SEATTLE, Aug. 01, 2017 (GLOBE NEWSWIRE) -- Trupanion, Inc. (Nasdaq:TRUP), a leading provider of medical insurance for cats and dogs,
today announced financial results for the second quarter ended June 30, 2017.
“Our second quarter results highlight the consistency of our revenue growth and our continued progress leveraging our fixed
expenses,” said Darryl Rawlings, CEO of Trupanion. “This is enabling us to test additional initiatives around pet acquisition
while maintaining positive cash flow.”
Second Quarter 2017 Financial and Business Highlights
- Total revenue was $58.3 million, an increase of 27% compared to the second quarter of 2016.
- Total enrolled pets (including pets from our other business segment) was 383,293 at June 30, 2017, an increase of 19% over
the prior year period.
- Subscription business revenue was $52.6 million, an increase of 25% compared to the second quarter of 2016.
- Subscription enrolled pets was 346,409 at June 30, 2017, an increase of 16% over the prior year period.
- Net income was $0.4 million compared to a net loss of $(1.0) million in the second quarter of 2016. In the second quarter of
2017, net income included a one-time $1.0 million gain on the sale of an equity investment. Excluding this one-time gain, net
loss would have been $(0.6) million in the second quarter of 2017.
- Second quarter GAAP basic and diluted earnings per share was $0.01. Excluding our one-time gain we had a net loss of $(0.02)
per share for the quarter.
- Adjusted EBITDA was $1.4 million, compared to $0.5 million in the second quarter of 2016.
- Operating cash flow generated was $1.8 million and free cash flow generated was $1.0 million, compared to operating cash flow
of $1.6 million and free cash flow of $1.1 million in the second quarter of 2016.
First Half 2017 Financial and Business Highlights
- Total revenue was $113.0 million, an increase of 28% compared to the first half of 2016.
- Subscription business revenue was $102.9 million, an increase of 27% compared to the first half of 2016.
- Net loss was $(1.1) million, compared to a net loss of $(3.5) million in the first half of 2016. In the first half of
2017, net loss including a one-time $1.0 million gain on the sale of an equity investment. Excluding this one-time gain,
net loss would have been $(2.1) million in the first half of 2017.
- Adjusted EBITDA was $1.8 million, compared to a loss of $(0.5) million in the first half of 2016.
- As of June 30, 2017, there were 30.0 million basic shares outstanding and 32.7 million shares outstanding on a
weighted-average diluted basis.
Revenue by Quarter
A chart accompanying this release is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/7a1224ff-48b4-4422-825f-5c2655d9d922
Conference Call
Trupanion’s management will host a conference call today to review its second quarter 2017 results. The call is scheduled to begin
shortly after 1:30 p.m. PT/ 4:30 p.m. ET. A live webcast will be accessible through the Investor Relations section of
Trupanion’s website at http://investors.trupanion.com and will be archived online for 3 months upon completion of the
conference call. Participants can access the conference call by dialing 1-877-407-0784 (United States) or 1-201-689-8560
(International). A telephonic replay of the call will also be available, one hour after the completion of the call, by dialing
1-844-512-2921 (United States) or 1-412-317-6671 (International) and entering the replay pin number: 13666206.
About Trupanion
Trupanion is a leading provider of medical insurance for cats and dogs throughout the United States and Canada. For almost two
decades, Trupanion has given pet owners peace of mind so they can focus on their pet’s recovery, not financial stress. Trupanion is
committed to providing pet owners with the highest value in pet medical insurance. Trupanion is listed on the Nasdaq Stock Exchange
under the symbol TRUP. The company was founded in 2000 and is headquartered in Seattle, WA. Trupanion policies are issued, in the
United States, by its wholly-owned insurance entity American Pet Insurance Company and, in Canada, by Omega General Insurance
Company. For more information please visit Trupanion.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934 relating to, among other things, expectations, plans, prospects and financial results
for Trupanion, including, but not limited to, its expectations regarding its ability to execute its business plans. These
forward-looking statements are based upon the current expectations and beliefs of Trupanion’s management as of the date of this
press release, and are subject to certain risks and uncertainties that could cause actual results to differ materially from those
described in the forward-looking statements. All forward-looking statements made in this press release are based on information
available to Trupanion as of the date hereof, and Trupanion has no obligation to update these forward-looking statements.
