Total revenue of $45.8 million, up 29% year-over-year (30% on a constant currency basis)320,896 total enrolled pets at quarter-end, up 23% year-over-year
SEATTLE, Aug. 02, 2016 (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, 2016.
“Trupanion delivered another quarter of consistent financial results, with the
second quarter marking our 35th consecutive quarter of revenue growth in excess
of 25%,” said Darryl Rawlings, CEO of Trupanion. “Notably, we achieved positive
free cash flow this quarter, a guiding objective since our IPO and one that we
are pleased to hit on plan.”
Second Quarter 2016 Financial and Business Highlights
Total revenue was $45.8 million, an increase of 29% compared to the second quarter of 2015 (30% on a constant currency basis).Total enrolled pets (including pets from our other business segment) was 320,896 at June 30, 2016, up 23% over the prior year period.Subscription business revenue was $42.2 million, an increase of 31% compared to the second quarter of 2015 (32% on a constant currency basis).Subscription pets enrolled was 299,856 at June 30, 2016, up 24% over the prior year period.Net loss was $(1.0) million, compared to a net loss of $(4.6) million in the second quarter of 2015.Adjusted EBITDA was $0.5 million, compared to a loss of $(3.2) million in the second quarter of 2015.
First Half 2016 Financial and Business Highlights
Total revenue was $88.5 million, an increase of 28% compared to the first half of 2015 (30% on a constant currency basis).Subscription business revenue was $81.3 million, an increase of 31% compared to the first half of 2015 (33% on a constant currency basis).Net loss was $(3.5) million, compared to a net loss of $(9.6) million in the first half of 2015.Adjusted EBITDA was a loss of $(0.5) million, compared to a loss of $(6.5) million in the first half of 2015.As of June 30, 2016 there were 29.0 million basic shares outstanding and 32.8 million shares outstanding on a fully diluted basis.
A chart accompanying this release is available
at http://www.globenewswire.com/NewsRoom/AttachmentNg/3f5d6b1b-2620-41ef-8742-2b1
b38499fda
Conference Call
Trupanion’s management will host a conference call today to review its second
quarter 2016 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
1-877-870-5176 (United States) or 1-858-384-5517 (International) and entering
the replay pin number: 13641640.
About TrupanionTrupanion 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 StatementsThis 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 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; 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 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; 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; the ability to
recognize benefits from investments in new solutions and enhancements to
Trupanion’s technology platform and website; and 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.
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, 2015 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 MeasuresTrupanion’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, and
adjusted EBITDA. 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, income tax expense (benefit), and (income) loss 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, which are included below and on Trupanion’s
Investors 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 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
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 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 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’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 for share and per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2015 2016 2015
Revenue:
Subscription $ 42,162 $ 32,208 $ 81,305
$ 62,264
business
Other business 3,670 3,379 7,226 6,633
Total revenue 45,832 35,587 88,531 68,897
Cost of revenue:
Subscription 34,158 26,661 66,361 51,427
business (1)
Other business 3,408 3,140 6,600 6,102
Total cost of 37,566 29,801 72,961 57,529
revenue (2)
Gross profit:
Subscription 8,004 5,547 14,944 10,837
business
Other business 262 239 626
531
Total gross 8,266 5,786 15,570 11,368
profit
Operating
expenses:
Sales and 3,564 3,533 7,404 7,184
marketing (1)
Technology and 2,164 2,879 4,451 5,677
development (1)
General and
administrative 3,495 3,996 7,217 7,693
(1)
Total operating 9,223 10,408 19,072 20,554
expenses
Operating loss (957 ) (4,622 ) (3,502 ) (9,186 )
Interest expense 41 40 71
285
Other (income) (38 ) (15 ) (55
) 4
expense, net
Loss before (960 ) (4,647 ) (3,518 ) (9,475 )
income taxes
Income tax
expense 4 (22 ) 18 86
(benefit)
Net loss $ (964 ) $ (4,625 ) $ (3,536
) $ (9,561 )
Net loss per
share:
Basic and $ (0.03 ) $ (0.17 ) $ (0.13
) $ (0.35 )
diluted
Weighted-average
shares used to
compute net loss
per share:
Basic and 28,348,348 27,597,721 28,173,798 27,468,231
diluted
(1) Includes
stock-based
compensation
expense as
follows:
Three Months Ended Six Months Ended
June 30, June 30,
2016 2015 2016 2015
Cost of revenue $ 66 $ 58 $ 132
$ 127
Sales and 165 110 247
240
marketing
Technology and 36 93 91
214
development
General and 476 636 969
1,019
administrative
Total
stock-based $ 743 $ 897 $ 1,439
$ 1,600
compensation
expense
(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,
2016 2015 2016 2015
Claims expense $ 32,466 $ 25,487 $ 63,070
$ 48,838
Other cost of 5,100 4,314 9,891 8,691
revenue
Total cost of $ 37,566 $ 29,801 $ 72,961
$ 57,529
revenue
Trupanion, Inc.
