What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-05-01 · 186 added, 79 removed, 407 unchanged (39% of the section changed)

24 unchanged sentences

The largest source of revenue within this segment is from our long-standing contractual relationship as an underwriter for Pets Best Insurance Services ("Pets Best"), a third-party insurance provider we have worked with since 2015.

Additional products in this segment include the U.S.

Department of Veterans Affairs program and employer-sponsored programs.

Key Operating Metrics

The following table sets forth total enrolled pets in our subscription and our other business segment and key operating metrics for our subscription business for each of the last eight fiscal quarters.

The following tables set forth total enrolled pets in our subscription and our other business segment and key operating metrics for our subscription business for year to date values as well as each of the last eight fiscal quarters.

Six Months Ended June 30,

Total Business:

Total pets enrolled (at period end) 1,660,455 1,699,643

Subscription Business:

Total subscription pets enrolled (at period end) 1,066,354 1,020,934

Monthly average revenue per pet $ 78.73 $ 70.76

Average pet acquisition cost (PAC) $ 272 $ 219

Average monthly retention 98.29 % 98.34 %

Three Months Ended

30, 2025 Mar.

31, 2025 Dec.

4 unchanged sentences

31, 2023 Sep.

30, 2023 Jun.

Total Business:

11 unchanged sentences

Total subscription pets enrolled.

Total subscription pets enrolled reflects the number of pets in active memberships in our subscription business segment at the end of each period presented.

Total subscription pets enrolled reflects the number of pets enrolled in one of the insurance products offered in our subscription business segment at the end of each period presented.

We monitor total subscription pets enrolled because it provides an indication of the growth of our subscription business.

12 unchanged sentences

Average monthly retention is measured as the monthly retention rate of enrolled subscription pets for each applicable period averaged over the 12 months prior to the period end date.

As such, our average monthly retention rate as of March 31, 2025 is an average of each month’s retention from April 1, 2024 through March 31, 2025.

As such, our average monthly retention rate as of June 30, 2025 is an average of each month’s retention from July 1, 2024 through June 30, 2025.

We calculate monthly retention as the number of pets that remain after subtracting all pets that cancel during a month, including pets that enroll and cancel within that month, divided by the total pets enrolled at the beginning of that month.

12 unchanged sentences

We define non-GAAP fixed expenses as the total of technology and development expense and general and administrative expense, less stock-based compensation expense, non-recurring transaction and restructuring expense, and development expenses related to exploring and developing new products and offerings that generally are in the pre-revenue stage or not at scale.

The following table presents the reconciliation of our non-GAAP financial measures from corresponding GAAP measures for the periods presented (in thousands):

The following tables present the reconciliation of our non-GAAP financial measures from corresponding GAAP measures for year to date values as well as each of the last eight fiscal quarters (in thousands):

Six Months Ended June 30,

Veterinary invoice expense $ 503,030 $ 464,671

Stock-based compensation expense (1)

(1,522) (1,705)

Other business cost of paying veterinary invoices (2)

(161,975) (156,836)

Subscription cost of paying veterinary invoices (non-GAAP) $ 339,533 $ 306,130

% of subscription revenue 71.4 % 74.7 %

Other cost of revenue $ 86,572 $ 79,754

Stock-based compensation expense (1)

(1,082) (943)

Other business variable expenses (2)

(42,267) (39,589)

Subscription variable expenses (non-GAAP) $ 43,223 $ 39,222

% of subscription revenue 9.1 % 9.6 %

Technology and development expense $ 16,658 $ 15,150

General and administrative expense 40,014 29,926

Stock-based compensation expense (1)

(11,788) (9,208)

Development expenses (3)

(2,353) (2,832)

Fixed expenses (non-GAAP) $ 42,531 $ 33,036

% of total revenue 6.1 % 5.3 %

New pet acquisition expense $ 40,359 $ 34,717

Stock-based compensation expense (1)

(4,390) (3,923)

Other business pet acquisition expense (2)

Subscription acquisition cost (non-GAAP) $ 35,892 $ 30,771

% of subscription revenue 7.6 % 7.5 %

(1) Trupanion 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 in accordance with GAAP, but we do not include it in any non-GAAP adjustments.

Stock-based compensation associated with bonuses was approximately $0.5 million for the six months ended June 30, 2025.