In particular, the following factors, among others, could cause results to differ materially from those expressed or implied by
such forward-looking statements: the ability to achieve or maintain profitability and/or appropriate levels of cash flow in future
periods; the accuracy of assumptions used in determining appropriate member acquisition expenditures; the severity and frequency of
claims; the ability to maintain high retention rates; the accuracy of assumptions used in pricing medical plan subscriptions and
the ability to accurately estimate the impact of new products or offerings on claims frequency; actual claims expense exceeding
estimates; regulatory and other constraints on the ability to institute, or the decision to otherwise delay, pricing modifications
in response to changes in actual or estimated claims expense; the effectiveness and statutory or regulatory compliance of our
Territory Partner model and of our Territory Partners, veterinarians and other third parties in recommending medical plan
subscriptions to potential members; the ability to increase the number of Territory Partners and active hospitals; compliance by us
and those referring us members with laws and regulations that apply to our business, including the sale of a pet medical plan;
fluctuations in the Canadian currency exchange rate; the ability to protect our proprietary and member information; the ability to
maintain our culture and team; the ability to maintain the requisite amount of risk-based capital; the ability to protect and
enforce Trupanion’s intellectual property rights; third-party claims including litigation and regulatory actions; and the ability
to recognize benefits from investments in new solutions and enhancements to Trupanion’s technology platform and website.
For a detailed discussion of these and other cautionary statements, please refer to the risk factors discussed in filings with
the Securities and Exchange Commission (SEC), including but not limited to, Trupanion’s Annual Report on Form 10-K for the year
ended December 31, 2016 and any subsequently filed reports on Forms 10-Q and 8-K. All documents are available through the SEC’s
Electronic Data Gathering Analysis and Retrieval system at www.sec.gov or the Investor Relations section of Trupanion’s website at http://investors.trupanion.com.
Non-GAAP Financial Measures
Trupanion’s stated results may include certain non-GAAP financial measures, including, without limitation, free cash flow,
acquisition cost, net acquisition cost, cost of goods, variable expenses, fixed expenses, non-GAAP subscription gross profit,
non-GAAP gross profit, adjusted EBITDA, and basic earnings per share, excluding gain on sale of equity method
investment. Adjusted EBITDA is a non-GAAP financial measure that we define as net loss excluding stock-based compensation
expense, depreciation and amortization expense, interest income, interest expense, income tax expense (benefit), and loss (gain)
from equity method investment.
Trupanion’s non-GAAP financial measures may not provide information that is directly comparable to that provided by other
companies in its industry as other companies in its industry may calculate or use non-GAAP financial measures differently. In
addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in
accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have
a material impact on Trupanion’s reported financial results. Further, stock-based compensation expense and other items used in the
calculation of various metrics have been and will continue to be for the foreseeable future significant recurring expenses in
Trupanion’s business. The presentation and utilization of non-GAAP financial measures is not meant to be considered in isolation or
as a substitute for the directly comparable financial measures prepared in accordance with GAAP. Trupanion urges its investors to
review the reconciliation of its non-GAAP financial measures to the most directly comparable GAAP financial measures in its
consolidated financial statements, and not to rely on any single financial or operating measure to evaluate its business.
These reconciliations are included below and on Trupanion’s Investor Relations website.
Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can
impact a company’s non-cash expenses, Trupanion believes that providing various non-GAAP financial measures that exclude
stock-based compensation expense allows for more meaningful comparisons between its operating results from period to period.
Trupanion calculates non-GAAP gross profit by subtracting cost of goods and variable expenses from revenue. Cost of goods and
variable expenses used in this calculation are non-GAAP measures which exclude stock-based compensation expense. Fixed expenses is
a non-GAAP measure which excludes stock-based compensation expense and depreciation and amortization expense. Trupanion excludes
sign-up fee revenue from the calculation of net acquisition cost because it collects sign-up fee revenue from new members at the
time of enrollment and considers it to be an offset to a portion of Trupanion’s sales and marketing expenses. Trupanion believes
this allows it to calculate and present acquisition cost, net acquisition cost and the related financial measures it derives from
them, as well as adjusted EBITDA, in a consistent manner across periods. Trupanion presents earnings-per-share excluding the impact
of one-time transactions and events for increased comparability across periods. Trupanion’s management believes that the non-GAAP
financial measures and the related financial measures derived from them are important tools for financial and operational
decision-making and for evaluating operating results over different periods of time.
