Trupanion Reports Third Quarter 2015 Results

Trupanion Reports Third Quarter 2015 Results

- Total revenue of $37.9 million, up 25% year-over-year (up 30% on a constant currency basis)  - 276,988 total enrolled pets at quarter-end, up 25% year-over-year 

SEATTLE, Nov. 3, 2015 /PRNewswire/ -- Trupanion, Inc. (NYSE: TRUP), a direct-to-consumer, monthly subscription business that provides medical plans for cats and dogs, today announced financial results for the three and nine months ended September 30, 2015.

"Our third quarter performance was exceptionally strong, as evidenced by the strength of our new pet enrollments and the acceleration in our active hospital growth rate to the highest level in four years," said Darryl Rawlings, Trupanion's Chief Executive Officer.  "As is evident, our Territory Partners continue to build the trust and support of veterinarians and their staff.  We also continued our efforts to provide a world-class member experience with the deployment of Trupanion Express.  We are ahead of schedule on Trupanion Express installations, having already achieved our year-end projections of 350 Trupanion Express enabled hospitals during the third quarter."

Rawlings added, "Our core subscription business remains the primary driver of our performance, posting 27% revenue growth despite foreign exchange headwinds and a 26% increase in enrolled pets.  Our value proposition continues to resonate with our members, as evidenced by our continually strong 98.66% monthly membership retention rate.  We also delivered subscription gross margin expansion to within our long-term target of 18-21%.  As a result, subscription gross profit increased 54% over the prior year period."

Third Quarter 2015 Financial Highlights 
(All comparisons on a year-over-year basis)

  • Total revenue was $37.9 million, an increase of 25%.  Revenue growth was 30% on a constant currency basis.

  • Subscription business revenue was $34.4 million, an increase of 27%.  Subscription business revenue increased 33% on a constant currency basis.

  • Adjusted EBITDA was a loss of $(3.2) million, compared to a loss of $(2.9) million.

  • Net loss was $(4.6) million, compared to a net loss of $(8.5) million.

  • Cash, cash equivalents and short-term investments of $44.9 million.

Year-to-date 2015 Financial Highlights
(All comparisons on a year-over-year basis)

  • Total revenue was $106.8 million, an increase of 27%.  Total revenue growth was 31% on a constant currency basis.

  • Subscription business revenue was $96.7 million, an increase of 29%.  Subscription business revenue increased 34% on a constant currency basis.

  • Adjusted EBITDA was a loss of $(9.7) million, compared to a loss of $(7.4) million.

  • Net loss was $(14.2) million, compared to a net loss of $(16.9) million.

Third Quarter 2015 Operating Metrics
(All comparisons on a year-over-year basis)

  • Monthly adjusted revenue per pet (ARPP) was $45.15, an increase of 0.6%.  ARPP increased 5% on a constant currency basis. 

  • The ratio of lifetime value of a pet (LVP) to average pet acquisition cost (PAC) was 4.6 to 1.

  • Total enrolled pets (including pets from our other business segment) was 276,988 at quarter-end, up 25%.

  • Subscription pets enrolled was 258,546 at quarter-end, up 26%.

Outlook
Trupanion currently expects to achieve the following results for the full year ending December 31, 2015:

  • Total revenue is expected to be in the range of $146.5 - $148.5 million.

  • Adjusted EBITDA is expected to be in the range of $(13)-$(10) million.

The company's outlook for full year 2015 assumes a 75% Canadian currency exchange rate, the approximate rate at the end of September 2015.

Revenue by Quarter

Total Revenue by New vs. Existing Pets

Conference Call
Trupanion's management will host a conference call today to review its third quarter 2015 results and to discuss its financial outlook for the full year 2015. The call is scheduled to begin at 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 athttp://investors.trupanion.com and will be archived online for 60 days upon completion of the conference call. Participants can access the conference call by dialing 1-866-311-7654 (United States), 1-855-669-9657 (Canada), or 1-412-902-4113 (International). A telephonic replay of the call will also be available, one hour after the completion of the call, by dialing 1-877-344-7529 (United States), 1-855-669-9658 (Canada), or 1-412-317-0088 (International) and entering the replay pin number: 10057847.