(2) Excludes the portion of stock-based compensation expense attributable to the other business segment.

(3) Consists of costs related to product exploration and development that are pre-revenue and historically have been insignificant.

Three Months Ended

30, 2025 Mar.

31, 2025 Dec.

4 unchanged sentences

31, 2023 Sep.

30, 2023 Jun.

Veterinary invoice expense $ 255,580 $ 247,450 $ 245,663 $ 238,814 $ 231,102 $ 233,569 $ 217,739 $ 212,441

31 unchanged sentences

We account for such expense as stock-based compensation in accordance with GAAP, but we do not include it in any non-GAAP adjustments.

Stock-based compensation associated with bonuses was approximately $0.3 million for the three months ended March 31, 2025.

Stock-based compensation associated with bonuses was approximately $0.2 million for the three months ended June 30, 2025.

(2) Excludes the portion of stock-based compensation expense attributable to the other business segment.

(3) Consists of business acquisition transaction expenses, severance and legal costs due to certain executive departures.

(4) Consists of costs related to product exploration and development that are pre-revenue and historically have been insignificant.

(4) Excludes the portion of stock-based compensation expense attributable to the other business segment.

When determining our PAC, we calculate net acquisition cost for a more comparable metric across periods.

4 unchanged sentences

We offset sign-up fee revenue because it is a one-time charge to some new members collected at the time of enrollment used to partially offset initial setup costs, which are included in new pet acquisition expenses.

The following table reconciles GAAP new pet acquisition expense to non-GAAP net acquisition cost (in thousands) for each of the last eight fiscal quarters:

The following table reconciles GAAP new pet acquisition expense to non-GAAP net acquisition cost (in thousands) for year to date values as well as each of the last eight fiscal quarters:

Six Months Ended June 30,

New pet acquisition expense $ 40,359 $ 34,717

Net of sign-up fee revenue (2,101) (2,055)

Stock-based compensation expense (4,390) (3,923)

Other business pet acquisition expense (77) (23)

Pet acquisition expense for commission-based policies (1,524) (1,586)

Net acquisition cost $ 32,267 $ 27,130

Three Months Ended

30, 2025 Mar.

31, 2025 Dec.

4 unchanged sentences

31, 2023 Sep.

30, 2023 Jun.

New pet acquisition expense $ 19,843 $ 20,516 $ 18,354 $ 18,308 $ 17,874 $ 16,843 $ 17,189 $ 17,772

24 unchanged sentences

Membership may be canceled at any time without penalty, and we issue a refund for the unused portion of the canceled membership.

In addition to subscription payments, we generate a small amount of revenue from charging a one-time sign-up fee to some new members collected at the time of enrollment to partially offset initial setup costs.

In addition to subscription payments, we generate a small amount of revenue from charging a one-time sign-up fee collected at the time of new enrollment to partially offset initial setup costs.

Sign-up fees are related to Trupanion's obligation to provide insurance coverage and are recognized over the policy term.

69 unchanged sentences

The period-to-period comparison of financial results is not necessarily indicative of future results.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

(in thousands)

9 unchanged sentences

Technology and development (1)

8,586 8,190 16,658 15,150

General and administrative (1)

5 unchanged sentences

Loss from investment in joint venture — (47) (305) (150)

Operating loss (1,473) (6,137)

Operating income (loss) 2,314 (5,471) 841 (11,608)

Interest expense 3,682 3,655 6,893 7,251

Other (income), net (11,914) (3,220) (15,154) (6,063)

Loss before income taxes (1,444) (6,890)

Income (loss) before income taxes 10,546 (5,906) 9,102 (12,796)

Income tax (benefit) expense 1,133 (44) 1,172 (82)

Net loss $ (1,483) $ (6,852)

Net income (loss) $ 9,413 $ (5,862) $ 7,930 $ (12,714)

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

(in thousands)

Cost of revenue $ 1,259 $ 1,390

Veterinary invoice expense $ 774 $ 854 $ 1,544 $ 1,778

Other cost of revenue 605 541 1,094 1,007

Technology and development 1,470 1,261 2,621 2,515

2 unchanged sentences

Total stock-based compensation expense $ 9,456 $ 8,646 $ 19,286 $ 16,798

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

(as a percentage of revenue)

