TRUP - Earnings call transcript Q4 2024

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Operator

Good day, and welcome to the Trupanion Fourth Quarter 2024 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Gil Melchior, Director of Investor Relations. Please go ahead.

Gil Melchior

Good afternoon, and welcome to Trupanion's Fourth Quarter and Full Year 2024 Financial Results Conference Call. are Qureshi, Chief Chief call President; Officer today's Fawwad and Financial on Margi Executive Tooth, and Participating Officer.

on will For a ease tab. made which Quarterly slide included Relations available be presentation to under of accompany today's Earnings reference, our our Investor we've website discussion,

XX-K, compensation financial statements. to detailed facts uncertainties not begin, as we discussed. are These operations, differ materially performance, Securities remediate contains X-K but non-GAAP uncertainties known are evaluate and material a the and including earnings and management cash in and otherwise key it forward-looking pet margins with risks acquisition performance, which a expenses and uses forward-looking inflation for we including, operating filed and company's When These from the discussion to, income, measures presentation of operating advised other our statements GAAP performance risks and Today's or most future new XX-Q income operating all financial fixed Commission. Investors than to these company's today internal will the is review costs, presented acquisition results excluding financial be Form GAAP. depreciation to non-GAAP weaknesses. can involve without the our that not statements. Before in accordance are and and with the are Unless expenses. references of A statements margin and and income are expense flow. opportunities other intended the comparable a measures remarks operating included our industry pricing limitation, as release expense. on Exchange prepared today's term substitute will statements adjusted metrics, addition or cost refer statements margin, limited to these and adjusted and that that to to of unknown of development basis release. before noted, rate could today's regarding and in free be reports, U.S. recent directly press veterinary contain of be measures results, non-GAAP well please adjusted All paying expenses, actual financial measures of veterinary invoices, in ability of most use expenses, variable non-GAAP non-GAAP our to historical found high those encouraged to include, stock-based return, the cause EBITDA to degree These reconciliations and

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

Margaret Tooth

hello, and We Gil, marked the report mandates, goals our to and XXXX these with delivered. execution. Against less balance fortify sheet everyone. spend. ambitious repair to for and year Thank strong financial was simultaneously significant we I'm you, year enroll pets guiding Trupanion, operational PAC continuing expand to pleased by with a and started margins while our

year-over-year, and adjusted quarter, quarterly doubling XX% drove our than quarter. in we second Here In our in XXXX. achieving subscription are the our we highest proposition consecutive business, point the fourth early a quarterly value grew achieved margin more highlights. margin XX% Subscription margin XXXX some the meaningful our for revenue history, low subscription in the of expansion industry-leading operating from

adjusted XX% income record year operating grew For to million. the of full a $XXX 'XX, nearly

early need. Time growing reinvesting majority receive of internal focus with and help We is our they improvement the driven flow, to rates an estimated operating by large $XX at adjusted of pets team of vast demonstrated all-time income our and The we and over reached ability year, underpenetrated million high, free adjusted more line In major on more also higher XXX,XXX were strategically our in again, products. In and was with cash milestone return operating on exception. this which majority objective, the approximately the months. being last generated has added the coming branded a income. the cats high care our X XX vast market, of no mission, dogs, flagship million to our these Trupanion in their deliver XXXX protecting than from

quarters direct purposeful ability of proven In demand team. our claims meaningfully payment, and our of payment need we claims the continue of growing the of and force business progress at to levels value made commitment is resulting count to for driving to product all-time advancements to our consistent we our software our XXXX, X today. Our pet invest record near of lows. that reimbursement. continue our pet acquisition traditional including support best-in-class in speed claims decision been experience our eliminates our proposition be for has inventory spite heart in to to and member the and Trupanion's grow members with our for the consecutive in directly spend and in significant reduce will experience, of parents In so, to a illustrates need upholding doing across improve

last growing veterinary ago, being less the than in unmatched directly solving X This plays invoice months the Trupanion months. new milestone, in Just role of support in level demonstrates billion surpassing paid another achieved veterinary hit care. veterinary the XX normal $X billion we invoices, in