About Trupanion
Founded in 2000, Trupanion is an industry-leading, direct-to-consumer, monthly subscription business that provides medical plans for cats and dogs in the United States, Canada and Puerto Rico through its affiliated entities. With over 275,000 total enrolled pets (as of November 3, 2015), Trupanion is one of the largest pet medical insurance companies in North America with the mission to help the pets we all love receive the best veterinary care. Trupanion offers a simple, fair and comprehensive pet medical plan that pays 90% of covered veterinary costs for pets' illness and injury claims. Trupanion's shares are traded on the New York Stock Exchange under the ticker symbol TRUP. The company is headquartered in Seattle, WA and can be found online at 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 and financial objectives and its future operating results and expenditures. 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 in the future; the accuracy of assumptions used in determining appropriate member acquisition expenditures; the severity and frequency of claims; fluctuations in the Canadian currency exchange rate; 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 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; 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 the Trupanion's intellectual property rights; third-party claims including litigation and regulatory actions; the ability to recognize benefits from investments in new solutions and enhancements to Trupanion's technology platform and website; and compliance with laws and regulations that apply to our business, including the sale of a pet medical plan.

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, 2014 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 include certain non-GAAP financial measures, including adjusted revenue, Trupanion's stated results include certain non-GAAP financial measures, including free cash flow, adjusted revenue, contribution margin, acquisition cost and adjusted EBITDA. Free cash flow is a non-GAAP measure that Trupanion defines as net cash used in operating activities less purchases of property and equipment. Monthly adjusted revenue per pet is calculated in part based on adjusted revenue, a non-GAAP financial measure that Trupanion defines as revenue from our subscription business segment excluding sign-up fee revenue and the change in deferred revenue between periods. Lifetime value of a pet is calculated in part based on contribution margin, a non-GAAP financial measure, that Trupanion defines as gross profit from its subscription business segment for the 12 months prior to the period end date excluding stock-based compensation expense related to cost of revenue from its subscription business segment, sign-up fee revenue and the change in deferred revenue between periods. Average pet acquisition cost is calculated in part based on acquisition cost, a non-GAAP financial measure that Trupanion defines as sales and marketing expenses, excluding stock-based compensation expense and other business segment sales and marketing expense, net of sign-up fee revenue. Adjusted EBITDA is a non-GAAP financial measure that Trupanion defines as net loss excluding stock-based compensation expense, depreciation and amortization expense, interest income, interest expense, change in fair value of warrant liabilities and income tax expense (benefit).

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 adjusted EBITDA 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.

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 non-GAAP financial measures such as contribution margin, acquisition cost and adjusted EBITDA that exclude stock-based compensation expense and, in the case of adjusted EBITDA, the change in fair value of warrant liabilities allows for more meaningful comparisons between its operating results from period to period. Trupanion excludes sign-up fee revenue from the calculation of both adjusted revenue and contribution margin 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. For this reason, Trupanion also nets sign-up fees with sales and marketing expenses in its calculation of acquisition cost. Trupanion excludes changes in deferred revenue from the calculation of both adjusted revenue and contribution margin in order to eliminate fluctuations caused by the timing of pet enrollment during the last month of any particular period in which such measures are being presented or utilized. Trupanion excludes the change in fair value of warrant liabilities from its calculation of adjusted EBITDA in order to eliminate fluctuations caused by changes in its stock price. Trupanion believes this allows it to calculate and present adjusted revenue, contribution margin and acquisition cost and the related financial measures it derives from them, as well as adjusted EBITDA, in a consistent manner across periods. Trupanion calculates non-GAAP free cash flow as net cash used in operating activities less purchases of property and equipment. Free cash flow is included as it is a key measure used by Trupanion's management and board of directors. Trupanion's management believes free cash flow is an important indicator of liquidity and its business performance as it measures the amount of cash generated that is available to repay debt obligations, make investments and for certain other activities. Free cash flow also reflects changes in working capital. Trupanion's non-GAAP financial measures and the related financial measures it derives from them are important tools for financial and operational decision-making and for evaluating its own operating results over different periods of time.

