our is within other million. Now, which revenue segment. to enrolled Adjusted to comprised this component of

margin, business no fixed our and and the segment. virtually we lower other acquisition spend provides expenses, within and scale data While incur

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

able $XX.X return acquire for pets. rate resulted a a estimated and were subscription in or we internal invest of pet XX% $XXX quarter, year-over-year new the XX% of pet. nearly During average acquisition cost XX,XXX This more to single million to

our monthly some as recurring we IR acquisition, customer, where duration We cost found and spend costs well as pet over call site. Meaning a that are IT consumer on includes our tables fully that unlike is details of based our IRR the other costs financial niche how on that acquisition on our of reminder, and loaded. financial in I'll it customer sales, pet's recoup provide the the the center We a life be over of Web acquisition reinforce life pet that acquisition can advertising these personnel spend. marginal we upfront. our the Trupanion. As of amortized promotion work supplemental marketing, policy, recognize products, with calculate

to our the to quarter expansion, on $X.X are These products, deepen international development primarily invested channels also competitive expect and related moats. million we in costs. which We new

year. X.X% approximately million This the to $X.X of continue of an We loss expense quarter. of resulted unadjusted of the EBITDA in to EBITDA revenue $X.X prior an in million development year compared for adjusted expect

to growing Trupanion’s asked these we we that among, But if that often business are from referrals. being adding or to to pet cost important by pets it's We effective or have growth XX TruTopia ahead, TruTopia. XX% comes of owners about count opportunities Of this provide looks pets were to we this state, sources. of highlight flat? or lead illustrative frequently ample the replaced gap dynamic example. referrals, is we what I'll our the of X.XX% our friend as like and refer keeping steady an pet first, approximately book lose While points portion basis

powerful just referral expense XX% and enough pet enroll it, fixed steady the delivering current As we brand with neutral pet our the standstill in quarter, reflects When were TruTopia, if excluding sources business to In we pets churn, of grows churn, assumes that through enrollments we first would've offset to word our estimate these entirely of dynamic portfolio. reputation and or book EBITDA and those and our ratios segment, of revenue. its are of offset would the variable This been pets in state count. number subscription rolling grows also also other mouth. our around our

for the performance annual growth value large by level of there today the we value the value a our of value strategic believe We greater flow just of and creation. of with grants in February, the capital driven. invest with This amortization We growth company making deploying adjusting a includes periods majority not excess long that estimate of the be Total in intrinsic increase for intrinsic effect dilution growing additional performance relate is are for stock-based income and performance increase compounding business, initial in around year-over-year inline what annual this our cost return decision our However, XX%. the annual million, of If after well XX%, X%, market of underpenetrated rates the we approximately our internal which of at usage, sums in XXXX grow any our of over cash of drives in compensation high cash team. our would thoughts $X.X deploying recent capital expense appropriate we intrinsic time with grants. to expense X.X% shared was expectations. over XXXX. business. generation creation based embedded including And at this is reiterate compensation doesn't of our share adjusted that amounts of estimated letter. this shareholder creation, provide by increased to expected Daryl's We and value is I'll the given value operating of most return rate

based the be million stock expect quarter to remainder compensation per We around $X this for of year.

in loss loss net million per to and was year diluted loss a of result, per basic of a diluted of million period. a a or $XX.X loss $X.XX prior $X.XX $X.X the and share share net or As basic compared

$XXX growth, have and debt facility Chewy earn income Turning previous my to fund to services our an allocation, for to offsetting in we investments. a five million lower for thrilled through we million. cash our including comments quarter additional flexibility the to held our debt and ended requirements. us XX% and draw estimated allow sheet. return. than Further cash, to the balance revenue. We facility million equivalents capital of X% With initiatives with to can on the allocation like XX% term end, quarter our a we're into the of $XXX amounts Prior provides where cost at to rates coming regulatory over entered discretionary short We of Aflac with $XX capital year initial targeted approximate less market, of to areas cost alternative

as in $X.X to cash terms flow the a period. $X.X operating negative million million. And million was In cash compared year $X.X quarter flow, in negative quarter. expenditures negative $X.X was totaled in the Capital free the a cash of prior result, million

that to reiterate subscription deploying to operating IRR within XX% for adjusted XX%. are continue continue the plan income as by much XXXX, year. of to quarter we first to capital our of able I'll guardrails We XX% the we growing as Following target

progress. look on ‘XX, forward We results of meaningfully continue to in of manifest our second plan hand if so you track to over successful in initiatives Darryl. our XXXX. up would We month the ramp With it be of in I'll but half our keeping that begin XX in apprised to to back more the several to that,