|
Trupanion, Inc. |
Consolidated Statements of
Operations |
(in thousands, except per share
data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2017
|
|
2016
|
|
2017
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
Subscription business |
$ |
52,641 |
|
|
$ |
42,162 |
|
|
$ |
102,870 |
|
|
$ |
81,305 |
|
Other business |
|
5,634 |
|
|
|
3,670 |
|
|
|
10,134 |
|
|
|
7,226 |
|
Total revenue |
|
58,275 |
|
|
|
45,832 |
|
|
|
113,004 |
|
|
|
88,531 |
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
Subscription business (1) |
|
42,591 |
|
|
|
34,158 |
|
|
|
83,837 |
|
|
|
66,361 |
|
Other business |
|
5,333 |
|
|
|
3,408 |
|
|
|
9,661 |
|
|
|
6,600 |
|
Total cost of revenue (2) |
|
47,924 |
|
|
|
37,566 |
|
|
|
93,498 |
|
|
|
72,961 |
|
Gross profit: |
|
|
|
|
|
|
|
|
|
|
|
Subscription business |
|
10,050 |
|
|
|
8,004 |
|
|
|
19,033 |
|
|
|
14,944 |
|
Other business |
|
301 |
|
|
|
262 |
|
|
|
473 |
|
|
|
626 |
|
Total gross profit |
|
10,351 |
|
|
|
8,266 |
|
|
|
19,506 |
|
|
|
15,570 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing (1) |
|
4,372 |
|
|
|
3,564 |
|
|
|
8,461 |
|
|
|
7,404 |
|
Technology and development (1) |
|
2,322 |
|
|
|
2,164 |
|
|
|
4,725 |
|
|
|
4,451 |
|
General and administrative (1) |
|
4,245 |
|
|
|
3,495 |
|
|
|
8,257 |
|
|
|
7,217 |
|
Total operating expenses |
|
10,939 |
|
|
|
9,223 |
|
|
|
21,443 |
|
|
|
19,072 |
|
Operating loss |
|
(588 |
) |
|
|
(957 |
) |
|
|
(1,937 |
) |
|
|
(3,502 |
) |
Interest expense |
|
109 |
|
|
|
41 |
|
|
|
246 |
|
|
|
71 |
|
Other (income) expense, net |
|
(1,112 |
) |
|
|
(38 |
) |
|
|
(1,140 |
) |
|
|
(55 |
) |
Income (loss) before income taxes |
|
415 |
|
|
|
(960 |
) |
|
|
(1,043 |
) |
|
|
(3,518 |
) |
Income tax expense |
|
4 |
|
|
|
4 |
|
|
|
28 |
|
|
|
18 |
|
Net income (loss) |
$ |
411 |
|
|
$ |
(964 |
) |
|
$ |
(1,071 |
) |
|
$ |
(3,536 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
$ |
0.01 |
|
|
$ |
(0.03 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.13 |
) |
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
29,510,907 |
|
|
|
28,348,348 |
|
|
|
29,383,502 |
|
|
|
28,173,798 |
|
Diluted |
|
32,734,624 |
|
|
|
28,348,348 |
|
|
|
29,383,502 |
|
|
|
28,173,798 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes stock-based compensation expense as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Cost of revenue |
$ |
149 |
|
|
$ |
66 |
|
|
$ |
262 |
|
|
$ |
132 |
|
Sales and marketing |
|
198 |
|
|
|
165 |
|
|
|
385 |
|
|
|
247 |
|
Technology and development |
|
59 |
|
|
|
36 |
|
|
|
109 |
|
|
|
91 |
|
General and administrative |
|
482 |
|
|
|
476 |
|
|
|
913 |
|
|
|
969 |
|
Total stock-based compensation expense |
$ |
888 |
|
|
$ |
743 |
|
|
$ |
1,669 |
|
|
$ |
1,439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)The breakout of cost of revenue between claims and other
cost of revenue is as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Claims expense |
$ |
41,009 |
|
|
$ |
32,466 |
|
|
$ |
80,196 |
|
|
$ |
63,070 |
|
Other cost of revenue |
|
6,915 |
|
|
|
5,100 |
|
|
|
13,302 |
|
|
|
9,891 |
|
Total cost of revenue |
$ |
47,924 |
|
|
$ |
37,566 |
|
|
$ |
93,498 |
|
|
$ |