Trupanion has not reconciled adjusted EBITDA guidance to net income (loss) guidance because it does not provide guidance for stock-based compensation expense, depreciation and amortization, interest income, interest expense, change in fair value of warrant liabilities or income tax expense (benefit), which are reconciling items between net income (loss) and adjusted EBITDA.  Accordingly, reconciliation to net income (loss) is not available without unreasonable effort.  For a reconciliation of historical non-GAAP financial measures to the nearest comparable GAAP measures, see the reconciliation tables included in this press release.

Contacts: 

Investors: 
Laura Bainbridge, Addo Communications
310.829.5400 
[email protected]

Media: 
Britta Gidican, Director, Public Relations 
206.607.1930 
[email protected]

Trupanion, Inc.

Consolidated Statements of Operations

(in thousands, except for share and per share data)

                       
 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

   

2015

   

2014

   

2015

   

2014

 

(unaudited)

Revenue:

                     

Subscription business

$

34,420

 

$

27,112

 

$

96,684

 

$

74,885

Other business

 

3,445

   

3,200

   

10,078

   

9,157

Total revenue

 

37,865

   

30,312

   

106,762

   

84,042

Cost of revenue:

                     

Subscription business (1)

 

28,145

   

23,051

   

79,572

   

61,711

Other business

 

3,129

   

2,816

   

9,231

   

7,980

Total cost of revenue

 

31,274

   

25,867

   

88,803

   

69,691

Gross profit:

                     

Subscription business

 

6,274

   

4,061

   

17,112

   

13,174

Other business

 

317

   

384

   

847

   

1,177

Total gross profit

 

6,591

   

4,445

   

17,959

   

14,351

Operating expenses:

                     

Sales and marketing (1)

 

4,128

   

2,934

   

11,312

   

8,390

Technology and development(1)

 

3,005

   

2,532

   

8,683

   

7,285

General and administrative(1)

 

4,067

   

4,385

   

11,760

   

10,463

Total operating expenses

 

11,200

   

9,851

   

31,755

   

26,138

Operating loss

 

(4,609)

   

(5,406)

   

(13,796)

   

(11,787)

Interest expense

 

14

   

5,155

   

298

   

6,623

Other expense (income), net

 

4

   

(2,066)

   

8

   

(1,545)

Loss before income taxes

 

(4,627)

   

(8,495)

   

(14,102)

   

(16,865)

Income tax expense

 

16

   

14

   

102

   

36

Net loss

$

(4,643)

 

$

(8,509)

 

$

(14,204)

 

$

(16,901)

                       

Net loss per share:

                     

    Basic and diluted

$

(0.17)

 

$

(0.41)

 

$

(0.52)

 

$

(2.09)

Weighted-average shares used to compute net loss per share:

                     

   Basic and diluted

 

27,755,310

   

20,857,126

   

27,564,975

   

8,092,287

                       

(1)Includes stock-based compensation expense as follows:

                     
 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

   

2015

   

2014

   

2015

   

2014

Cost of revenue

$

68

 

$

78

 

$

195

 

$

223

Sales and marketing 

 

102

   

115

   

342

   

408

Technology and development

 

97

   

110

   

311

   

306

General and administrative

 

482

   

1,698

   

1,501

   

2,257

Total stock-based compensation expense

$

749

 

$

2,001

 

$

2,349

 

$

3,194

 

Trupanion, Inc.