value ensuring pet we As feel number remain of in our on we increasing the support members confident focused provides. extend parents, an Trupanion to

rate needed we which a phase on stabilized, members. While still work cohort, have rates a be now maintaining making where in refining leading largely to increases that refinement, lower budgeting our costs where reached pleased easier every to solid to across We're build. be foundation have there is our to done make for of and average necessary as pricing such adjustments

where cohorts, course, our especially receiving business member retention retention. our increase XX%, all with year, our a is most continued And Of real of strengthening closed product as today. the proof sits members rate of across the in of over saw we we

markets Switzerland, solution. XX,XXX of strategy in international which the access solution greater the With an and product the to early increases fourth focus to veterinary XX,XXX by been pet efforts rate brand our year we've our pet and now regards Germany adjusting retention retention. is Vet of unreplicated we all-time the Veterinary hospitals. anticipated Direct X including encouraged performance, cohort span is base, XX% in a our growth. Thanks Building we fact, home retention is across ended per this in foundation, during acquisition we our Pet the the XX%, veterinary margin and saw we're changes the quarter improvements In was to costs, XXXX allowable of normalizing, in with making. with with veterinary over high-value to First over stage hospitals investment with growth this ultimately in this hospital year rate Trupanion will pet in first years. rate payment approximately less direct our launch than entire Europe. using those of and expansion per strong stride pullback ARPU strong their high for flow have our for what our highest This with expansion, setting hospitals and the profit for even in in introduction lead increase forward among on active took retention and volume, parents a member payment significant With Trupanion's to

our To intrinsic We In into to and and We differing do. the parents set with have was they reaching foundation very company. scalable also with achieved brands and these large and We've our with enhance those are our a point it, financial strong potential what channels and minor purpose made growth a with continued summarize, our pet developed needs. for consumer partnership a out with operationally. financially market, opportunities investment value. products and XXXX progress connect turning household the we where meaningful long-term of solid in newer to year underpenetrated

we'll turn our steady, our sustainable XXXX, in attention now the the plan. In we XX-month year growth business. So to subscription anticipate final of year ahead, our

and year continue up retention. profit expect to tandem, We our gradually improved and normalize, the progresses. increasing in acquisition step increased We'll pet driving as margins to to per investment changes rate spend pet expand

which trends margin at performance inflation, start with contributing of in typically prices the to by drives confidence second Veterinarians is align raise Our our a stronger veterinary in trajectory year, expectations. the recent our half that reinforced of margin to continue costs seasonal in the year. in step-up the

the pattern hospitals team's and margin ramp XX While quarter, yet veterinary early this pet acquisition XXXX, in the the the months. seeing time, confidence our similar up progress next we leads same a play into made ability growth investment. out has we're active accelerate At journey reinforced our increasing to and last anticipate as throughout improved over

infrastructure. the a growth. in with near across by growth moment In Growth our I'm be if to towards goal the XX%, to designed drive reinforcing plays robust and in base aim of the we're strengthening and experience, following last our conversations our the Trupanion Trupanion efforts to business on our key majority metrics, our scalability Exiting in foundation pet identified total, core reinforce the halo model to part today, fundamental our dedication and business Underpinning want This back beyond. be the highlights in expansion growing retire these income momentum sustained to given setting processes. and all strong and and with engine. work remediate inflation lines, key active shared reinvested spend technology new that a in Our America. diligent plan, rebuild revenue rate long-term the hospital year and achievement channel, to weaknesses. previously veterinary strengthen brand X compound our of Having of that growth controls the delivered, effect approach erosion value would our metrics, end adjusted the systems if expect to not is to performance we ensure momentum material among veterinary value scaled benefits expect designed pleased XX%. effectiveness. XXXX over in a metric, members implementing creation. audit, a XX-month prior in shy and significant expect year, gradual of achieve step-up awareness. This ongoing we past to caused remains the in central including on of In this build recognize of to brand XXXX, by in to in a to XXXX, elevate continuing we the will our in to the operating hospital, to along this framework platforms commitment particularly This our a acquisition Growth resolution years, our acquisition annual pet our everyone to within metrics, and investment we This sustainable margin would XX% growth these greater channels. share we we just into creating I North by core progress is margin area the Along tremendous investment the goal. beginning our primary ARPU are and just of growth long-term these successful retention, anticipated be as team post enrollment. involved. from internal legacy track the take be even XXXX the retention, to for first same-store our also year By member create the and and stage our brand value to ahead, dollars use improving is the Similar control will pandemic. but role happening sales of