Consolidated Balance Sheets
(in thousands, except for share data)
June 30, December
2016 31, 2015
(audited)
Assets
Current assets:
Cash and cash equivalents $ 18,207 $ 17,956
Short-term investments 27,192 25,288
Accounts and other receivables 9,278
8,196
Prepaid expenses and other assets 1,717 2,193
Total current assets 56,394 53,633
Long-term investments, at fair value 2,500 2,388
Equity method investment 311 300
Property and equipment, net 9,733 9,719
Intangible assets, net 4,882 4,854
Other long term assets 62 23
Total assets $ 73,882 $ 70,917
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 865 $ 1,289
Accrued liabilities 3,368 4,189
Claims reserve 7,582 6,274
Deferred revenue 12,396 11,042
Deferred tax liabilities 169 169
Other payables 870 654
Total current liabilities 25,250 23,617
Long-term debt 986 -
Deferred tax liabilities 1,433 1,433
Other liabilities 741 511
Total liabilities 28,410 25,561
Stockholders’ equity:
Common stock, $0.00001 par value per share,
100,000,000 shares authorized at June 30, 2016 and
200,000,000 shares authorized at December 31, 2015,
29,623,633 and 29,002,654 shares issued and
- -
outstanding at June 30, 2016; 29,017,168 and
28,396,189 shares issued and outstanding at December
31, 2015.
Preferred stock: $0.00001 par value per share,
10,000,000 shares authorized at June 30, 2016 and - -
December 31, 2015, and 0 shares issued and outstanding
at June 30, 2016 and December 31, 2015.
Additional paid-in capital 126,188
122,844
Accumulated other comprehensive loss (194 ) (502 )
Accumulated deficit (77,921 ) (74,385 )
Treasury stock, at cost: 620,979 shares at June 30, (2,601 ) (2,601 )
2016 and December 31, 2015.
Total stockholders’ equity 45,472 45,356
Total liabilities and stockholders’ equity $ 73,882 $ 70,917
Trupanion, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2015 2016 2015
Operating activities
Net loss
$ (964 ) $ (4,625 ) $ (3,536 ) $ (9,561 )
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization
739 563 1,524 1,129
Stock-based compensation expense 743 897 1,439 1,600
Other, net 30 3 39 (113 )
Changes in operating assets and liabilities:
Accounts and other receivables
(760 ) (998 ) (994 ) (923 )
Prepaid expenses and other assets 310 (228 ) 463 (380 )
Accounts payable (260 ) (165 ) (460 ) (552 )
Accrued liabilities 117 119 (1,150 ) (617 )
Claims reserve 723 638 1,244 714
Deferred revenue 608 420 1,284 749
Other payables 272 (612 ) 407 (942 )
Net cash provided by (used in) operating activities
1,558 (3,988 ) 260 (8,896 )
Investing activities
Purchases of investment securities
(7,264 ) (7,860 ) (11,223 ) (11,066 )
Maturities of investment securities
5,638 6,021 9,338 10,266
Purchases of property and equipment
(437 ) (1,054 ) (1,090 ) (2,644 )
Other
(35 ) - (69 ) -
Net cash used in investing activities
(2,098 ) (2,893 ) (3,044 ) (3,444 )
Financing activities
Tax withholding on restricted stock
- - - (384 )
Proceeds from exercise of stock options
1,299 434 1,785 801
(Repayment of) proceeds from debt financing
(1 ) - 986 (14,900 )