Darryl Rawlings

Thanks Drew.

you annual Investor shareholder hope worth Omaha. our weekend, a to myself, mentioned see up but and connect few Relations is great Q&A hosting open will our Tricia, questions, to Margi, repeating, be be I held with This And events. we in I June of will remind Before for as to earlier, annual you like-minded meeting This want investors. it upcoming venue there. We a on Xth. Drew

are to We possible host if person With guests up and Relations visit website. our questions. are and for again our you register I able as as to in shareholders on Seattle. excited to you open we'll encourage it soon Investor once in that, at headquarters so

Operator

line question Khajuria with first the Instructions] ISI. Evercore Shweta have [Operator a from We

Shweta Khajuria

Let start please. with me two,

table bit it on So a XX of and Darryl you this letter, active the in little have with about your you're prepared shareholder hospitals page remarks. talked

is penetration -- the it you I do really hospital right So your is in about seems question think where There now guess countries. active XX,XXX are so like XX%. three

your Where we hospital. same active you in subscription at your new that XX.Xk. the So How about is internal that's that do then or for go? And You're can pets you for question pets revenue you quarter the of And go? quarter? can the think X.XX in think the where second should the expectations do subscription first think in did terms how per versus then question question.

Darryl Rawlings

what Well, question. active but that to intrinsic XX% in years if value opening in remarks, drivers that is ETF of you to the I to the hospitals I how we believe, I been I we mentioned were we're we XX% focused a the markets, active us, same and to for point back markets year value standpoint, go about XX,XXX, are the mean, build hospitals an get actively I at an come. is where we've my then XX,XXX. second store in about recommending ended to could certain will area When our we number important really is hospitals of have see out can a longer, be and look at biggest We that's in the from sales. model us the

that that many early. next year-over-year the hospitals hospitals -- month. Margi. have we've over is store little as can level, I as And per to XX get or to over improvements But expectations, pets years. far limit yet. A of percentage hand of here XX how actual we the that but on have of certainly it what number think sales, seen see a revenue sales to same don't would expect the We I'll five think I upper rated I that think on that I same of speculate our not As many we I'm that that growth really far as over store

Margi Tooth

bang I overall in talked and do about continued of call and a the last the how the last quarter -- of think QX? momentum that through do right we terms momentum now aligned, the continues lot performing in and In end it some pets way we we is, quite the communication quarter of Expectations strong is we’ve seen and really April. The into team very I well. are turning on, it's flywheel think really nicely.

all all we're continue. in really seeing for expectations by in So line that to and with momentum encouraged what

Operator

question of with Canaccord next the Ripps have from We Maria line Genuity.

Maria Ripps

First annual after your on while I continues this retention scorecard member B experience guess, think where at you your can year. reported? as you you improve if are is rate would to improve? versus optimal of member where to year, rate you areas your sort experience year monthly And your you retention see just your some an like still level that level, what XX.XX%

Darryl Rawlings

year drove Trish Margi the and scorecards. Well, in this shareholder letter, my

answer let question. So them the I'll

Margi Tooth

month map at So just this as a through were road looking of, where we to a way first and the lens were I XX the months that month plan. reminder, XX the at and our when let's this have expectations months XX in look and the we XX scoring the Trish

performing B were with it's happy it. So of pretty pretty a expectations well, our

moving. way seen We're been that's very the with the You've happy retention rates.

very hospitals on of areas got a routine more regular penetration opportunity, more we of we believe of software, terms the our can that we've definitely more a In sure increase that basis, basis. utilizing make rate

a frequently it when seeing being more in than overall We’re that retention we know we improves. see the moving direction. rate And positive used

is experience Our better. member

settled. less know their We being the what's happy us people They have contact for claim to because happening and vets are need is too.