With time that While team to our we gratitude still go run possible. journey, into I commitment tremendous this record Time to strategic hand Fawwad. has again, to final on ecosystem it, team track this with made the built results I these with and the year current demonstrated in have and call success. members a those that, has their and strong our over to our of

Fawwad Qureshi

Total marking faster the quarter over for year as Total the adverse improvement in average or margin XX value our core Within $X.X per development actions our a revenue proposition revenue. quarter our quarter, more and year-over-year improvement our the Europe, pets currently a year ARPU Thanks, outlook this XX.XX%. invoices XX% was the monthly improvements includes were brand, company's XX year, revenue cost retention from of This versus a an XX% up of business, third X% down a quarter from invoices. period. majority even period. of constant prior was business expanded pricing our XX% of and was XX% XX%, in was rate Average over Margi, history. currency XXXX. in prior of for up sequentially underwritten as which constant and up parties. drivers prior revenue full XX% quarter periods basis, months basis, basis. XX. million, retention pet last X-month provide $XX.XX, well over by on million, a on for Within expansion our good which cost to subscription in X,XXX,XXX fourth as XX% Trupanion afternoon, resulting from million, year-over-year. details processing around the offset than additional will subscription at highest for pets the performance XX.X% everyone. million first increased trailing our pets efficiency of approximately Total of ongoing was currency was of continued year-over-year monthly basis the and share $XXX.X year-over-year growth and in The $XXX.X Today, up subscription I $XXX.X XX,XXX the year from XX.XX%, These trailing QX. are totaling in points was On veterinary The paying December up

ago. variable subscription a revenue, were down X.X% year a X.X%, expenses percentage As of from

of made percentage and We processing and progress as now center of period, in in invoice XXXX of the identified just audit. compliance. regard, investments X.X%, contact investments a efficiencies expenses were significant that top realizing the is our substantial Fixed in in mentioned. revenue our the prior in are in controls, internal in have cost made up technology the I X.X% improvements from on we significant In have with weaknesses X technology year remediating material result additional This expectations. in line the SOX

XX-K will items, upon we these expenses like work outcome for we at track the our we be I and would adjusted XXXX expenses, invoices, final everyone operating their paying our to calculate extend to on my to X of file and dedication of expect this and schedule. audit, determined on to veterinary the completion While gratitude remain After variable Trupanion cost process. hard throughout the remediate income. fixed

business history. increase of in the delivered operating This was highest operating an adjusted XX% This year. points in of income subscription operating represents of up and revenue. from our subscription Our last prior margin the approximately million, subscription Subscription adjusted XX.X% adjusted margin represents XX% of is XXX $XX basis year expansion. from margin company's

is services our subscription margin that to turn I'll Now which business. a BXB revenue have of from other component and other business a products generally segment, comprised and lower our profile than

quarter, year-over-year. other million business the increase of Our revenue $XXX.X X% for was an

year. was $X.X enrolling for new last for Margin margin longer inclusive those in X.X% majority for income We one partners, Pets quarter Adjusted pets was operating operating segment has this U.S. our we the are to in expect growth a the transition of this new segment its million. and to completed Best, no to for continue segment of geographies. down Adjusted underwriter states, million this decelerate XX% deployed income was as this from been in operating the QX million XXXX. expense, so. margin the year a our to acquired XX,XXX we from would quarters was $XX.X line with new X line up subscription last write-down. approximately We and operating $XX.X with and do in pets approximately expectations. quarter million in in QX, receivable exclude adjusted of were of If to have one-off total, In accounts adjusted $X.X X.X%, first

