(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
(d) | Exhibits | |||||||
Exhibit No. | Description | |||||||
Press release issued by Trupanion, Inc. dated April 28, 2022 | ||||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL) |
TRUPANION, INC. | |||||
By: | /s/ Drew Wolff | ||||
Name: Drew Wolff | |||||
Title: Chief Financial Officer |
Trupanion, Inc. Consolidated Statements of Operations (in thousands, except share data) | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
(unaudited) | ||||||||||||||
Revenue: | ||||||||||||||
Subscription business | $ | 139,839 | $ | 113,292 | ||||||||||
Other business | 66,160 | 41,393 | ||||||||||||
Total revenue | 205,999 | 154,685 | ||||||||||||
Cost of revenue: | ||||||||||||||
Subscription business(1) | 115,263 | 95,537 | ||||||||||||
Other business | 60,842 | 38,048 | ||||||||||||
Total cost of revenue(2) | 176,105 | 133,585 | ||||||||||||
Operating expenses: | ||||||||||||||
Technology and development(1) | 5,229 | 3,731 | ||||||||||||
General and administrative(1) | 9,366 | 7,216 | ||||||||||||
New pet acquisition expense(1) | 21,627 | 19,704 | ||||||||||||
Depreciation and amortization | 2,717 | 3,093 | ||||||||||||
Total operating expenses | 38,939 | 33,744 | ||||||||||||
Loss from investment in joint venture | (69) | (85) | ||||||||||||
Operating loss | (9,114) | (12,729) | ||||||||||||
Interest expense | 79 | (2) | ||||||||||||
Other income, net | (314) | (62) | ||||||||||||
Loss before income taxes | (8,879) | (12,665) | ||||||||||||
Income tax benefit | (24) | (217) | ||||||||||||
Net loss | $ | (8,855) | $ | (12,448) | ||||||||||
Net loss per share: | ||||||||||||||
Basic and diluted | $ | (0.22) | $ | (0.31) | ||||||||||
Weighted average shares of common stock outstanding: | ||||||||||||||
Basic and diluted | 40,581,989 | 39,700,454 | ||||||||||||
(1)Includes stock-based compensation expense as follows: | Three Months Ended March 31, | |||||||||||||
2022 | 2021 | |||||||||||||
Cost of revenue | $ | 1,836 | $ | 3,234 | ||||||||||
Technology and development | 908 | 664 | ||||||||||||
General and administrative | 2,423 | 1,819 | ||||||||||||
New pet acquisition expense | 2,382 | 2,731 | ||||||||||||
Total stock-based compensation expense | $ | 7,549 | $ | 8,448 | ||||||||||
(2)The breakout of cost of revenue between veterinary invoice expense and other cost of revenue is as follows: | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Veterinary invoice expense | $ | 144,926 | $ | 109,870 | ||||||||||
Other cost of revenue | 31,179 | 23,715 | ||||||||||||
Total cost of revenue | $ | 176,105 | $ | 133,585 |
Trupanion, Inc. Consolidated Balance Sheets (in thousands, except share data) | |||||||||||
March 31, 2022 | December 31, 2021 | ||||||||||
(unaudited) | |||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 122,462 | $ | 87,400 | |||||||
Short-term investments | 136,571 | 126,012 | |||||||||
Accounts and other receivables, net of allowance for doubtful accounts of $358 at March 31, 2022 and $342 at December 31, 2021 | 189,035 | 165,217 | |||||||||
Prepaid expenses and other assets | 14,488 | 12,325 | |||||||||
Total current assets | 462,556 | 390,954 | |||||||||
Restricted cash | 13,470 | 13,469 | |||||||||
Long-term investments, at fair value | 7,384 | 7,061 | |||||||||
Property and equipment, net | 80,368 | 77,950 | |||||||||
Intangible assets, net | 21,317 | 22,663 | |||||||||
Other long-term assets | 17,722 | 17,776 | |||||||||
Goodwill | 31,794 | 32,709 | |||||||||