leads with probably really -- making higher all-in-all coverage, opportunity of and there we So which their I The referral that's the think, better is experience have to job are friends. positive more of member doing a sure there. biggest clarity that teams good

virtually XX%. now is of perfect. XX as to retention get think there we month will are plan XX%. on terms have you areas goal that the We tell In that's working I above good our as

passing know we're that's we and you that plus we So that for But an XX%. that. end can't would to will X that X% I are hopefully. think beyond we is anything with can up ultimately say believe away but pet Unfortunately, get add? the Trish, shooting we all-in-all -- happy

Maria Ripps

And how that question Chewy states on can were second any is, my us you on already there progress and and with your are maybe can maybe you partnerships? are And whether launched? to you Chewy, update with any launching close call Aflac share

Margi Tooth

I Chewy So take first. if

So Chewy, aligned partner, really well actually Chewy well aligned both very Aflac partners. and

commencing For imminently phased our Chewy, launched. are we

excited are partnership. excited we and remain with potential very We about there the that

Behind businesses all Chewy, launches. perform the core get we've them hard both Our for scenes, had continue Aflac Trupanion, to product working teams to well. with of ready and strongly basically these

excited that see really coming soon. to So to fruition very

Aflac, Phase In launch of is terms in so March. I

reminder, takes As cycle, site sales the work cycle, a time. a long

XXXX encouraging us that which to brokers, realistically. means, So with been that us anything hit launch expect Aflac up, and partnering really to the begin launch have with the until have are that has means wouldn't from been to team, introduce about what to pipeline the with. conversations to who talking opening a to start starting come just we brokers, it And the work the we would with

Operator

the next have We Wilbur with James. Elliot line Raymond from of question

Elliot Wilbur

strategies. I to has just decline deployment given volumes question year-to-date. your if that with the deceleration services in of capital impacted overall reporting clinic we've vet just they Wondering of sort lead a at First actually generation and guess, as is seen discretionary all in the some trends are visits. respect conversion visit overall between of vet or

Darryl Rawlings

Trish it can patterns, kind me of of on are we Margi that to first the then side and and up. answer seeing the follow with let claim visit data part get So the

Tricia Plouf

as in have well we general, some we our of same industry trend data. In details seeing are those that seen and not

We in are frequency. seeing increase overall

illness little invoices in bit of are the and a over active we up of that coverage. in an come quarter, was kind the So frequency

they are happy need when our when we’re to members, here that for product, they are it. we the use using So

paying them, for here are the are claims. We we

is paying actually have we helping are ever that experience. which with member We claims before, now than faster

our trends that. our base overall not So membership are data within following

have years in Another longer with vet time, impacts at looks at that because point periods the kind I'll moved data particular COVID of give of around hospital. the look compared QX average our that back number we invoice to amounts XXXX to pre-COVID, the up invoices get, we well the the of XXXX. are average as as actually two dollar that past frequency, per things When

the and So I’ll Margi the obviously, we're trends, by price it. that then we're value seeing our seeing to the side usage continue speak we're of and let kind encouraged to lead proposition. of to

Margi Tooth

spend. leads terms discretionary in So the on the and overall of impact

things our get coming one So channel specifically. the partners in relationships. we've can in [existing] a back hospitals, fact the that of those saw territory was the channel call that's out uplift and QX, the and from quarter lead the seen in last they’re rebuilding mentioned tremendous our in we we vet field, And that

vet talk metrics everything that we has traffic do. vet for is and that channel of hotline when certainly the So we effect us on about the a new

be higher conversion as to can that is us and that think discretionary rate. the investing at we that to is because And efficiently we that So a allows about we we ultimately capital. that benefit then know then other think also sourced business the we'll convert more efficient, more means that other have areas about the the

perspective the impact to it’s from and partners having of looking the really all field very see hospitals. healthy having that pleased all and with conversations back So in in territory