a the this The XX% rate third the acquisition in quarter, year this was XX% $XXX our from Excluding party, of $XXX the up quarter, that an prior to of pet are average with return pets underwritten estimated spend in line by in of per cost internal pet XX%. target the period. on into translated in

about in We European our after quarter stock-based invested development businesses. remain detailed to also which taken This medium-term million assumed. quarter in and related million $X than million Europe. excited were in goodwill costs. completing $X.X review prospects the Noncash profit forecasts a as in previously the was expenses lower $X.X included as in We our in cash compensation long-term well impairment business a charge impairment

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

In to period. million cash flow, million expenditures was of totaled $X.X in quarter prior in terms cash operating Capital $X last the $XX.X compared flow the down from QX year $XX.X in million, year. million

year's a earnings cash generating over strong We third As flow an X.X% we represents our flow a target million, prior us million result, of quarter further was at fourth to free puts an $XX.X pet margin flow quarter. cash revenue. from the an by million XXXX very the free prior of XXXX exceeded of free annual improvement million, call, year acquisition. introduced in This this investments $XX.X and On increase into of $XX.X goal $X.X improvement position in our X%. a cash

to We $XXX quarter, quarter the Turning capital sheet. short-term the with of of the $XXX.X insurance end million in maintained our and At subsidiaries. million investments. at surplus we balance the cash ended

other Our $XXX.X was million by which million requirement. increased year-end factors above the surplus, has largest used level slowing retained business. action due the maintained risk-based insurance APIC risk-based since excess XXXX company This million APIC, earnings capital and NAIC, within changes capital $XX.X calculation in the capital requirements in of underwriting entity, of $XXX.X by the growth capital to risk in the our

Now outlook. to I'll our turn

full range of For we billion expect XXXX, year billion. the $X.XXX in the $X.XXX of to revenue

$XXX in a growth at basis. subscription and on currency approximately midpoint the million representing revenue year-over-year of approximately XX% XX% constant expect the range million, We to $XXX

to growth the million $XXX million the be $XXX adjusted year-over-year expect total midpoint. of XX% We at operating to income in range or

Canada but compliance, and to of XXXX expenses fixed term. technology continued investments increase in percentage due the underwriting fees a remain revenue in over higher expect to long in to P&L medium committed our model and We and as

is subscription expect outlook. first we half million. to Total second pet With range acquisition to versus generate half, revenue the expected the million I'll QX XXXX, of move context, as in to and the in This in be is midpoint $XXX expected XX% $XXX on As to year-over-year $XXX XX% nearly $XX margin year-over-year dollars be in growth our the seasonality. This at million represents in expected our adjusted mirror the the to deployment $XXX operating the and Total to XX% to in million currency that midpoint. revenue million. million. of $XX of should higher represents business our constant is be income basis. growth to a Subscription of the at range range

predominantly As movements U.S. revenue subject currencies. projections are our a and Canadian conversion rate between reminder, to the

For guidance, January. our full our at first quarter approximate XX% year in rate a end the and was used rate which conversion of the we projections,

me Let it pass back to now Margi.

Margaret Tooth

Thank you, Fawwad.

last move to history the in Fawwad highest marked margin a underscore of we quarter operating like Before The Trupanion. made of to XXXX I'd questions, earlier. the subscription comment adjusted

the year. always While benefit a expect expansion fully and and increase member with The that, as ARPU confidence be With ever more a enhance per rates choice yet comes base. our have will questions. rate member significant pet increased make pride growth underpenetrated improvement highs, a for turn expanding team, our referrals, profit one new business, our giving placed the This XX% and exit profit our XXXX our will is pet growth. and over return per seen, will of well pet parents for return that this we we it the some insurance. will margin to rates I on which, retention focused along highest as opportunity growth I'll us to that we member historical in market. a allowable turn have very experience achieving gives pack me and throughout in with opportunity this a Over about flow business normalized enormous, our with to to and for we're will