8 unchanged sentences

Loss from investment in joint venture — — — —

Operating loss — (2)

Operating income (loss) 1 (2) — (2)

Interest expense (1) (1) (1) (1)

Other (income), net 3 1 2 1

Loss before income taxes — (2)

Income (loss) before income taxes 3 (2) 1 (2)

Income tax (benefit) expense — — — —

Net loss — % (2) %

Net income (loss) 3 % (2) % 1 % (2) %

Stock-based compensation expense:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

(as a percentage of revenue)

Cost of revenue — % — %

Veterinary invoice expense — % — % — % — %

Other cost of revenue — — — —

Technology and development — — — —

2 unchanged sentences

Total stock-based compensation expense 1 % 3 % 2 % 3 %

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

(as a percentage of subscription revenue)

1 unchanged sentence

Subscription business cost of revenue 81 84 81 85

Comparison of the Three Months Ended March 31, 2025 and 2024

Three Months Ended March 31, % Change

Comparison of the Three and Six Months Ended June 30, 2025 and 2024

Three Months Ended June 30, % Change Six Months Ended June 30, % Change

2025 2024 2025 2024

(in thousands, except percentages, pet and per pet data)

10 unchanged sentences

Average monthly retention 98.29 % 98.34 % 98.29 % 98.34 %

Three months ended March 31, 2025 compared to three months ended March 31, 2024.

Total revenue increased by $35.9 million, or 12%, to $342.0 million for the three months ended March 31, 2025.

Revenue from our subscription business segment increased by $31.9 million, or 16%, to $233.1 million for the year ended March 31, 2025.

This increase was primarily due to a 11% increase in monthly average revenue per pet and an increase in subscription pet months (the sum of pets enrolled for each month during a period) for policies underwritten by Trupanion.

Revenue from our other business segment increased by $3.9 million, or 4%, to $108.9 million for the three months ended March 31, 2025.

This increase was primarily driven by an 18% increase in monthly average revenue per pet in this segment, partially offset by a decrease in pet months primarily reflecting the expected run-off of pets we historically insured for Pets Best.

Three months ended June 30, 2025 compared to three months ended June 30, 2024.

Total revenue increased by $38.8 million, or 12%, to $353.6 million for the three months ended June 30, 2025.

Revenue from our subscription business segment increased by $33.5 million, or 16%, to $242.2 million for the three months ended June 30, 2025.

This increase was primarily due to an 11% increase in monthly average revenue per pet and an increase in subscription pet months (the sum of pets enrolled for each month during a period) for policies underwritten by Trupanion.

Revenue from our other business segment increased by $5.2 million, or 5%, to $111.4 million for the three months ended June 30, 2025.

This increase was primarily driven by a 20% increase in monthly average revenue per pet in this segment, partially offset by a decrease in pet months primarily reflecting the expected run-off of pets we historically insured for Pets Best.

Six months ended June 30, 2025 compared to six months ended June 30, 2024.

Total revenue increased by $74.6 million, or 12%, to $695.5 million for the six months ended June 30, 2025.

Revenue from our subscription business segment increased by $65.5 million, or 16%, to $475.2 million for the six months ended June 30, 2025.

Revenue from our other business segment increased by $9.1 million, or 4%, to $220.3 million for the six months ended June 30, 2025.

This increase was primarily driven by a 19% increase in monthly average revenue per pet in this segment, partially offset by a decrease in pet months primarily reflecting the expected run-off of pets we historically insured for Pets Best.

Cost of Revenue

Three Months Ended March 31, % Change

Three Months Ended June 30, % Change Six Months Ended June 30, % Change

2025 2024 2025 2024

(in thousands, except percentages, pet and per pet data)

19 unchanged sentences

Total subscription pets enrolled (at period end) 1,066,354 1,020,934 4 1,066,354 1,020,934 4

Three months ended March 31, 2025 compared to three months ended March 31, 2024.

Total cost of revenue for our subscription business segment increased by $17.7 million, or 10%, to $189.8 million, for the three months ended March 31, 2025.

Three months ended June 30, 2025 compared to three months ended June 30, 2024.

Total cost of revenue for our subscription business segment increased by $19.7 million, or 11%, to $195.5 million, for the three months ended June 30, 2025.