Total assets | $ | 634,611 | $ | 562,582 | |||||||
Liabilities and stockholders’ equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 5,795 | $ | 8,952 | |||||||
Accrued liabilities and other current liabilities | 29,746 | 28,162 | |||||||||
Reserve for veterinary invoices | 38,524 | 39,671 | |||||||||
Deferred revenue | 170,990 | 146,911 | |||||||||
Long-term debt - current portion | 609 | — | |||||||||
Total current liabilities | 245,664 | 223,696 | |||||||||
Long-term debt | 53,662 | — | |||||||||
Deferred tax liabilities | 2,690 | 2,827 | |||||||||
Other liabilities | 4,062 | 3,859 | |||||||||
Total liabilities | 306,078 | 230,382 | |||||||||
Stockholders’ equity: | |||||||||||
Common stock: $0.00001 par value per share, 100,000,000 shares authorized; 41,644,656 and 40,711,491 issued and outstanding at March 31, 2022; 41,408,350 and 40,475,185 shares issued and outstanding at December 31, 2021 | — | — | |||||||||
Preferred stock: $0.00001 par value per share, 10,000,000 shares authorized; no shares issued and outstanding | — | — | |||||||||
Additional paid-in capital | 472,878 | 466,792 | |||||||||
Accumulated other comprehensive loss | 2,179 | 3,077 | |||||||||
Accumulated deficit | (135,745) | (126,890) | |||||||||
Treasury stock, at cost: 933,165 shares at March 31, 2022 and December 31, 2021 | (10,779) | (10,779) | |||||||||
Total stockholders’ equity | 328,533 | 332,200 | |||||||||
Total liabilities and stockholders’ equity | $ | 634,611 | $ | 562,582 |
Trupanion, Inc. Consolidated Statements of Cash Flows (in thousands) | |||||||||||
Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
(unaudited) | |||||||||||
Operating activities | |||||||||||
Net loss | $ | (8,855) | $ | (12,448) | |||||||
Adjustments to reconcile net loss to cash provided by operating activities: | |||||||||||
Depreciation and amortization | 2,717 | 3,093 | |||||||||
Stock-based compensation expense | 7,549 | 8,448 | |||||||||
Other, net | (79) | (230) | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts and other receivables | (23,815) | (18,805) | |||||||||
Prepaid expenses and other assets | (2,060) | (1,331) | |||||||||
Accounts payable, accrued liabilities, and other liabilities | (1,806) | 35 | |||||||||
Reserve for veterinary invoices | (1,213) | 1,179 | |||||||||
Deferred revenue | 23,972 | 18,324 | |||||||||
Net cash used in operating activities | (3,590) | (1,735) | |||||||||
Investing activities | |||||||||||
Purchases of investment securities | (22,892) | (12,157) | |||||||||
Maturities of investment securities | 12,199 | 10,478 | |||||||||
Purchases of property and equipment | (3,553) | (2,883) | |||||||||
Other | (5) | (40) | |||||||||
Net cash used in investing activities | (14,251) | (4,602) | |||||||||
Financing activities | |||||||||||
Proceeds from debt financing, net of financing fees | 54,463 | — | |||||||||
Proceeds from exercise of stock options | 600 | 1,238 | |||||||||
Shares withheld to satisfy tax withholding | (2,298) | (1,881) | |||||||||
Net cash provided by (used in) financing activities | 52,765 | (643) | |||||||||
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash, net | 139 | 230 | |||||||||
Net change in cash, cash equivalents, and restricted cash | 35,063 | (6,750) | |||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 100,869 | 146,197 | |||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 135,932 | $ | 139,447 |