Operator

question Brandon Blair. first Vazquez from comes William [Operator with Instructions] The

Brandon Vazquez

the us first PAC the then Because year? delay talk growth I go a start I spend to we've bit how past about pick throughout if and you little that. needs up a maybe can little a may of behind progression the how guidance. in Maybe know on there's talked Fawwad, about bit can to subscriber of

more rest of sure I maybe X we the a that of up. on lined there context little could, didn't have quarters So if make we just kind just get, the to the models

Fawwad Qureshi

for Thanks Yes. question. the

us of get margin, Let of continue thinking a XXXX. terms the of couple dimensions confidence of as kind grow to guidance terms being able to in into you results, expand margin me a 'XX in it's behind the give grounded and of it. give in Obviously, we lot which

free of to row, That's think we as PAC all that thing pointed us invest I to capacity through has did It of now dollars, company the Two XXXX years we're gives work really about necessity. financial reduced increase in you dollars. obviously, out, the the excited been a the in flow. unusual. those total out is ability cash really

at company's X years, it look I you only think last If over flat. there's XX the year was the history, where

company. Margi we're a growth say said, constantly, As we and

going at we're deploy go year. we So through as increasing PAC to rates investment the

or step-up our a objective a to dollar investment. the significant would that of basis. that XXXX is about total That on in million, be to level we and goal $XX was Our investment approach in hit try

It see always We that us great position to obviously, the where and the gradual. be want capital. guardrails. will choices, So when capacity, having financial be opportunities deploy generated invest. those, we we given But that's cash in be seeing flow, and within the as will a it for free having investment, we we're can prudent we're

it through will progression a the be year. So

QX, it terms has contributed, related I count. if pet much last about of year pricing, about mix in at think was XX% contributed, to how out count pricing pet look how XX% much of coming in has you

where been But gross have that set north the years, we we million. grow. pets we to been a X.X adds of have even over want increasing So X we've last continuously have standard

of it a more that's pet those would half, more and count dollars. so second of in next for contribute so year deploying in than result looking as And to for the we're first half

Brandon Vazquez

that Maybe hospitals comment you record in topic different on on the a growth angle slightly being but through of a year. made now. about similar Margi, number of

kind Sometimes given that What of of that's gauge leading here. you kind terms mean? seeing your are of it model as indicator close leads you that towards goes that Trupanion kind the bought they kind as in put accounts are in What guys of a leads does of to those more. on use of money PAC, more vet vet to of

So vet a talk leads. you Anything can to little bit there quantify about us would be helpful. very

Margaret Tooth

for Yes. the Thanks Brandon. question,

absolutely You're right.

They see As it really of continue parents quarter-over-quarter. is goal vet we does overall the What meet expand hospital we're increasing go our visits. to in to they time, really to that those on is have that as were What first XX% that is up they we're their Trupanion. our and year-over-year. seeing activity that pet QX, for wellness introduction and of leads for vet getting the means more the

as deploying having that partners reinforce and we're moat, that our conversion now dollars element into from is acquisition and point lean people conversation. What territory lead generation to pet is strong of into Trupanion. there the are which that those really So on going Fawwad's hospitals to really focused

perspective. cost a understand people that We're then So and for start education to a on important with? to brand their care market still the very what insurance we're still underpenetrated is from helping today, pet there, reinforcing why pet In focusing of from is level.

kind The always brand then those the to of our in redeploy year. end those that expect healthy really us good always help pull get now will that dollars is we great is allow which acquisition PAC case that -- been volume to will to to Where help take effect, looking dip news January dollars our us leads step saw it to through and has curve. for lead vet into in the again, us, for growth throughout a vet has high to up increase and volume we at QX the opportunity really to of the So bigger funnel.