72,961 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Trupanion, Inc. |
Consolidated Balance Sheets |
(in thousands, except per share
data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2017 |
|
December 31,
2016 |
|
(unaudited) |
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
24,604 |
|
|
$ |
23,637 |
|
Short-term investments |
|
32,565 |
|
|
|
29,570 |
|
Accounts and other receivables |
|
17,098 |
|
|
|
10,118 |
|
Prepaid expenses and other assets |
|
2,294 |
|
|
|
2,062 |
|
Total current assets |
|
76,561 |
|
|
|
65,387 |
|
Restricted cash |
|
600 |
|
|
|
600 |
|
Long-term investments, at fair value |
|
2,829 |
|
|
|
2,579 |
|
Equity method investment |
|
- |
|
|
|
271 |
|
Property and equipment, net |
|
7,988 |
|
|
|
8,464 |
|
Intangible assets, net |
|
4,950 |
|
|
|
4,910 |
|
Other long-term assets |
|
2,723 |
|
|
|
134 |
|
Total assets |
$ |
95,651 |
|
|
$ |
82,345 |
|
Liabilities and stockholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
1,779 |
|
|
$ |
2,006 |
|
Accrued liabilities and other current liabilities |
|
6,582 |
|
|
|
5,416 |
|
Claims reserve |
|
10,820 |
|
|
|
9,521 |
|
Deferred revenue |
|
20,442 |
|
|
|
13,463 |
|
Total current liabilities |
|
39,623 |
|
|
|
30,406 |
|
Long-term debt |
|
6,309 |
|
|
|
4,767 |
|
Deferred tax liabilities |
|
1,623 |
|
|
|
1,623 |
|
Other liabilities |
|
944 |
|
|
|
834 |
|
Total liabilities |
|
48,499 |
|
|
|
37,630 |
|
Stockholders’ equity: |
|
|
|
Common stock, $0.00001 par value per share, 100,000,000 shares
authorized at June 30, 2017 and December 31, 2016, 30,652,240 and 29,994,940 shares issued and outstanding at June 30, 2017;
30,156,247 and 29,498,947 shares issued and outstanding at December 31, 2016 |
|
- |
|
|
|
- |
|
Preferred stock: $0.00001 par value per share, 10,000,000 shares
authorized at June 30, 2017 and December 31, 2016, and 0 shares issued and outstanding at June 30, 2017 and December 31,
2016 |
|
- |
|
|
|
- |
|
Additional paid-in capital |
|
132,950 |
|
|
|
129,574 |
|
Accumulated other comprehensive loss |
|
(245 |
) |
|
|
(377 |
) |
Accumulated deficit |
|
(82,352 |
) |
|
|
(81,281 |
) |
Treasury stock, at cost: 657,300 shares at June 30, 2017 and
December 31, 2016 |
|
(3,201 |
) |
|
|
(3,201 |
) |
Total stockholders’ equity |
|
47,152 |
|
|
|
44,715 |
|
Total liabilities and stockholders’ equity |
$ |
95,651 |
|
|
$ |
82,345 |
|
|
|
|
|
Trupanion, Inc. |
Consolidated Statements of Cash
Flows |
(in thousands) |
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
Operating activities |
|
|
|
|
|
|
|
Net income (loss) |
$ |
411 |
|
|
$ |
(964 |
) |
|
$ |
(1,071 |
) |
|
$ |
(3,536 |
) |
Adjustments to reconcile net income (loss) to cash provided by operating
activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
1,077 |
|
|
|
739 |
|
|
|
2,113 |
|
|
|
1,524 |
|
Stock-based compensation expense |
|
888 |
|
|
|
743 |
|
|
|
1,669 |
|
|
|
1,439 |
|
Gain on sale of equity method investment |
|
(1,036 |
) |
|
|
- |
|
|
|
(1,036 |
) |
|
|
- |
|
Other, net |
|
(41 |
) |
|
|
30 |
|
|
|
56 |
|
|
|
39 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts and other receivables |
|
(3,596 |
) |
|
|
(760 |
) |
|
|