This increase was driven by a $17.4 million, or 11%, increase in veterinary invoice expense and a $2.3 million, or 12%, increase in other cost of revenue.

1 unchanged sentence

The 12% increase in other cost of revenue was primarily due to general increases in costs attributable to growth in our membership and subscription revenue.

Subscription business cost of revenue decreased from 86% to 81% of revenue year-over-year.

Total cost of revenue for our other business segment increased by $3.3 million, or 3%, to $101.0 million for the three months ended March 31, 2025.

This increase was driven by a $5.2 million, or 31%, increase in other cost of revenue partially offset by a $1.9 million, or 2%, decrease in veterinary invoice expense.

The 31% increase in other cost of revenue was primarily driven by increases in managing general agent fees.

The 2% decrease in veterinary invoice expense was primarily driven by an 11% increase in veterinary invoice expense per pet, offset by a decrease in pet months in this segment primarily reflecting the expected run-off of pets we historically insured for a third-party.

Subscription business cost of revenue decreased from 84% to 81% of revenue year-over-year primarily due to growth in subscription revenue outpacing growth in subscription veterinary invoice expense.

Total cost of revenue for our other business segment increased by $4.5 million, or 5%, to $103.2 million for the three months ended June 30, 2025.

This increase was driven by a $7.1 million, or 9%, increase in veterinary invoice expense, partially offset by a $2.6 million, or 11%, decrease in other cost of revenue.

The 9% increase in veterinary invoice expense was primarily driven by a 25% increase in veterinary invoice expense per pet, partially offset by a decrease in pet months in this segment primarily reflecting the expected run-off of pets we historically insured for Pets Best.

Cost of revenue for the other business segment remained constant at 93% of revenue year-over-year.

Six months ended June 30, 2025 compared to six months ended June 30, 2024.

Total cost of revenue for our subscription business segment increased by $37.5 million, or 11%, to $385.3 million, for the six months ended June 30, 2025.

This increase was driven by a $33.2 million, or 11%, increase in veterinary invoice expense and a $4.2 million, or 11%, increase in other cost of revenue.

The 11% increase in veterinary invoice expense was driven by a 6% increase in veterinary invoice expense per pet and an increase in total subscription pet months for policies underwritten by Trupanion.

The 11% increase in other cost of revenue was primarily due to general increases in costs attributable to growth in our membership and subscription revenue.

Subscription business cost of revenue decreased from 85% to 81% of revenue year-over-year primarily due to growth in subscription revenue outpacing growth in subscription veterinary invoice expense.

Total cost of revenue for our other business segment increased by $7.7 million, or 4%, to $204.3 million for the six months ended June 30, 2025.

This increase was driven by a $5.1 million, or 3%, increase in veterinary invoice expense and a $2.6 million, or 6% increase in other cost of revenue.

The 3% increase in veterinary invoice expense was primarily driven by a 18% increase in veterinary invoice expense per pet, partially offset by a decrease in pet months in this segment primarily reflecting the expected run-off of pets we historically insured for Pets Best.

Cost of revenue for the other business segment remained constant at 93% of revenue year-over-year.

Technology and Development Expenses

Three Months Ended March 31, % Change

(in thousands, except percentages)

Three Months Ended June 30, % Change Six Months Ended June 30, % Change

2025 2024 2025 2024

(in thousands, except percentages) (in thousands, except percentages)

Technology and development $ 8,586 $ 8,190 5 % $ 16,658 $ 15,150 10 %

Percentage of total revenue 2 % 3 % 2 % 2 %

Three months ended March 31, 2025 compared to three months ended March 31, 2024.

Technology and development expenses increased by $1.1 million, or 16%, to $8.1 million for the three months ended March 31, 2025.

This increase was primarily due to a $0.6 million increase in general compensation and other employee-related expenses, a $0.4 million reduction in capitalized expenditures related to internally developed software projects launched in early 2024, and a $0.3 million increase in development expense, offset by a $0.2 million decrease in infrastructure-related expenses.

Three months ended June 30, 2025 compared to three months ended June 30, 2024.

Technology and development expenses increased by $0.4 million, or 5%, to $8.6 million for the three months ended June 30, 2025.

This increase was primarily due to a $1.0 million increase in general compensation and other employee-related expenses and a $0.2 million reduction in capitalized expenditures related to internally developed software projects, partially offset by a $0.6 million decrease in development expense and a $0.2 million decrease in infrastructure-related expenses.