Consolidated Balance Sheets

(in thousands, except for share data)

           
   

September 30, 2015

 

December 31, 2014

   

(unaudited)

     

Assets

         

Current assets:

         

Cash and cash equivalents

$

21,688

 

$

53,098

Short-term investments

 

23,203

   

22,371

Accounts and other receivables

 

8,344

   

7,887

Prepaid expenses and other assets

 

2,157

   

1,299

Total current assets

 

55,392

   

84,655

Long-term investments, at fair value

 

2,420

   

942

Equity method investment

 

300

   

Property and equipment, net

 

9,614

   

7,862

Intangible assets, net

 

4,799

   

4,847

Other long term assets

 

29

   

Total assets

$

72,554

 

$

98,306

Liabilities and stockholders' equity 

         

Current liabilities:

         

Accounts payable

$

1,451

 

$

1,962

Accrued liabilities

 

4,327

   

4,607

Claims reserve

 

6,188

   

5,107

Deferred revenue

 

10,604

   

9,345

Other payables

 

668

   

1,523

Total current liabilities

 

23,238

   

22,544

Long-term debt

 

-

   

14,900

Deferred tax liabilities

 

1,495

   

1,495

Other liabilities

 

412

   

92

Total liabilities

 

25,145

   

39,031

Stockholders' equity:

         

Common stock, $0.00001 par value per share, 200,000,000 shares authorized at September 30, 2015 and December 31, 2014, 28,898,227 and 28,277,248 issued and outstanding at September 30, 2015; 28,451,920 and 27,830,941 shares issued and outstanding at December 31, 2014.

 

-

   

-

Preferred stock: $0.00001 par value per share, 10,000,000 authorized at September 30, 2015 and December 31, 2014, and 0 issued and outstanding at September 30, 2015 and December 31, 2014.

 

-

   

-

Additional paid-in capital

 

121,741

   

119,045

Accumulated other comprehensive (loss) income

 

(348)

   

11

Accumulated deficit

 

(71,383)

   

(57,180)

Treasury stock, at cost: 620,979 shares at September 30, 2015 and December 31, 2014.

 

(2,601)

   

(2,601)

Total stockholders' equity

 

47,409

   

59,275

Total liabilities and stockholders' equity

$

72,554

 

$

98,306

 

Trupanion, Inc.

Consolidated Statements of Cash Flows

(in thousands)

               
 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2015

 

2014

 

2015

 

2014

 

(unaudited)

Operating activities

             

Net loss

$  (4,643)

 

$  (8,509)

 

$ (14,204)

 

$ (16,901)

Adjustments to reconcile net loss to cash used in operating activities:

             

Depreciation and amortization

673

 

504

 

1,800

 

1,234

Amortization of debt discount and prepaid loan fees

5

 

4,563

 

5

 

5,033

Warrant income

-

 

(2,054)

 

-

 

(1,574)

Stock-based compensation expense

749

 

2,001

 

2,349

 

3,194

Other, net

22

 

4

 

(91)

 

56

Changes in operating assets and liabilities:

             

Accounts and other receivables

419

 

(508)

 

(504)

 

(828)

Prepaid expenses and other current assets

(488)

 

(335)

 

(868)

 

(456)

Accounts payable

223

 

76

 

(329)

 

151

Accrued liabilities

670

 

30

 

53

 

(398)

Claims reserve

413

 

1,018

 

1,127

 

(201)

Deferred revenue

561

 

520

 

1,310

 

823

Other payables, net

526

 

(573)

 

(416)

 

167

Net cash used in operating activities

(870)

 

(3,263)

 

(9,768)

 

(9,700)

Investing activities

             

Purchases of investment securities

(5,016)

 

(10,189)

 

(16,082)

 

(26,455)

Maturities of investment securities

3,313

 

4,962

 

13,580

 

23,239

Equity method investment

(300)

 

-

 

(300)

 

-

Purchases of property and equipment

(1,171)

 

(1,746)

 

(3,816)

 

(4,013)

Net cash used in investing activities

(3,174)

 

(6,973)

 

(6,618)

 

(7,229)

Financing activities

             

Release of restricted cash

-

 

2,700

 

-

 

3,000

Tax withholding on restricted stock

(259)

 

-

 

(643)

 

-

Payment of loan fee

-

 

-

 

-

 

(103)

Repayment of debt financing

-

 