Elliot Wilbur

And Darrly’s think metrics. my what I the is with but vet guess read thinking question, next of ‘XX deals hospital it into letter it -- comments the -- table your just I in sort about with

if hospitals you that still expanded. think to XX% metric is you're of XX number about XX on just that calling of versus has hospitals every but high XXXX, frequency within mean, the days. down of the you’re I number So roughly sort hospitals or visiting

of how has do XX in about in think to increased. visits recovery number in sort hospitals get face you're we overall overall terms number just that higher that days XX every calling in patterns versus here visits of is recapturing face you're a book that to your the of So impacting of sense hospitals the But terms just of the the of call important on. Trying to it visiting business? of frequency how expanding aggregate of

Tricia Plouf

well it think, yourself. I mean, I you very said

terms the incredibly impact of the impactful. to it's business, In

when we're any XXXX, XXXX ‘XX are the in we got back little our And us levels, now visit XXXX, and is up about than think to pattern quicker it aiming thinking expecting. us, quarter we with for. where I has which there obviously first So were what behind XXXX of were

helps is of much think, impact So improve perspective. confident perspective, insurance. from people seeing feel territory getting the view. us benefits us We them also risk. both from people of high just that momentum medical introduction to is because And on quality lead that you a are that ultimately how The the a It all we've how tell now to And and deep back experience, territory three April from help it's The the that that hospital of from see had that for stronger, a the the because we that partners member the now coming referral quickly putting critical at as moat going member we and back hospitals lead rates, without about grow we to point really is overall retention the think just excited generation for is with conversion, that and it's carried into It volume. us at critical but could moat, understand excited will the business. together were the throughout are months experience, a as partners last partners to back in hospitals. of I field over in. I in territory to have business very helps the continuing have and it’s the performance

think to would at I making we in that can sure we're number we of go terms we always address, hospitals going refer what that internally of the looking wide.

can standstill number people possibly repeat do we perhaps we looking need, to a is hospitals how at, question? really that do but numbers we Does a the Trupanion. conversation many critical about how going help going of sources also as Darryl helps your frequency moment that understand we that do as answer and get that care, that up, ago, as habit, how of which sales mentioned reinforces the having treatment deep. value insurance they greater We're get So and and it into the greater build

Elliot Wilbur

a more for bit believe And since Drew. I then a revenue I terms expenses. by percent XXX relative end driving XXXX. subscription subscription up the last gone about number's just insight year maybe that question, just points into ask, basis increase a what little as I variable of Because get in is think want of to

out? want kind being bit maybe kind more investments some a or in get sort the a kind natural of that of of granularity is costs the embedded are if it's temporary? of terms -- experience Just sense just incremental that's basically made. that of to get in to when to business? you trying Just of of retention higher little that just -- caps this to Whether expense a when And are member basically of moderate, evolution that made that sense investments consider transitory ratio get a what know, might of as trying when or book may -- just maybe larger number being

Drew Wolff

or fluctuate be specifically of first quarter But and harder QX expenses. specifics tends into that and year retention Our our number for us, it invested what put best margin And quarter. heavier those would this retention does quarter our we But to some I just ever a quarter an QX quarter. seasonality initiatives get retention we'll QX up always is say retention. in we in specifically, of as target is a were. of annual XX% to for target

So it throughout making march two, and interplay expect and the percentage year we investment And dialing down fixed value revenue. saw that and the scale we to of a those of between as up. There's between down variable. the

the and margin. probably So get we expect point. land to expect But XX% between the this to scale, do is year high XX% we

Operator

America. of Your next Shanker the question from line Bank with Josh of

Josh Shanker

late. minutes I question. the And for Drew few guess, I a first joined

have seasonal were payable in true mentioned going It quarter hit Wondering it. broadly on, in to a the like prepaid there, cash there the and up later prepaid looks XQ. lot flow have year? is some does bill, might a accounts that what's in information You that expenses expenses there that of

Drew Wolff

to quarter be heavier have generally prepaid tends us. to revenue throughout down And through we scale We come get the some do QX. expect licenses of for do heavy percent that QX year. a it's towards as and a scale -- been seasonally in

Josh Shanker

in the as reverses XQ seeing first that from cash in recurring And so we're the goes free and be quarter, should drag year on? the

Drew Wolff

into the half will two -- first I half. it Yes, split

more The half first flows a in back of negative part flow the of and is more in the have year then positive we year the cash general. half,