Technology and development expenses decreased from 3% to 2% of total revenue year-over-year.

Six months ended June 30, 2025 compared to six months ended June 30, 2024.

Technology and development expenses increased by $1.5 million, or 10%, to $16.7 million for the six months ended June 30, 2025.

This increase was primarily due to a $1.6 million increase in general compensation and other employee-related expenses, a $0.5 million reduction in capitalized expenditures related to internally developed software projects and a $0.2 million increase in professional services, partially offset a $0.3 million decrease in development expense and a $0.4 million decrease in infrastructure-related expenses.

Technology and development expenses remained constant at 2% of total revenue year-over-year.

General and Administrative Expenses

Three Months Ended March 31, % Change

(in thousands, except percentages)

Three Months Ended June 30, % Change Six Months Ended June 30, % Change

2025 2024 2025 2024

(in thousands, except percentages) (in thousands, except percentages)

General and administrative $ 20,122 $ 15,253 32 % $ 40,014 $ 29,926 34 %

Percentage of total revenue 6 % 5 % 6 % 5 %

Three months ended March 31, 2025 compared to three months ended March 31, 2024.

General and administrative expenses increased by $5.2 million, or 36%, to $19.9 million for the three months ended March 31, 2025.

This increase was driven by increases of $2.4 million in general compensation and other employee-related expenses, $1.2 million in professional services, and $1.8 million in underwriting fees related to our Canadian business.

Three months ended June 30, 2025 compared to three months ended June 30, 2024.

General and administrative expenses increased by $4.9 million, or 32%, to $20.1 million for the three months ended June 30, 2025.

This increase was driven by increases of $4.3 million in general compensation and other employee-related expenses and $1.5 million in underwriting fees related to our Canadian business, partially offset by a decrease of $0.8 million in professional services.

General and administrative expenses increased from 5% to 6% of total revenue year-over-year.

Six months ended June 30, 2025 compared to six months ended June 30, 2024.

General and administrative expenses increased by $10.1 million, or 34%, to $40.0 million for the six months ended June 30, 2025.

This increase was driven by increases of $6.7 million in general compensation and other employee-related expenses and $3.4 million in underwriting fees related to our Canadian business.

General and administrative expenses increased from 5% to 6% of total revenue year-over-year.

New Pet Acquisition Expense

Three Months Ended March 31, % Change

(in thousands, except percentages, pet and per pet data)

Three Months Ended June 30, % Change Six Months Ended June 30, % Change

2025 2024 2025 2024

(in thousands, except percentages, pet and per pet data) (in thousands, except percentages, pet and per pet data)

New pet acquisition expense $ 19,843 $ 17,874 11 % $ 40,359 $ 34,717 16 %

3 unchanged sentences

Average pet acquisition cost (PAC) $ 276 $ 231 19 $ 272 $ 219 24

Three months ended March 31, 2025 compared to three months ended March 31, 2024.

New pet acquisition expenses increased by $3.7 million, or 22%, to $20.5 million for the three months ended March 31, 2025.

Three months ended June 30, 2025 compared to three months ended June 30, 2024.

New pet acquisition expenses increased by $2.0 million, or 11%, to $19.8 million for the three months ended June 30, 2025.

This increase was primarily driven by increased marketing spend as we have begun deploying more capital to acquire new pets in a disciplined manner.

New pet acquisition expense as a percentage of revenue remained constant at 6% as we were able to stay disciplined with our discretionary pet acquisition spend.

Six months ended June 30, 2025 compared to six months ended June 30, 2024.

New pet acquisition expenses increased by $5.6 million, or 16%, to $40.4 million for the six months ended June 30, 2025.

This increase was primarily driven by increased marketing spend as we have begun deploying more capital to acquire new pets in a disciplined manner.

New pet acquisition expense as a percentage of revenue remained constant at 6% as we were able to stay disciplined with our discretionary pet acquisition spend.

Depreciation and Amortization

Three Months Ended March 31, % Change

(in thousands, except percentages)

Three Months Ended June 30, % Change Six Months Ended June 30, % Change

2025 2024 2025 2024

(in thousands, except percentages) (in thousands, except percentages)

Depreciation and amortization $ 3,962 $ 4,376 (9) % $ 7,753 $ 8,161 (5) %

Percentage of total revenue 1 % 1 % 1 % 1 %

Three months ended March 31, 2025 compared to three months ended March 31, 2024.