(31,700)

 

(14,900)

 

(32,000)

Proceeds from exercise of stock options

113

 

115

 

914

 

161

Proceeds from debt financing

-

 

15,000

 

-

 

-

Proceeds from line of credit

-

 

-

 

-

 

17,000

Net proceeds from initial public offering

-

 

73,933

 

-

 

72,946

Net cash (used in) provided by financing activities

(146)

 

60,048

 

(14,629)

 

61,004

Effect of foreign exchange rates on cash, net

(278)

 

(31)

 

(395)

 

55

Net change in cash and cash equivalents

(4,468)

 

49,781

 

(31,410)

 

44,130

Cash and cash equivalents at beginning of period

26,157

 

9,288

 

53,098

 

14,939

Cash and cash equivalents at end of period

$ 21,688

 

$ 59,069

 

$  21,688

 

$  59,069

 

The following tables set forth our key financial and operating metrics:

                       
                               
 

Nine Months Ended

                       
 

September 30,

                       
 

2015

 

2014

                       

Total pets enrolled (at period end)

276,988

 

221,479

                       

Total subscription pets enrolled (at period end)

258,546

 

205,194

                       

Monthly adjusted revenue per pet

$   44.88

 

$   43.89

                       

Lifetime value of a pet

$      591

 

$      580

                       

Average pet acquisition cost

$      132

 

$      114

                       

Average monthly retention

98.66%

 

98.67%

                       

Adjusted EBITDA (in thousands)

$ (9,711)

 

$ (7,444)

                       
                               
 

Three Months Ended

 

Sept. 30, 2015

 

Jun. 30, 2015

 

Mar. 31, 2015

 

Dec. 31, 2014

 

Sept. 30, 2014

 

Jun. 30, 2014

 

Mar. 31, 2014

 

Dec. 31, 2013

Total pets enrolled (at period end)

276,988

 

259,948

 

246,106

 

232,450

 

221,479

 

207,969

 

194,902

 

182,497

Total subscription pets enrolled (at period end)

258,546

 

241,808

 

228,409

 

215,491

 

205,194

 

192,338

 

179,819

 

168,405

Monthly adjusted revenue per pet

$   45.15

 

$   45.10

 

$   44.34

 

$   44.79

 

$   44.88

 

$   43.60

 

$   43.07

 

$   43.06

Lifetime value of a pet (LVP)

$      591

 

$      570

 

$      567

 

$      591

 

$      580

 

$      602

 

$      612

 

$      613

Average pet acquisition cost (PAC)

$      129

 

$      133

 

$      134

 

$      145

 

$      115

 

$      114

 

$      113

 

$      106

Average monthly retention

98.66%

 

98.67%

 

98.66%

 

98.69%

 

98.67%

 

98.65%

 

98.65%

 

98.65%

Adjusted EBITDA (in thousands)

$ (3,234)

 

$ (3,165)

 

$ (3,333)

 

$ (2,903)

 

$ (2,908)

 

$ (2,459)

 

$ (2,079)

 

$ (1,780)

 

The following table reflects the reconciliation of cash used in operating activities to free cash flow (in thousands):

               
 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2015

 

2014

 

2015

 

2014

Net cash used in operating activities

$    (870)

 

$ (3,263)

 

$   (9,768)

 

$   (9,700)

Purchases of property and equipment

(1,171)

 

(1,746)

 

(3,816)

 

(4,013)

Free cash flow

$ (2,041)

 

$ (5,009)

 

$ (13,584)

 

$ (13,713)

 

The following table reflects the reconciliation of GAAP measures to non-GAAP measures (in thousands, except percentages):

                         
   

Three Months Ended
September 30,

 

Nine Months Ended
September,

   

2015

 

2014

 

2015

 

2014

                         

GAAP cost of revenue

 

$

31,274

 

$

25,867

 

$

88,803

 

$

69,691

Stock-based compensation expense

   

(68)

   

(78)

   

(195)

   

(223)

Non-GAAP cost of revenue

 

$

31,206

 