Josh Shanker

this new be acquiring the pets, bigger are versus to spending about friend channels acquisition new IR at and that through successful in you that are not dollars you And ways customers what do other intact? a published. on acquisition being as acquiring obviously extent but the may pet what bigger is trying becoming you spent costs it higher or profile recurring may think in business. and as long worth than are portion refer thinking to suggests find what even of pets, It the When experimentations keep gain point per you

Drew Wolff

question, right. make you want sure it I I If to could get restate your

Josh Shanker

they friend, in new and a are acquire almost across you're pet channels coming experimenting really pet is averaged right those to nothing but pets, but costs spend $XXX through the you very higher now. costs a all little the a pet, it actually acquire per So pet. and other customer, for versus a There to new refer recurring

is experiments you're you think return do that to to acquire is spend a out I'm pets? to way at marketing on it figure half, and trying knowable look to in figure extent this the to right you knot hard spend I getting the which when the the spent versus out how how new -- are ad wondering much like of and you Sounds guess? money well cut spending,

Darryl Rawlings

the to factor we guardrails I'll your that cash part the around the is let specifics single IRR. a within. answer cash first Margi question. of I growth But the just the and answer want of IRR, flow on biggest I’ll of -- run main our Margi part the that free let rate on flow, the

Margi Tooth

the hit Darryl So head nail on IRR. on the

most a really are, of are customers, gamut see we pointed word is features channels, a environment. fantastic efficient and different thinking to recurring of the mouth, and which investing you across about difference friend our per member experience refer So the cost looking for are in, we made. which as specific us when out, But and metrics different spend a we when we're of allows It channels thinking are about brand.

that value, we if a example, to So opportunity more in space. more we have spend have we for that high know lifetime

to you're to So up, consistent. are IRR amount, the at is going see if go pure but be you that going the looking dollar

So just to coming IRR take an look at we in day XX. overall is at don't XX IRR.

for We particular are looking cohort. mean it at this what does

They of to element really are some are looking very that, allows way like at to are looking detail. in looking have pricing So to point, the breed. are type They at we team. are every looking species. the a of marketing. That level experimental. are with us They can much teams granular are specific They geography. we our They areas at are your looking at get

very may a a are there. percentage And that But and it at between looking are we're before, way go a beauty consistently month. IRR, be be testing we not know can that is And results is of are we will it in track testing so if test. can our good goal quarter-over-quarter, may that we we test what get otherwise that and to see there you XX% can over the they haven't when at better the and disciplined are very do We set we we find And lead test, the tried to areas be that. time. conversion XX% every we teams we the

dollar, that's we're doing and that And we focusing what that that so dollar pet focusing IRR about about about on amount, we enrolling. thinking the it's are it's are not the when on number specifically for every

Josh Shanker

from one better How quarter with reasonable far quick persistency? are persistency. another One perfection away in in you

Darryl Rawlings

that, getting dialed plan, regions, before that in long or mentioned in pet month but any a persistency XX% our think bit is with Margi really our term that difficult our question retention you've XX And little is answered and higher the she goal. achieved we've some already I late, areas monthly in debt.

Operator

We have next question Block from Stifel. the Jon line with of

Jon Block

one, than growth Drew, just X% the that environment about your inflationary mean, we year-over-year? first maybe prices. But pretty about the plans. some ARPU, why about repricing hear explained invoice you modest of thought X% less I well, the the talking increasing I

I up. number think Trish said of earlier the going that invoices were

just of but last been invoice we're was sort So seeing where the X% parts less than of a you Why the think explanation stick on good somewhat I let's a are seemingly one it with just ARPU why X% such modest climb, guys the less muted, quarter. only actually than this growth. quarter,

If could be that'd helpful. very expound you upon that

Drew Wolff

powerful with mean, to we I services it's would seeing, pricing veterinary seeing. of reiterate. mix we're by the dynamic of cost what this and market Whereas is our proposition. just I rest in value line are the the masked

ARPU is overall claims, business. this that that just of foundational in with So aligning pricing and cost

a neighborhood, talking so as and breed, subcategories, million So across age. I'm we optimize,

we're aligning we're of that, doing we're with our ARPU our cost that as care seeing. So

seeing is but value the we So where XX% shooting can And we're what are more quarter typical, now in specific in we pretty for. hit a aggregate, the you one, aligned. just getting lot any which proposition we're were in we growing see