(6,968 |
) |
|
|
(994 |
) |
Prepaid expenses and other assets |
|
36 |
|
|
|
310 |
|
|
|
(183 |
) |
|
|
463 |
|
Accounts payable, accrued liabilities and other liabilities |
|
1,208 |
|
|
|
129 |
|
|
|
913 |
|
|
|
(1,203 |
) |
Claims reserve |
|
166 |
|
|
|
723 |
|
|
|
1,259 |
|
|
|
1,244 |
|
Deferred revenue |
|
2,711 |
|
|
|
608 |
|
|
|
6,929 |
|
|
|
1,284 |
|
Net cash provided by operating activities |
|
1,824 |
|
|
|
1,558 |
|
|
|
3,681 |
|
|
|
260 |
|
Investing activities |
|
|
|
|
|
|
|
Purchases of investment securities |
|
(9,723 |
) |
|
|
(7,264 |
) |
|
|
(14,895 |
) |
|
|
(11,223 |
) |
Maturities of investment securities |
|
7,841 |
|
|
|
5,638 |
|
|
|
11,712 |
|
|
|
9,338 |
|
Proceeds from sale of equity method investment |
|
1,402 |
|
|
|
- |
|
|
|
1,402 |
|
|
|
- |
|
Purchases of property and equipment |
|
(802 |
) |
|
|
(437 |
) |
|
|
(1,264 |
) |
|
|
(1,090 |
) |
Other investments |
|
(43 |
) |
|
|
(35 |
) |
|
|
(2,753 |
) |
|
|
(69 |
) |
Net cash used in investing activities |
|
(1,325 |
) |
|
|
(2,098 |
) |
|
|
(5,798 |
) |
|
|
(3,044 |
) |
Financing activities |
|
|
|
|
|
|
|
Proceeds from exercise of stock options |
|
610 |
|
|
|
1,299 |
|
|
|
1,647 |
|
|
|
1,785 |
|
Proceeds from debt financing, net of financing fees |
|
1,499 |
|
|
|
(1 |
) |
|
|
1,459 |
|
|
|
986 |
|
Payments on capital lease obligation |
|
(101 |
) |
|
|
(73 |
) |
|
|
(203 |
) |
|
|
(73 |
) |
Net cash provided by financing activities |
|
2,008 |
|
|
|
1,225 |
|
|
|
2,903 |
|
|
|
2,698 |
|
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted
cash, net |
|
160 |
|
|
|
(4 |
) |
|
|
181 |
|
|
|
337 |
|
Net increase in cash, cash equivalents, and restricted cash |
|
2,667 |
|
|
|
681 |
|
|
|
967 |
|
|
|
251 |
|
Cash, cash equivalents, and restricted cash at beginning of period |
|
22,537 |
|
|
|
17,526 |
|
|
|
24,237 |
|
|
|
17,956 |
|
Cash, cash equivalents, and restricted cash at end of period |
$ |
25,204 |
|
|
$ |
18,207 |
|
|
$ |
25,204 |
|
|
$ |
18,207 |
|
|
|
|
|
|
|
|
|
The following tables set forth our key operating metrics: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total pets enrolled (at period end) |
|
383,293 |
|
|
|
320,896 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total subscription pets enrolled (at period end) |
|
346,409 |
|
|
|
299,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Monthly average revenue per pet |
$ |
50.99 |
|
|
$ |
46.77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lifetime value of a pet (LVP) |
$ |
654 |
|
|
$ |
622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average pet acquisition cost (PAC) |
$ |
135 |
|
|
$ |
120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average monthly retention |
|
98.57 |
% |
|
|
98.64 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
Jun. 31,
2017 |
|
Mar. 31,
2017 |
|
Dec. 31,
2016 |
|
Sep. 30,
2016 |
|
Jun. 30,
2016 |
|
Mar. 31,
2016 |
|
Dec. 31,
2015 |
|
Sept. 30,
2015 |
|
Total pets enrolled (at period end) |
|
383,293 |
|
|
|
364,259 |
|
|
|
343,649 |
|
|
|
334,070 |
|
|
|
320,896 |
|
|
|
307,298 |
|
|
|
291,818 |
|
|
|
276,988 |
|
|
Total subscription pets enrolled (at period end) |
|
346,409 |
|