$

25,789

 

$

88,608

 

$

69,468

% of revenue

   

82.4%

   

85.1%

   

83.0%

   

82.7%

                         

GAAP gross profit

 

$

6,591

 

$

4,445

 

$

17,959

 

$

14,351

Stock-based compensation expense

   

68

   

78

   

195

   

223

Non-GAAP gross profit

 

$

6,659

 

$

4,523

 

$

18,154

 

$

14,574

% of revenue

   

17.6%

   

14.9%

   

17.0%

   

17.3%

                         

GAAP sales and marketing expense

 

$

4,128

 

$

2,934

 

$

11,312

 

$

8,390

Stock-based compensation expense

   

(102)

   

(115)

   

(342)

   

(408)

Non-GAAP sales and marketing expense

 

$

4,026

 

$

2,819

 

$

10,970

 

$

7,982

% of revenue

   

10.6%

   

9.3%

   

10.3%

   

9.5%

                         

GAAP technology and development expense

 

$

3,005

 

$

2,532

 

$

8,683

 

$

7,285

Stock-based compensation expense

   

(97)

   

(110)

   

(311)

   

(306)

Non-GAAP technology and development expense

 

$

2,908

 

$

2,422

 

$

8,372

 

$

6,979

% of revenue

   

7.7%

   

8.0%

   

7.8%

   

8.3%

                         

GAAP general and administrative expense

 

$

4,067

 

$

4,385

 

$

11,760

 

$

10,463

Stock-based compensation expense

   

(482)

   

(1,698)

   

(1,501)

   

(2,257)

Non-GAAP general and administrative expense

 

$

3,585

 

$

2,687

 

$

10,259

 

$

8,206

% of revenue

   

9.5%

   

8.9%

   

9.6%

   

9.8%

                         

GAAP operating loss

 

$

(4,609)

 

$

(5,406)

 

$

(13,796)

 

$

(11,787)

Stock-based compensation expense

   

749

   

2,001

   

2,349

   

3,194

Non-GAAP operating loss

 

$

(3,860)

 

$

(3,405)

 

$

(11,447)

 

$

(8,593)

% of revenue

   

10.2%

   

11.2%

   

10.7%

   

10.2%

                         

GAAP subscription business gross profit

 

$

6,274

 

$

4,061

 

$

17,112

 

$

13,174

Stock-based compensation expense

   

68

   

78

   

195

   

223

Non-GAAP subscription business gross profit

 

$

6,342

 

$

4,139

 

$

17,307

 

$

13,397

% of subscription revenue

   

18.4%

   

15.3%

   

17.9%

   

17.9%

 

The following tables reflect the reconciliation of adjusted revenue to revenue (in thousands):

               
                                 
   

Nine Months Ended

                       
   

September 30,

                       
   

2015

 

2014

                       

Revenue

 

$ 106,762

 

$ 84,042

                       

Excluding:

                               

Other business revenue

 

(10,078)

 

(9,157)

                       

Change in deferred revenue

 

1,072

 

731

                       

Sign-up fee revenue

 

(1,477)

 

(1,209)

                       

Adjusted revenue

 

$   96,279

 

$ 74,407

                       
                                 
   

Three Months Ended

   

Sept. 30, 2015

 

Jun. 30, 2015

 

Mar. 31, 2015

 

Dec. 31, 2014

 

Sept. 30, 2014

 

Jun. 30, 2014

 

Mar. 31, 2014

 

Dec. 31, 2013

Revenue

 

$   37,865

 

$ 35,587

 

$ 33,310

 

$ 31,868

 

$ 30,312

 

$ 28,090

 

$ 25,640

 

$ 24,011

Excluding:

                               

Other business revenue

 

(3,445)

 

(3,379)

 

(3,254)

 

(3,251)

 

(3,200)

 

(3,178)

 

(2,779)

 

(2,736)

Change in deferred revenue

 

423

 

321

 

328

 

247

 

385

 

84

 

262

 

452

Sign-up fee revenue

 

(542)