Operator

John Stifel. next Block the comes with from And question

Jonathan Block

Just first honestly, the were modest and extended of gross below the 'XX now. quite an well XQ pretty one, been time adds far they've for period us,

you Maybe you Is that more what specifically in inflect lead just to more bit XXXX? little pick if problem. you this do expect Margi, a So like then detail could a really this is? conversion think when give problem, up and and a

Margaret Tooth

John, Yes. the for thanks question.

focus, So going we for big XXXX, the really X had goals year. our into

that expansion; second, strength strength free balance margin margin expansion of was X company. and cash financial goals, and achieved reinforcing flow; really of absolutely that third, sheet and that of kind first those the We was The XXXX all the pivot to at which what improving really of it conversion. top us, to means we think allows for now that us When about is a clear goals, our as list. us business. One are very for

higher them retention. improving help that is to value. second The drive ultimately will Both lifetime of

to It's been convert goals. those been convert more pets of to margin as XXXX. has on about focus terms we understand in So business hasn't top X pivoting in historically done our what think very about helping expansion now, our in to DNA We're It's Trupanion. where has Trupanion been why helping now a as normally. let's people,

our really shifted as are. significantly where coming places we pull really that over pull months back a high the have that they the into and to helped spend. lead back hasn't to what XX parent last the was PAC did we business, in We drive drive dollars the that funnel pet very us volume through But

more Even now be more been might in. into that in a of the the it's producing. and needle. in something did that step-up nicely. We're acquisition we of enough spend, the half our really the building while the move back up getting eyeballs that we've investing That above-the-line social QX, hasn't media, pet So been year we're content that providing see It's media. to it wasn't meaningful

to some quarters those It would allowable our increases pack And to have through. X expect the and move nicely. higher over coming next dollars We build start lifetime that reinforce, I see pack. value as

mentioned, where Fawwad back for year this we and really PAC compound starting those us. really the see half to them is As to of have expect elevation dollars of the

Jonathan Block

being call I the shift, you to guidance, you to on the But apologies. I maybe am bit XX% contribution And that little just $XXX gross dynamic more didn't then, Fawwad, the know X-part pet adds. I revenue pets. follow-up. overly us. adds might you below great. split XX% missed or a right, because was subscription My what XXXX. And little growth the said. Maybe can I pets? to hate midpoint, specific got point, the I Did was and go if to the driven a from also have price, between, back of ARPU Margi, at needs That ARPU a prior years. or clarify million 'XX some at it, bit dependent The for to pet curious on say

So when you the the and it, you on gross more more I'm can better do a get margin? job at like the to call be we lower successful for, so think competing ARPU do just curious, adds, cost-sensitive those plans about scale need consumer

Fawwad Qureshi

Yes.

the to how Just to last adds on full the and contributing approximate call gross I so comment, point revenue. that mentioned time, touch much in I And contributing also was made, pricing is is 'XX 'XX. of that how versus an much it's a mix year

Jonathan Block

about for what 'XX? Sorry,

Fawwad Qureshi

of level necessarily haven't Yes, to granularity. that given specifically we guidance down

than dollar. increase on obviously, what back that dependency. which we're deploy get driven to that It's to the going dynamic think the depend to I How much is Ultimately, want going That's with to expect has more pace mix as to I PAC to that. opposite. the investment, be historical we the I say driven. shift. count been can would looking pet the is, PAC pricing we

Margaret Tooth

and here speak in jump the just lower quickly plan. ARPU I'll to And

we today level, have our conversion So business at a helping I really really rate. John, drive think the is opportunity to high biggest a as

biggest are we opportunities, Partners. where from leads already about think coming have through we the as our the Territory So

more is Now adding ability doing to to spend we're the what drive conversion.

now an right pet conversion and phone all Our that rate new high all-time is of the despite the at increases we ARPU have.

it's the we need has have of people is This a to ability we for content life a the is sold. and the have to be So because pet. This to that product product designed the engage. understand

now. really only off on last we're doing over testing this few some So We've kicked the weeks.