Depreciation and amortization expense remained constant at $3.8 million, or 1% of revenue for the three months ended March 31, 2025.

Total Other Expense (Income), Net

Three Months Ended March 31, % Change

(in thousands)

Three months ended June 30, 2025 compared to three months ended June 30, 2024.

Depreciation and amortization expense decreased by $0.4 million, or 9%, to $4.0 million for the three months ended June 30, 2025, primarily driven by fewer internally developed software projects placed in-service during the period.

Six months ended June 30, 2025 compared to six months ended June 30, 2024.

Depreciation and amortization expense decreased by $0.4 million, or 5%, to $7.8 million for the six months ended June 30, 2025, primarily driven by by fewer internally developed software projects placed in-service during the period.

Total Other (Income) Expense, Net

Three Months Ended June 30, % Change Six Months Ended June 30, % Change

2025 2024 2025 2024

(in thousands, except percentages) (in thousands, except percentages)

Interest expense $ 3,682 $ 3,655 1 % $ 6,893 $ 7,251 (5) %

2 unchanged sentences

Percentage of total revenue (2) % — % (1) % — %

Three months ended March 31, 2025 compared to three months ended March 31, 2024.

Total other (income) expense, net, increased by $0.8 million to income of less than $0.1 million for the three months ended March 31, 2025, primarily due to an increase in interest income from our investments and a decrease in interest expense.

Three months ended June 30, 2025 compared to three months ended June 30, 2024.

Total other (income) expense, net increased by $8.6 million from expense of $0.4 million to income of $8.2 million for the three months ended June 30, 2025, primarily due to a $7.8 million realized gain on the nonmonetary exchange of our Baystride preferred stock investment for intellectual property developed by Baystride.

Six months ended June 30, 2025 compared to six months ended June 30, 2024.

Total other (income) expense, net increased by $9.5 million from expense of $1.2 million to income of $8.3 million for the six months ended June 30, 2025, primarily due to a $7.8 million realized gain on the nonmonetary exchange of our Baystride preferred stock investment for intellectual property developed by Baystride.

Additionally, total other (income) expense, net includes an increase in interest income from our investments and a decrease in interest expense.

Stock-Based Compensation

Three months ended March 31, 2025 compared to three months ended March 31, 2024.

Three months ended June 30, 2025 compared to three months ended June 30, 2024.

Stock-based compensation is included in the cost and expense line items in the consolidated statements of operations, discussed above.

Stock-based compensation expense increased from $8.2 million to $9.8 million for the three months ended March 31, 2025.

Stock-based compensation expense increased from $8.6 million to $9.5 million for the three months ended June 30, 2025.

The amount of stock-based compensation recognized largely reflects the timing and vesting of our annual performance grants, calculated according to our equity incentive plan.

Six months ended June 30, 2025 compared to six months ended June 30, 2024.

Stock-based compensation is included in the cost and expense line items in the consolidated statements of operations, discussed above.

Stock-based compensation expense increased from $16.8 million to $19.3 million for the six months ended June 30, 2025.

The amount of stock-based compensation recognized largely reflects the timing and vesting of our annual performance grants, calculated according to our equity incentive plan.

Liquidity and Capital Resources

The following table summarizes our cash flows for the periods indicated (in thousands):

Three Months Ended March 31,

Six Months Ended June 30,

Net cash provided by operating activities $ 30,989 $ 9,290

1 unchanged sentence

Net cash used in financing activities (16,346) (1,244)

Effect of foreign exchange rates on cash, cash equivalents, and restricted cash, net (52) (313)

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash, net 1,738 (463)

Net change in cash, cash equivalents, and restricted cash $ (35,059) $ (22,871)

8 unchanged sentences

If our capital surplus grows relative to the rate of growth of our business, we may also generate cash for operations and growth via dividends or other methods, from one or more of our underwriting entities.

As of March 31, 2025, we had $321.8 million in cash, cash equivalents and short-term investments, of which $273.0 million was held by our insurance entities.

As of June 30, 2025, we had $319.6 million in cash, cash equivalents and short-term investments, of which $266.3 million was held by our insurance entities.