Payments of capital lease obligations
(73 ) - (73 ) -
Net cash provided by (used in) financing activities
1,225 434 2,698 (14,483 )
Effect of foreign exchange rates on cash, net
(4 ) 110 337 (118 )
Net change in cash and cash equivalents
681 (6,337 ) 251 (26,941 )
Cash and cash equivalents at beginning of period
17,526 32,494 17,956 53,098
Cash and cash equivalents at end of period
$ 18,207 $ 26,157 $ 18,207 $ 26,157
The following tables set forth our key financial and operating metrics:
Six Months Ended
June 30,
2016 2015
Total pets enrolled (at period end) 320,896 259,948
Total subscription pets enrolled (at period end) 299,856 241,808
Monthly average revenue per pet $ 46.77 $ 44.73
Lifetime value of a pet (LVP) $ 622 $ 570
Average pet acquisition cost (PAC) $ 120 $ 133
Average monthly retention 98.64 % 98.67 %
Adjusted EBITDA (in thousands) $ (544 ) $ (6,498 )
Three Months Ended
Jun. 30, Mar. 30, Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31, Sept. 30,
2016 2016 2015 2015 2015 2015 2014 2014
Total pets enrolled (at period end) 320,896
307,298 291,818 276,988 259,948 246,106 232,450 221,479
Total subscription pets enrolled (at period end) 299,856 287,123 272,636 258,546 241,808 228,409 215,491 205,194
Monthly average revenue per pet $ 47.39 $ 46.12 $ 45.48 $ 45.15 $ 45.10 $ 44.34 $ 44.79 $ 44.88
Lifetime value of a pet (LVP) $ 622 $ 603 $ 591 $ 591 $ 570 $ 567 $ 591 $ 580
Average pet acquisition cost (PAC) $ 118 $ 123
$ 132 $ 129 $ 133 $ 134 $ 145 $ 115
Average monthly retention 98.64 %
98.65 % 98.64 % 98.66 % 98.67 % 98.66 % 98.69 % 98.67 %
Adjusted EBITDA (in thousands) $ 522 $
(1,066 ) $ (1,588 ) $ (3,211 ) $ (3,165 ) $ (3,333 ) $ (2,903 ) $ (2,908 )
The following table reflects the reconciliation of cash used in operating
activities to free cash flow (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
2016 2015 2016 2015
Net cash provided by (used $ 1,558 $ (3,988 ) $ 260 $ (8,896 )
in) operating activities
Purchases of property and (437 ) (1,054 ) (1,090 ) (2,644 )
equipment
Free cash flow $ 1,121 $ (5,042 ) $ (830 ) $ (11,540 )
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,
2016 2015 2016 2015
Claims expense $ 32,466 $ 25,487 $ 63,070 $ 48,838
Stock-based (57 ) (49 ) (115 ) (102 )
compensation expense
Cost of goods $ 32,409 $ 25,438 $ 62,955 $ 48,736
% of revenue 70.7 % 71.5 % 71.1 % 70.7 %
Other cost of $ 5,100 $ 4,314 $ 9,891 $ 8,691
revenue
Stock-based (9 ) (9 ) (17 ) (25 )
compensation expense
Variable expenses $ 5,091 $ 4,305 $ 9,874 $ 8,666
% of revenue 11.1 % 12.1 % 11.2 % 12.6 %
Subscription
business gross $ 8,004 $ 5,547 $ 14,944 $ 10,837
profit
Stock-based 66 58 132 127
compensation expense
Non-GAAP
subscription $ 8,070 $ 5,605 $ 15,076 $ 10,964
business gross
profit
% of subscription 19.1 % 17.4 % 18.5 % 17.6 %
revenue
Gross profit $ 8,266 $ 5,786 $ 15,570 $ 11,368
Stock-based 66 58 132 127
compensation expense
Non-GAAP gross $ 8,332 $ 5,844 $ 15,702 $ 11,495
profit
% of revenue 18.2 % 16.4 % 17.7 % 16.7 %
General and
administrative $ 3,495 $ 3,996 $ 7,217 $ 7,693