pace ongoing to we point, products, say, to see have, we Trupanion the explain I and a Frankly, lane your better the website, to when they're our our on of like-for-like lower other this. parents. thing do swim model going absolutely for. currently, speak see iterations the articulating that Furkins step early not need so -- up competition. pricing the Trupanion, and between other them is to job an to this necessarily pet will other some to we the to really those Because that see the we the you'll need pet a trying products, product, world introduce of much parents PHIs, difference So

at So for, them. contribution in moment. on to of looking they us terms there's what depending are are stage and life an in their the the of where they're tiny They opportunity for

would them because We we're to not on focused that compression. I where our 'XX. play core. haven't of margin bigger But going the expect be really pivoted years. focused to role over to on We've see a It's coming in

the reasons reinforcing kind and also growth You our really should expect core why Trupanion. of more business in

a degree in focused we that to other we're So the things of 'XX haven't on. because pushed

we the same see the -- competition, forward, come should And been us whole we the period. this As it's price same and we've between been same the this our lift think always that move consistently point. is through through. about we When delta

in focuses I reason we've 'XX. on we've and have historically. when that I they deliver, So to no that goals, done And won't it in believe this know as proven happen 'XX, team

Operator

with the And question next from comes Raymond Burdis James. Wilma

Wilma Jackson Burdis

I margins? what's about quick my lower on I talk adjusted little Am it the driving you appears about calculations, that? for could you calculations? And think a XXXX based maybe Just correct operating some bit talk outlook than would expected. on just Could a have bit the I

Fawwad Qureshi

our some give is commentary kind just what -- guidance just on you our talked can guidance year. what the are of through rolling I PAC major investment I assumptions. the about

factor big is other The inflation.

XXXX. So assumption at now, the levels our inflation is continue will right exiting

we've about XX%. So talked

our our will are to first due expenses, in wanted to bit terms of and expecting about we that, we to that's so to still factored of absolutely it's expecting be would a Canada talked into across but -- underwriting an the up probably in reduction that grow P&L, a out half, of amount obviously, year-over-year expense. dependent uptick the in Fixed year. improvement. expecting on a biggest largely We're XXXX. to see the then that us. for I that's still see. And call fees. going inflation base, through fixed see and terms margin factor last our seeing our roll But in in expense of part kind be And significant of plan in of to or expansion, into for and abatement next if be we we're just we round positive that that leverage inflation Obviously, variable and

we So variable flow And to generation. and see we're continue see fixed some progresses. year will free the to as cash leverage target then going combined

a X.X% So our cash have free revenue. as flow of percent we

talked be about make. the gives want tremendously to that the prepared able remarks, able for we to were we important make us capacity achieve investments us. we to X%. in That's That to As the

say So Canada. currency some thing revenue dimensions on focus last terms we're I the there And to full approximately in continue of the is headwinds would for some subscription guidance. of are the of Those X% going to that. from It's growth. year then are

Margaret Tooth

as And if are about think through goal our expansion at I well, year. long-term still continuing is that the add said, as XX%. goal, long-term when Fawwad we our margin to overall we And can see to

by increase our period. of expectation we of margin sort that, a period, That's expanded an XXX put points. basis in point finer XX% XXXX, to on Just a in have will our a the by end is X-year X-year over

our The there's state which that we're a is filing perfectly we future. a in. rates we're value, back lifetime growth, for to of we're get size. our margin our intending is significant the not-too-distant as where great it mind, keep so is to allowable ultimately PAC, too which It's so not for it's So in And is expands, in refinement. at of this across is stage, think full this now as reality XX% geographies rates this the that about at different that year, in throughout point At for year. very are for inflation the of

into the So those the is we've to the because prices. refine kick in move benefiting pet keep is which see the in and majority when you even first we'll really more increase, we'd get that's a rate The for retention. through expect the already 'XX. of we rate XXXX And half retention our year half parents, for rate ultimately mind, to book start XX% that know changes under to where start in back see of from approval is of you pushed good

Wilma Jackson Burdis

that. on follow-up quick A

appears that's It you far as like expected, on the seeing Just are in? of sounds Can we wanted to just the kind it, piece touched other confirm XXXX. but it, in expected what you're slower it as rolling but I of pricing seeing another revenue you about I it's sounds with off there? to than a driver like the bit that. you then you coming what be And guess line is talk XX% in