|
|
334,909 |
|
|
|
323,233 |
|
|
|
312,282 |
|
|
|
299,856 |
|
|
|
287,123 |
|
|
|
272,636 |
|
|
|
258,546 |
|
|
Monthly average revenue per pet |
$ |
51.47 |
|
|
$ |
50.50 |
|
|
$ |
49.17 |
|
|
$ |
48.37 |
|
|
$ |
47.39 |
|
|
$ |
46.12 |
|
|
$ |
45.48 |
|
|
$ |
45.15 |
|
|
Lifetime value of a pet (LVP) |
$ |
654 |
|
|
$ |
637 |
|
|
$ |
631 |
|
|
$ |
624 |
|
|
$ |
622 |
|
|
$ |
603 |
|
|
$ |
591 |
|
|
$ |
591 |
|
|
Average pet acquisition cost (PAC) |
$ |
143 |
|
|
$ |
128 |
|
|
$ |
133 |
|
|
$ |
120 |
|
|
$ |
118 |
|
|
$ |
123 |
|
|
$ |
132 |
|
|
$ |
129 |
|
|
Average monthly retention |
|
98.57 |
% |
|
|
98.58 |
% |
|
|
98.60 |
% |
|
|
98.61 |
% |
|
|
98.64 |
% |
|
|
98.65 |
% |
|
|
98.64 |
% |
|
|
98.66 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reflects the reconciliation of cash provided by
operating activities to free cash flow (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
Net cash provided by operating activities |
$ |
1,824 |
|
|
$ |
1,558 |
|
|
$ |
3,681 |
|
|
$ |
260 |
|
|
Purchases of property and equipment |
|
(802 |
) |
|
|
(437 |
) |
|
|
(1,264 |
) |
|
|
(1,090 |
) |
|
Free cash flow |
$ |
1,022 |
|
|
$ |
1,121 |
|
|
$ |
2,417 |
|
|
$ |
(830 |
) |
|
The following table reflects the reconciliation of GAAP measures to
non-GAAP measures (in thousands, except percentages): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30, |
|
Six Months
Ended
June 30, |
|
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
Claims expense |
|
$ |
41,009 |
|
|
$ |
32,466 |
|
|
$ |
80,196 |
|
|
$ |
63,070 |
|
|
|
Stock-based compensation expense |
|
|
(89 |
) |
|
|
(57 |
) |
|
|
(159 |
) |
|
|
(115 |
) |
|
|
Cost of goods |
|
$ |
40,920 |
|
|
$ |
32,409 |
|
|
$ |
80,037 |
|
|
$ |
62,955 |
|
|
|
% of revenue |
|
|
70.2 |
% |
|
|
70.7 |
% |
|
|
70.8 |
% |
|
|
71.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other cost of revenue |
|
$ |
6,915 |
|
|
$ |
5,100 |
|
|
$ |
13,302 |
|
|
$ |
9,891 |
|
|
|
Stock-based compensation expense |
|
|
(60 |
) |
|
|
(9 |
) |
|
|
(103 |
) |
|
|
(17 |
) |
|
|
Variable expenses |
|
$ |
6,855 |
|
|
$ |
5,091 |
|
|
$ |
13,199 |
|
|
$ |
9,874 |
|
|
|
% of revenue |
|
|
11.8 |
% |
|
|
11.1 |
% |
|
|
11.7 |
% |
|
|
11.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription gross profit |
|
$ |
10,050 |
|
|
$ |
8,004 |
|
|
$ |
19,033 |
|
|
$ |
14,944 |
|
|
|
Stock-based compensation expense |
|
|
149 |
|
|
|
66 |
|
|
|
262 |
|
|
|
132 |
|
|
|
Non-GAAP subscription gross profit |
|
$ |
10,199 |
|
|
$ |
8,070 |
|
|
$ |
19,295 |
|
|
$ |
15,076 |
|
|
|
% of subscription revenue |
|
|
19.4 |
% |
|
|
19.1 |
% |
|
|
18.8 |
% |
|
|
18.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
$ |
10,351 |
|
|
$ |
8,266 |
|
|
$ |
19,506 |
|
|
$ |
15,570 |
|
|
|
Stock-based compensation expense |
|
|
149 |
|
|
|
66 |
|
|
|
262 |
|
|
|
132 |
|
|
|
Non-GAAP gross profit |
|
$ |
10,500 |
|
|
$ |
8,332 |
|
|
$ |
19,768 |
|
|
$ |
15,702 |
|
|
|
% of revenue |
|
|
18.0 |
% |
|
|
18.2 |
% |
|
|
17.5 |
% |
|
|
17.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expense |
|
$ |
4,245 |
|
|
$ |
3,495 |
|
|
$ |
8,257 |
|
|
$ |
7,217 |
|
|
|
Technology and development expense |