Margi Tooth

company, pricing team is what you doing think can where it as should giving rest the of way is team communicating, if we as to as And the brain if of Jon, think pricing I of the the The the that the the information to be we targeting. mentioned business a way ago. and second everyone is well, is about add when operating, I

if more. broad bit before, we people priced those now little influence after targeting that that. a were we now mixed brush specifically that a we to brush XX%. whereas mix proposition maybe in when be see after pets, that to directly being broad be that approach, are by ARPU But we we’re value weren't that would And hitting approach, take you're So would at going go going changing

Jon Block

fully you're get base up I could don't saying is follow I it. the mean, after, I so offline. your I install are pets guess going big.

challenges on didn't ad ahead that so sort challenges touch to to slightly think importantly, challenges usually not you that I big. just you segue of I I being quarter, XQ a fourth it's was low mid. high what last want see those in ‘XX. my offset on completely X,XXX a about you from and a XX,XXX it's ads because line quarter a your you maybe conversion can't you gross were, gross the up those maybe or occur XX,XXX talked know your normalize pets is below fourth much, to the that trend bringing of you're had sequential don’t said up in if it question. digit You're growing base so quarter, follow every more that go bump single the XQ quarter by step if see offline of actually beat resolved? you it and that number. again, I were of But you historically, just fast, could and sort offset because COVID, on And of but a next some into Margi, rates you in was that. hard a pets to little more bit maybe our

the is you And where some conversion again, what resolve can so those talk maybe on just past of trying company were to issues. the rates, challenges

Margi Tooth

pet generation, are how do we make So making we and us from about it from think a then our about aware angles, two we of conversion growth, about lead think think conversion When so actually think progress. owners space. sure about the we perspective, we're we

in lead Our outpacing than our forward. moving of progress terms of Both generation are is them conversion.

really is area trending momentum four what we web which time The Phone we mentioned that to conversion. see. conversions in we well. areas, was both So have want last

making improvements. We are

we and opportunity resolved Web grow when the that said, there's And we site. going adjusting fact that than pace, there. in a we're tremendous issues are today. get can to We growing conversion the our our have we move That same same at growing, if faster we leads about we're we have be think the direction, the can significantly even are rate the pace within to our that

So two last specific distribution over our owners. make to our it's take we we new pet years, appropriately we've really started that those to do that thinking, really sure tailoring how the about open up channels journeys are

as in will said, about that thinking different the able exciting help at through I but two time and say in say a of this slightly driving folks to conversion. can on the focus are, They be right hired was the funnel. really at that journeys So with pull we're we a people just of we of opportunity start front most to be particularly team end in back ton the the the we’re of I making, to right terms excited quarter being we of way, have so us. place the specifically in will June, the positively, the progress and a to thing come that joining what's will in experience make them are

Operator

question line with next We Barnidge John of the have from Sandler. Piper

John Barnidge

that? were The revenue so developed a and You offering. expound products with aspirations, development market to overseas, unique assume X.X% maybe you believe spend. Can I be I going with international more talking was of it you'd about growth upon

Darryl Rawlings

month So in a trying addressable of look to time we're market. our at XX plan, period our over doubling long

closer That the long addressable continue have been shareholder drivers number company. get allows sales we to lever we're active -- two have only not that add three is of have growth market. with a And to that engine a this we'd think store number we're the hospitals see those like in to about same that XX,XXX. and us the growth of but in hospitals. a to look you Over time, if you period to countries XX,XXX now letter, So can of

going size we're different making areas when XX looking the player. a more months, in of decent our progress, going. the joined And additional And addressable of we market. other really distribution have to being products adding to are last where pretty we're to the forward company as Wheeler, We to who early in we're We international of and where some But is be about levers. trying hired increasing determine and channels stages Simon global growth

John Barnidge

this When to kind in us you're And quarter. February, call growth the third we bit I then quarter, have early know early, holding weeks the the the rate question, follow-up gave could. you so of reverted similar had can a the if my I you of the little in of had call the Omaha.