The following table sets forth our key operating metrics: | |||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
Mar. 31, 2022 | Dec. 31, 2021 | Sept. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||
Total Business: | |||||||||||||||||||||||||||||||||||||||||||||||
Total pets enrolled (at period end) | 1,267,253 | 1,176,778 | 1,104,376 | 1,024,226 | 943,854 | 862,928 | 804,251 | 744,727 | |||||||||||||||||||||||||||||||||||||||
Subscription Business: | |||||||||||||||||||||||||||||||||||||||||||||||
Total subscription pets enrolled (at period end) | 736,691 | 704,333 | 676,463 | 643,395 | 609,835 | 577,957 | 552,909 | 529,400 | |||||||||||||||||||||||||||||||||||||||
Monthly average revenue per pet | $ | 64.21 | $ | 63.89 | $ | 63.60 | $ | 63.69 | $ | 62.97 | $ | 62.03 | $ | 60.87 | $ | 59.40 | |||||||||||||||||||||||||||||||
Lifetime value of a pet, including fixed expenses | $ | 730 | $ | 717 | $ | 697 | $ | 681 | $ | 684 | $ | 653 | $ | 615 | $ | 597 | |||||||||||||||||||||||||||||||
Average pet acquisition cost (PAC) | $ | 301 | $ | 306 | $ | 280 | $ | 284 | $ | 279 | $ | 272 | $ | 261 | $ | 199 | |||||||||||||||||||||||||||||||
Average monthly retention | 98.75 | % | 98.74 | % | 98.72 | % | 98.72 | % | 98.73 | % | 98.71 | % | 98.69 | % | 98.66 | % |
The following table reflects the reconciliation of cash provided by operating activities to free cash flow (in thousands): | |||||||||||
Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Net cash used in operating activities | $ | (3,590) | $ | (1,735) | |||||||
Purchases of property and equipment | (3,553) | (2,883) | |||||||||
Free cash flow | $ | (7,143) | $ | (4,618) |
The following table reflects the reconciliation between GAAP and non-GAAP measures (in thousands except percentages): | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Veterinary invoice expense | $ | 144,926 | $ | 109,870 | ||||||||||
Less: | ||||||||||||||
Stock-based compensation expense1 | (1,173) | (2,299) | ||||||||||||
Other business cost of paying veterinary invoices | (44,336) | (26,144) | ||||||||||||
Subscription cost of paying veterinary invoices (non-GAAP) | $ | 99,417 | $ | 81,427 | ||||||||||
% of subscription revenue | 71.1 | % | 71.9 | % | ||||||||||
Other cost of revenue | $ | 31,179 | $ | 23,715 | ||||||||||
Less: | ||||||||||||||
Stock-based compensation expense1 | (631) | (935) | ||||||||||||
Other business variable expenses | (16,506) | (11,904) | ||||||||||||
Subscription variable expenses (non-GAAP) | $ | 14,042 | $ | 10,876 | ||||||||||
% of subscription revenue | 10.0 | % | 9.6 | % | ||||||||||
Technology and development expense | $ | 5,229 | $ | 3,731 | ||||||||||
General and administrative expense | 9,366 | 7,216 | ||||||||||||
Less: | ||||||||||||||
Stock-based compensation expense1 | (3,226) | (2,483) | ||||||||||||
Business combination transaction costs | — | (82) | ||||||||||||
Development expenses2 | (1,258) | (821) | ||||||||||||
Fixed expenses (non-GAAP) | $ | 10,111 | $ | 7,561 | ||||||||||
% of total revenue | 4.9 | % | 4.9 | % | ||||||||||
New pet acquisition expense | $ | 21,627 | $ | 19,704 | ||||||||||
Less: | ||||||||||||||
Stock-based compensation expense1 | (2,328) | (2,731) | ||||||||||||
Other business pet acquisition expense | (109) | (171) | ||||||||||||
Subscription acquisition cost (non-GAAP) | $ | 19,190 | $ | 16,802 | ||||||||||
% of subscription revenue | 13.7 | % | 14.8 | % | ||||||||||