|
|
2,322 |
|
|
|
2,164 |
|
|
|
4,725 |
|
|
|
4,451 |
|
|
|
Depreciation and amortization expense |
|
|
(1,077 |
) |
|
|
(739 |
) |
|
|
(2,113 |
) |
|
|
(1,524 |
) |
|
|
Stock-based compensation expense |
|
|
(541 |
) |
|
|
(512 |
) |
|
|
(1,022 |
) |
|
|
(1,060 |
) |
|
|
Fixed expenses |
|
$ |
4,949 |
|
|
$ |
4,408 |
|
|
$ |
9,847 |
|
|
$ |
9,084 |
|
|
|
% of revenue |
|
|
8.5 |
% |
|
|
9.6 |
% |
|
|
8.7 |
% |
|
|
10.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing expense |
|
$ |
4,372 |
|
|
$ |
3,564 |
|
|
$ |
8,461 |
|
|
$ |
7,404 |
|
|
|
Stock-based compensation expense |
|
|
(198 |
) |
|
|
(165 |
) |
|
|
(385 |
) |
|
|
(247 |
) |
|
|
Acquisition cost |
|
$ |
4,174 |
|
|
$ |
3,399 |
|
|
$ |
8,076 |
|
|
$ |
7,157 |
|
|
|
% of revenue |
|
|
7.2 |
% |
|
|
7.4 |
% |
|
|
7.1 |
% |
|
|
8.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables reflect the reconciliation of acquisition cost
and net acquisition cost to sales and marketing expense (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing expenses |
|
$ |
8,461 |
|
|
$ |
7,404 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
(385 |
) |
|
|
(247 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition cost |
|
|
8,076 |
|
|
|
7,157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sign-up fee revenue |
|
|
(1,061 |
) |
|
|
(1,022 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other business segment sales and marketing expense |
|
|
(111 |
) |
|
|
(93 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net acquisition cost |
|
$ |
6,904 |
|
|
$ |
6,042 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
|
Jun. 31,
2017 |
|
Mar. 31,
2017 |
|
Dec. 31,
2016 |
|
Sep. 30,
2016 |
|
Jun. 30,
2016 |
|
Mar. 31,
2016 |
|
Dec. 31,
2015 |
|
Sept. 30,
2015 |
|
Sales and marketing expenses |
|
$ |
4,372 |
|
|
$ |
4,089 |
|
|
$ |
3,951 |
|
|
$ |
3,892 |
|
|
$ |
3,564 |
|
|
$ |
3,840 |
|
|
$ |
3,919 |
|
|
$ |
4,128 |
|
|
Excluding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
(198 |
) |
|
|
(187 |
) |
|
|
(113 |
) |
|
|
(172 |
) |
|
|
(165 |
) |
|
|
(82 |
) |
|
|
(104 |
) |
|
|
(102 |
) |
|
Acquisition cost |
|
|
4,174 |
|
|
|
3,902 |
|
|
|
3,838 |
|
|
|
3,720 |
|
|
|
3,399 |
|
|
|
3,758 |
|
|
|
3,815 |
|
|
|
4,026 |
|
|
Net of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sign-up fee revenue |
|
|
(517 |
) |
|
|
(544 |
) |
|
|
(526 |
) |
|
|
(525 |
) |
|
|
(495 |
) |
|
|
(527 |
) |
|
|
(506 |
) |
|
|
(542 |
) |
|
Other business segment sales and marketing expense |
|
|
(63 |
) |
|
|
(48 |
) |
|
|
(62 |
) |
|
|
(63 |
) |
|
|
(55 |
) |
|
|
(38 |
) |
|
|
(8 |
) |
|
|
(16 |
) |
|
Net acquisition cost |
|
$ |
3,594 |
|
|
$ |
3,310 |
|
|
$ |
3,250 |
|
|
$ |
3,132 |
|
|
$ |
2,849 |
|
|
$ |
3,193 |
|
|
$ |
3,301 |
|
|
$ |
3,468 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables reflect the reconciliation of adjusted EBITDA to
net income (loss) (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(1,071 |
) |
|
$ |
(3,536 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
1,669 |
|
|
|
1,439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
|
2,113 |
|
|
|
1,524 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