 

(451)

 

(484)

 

(363)

 

(425)

 

(407)

 

(377)

 

(345)

Adjusted revenue

 

$   34,301

 

$ 32,078

 

$ 29,900

 

$ 28,501

 

$ 27,072

 

$ 24,589

 

$ 22,746

 

$ 21,832

 

The following tables reflect the reconciliation of contribution margin to gross profit (in thousands):

               
                                 
   

Twelve Months Ended

   

Sept. 30, 2015

 

Jun. 30, 2015

 

Mar. 31, 2015

 

Dec. 31, 2014

 

Sept. 30, 2014

 

Jun. 30, 2014

 

Mar. 31, 2014

 

Dec. 31, 2013

Gross profit

 

$ 23,483

 

$ 21,337

 

$ 20,701

 

$ 19,874

 

$ 18,439

 

$ 18,113

 

$ 16,792

 

$ 15,644

Excluding:

                               

Stock-based compensation expense

 

286

 

296

 

302

 

315

 

309

 

287

 

270

 

230

Other business segment gross profit

 

(1,211)

 

(1,278)

 

(1,549)

 

(1,539)

 

(1,468)

 

(1,314)

 

(967)

 

(768)

Change in deferred revenue

 

1,319

 

1,281

 

1,044

 

977

 

1,183

 

1,111

 

1,246

 

1,107

Sign-up fee revenue

 

(1,840)

 

(1,723)

 

(1,679)

 

(1,572)

 

(1,554)

 

(1,514)

 

(1,464)

 

(1,418)

Contribution margin

 

$ 22,037

 

$ 19,913

 

$ 18,819

 

$ 18,055

 

$ 16,909

 

$ 16,683

 

$ 15,877

 

$ 14,795

 

The following tables reflect the reconciliation of acquisition cost to sales and marketing expense (in thousands):

           
                                 
   

Nine Months Ended

                       
   

September 30,

                       
   

2015

 

2014

                       

Sales and marketing expenses

 

$ 11,312

 

$ 8,390

                       

Excluding:

                               

Stock-based compensation expense

 

(342)

 

(408)

                       

Other business segment sales and marketing expense

 

(72)

 

(94)

                       

Net of:

                               

Sign-up fee revenue

 

(1,477)

 

(1,209)

                       

Acquisition cost

 

$   9,421

 

$ 6,679

                       
                                 
   

Three Months Ended

   

Sept. 30, 
2015

 

Jun. 30, 
2015

 

Mar. 31, 
2015

 

Dec. 31, 
2014

 

Sept. 30, 
2014

 

Jun. 30, 
2014

 

Mar. 31, 
2014

 

Dec. 31, 
2013

Sales and marketing expenses

 

$   4,128

 

$ 3,533

 

$ 3,651

 

$ 3,218

 

$  2,934

 

$ 2,810

 

$ 2,646

 

$ 2,238

Excluding:

                               

Stock-based compensation expense

 

(102)

 

(110)

 

(130)

 

(147)

 

(115)

 

(144)

 

(149)

 

(185)

Other business segment sales and marketing expense

 

(16)

 

(30)

 

(26)

 

(30)

 

(22)

 

(28)

 

(44)

 

(6)

Net of:

                               

Sign-up fee revenue

 

(542)

 

(451)

 

(484)

 

(363)

 

(425)

 

(407)

 

(377)

 

(345)

Acquisition cost

 

$   3,468

 

$ 2,942

 

$ 3,011

 

$ 2,678

 

$  2,372

 

$ 2,231

 

$ 2,076

 

$ 1,702

 

The following tables reflect the reconciliation of adjusted EBITDA to net loss (in thousands):

               
                                 
   

Nine Months Ended

                       
   

September 30,

                       
   

2015

 

2014

                       

Net loss

 

$ (14,204)

 

$ (16,901)

                       

Excluding:

                               

Stock-based compensation expense

 

2,349

 

3,194

                       

Depreciation and amortization expense

 

1,800

 

1,234

                       