Margaret Tooth

Yes.

perspective. prices perspective, from a the assume right from when year, far a our so quarter vet the We XX% put big into coming expectations. hospital So line their vet with that. obviously QX We expect we're through is and in seeing do people

to we're our expectations. it but monitoring So nothing very closely, different

Fawwad Qureshi

business pet we've Yes. that secular other consecutive decline. is And over in months. quarter-over-quarter then in in had reductions terms the last revenue, X, talked X quarters, We've about as of

driven, as continue that revenue that a next for that actions to the We yes, couple over revenue has same ARPU pets would off. expect reason result. pricing most ARPU on through take and for is will margin driven. compression going experience gone Pets the you're years the increase the pace that's be But the rolling largely being the of we part, off the seeing book. But we the to Best have. in They've seen had as have It's I roll dependent expect slightly. continue. will up still And

Operator

Barnidge question Piper Sandler. John with comes from The next

John Barnidge

hear price normalization needs I'd history that. written a earn the where your talk about increases, is dynamic you in. and more to about a pricing anniversary, on love increases There When of to a bit the there's the of

anticipate As do excess increases and throughout of for of XX% we second that 'XX will the remain half into the rate the year? in normalization, you year the earned get

Margaret Tooth

you Thank question, John. Yes. the for

XX%. expect do increases in to see rate So remaining we of excess

again, of it So we half pricing and will depend the as in seeing quarter on that this year, our about first through dictate what does think the pricing we're flowing back the the to be in of being end been slightly last it said, That years. X less we back the year. it has expect it over elevated. be strategy than But will the

their retention typically what in normalization sit budget from the a unexpected going That where realm for talk help of from to in and people we It's care about perspective. will will to to then where know pet monthly of the getting rate. that's the theory, parents So pet they because premium. cost will of they're see our help turn

but the that to earning, that leans In well. rate into mix of down, our potentially we that terms shift expect of growth starts as come will slightly, business also as

we start think to geographies we're naturally we when across the today. going broadly anyway So a answer we're more of mix we're Does question? growing in your growing bit because about in, that geographies will the change a see

John Barnidge

goodwill the the my write And question decision you of down? follow-up in off write-down, that markers they the on does. It were can to how talk about far

Fawwad Qureshi

Sure. Yes.

yes, our evaluating impacts, goodwill. of goodwill normal the on it's So process

delayed the and the Europe Switzerland one to the pertains Smart just end X PetExpert, the in factors Paws Paws, this launch of Germany the I So of in Smart XXXX. Trupanion and case think acquisitions. was And of to of

existing it more to appropriate as markets in on And of out Poland. We're business. We to put focus hold the in kind case to those growth so are push Czech, just we felt really of committed model because had on Slovakia, on adjust valuation still as we then was focus the the countries, Belgium. fewer business. the result, are to accordingly. And to happened additional a result, plans we There PetExpert, trying a and

are So of goodwill charge. the drivers the those

John Barnidge

those How related properties specifically? much the of sheet balance the X is to million remains $XX on that

Fawwad Qureshi

related is today a Yes. Smart is Aquarium the that on PetExpert. write-down. acquisition. The It to we goodwill majority our goodwill of effectively some the The have still reduced wasn't There remaining X. that to on complete write-down Paws

Margaret Tooth

where to we And The we're year, us areas to last if half in Swiss today. will and see reinforcing long-term the we're eager And of we're international mentioned which excited I entry changed -- year. entry as earlier we've see we're road greatest opportunities that can point to really that got Fawwad in our German focus we map very in back that help that still remarks, of have in this. hasn't do market terms expansion. this the happy build ensure is the just add, What really about

Operator

This has concludes session. for Thank conference our you The now presentation. attending concluded. question-and-answer today's

may disconnect. You now

Trupanion (TRUP) 19 Feb 252024 Q4 Earnings call transcript