(127 |
) |
|
|
(49 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
246 |
|
|
|
71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
28 |
|
|
|
18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain from equity method investment |
|
|
(1,029 |
) |
|
|
(11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
1,829 |
|
|
$ |
(544 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
|
Jun. 31,
2017 |
|
Mar. 31,
2017 |
|
Dec. 31,
2016 |
|
Sep. 30,
2016 |
|
Jun. 30,
2016 |
|
Mar. 31,
2016 |
|
Dec. 31,
2015 |
|
Sept. 30,
2015 |
|
Net income (loss) |
|
$ |
411 |
|
|
$ |
(1,482 |
) |
|
$ |
(1,723 |
) |
|
$ |
(1,637 |
) |
|
$ |
(964 |
) |
|
$ |
(2,572 |
) |
|
$ |
(3,001 |
) |
|
$ |
(4,643 |
) |
|
Excluding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
888 |
|
|
|
781 |
|
|
|
731 |
|
|
|
776 |
|
|
|
743 |
|
|
|
696 |
|
|
|
653 |
|
|
|
749 |
|
|
Depreciation and amortization expense |
|
|
1,077 |
|
|
|
1,036 |
|
|
|
1,229 |
|
|
|
1,093 |
|
|
|
739 |
|
|
|
785 |
|
|
|
741 |
|
|
|
672 |
|
|
Interest income |
|
|
(76 |
) |
|
|
(51 |
) |
|
|
(41 |
) |
|
|
(29 |
) |
|
|
(26 |
) |
|
|
(23 |
) |
|
|
(19 |
) |
|
|
(19 |
) |
|
Interest expense |
|
|
109 |
|
|
|
137 |
|
|
|
81 |
|
|
|
66 |
|
|
|
41 |
|
|
|
30 |
|
|
|
26 |
|
|
|
14 |
|
|
Income tax expense |
|
|
4 |
|
|
|
24 |
|
|
|
7 |
|
|
|
13 |
|
|
|
4 |
|
|
|
14 |
|
|
|
12 |
|
|
|
16 |
|
|
(Gain) loss from equity method investment |
|
|
(1,036 |
) |
|
|
7 |
|
|
|
18 |
|
|
|
22 |
|
|
|
(15 |
) |
|
|
4 |
|
|
|
- |
|
|
|
- |
|
|
Adjusted EBITDA |
|
$ |
1,377 |
|
|
$ |
452 |
|
|
$ |
302 |
|
|
$ |
304 |
|
|
$ |
522 |
|
|
$ |
(1,066 |
) |
|
$ |
(1,588 |
) |
|
$ |
(3,211 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables reflect the reconciliation of net income (loss),
excluding gain on sale of equity method investment, to net income (loss) (in thousands) and basic earnings per share,
excluding gain on sale of equity method investment, to basic earnings per share: |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
Net income (loss) |
$ |
411 |
|
|
$ |
(964 |
) |
|
$ |
(1,071 |
) |
|
$ |
(3,536 |
) |
Excluding: |
|
|
|
|
|
|
|
Gain on sale of equity method investment |
$ |
(1,036 |
) |
|
$ |
- |
|
|
$ |
(1,036 |
) |
|
$ |
- |
|
Net income (loss), excluding gain on sale of equity method investment |
$ |
(625 |
) |
|
$ |
(964 |
) |
|
$ |
(2,107 |
) |
|
$ |
(3,536 |
) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
Basic earnings per share |
$ |
0.01 |
|
|
$ |
(0.03 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.13 |
) |
Excluding: |
|
|
|
|
|
|
|
Gain on sale of equity method investment |
|
(0.03 |
) |
|
|
- |
|
|
|
(0.03 |
) |
|
|
- |
|
Basic earnings per share, excluding gain on sale of equity method
investment |
$ |
(0.02 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.13 |
) |
|
|
|
|
|
|
|
|
Basic weighted-average common shares outstanding |
|
29,510,907 |
|
|
|
28,348,348 |
|
|
|
29,383,502 |
|
|
|
28,173,798 |
|
Contacts: Investors: Laura Bainbridge, Addo Investor Relations 310.829.5400 InvestorRelations@trupanion.com Media: Scott Janzen, Trupanion Director of Communications 888.612.1138 ext 3450 scott.janzen@trupanion.com