to the refresh April So does what second growth and the in growth pets? on far early maybe could rate how the quarter, the you on so in is quarter's compare us weeks of maybe that rate and subscription first of

Margi Tooth

quarter look the back generation that channel a If where picked So talk from March we coming momentum. was up one, big hospital visits pretty January we the about for was us. up lead at ahead even more. started really the we off strong. year-over-year. vet February saw territory And that step the partners,

of was step April a up. is that. big ahead that nice So

well growth year double-digit talking lead are a we year So perspective. into over from

what like a getting we So we excited are see. mentioned feel of lot -- We momentum. about we

are come that seeing We traction through.

signs see in encouraging we excited the is the think are the strongly so really of general, do There really far. quarter. executing and with rest just are I for can what to that team we

Operator

next Securities. the Northland Gibas an from line have with Greg question We of

Greg Gibas

those First, down? now between out any been low offerings, seeing and have that or while. the newer either mid-level movements pets for a Are offerings you moving up

Margi Tooth

Direct. PHI are think I and you So Furkin referring to

products. low are there So and mid tier

the generate last is we which how conversion rate. at to of in testing we are to that, other talking need look is Canada. are we were we time lovely. side So volume, the we continue new to about which discussed able The And them, then

actually. on conversion We are making improvement rate

We where probably be, want with are progressing. to way see. that about is We're we the way that's nice happy which to half to

So every are month better. we getting

performing we increasing and are and nicely. and dedication focus it's the there, We size team think that

Greg Gibas

are the in territory in-person. And kind relationships can regarding a of lot kind discuss your revisit you frequently rebuild you it's Could your of conversions or old result channel of leads that? maybe comments of partners to vet on terms that chance and seeing, more with now having vets, improvements that the as a

Margi Tooth

offers lead our [indiscernible] our So significantly is up. traffic,

does in several to channels, have conversation And lead has pick originate So for in that be seen it that is last them the three when we quarters, channel, are at about from. continued of where us terms we our to months. up think we the strong for looking strongest while four really our always

the about it. medical to introduce the why back territory insurance, people high team really about the it insurance get just in talk conversation, and to it's have concept important remind the them thinking having to hospitals, of quality help So partners the just allows

starting as thinking seeing and getting The back to for lot that typical difference to well again. the a it's is normal because into those back start more other curbside people about conversations is pull team workflow, we're

having vet they and helps have for high-quality every been journey means so pets and single effectively, those of far the training they can them us treat from So do that that hard the insurance of more the jobs element do. benefit efficiently and that to

it's those lead then software thing the be I perspective. who So more the you subsequently have is an have about, this process. veterinarian, more that need understand critical there. and thinking much, bigger that by is the hospitals just just that our important better to the conversion saying helps because the think And it as all rate. efficient a that for much you when experience rate The much pet the retention and People us, of from is chosen authority been has conversion much

the do experience way efficient as the for rates we far them a time And the referral at us to when of paying higher, retention to pet a more owner better. see are the is manage experience We higher, that, And directly checkout. that rates that we well.

we the really just and everything of do the all-in-all, with to business So helps it what effective. is more foundation be trying are

Greg Gibas

see maybe historically know going XX%. faster rate of your up catching veterinary And do good the surprised you're of especially that think maybe do increasing in But vet we costs. really premiums cost proposition, about faster than isn't a the forward? all And at side your rate, premiums a kind think visibility if we with increasing I guess kind you about terms when value of Are guys that. at I you that you that at have partners perfecting of inflation?

Tricia Plouf

as we as that we're seeing. the something over pricing on. at data We're based we're looking our sure make obviously It's keep pricing eye possible on million categories a and from that accurately different