1Trupanion employees may elect to take restricted stock units in lieu of cash payment for their bonuses. We account for such expense as stock-based compensation according to GAAP, but we do not include it in any non-GAAP adjustments. Stock-based compensation associated with bonuses was approximately $0.2 million for the three months ended March 31, 2022. | ||||||||||||||
2As we enter the next phase of our growth, we expect to invest in initiatives that are pre-revenue, including adding new products and international expansion. These development expenses are costs related to product exploration and development that are pre-revenue and historically have been insignificant. We view these activities as uses of our adjusted operating income separate from pet acquisition spend. |
The following table reflects the reconciliation of new pet acquisition expense, previously called "sales and marketing", to acquisition cost and net acquisition cost (in thousands): | |||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
Mar. 31, 2022 | Dec. 31, 2021 | Sept. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||
New pet acquisition expense | $ | 21,627 | $ | 19,845 | $ | 19,708 | $ | 19,390 | $ | 19,704 | $ | 14,809 | $ | 13,344 | $ | 9,242 | |||||||||||||||||||||||||||||||
Excluding: | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | (2,328) | (2,136) | (2,112) | (2,181) | (2,731) | (801) | (741) | $ | (675) | ||||||||||||||||||||||||||||||||||||||
Acquisition cost | 19,299 | 17,709 | 17,596 | 17,209 | 16,973 | 14,008 | 12,603 | $ | 8,567 | ||||||||||||||||||||||||||||||||||||||
Net of: | |||||||||||||||||||||||||||||||||||||||||||||||
Sign-up fee revenue | (1,202) | (1,162) | (1,268) | (1,260) | (1,264) | (919) | (827) | $ | (781) | ||||||||||||||||||||||||||||||||||||||
Other business segment pet acquisition expense | (109) | (76) | (134) | (118) | (171) | (201) | (265) | $ | (191) | ||||||||||||||||||||||||||||||||||||||
Net acquisition cost | $ | 17,988 | $ | 16,471 | $ | 16,194 | $ | 15,831 | $ | 15,538 | $ | 12,888 | $ | 11,511 | $ | 7,595 |
The following table reflects the reconciliation of adjusted EBITDA to net income (loss) (in thousands): | |||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
Mar. 31, 2022 | Dec. 31, 2021 | Sept. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||
Net (loss) income | $ | (8,855) | $ | (7,042) | $ | (6,819) | $ | (9,221) | $ | (12,448) | $ | (3,502) | $ | (2,558) | $ | 1,353 | |||||||||||||||||||||||||||||||
Excluding: | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | 7,358 | 6,808 | 6,443 | 6,527 | 8,448 | 2,602 | 2,430 | 2,227 | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization expense | 2,717 | 2,770 | 2,944 | 3,158 | 3,093 | 2,301 | 1,666 | 1,723 | |||||||||||||||||||||||||||||||||||||||
Interest income | (97) | (80) | (85) | (84) | (88) | (83) | (74) | (134) | |||||||||||||||||||||||||||||||||||||||
Interest expense | 79 | 9 | — | 3 | (2) | 337 | 324 | 341 | |||||||||||||||||||||||||||||||||||||||
Other non-operating expenses | — | — | (1) | 3 | — | 1 | 2 | 44 | |||||||||||||||||||||||||||||||||||||||
Income tax (benefit) expense | (24) | 1,034 | (312) | (195) | (217) | 44 | 26 | 17 | |||||||||||||||||||||||||||||||||||||||
Business combination transaction costs | — | — | — | — | 82 | 522 | — | — | |||||||||||||||||||||||||||||||||||||||
(Gain) loss from equity method investment | — | — | — | 6 | — | — | — | (117) | |||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 1,178 | $ | 3,499 | $ | 2,170 | $ | 197 | $ | (1,132) | $ | 2,222 | $ | 1,816 | $ | 5,454 |