expense
Technology and 2,164 2,879 4,451 5,677
development expense
Depreciation and (739 ) (563 ) (1,524 ) (1,129 )
amortization expense
Stock-based (512 ) (729 ) (1,060 ) (1,233 )
compensation expense
Fixed expenses $ 4,408 $ 5,583 $ 9,084 $ 11,008
% of revenue 9.6 % 15.7 % 10.3 % 16.0 %
Sales and marketing $ 3,564 $ 3,533 $ 7,404 $ 7,184
expense
Stock-based (165 ) (110 ) (247 ) (240 )
compensation expense
Acquisition cost $ 3,399 $ 3,423 $ 7,157 $ 6,944
% of revenue 7.4 % 9.6 % 8.1 % 10.1 %
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,
2016 2015
Sales and
marketing $ 7,404 $ 7,184
expenses
Excluding:
Stock-based
compensation (247 ) (240 )
expense
Acquisition 7,157 6,944
cost
Net of:
Sign-up fee (1,022 ) (935 )
revenue
Other
business
segment (93 ) (56 )
sales and
marketing
expense
Net
acquisition $ 6,042 $ 5,953
cost
Three Months Ended
Jun. 30, Mar. 31, Dec. 31, Sept. 30,
Jun. 30, Mar. 31, Dec. 31, Sept. 30,
2016 2016 2015 2015 2015 2015 2014 2014
Sales and
marketing $ 3,564 $ 3,840 $ 3,919 $ 4,128 $ 3,533 $ 3,651 $ 3,218 $ 2,934
expenses
Excluding:
Stock-based
compensation (165 ) (82 ) (104 ) (102 ) (110 ) (130 ) (147 ) (115 )
expense
Acquisition 3,399 3,758 3,815 4,026 3,423 3,521 3,071 2,819
cost
Net of:
Sign-up fee (495 ) (527 ) (506 ) (542 ) (451 ) (484 ) (363 ) (425 )
revenue
Other
business
segment (55 ) (38 ) (8 ) (16 ) (30 ) (26 ) (30 ) (22 )
sales and
marketing
expense
Net
acquisition $ 2,849 $ 3,193 $ 3,301 $ 3,468 $ 2,942 $ 3,011 $ 2,678 $ 2,372
cost
The following tables reflect the reconciliation of adjusted EBITDA to net loss (in thousands):
Six Months Ended
June 30,
2016 2015
Net loss $ (3,536 ) $ (9,561 )
Excluding:
Stock-based
compensation 1,439 1,600
expense
Depreciation
and 1,524 1,129
amortization
expense
Interest (49 ) (37 )
income
Interest 71 285
expense
Change in
fair value - -
of warrant
liabilities
Income tax 18 86
expense
(Income)
loss from
equity (11 ) -
method
investment
Adjusted $ (544 ) $ (6,498 )
EBITDA
Three Months Ended
Jun. 30, Mar. 31, Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31, Sept. 30,
2016 2016 2015 2015 2015
2015 2014 2014
Net loss $ (964 ) $ (2,572 ) $ (3,001 ) $ (4,643 ) $ (4,625 ) $ (4,936 ) $ (4,276 ) $ (8,509 )
Excluding:
Stock-based
compensation 743 696 653 749
897 703 890 2,001
expense
Depreciation
and 739 785 741 672
563 566 441 505
amortization
expense
Interest (26 ) (23 ) (19 ) (19 ) (18 ) (19 ) (18 ) (20 )
income
Interest 41 30 26 14
40 245 103 5,155
expense
Change in
fair value - - - - - - - (2,054 )
of warrant
liabilities
Income tax
expense 4 14 12 16 (22 ) 108 (43 ) 14
(benefit)
(Income)
loss from
equity (15 ) 4 - - - - - -
method
investment
Adjusted $ 522 $ (1,066 ) $ (1,588 ) $ (3,211 ) $ (3,165 ) $ (3,333 ) $ (2,903 ) $ (2,908 )
EBITDA
Contacts:
Investors:
Laura Bainbridge, Addo Communications
310.829.5400
InvestorRelations@trupanion.com
Media:
Britta Gidican, Director, Public Relations
206.607.1930
MediaRelations@trupanion.com
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Source: Trupanion