Interest income

 

(56)

 

(56)

                       

Interest expense

 

298

 

6,623

                       

Change in fair value of warrant liabilities

 

-

 

(1,574)

                       

Income tax expense

 

102

 

36

                       

Adjusted EBITDA

 

$   (9,711)

 

$   (7,444)

                       
                                 
   

Three Months Ended

   

Sept. 30, 
2015

 

Jun. 30, 
2015

 

Mar. 31, 
2015

 

Dec. 31, 
2014

 

Sept. 30, 
2014

 

Jun. 30, 
2014

 

Mar. 31, 
2014

 

Dec. 31, 
2013

Net loss

 

$   (4,643)

 

$   (4,625)

 

$ (4,936)

 

$ (4,276)

 

$ (8,509)

 

$ (3,479)

 

$ (4,913)

 

$ (3,203)

Excluding:

                               

Stock-based compensation expense

 

749

 

897

 

703

 

890

 

2,001

 

626

 

567

 

574

Depreciation and amortization expense

 

649

 

563

 

566

 

441

 

505

 

419

 

310

 

229

Interest income

 

(19)

 

(18)

 

(19)

 

(18)

 

(20)

 

(18)

 

(18)

 

(13)

Interest expense

 

14

 

40

 

245

 

103

 

5,155

 

726

 

742

 

225

Change in fair value of warrant liabilities

 

-

 

-

 

-

 

-

 

(2,054)

 

(740)

 

1,219

 

414

Income tax expense (benefit)

 

16

 

(22)

 

108

 

(43)

 

14

 

7

 

14

 

(6)

Adjusted EBITDA

 

$   (3,234)

 

$   (3,165)

 

$ (3,333)

 

$ (2,903)

 

$ (2,908)

 

$ (2,459)

 

$ (2,079)

 

$ (1,780)

 

The following table reflects 2014 results by quarter after the reclass of certain pets from the subscription business segment  to the other business segment (in thousands):

                 
   

Dec. 31,

 

Sept. 30,

 

Jun. 30,

 

Mar. 31,

   

2014

 

2014

 

2014

 

2014

Revenue:

               

Subscription business

 

$ 28,617

 

$ 27,112

 

$ 24,912

 

$ 22,861

Other business

 

3,251

 

3,200

 

3,178

 

2,779

Total revenue

 

31,868

 

30,312

 

28,090

 

25,640

Cost of revenue:

               

Subscription business 

 

23,456

 

23,051

 

20,273

 

18,387

Other business

 

2,888

 

2,816

 

2,667

 

2,497

Total cost of revenue

 

26,344

 

25,867

 

22,940

 

20,884

Gross profit:

               

Subscription business

 

5,161

 

4,061

 

4,639

 

4,473

Other business

 

363

 

384

 

511

 

283

Total gross profit

 

5,524

 

4,445

 

5,150

 

4,756

Operating expenses:

               

Sales and marketing 

 

3,218

 

2,934

 

2,810

 

2,646

Technology and development 

 

2,614

 

2,532

 

2,553

 

2,200

General and administrative 

 

3,850

 

4,385

 

3,292

 

2,786

Total operating expenses

 

9,682

 

9,851

 

8,655

 

7,632

Operating loss

 

(4,158)

 

(5,406)

 

(3,505)

 

(2,876)

Interest expense

 

103

 

5,155

 

726

 

736

Other expense (income), net

 

58

 

(2,066)

 

(759)

 

1,286

Loss before income taxes

 

(4,319)

 

(8,495)

 

(3,472)

 

(4,898)

Income tax (benefit) expense

 

(43)

 

14

 

7

 

15

Net loss

 

$  (4,276)

 

$  (8,509)

 

$  (3,479)

 

$  (4,913)

 

Logo - http://photos.prnewswire.com/prnh/20141030/155651LOGO 
Photo - http://photos.prnewswire.com/prnh/20151102/283150

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/trupanion-reports-third-quarter-2015-results-300171547.html

SOURCE Trupanion, Inc.

 

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