a prices Drew data as calls. see doing to really breeds, that the going update kind hasn't a priced. should see in cost couple pushing decreasing we to mix that consolidated and go premiums of expect. just have, in costs in through given of it monitoring start capital that. our XX%, price a at XX% we're single means them, we're weren't areas areas the we our up to not the on. been in to information those could and very kind growth earlier, of talked last XX%. pricing starting And then that but for say, get model. a as many well, were of neighborhoods, been we've quarter, you We've her to one because we've value we more it question, really been to for that do as more level, doing are with is Margi would thing areas where updated years it, pricing been continue to come that we numbers. your we're initial accurately up. reporting effort you're line we single hitting conscious there, those numbers level before, seeing a the plus as And drive price. we're we've seeing we that will as reflecting to which move, we to We and got disaggregated inflation returning this that going to of in sometimes couple price And deploying through as more categories, disaggregate it mentioned that last possible. a because as and pricing, and the decreased of we're like some do we've been said claims The doing, maintaining back we've much a movement seen see And if lot and all It's on When And even if that you've we've they I you're accurately it accuracy. we're hitting is And cause have in we seeing at what our Now quarter. the were more, But we about a team much than we member more disaggregated the the instead of in

it's So continuous a process.

Operator

of line the from Tunis Ryan Autonomous question next have We Research. with

Ryan Tunis

mentioned I did I missed reach on But a that? than you it just Could on give to Chewy geographic be that in stage, little the meet apologize. if what months, that's maybe imminently. might I again more XX is of have the launching is us we you launch, is it, stage, color slower it three when five going

Margi Tooth

it's a the launch. At we soft moment are --

where we'll roll that tell the in that out it's work what launch the want going forward So go we It's expect. on specific we of the We as will and we controlling make details on as and like. are to roll into performing looks to typically can the sure that something that right do slowly the with We're that based when both us are launching with and with happy you anything. Chewy We'll launch make launches, move pace at we talk through slightly that geography, aligned not state-by-state way. we're sure to that of they in we moving but will year. everything roadmap just about is the we're all rolling

Ryan Tunis

the hoping went gave on And harsh. card. you more follow-up, new thinking think I annual Cs, What product it that the have little maybe into could I particular piece three the pretty But you the report in think guess, was two you C -- -- sounded you or yourself was a expand might hoping on maybe that? been was I could I a love I I which gave for. always letter. yourself into just go

Margi Tooth

to I can that. speak

we're call. don’t So thinking the that new Darryl, be and about that earlier, And specific I I about Trish if heard what you more to said on just products entails.

ARPUs So initiative that's our specifically at looking initiative. GPS and

within isn't outside would are giving I exist months, that insurance XXXX score think for earlier, plan, typical products when to been to looking about first months recap XX we the first ourselves would've January are, as have said, it as learned we've honestly because best, more we I think different It's the new again, December do these fine didn't both we're that progress that C I liked never higher have products. just it's in the about? a XX our horrible. C, made score worst. Getting from think certainly was at but is a not as the good mentioned and general, we about in. reason months, feel we of but for in where expect XX of space what to And the fine we to a These we of a And to the So insurance. But ton.

that to worth keeping XX it’s difficult was months will do. a we there, means -- make hard get in sure do It spaces difficult, plan. it replicate. that hard. that research, a lot dive, it's it everything like said have into to with like of They're deep going we of we're lot to in and do it's the be it's we when we And we So

we think, And I been frankly for sandbagging. would've we're if So were come expect all, A didn't As getting in kind and we the to all with happy and of pluses everything. progress the at we

year. bit go still to feel progress and to XX lot in get little work months that XX, We've well do. got our plan good a to a of think, about I we've to make So We've next higher month up a C. set general, we XX got of

Ryan Tunis

you So around, given yourself when you when ARPU it would guys those sat didn't -- include the you what lower for -- grade Furkin? for curiosity, have products

Margi Tooth

PHI Furkin additional included So products. are and insurance in our

So we gave them a B minus.

and Canada, that above And is which but as feel good them. probably taken lead we're a new products like revenue. would as and scorecard forward, we score we're again, where another in what So step we they're The into those much lots doing side we're And bringing a I well. products, put seeing the of Overall, higher our happening. getting convert of be we mean, but our and intrinsic areas about experience we that member be not they're the conversion. we've together, the good stuff business. two core if B US value time and good within we we suspect, another market, learning all about as all to to with today that I operate want. about making halfway we'll same continue want We to XXXX. before say with for our the And school since I that able We're to to we improve that minus than looking guardrails time. and operate be the would talk improvements momentum

Operator

question that and today's Ladies conference. that was concludes you. last the gentleman, Thank and

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

Trupanion (TRUP) 29 Apr 222022 Q1 Earnings call transcript