Trupanion, Inc. · NASDAQ:TRUP
Trupanion — Q3 2023 Earnings Presentation
19 slides from Trupanion's earnings presentation, Nov 2, 2023
Slide 1: Quarterly Earnings Supplement Q3 2023
Quarterly Earnings Supplement Q3 2023
Slide 2: Total Subscription Revenue Growth
Total Subscription Revenue Growth ($ in millions)
Slide 3: Subscription Revenue By Cohort
Subscription Revenue By Cohort ($ in millions) 1. For the 12-month period ended September 30, 2023. Average monthly retention is calculated as the monthly retention rate of enrolled subscription pets for each applicable. period averaged over the 12 months prior to the period end date.
Slide 4: Product Offerings
Product Offerings Other Business Subscription Segment Segment Other Subscription Other Subscription Trupanion Core Products Pets Best Products North America North America International Veteran Affairs PetExpert* Service Dog US PHI Direct (Czechia, Slovakia, Belgium, Poland) Program Legacy Worksite F
Slide 5: Subscription Adjusted Operating Margin
Subscription Adjusted Operating Margin 2020 2021
Slide 6: Updated Internal Rate of Return Methodology (Consolidated)
Updated Internal Rate of Return Methodology (Consolidated) 1. Average Revenue Per Pet (ARPU): Updated from a trailing twelve months blended ARPU to quarterly new pet ARPU. 2. Margin: Updated from a trailing twelve months to a trailing three-year average. 3. Retention: Updated from a trailing twelve
Slide 7: Updated Internal Rate of Return (IRR) Methodology (Consolidated)
Updated Internal Rate of Return (IRR) Methodology (Consolidated) Q3 2023 1-Year Trailing 3-Year Trailing Change to IRR ARPU $64.27 $62.25 (2%) Margin 9.7% 12.2% +17% Retention 98.55% 98.65% +1% IRR 26% 42% +16%
Slide 8: Returns on Invested Capital (Trupanion Core)
Returns on Invested Capital (Trupanion Core) • 57,300 gross new pets • $66.26 new pet ARPU • 12.3% per pet AOM* • 75.8 month average subscriber life* • $616 pet lifetime value* • $229 pet acquisition cost; $14 million (88%) total PAC spend • 42% IRR *Calculated on a trailing three-year basis
Slide 9: Returns on Invested Capital (Other North American Subscription)
Returns on Invested Capital (Other North American Subscription) • 9,400 gross new pets • $37.83 new pet ARPU • 17.1 month average subscriber life* • Negative per pet AOM & IRR due to lack of operating scale** • $111 pet acquisition cost; $1.0 million (7%) total PAC spend *Based on data since product
Slide 10: Future Mix of Business Impact (International - Illustrative Example)
Future Mix of Business Impact (International - Illustrative Example) •3,900 gross new pets •$25 new pet ARPU •12.2% per pet profit margin* •74.1 month average subscriber life* •$226 pet lifetime value* •$95 target pet acquisition cost @ 30 – 40% IRR; $800k (5%) of total PAC spend Note: International
Slide 11: Returns on Invested Capital by P&L
Returns on Invested Capital by P&L Q3 2023 Q3 2023 Q3 2023 Q3 2023 Other North Managing General Total Sub Segment Trupanion Core American Products* Agent Products Gross new pets 70,647 57,304 9,406 3,937 Quarterly new pet ARPU $62.25 $66.26 $37.83 Not included Quarterly pet acquisition cost $212 $22
Slide 12: Free Cash Flow and Non-Insurance Cash
Free Cash Flow and Non-Insurance Cash The following table reflects the reconciliation of cash provided by operating activities to free cash flow (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Net cash provided by (used in) operating activities $1
Slide 13: Outlook
Outlook Q4 2023 Full Year 2023 Revenue $287M to $295M $1.100B to $1.108B Subscription revenue $190M to $195M $711M to $716M Adjusted operating income $24M to $27M $80M to $83M CAD FX Rate 74% Stock-based compensation Around $7M
Slide 14: Q&A
a> QaA trwpanion Medical insurance for the life of your pet.
Slide 15: Appendix
Appendix trwpanion
Slide 16: Returns on Invested Capital (New Methodology)
Returns on Invested Capital (New Methodology) Q3 2023 Quarterly average revenue per new pet $62.25 Estimated trailing 3-year profit per pet per month (12.2% $7.59 X 74.1 months = $562 (Lifetime value of a pet, including fixed expenses) margin) Year 0 1 2 3 4 5 6 Months* 6 12 12 12 12 12 8.1 74.1 Est
Slide 17: Returns on Invested Capital (Prior Methodology)
Returns on Invested Capital (Prior Methodology) Year 0 1 2 3 4 5 6 Months* 6 12 12 12 12 12 3.0 69.0 Estimated profit per pet per month $6 $6 $6 $6 $6 $6 $6 Estimated profit per pet $37 $75 $75 $75 $75 $75 $19 $428 Capital charge** $(4) $(8) $(8) $(8) $(8) $(8) $(2) Quarterly pet acquisition cost (P
Slide 18: Unit Economics – Single Average Subscription Pet (Prior Methodology)
Unit Economics1 – Single Average Subscription Pet (Prior Methodology) Monthly ARPU $64.27 Paying veterinary invoices (48.84) Variable expenses (providing 24/7 fast service) (6.26) Fixed expenses (G&A + IT) (2.96) Cash generated per month, prior to capital charge $6.21 x 69.0 months2 = $428 LVP, incl
Slide 19: Definitions
Definitions • Total pets enrolled. Total pets enrolled reflects the number of subscription pets or pets enrolled in one of the insurance products offered in our other business segment at the end of each period presented. We monitor total pets enrolled because it provides an indication of the growth