Outside of insurance entities, we held $53.3 million in cash, cash equivalents and short-term investments with an additional $15.0 million available under our Credit Facility.

1 unchanged sentence

While our board of directors has approved the program, any repurchase activity is subject to quarterly assessment and board approval, based on various factors including available cash, our stock price relative to our estimated intrinsic value, forecasted operating results, and available opportunities to deploy capital.

We repurchased no shares under this program during the three months ended March 31, 2025.

We repurchased no shares under this program during the six months ended June 30, 2025.

Operating Cash Flows

Net cash provided by operating activities was $16.0 million for the three months ended March 31, 2025, compared to $2.4 million for the three months ended March 31, 2024.

This increase was primarily driven by improved operating results largely driven by higher revenue, improved Subscription Business margins, and timing differences in other working capital activities.

Net cash provided by operating activities was $31.0 million for the six months ended June 30, 2025, compared to $9.3 million for the six months ended June 30, 2024.

This increase was primarily driven by improved operating results, largely driven by higher revenue and improved Subscription Business margins, and timing differences in other working capital activities.

Changes in accounts receivable and deferred revenue were primarily related to annual policies with annual payment terms within our Other Business segment.

1 unchanged sentence

Investing Cash Flows

Net cash used by investing activities was $9.0 million for the three months ended March 31, 2025, primarily consisting of $40.9 million in purchases of investments, partially offset by $33.2 million in proceeds on maturities and sales of investments, and $1.9 million of capital expenditures mainly related to the development of internal-use software focused on member experience, claims processing and internal policy management improvements.

Net cash used in investing activities was $2.7 million for the three months ended March 31, 2024, primarily consisting of $3.1 million of capital expenditures mainly related to the development of internal-use software focused on member experience, claims processing and internal policy management improvements.

Net cash used in investing activities was $51.4 million for the six months ended June 30, 2025, primarily consisting of purchases of investment securities of $142.0 million as well as $4.9 million of capital expenditures primarily related to the development of internal-use software focused on member experience, claims processing and internal policy management improvements, partially offset by $94.3 million in sales and maturities of investment securities.

Net cash used in investing activities was $30.5 million for the six months ended June 30, 2024, primarily consisting of $81.2 million in purchases of investments as well as $5.9 million of capital expenditures primarily related to the development of internal-use software focused on member experience, claims processing and internal policy management improvements, partially offset by $55.7 million in sales and maturities of investment securities.

Financing Cash Flows

Net cash used by financing activities was $0.5 million for the three months ended March 31, 2025, consisting of $1.0 million in proceeds from the exercise of stock options, partially offset by $0.9 million in shares withheld to satisfy tax withholdings, and $0.3 million in repayments on the Credit Facility.

Net cash used in financing activities was $0.3 million for the three months ended March 31, 2024, primarily consisting of $0.3 million in repayments on the Credit Facility.

Net cash used in financing activities was $16.3 million for the six months ended June 30, 2025, primarily consisting of $15.5 million in repayments on the Credit Facility.

Net cash used in financing activities was $1.2 million for the six months ended June 30, 2024, primarily consisting of $0.7 million in repayments on the Credit Facility.

Long-Term Debt

Our Credit Facility provides us with up to $ 150.0 million of credit.

As of March 31, 2025, we issued term loans totaling $135.0 million under the Credit Facility.

As of June 30, 2025, we have outstanding term loans totaling $116.4 million under the Credit Facility.

The Credit Facility is secured by substantially all of our assets and those of our subsidiaries.

In June 2025, we made a $ 14.9 million principal repayment on the Initial Term Loan.

Refer to Note 8, Debt, included in Item 1 of Part I of this report, for further details.

As of March 31, 2025, our insurance entities collectively held $117.7 million in cash and cash equivalents, to be used for operating expenses of our insurance entities, $155.3 million in short-term investments and $287.6 million in other current assets.

As of June 30, 2025, our insurance entities collectively held $69.5 million in cash and cash equivalents, to be used for operating expenses of our insurance entities, $196.8 million in short-term investments and $288.5 million in other current assets.

The majority of the assets in our insurance entities are subject to certain capital and dividend rules and regulations prescribed by jurisdictions in which they are authorized to operate.

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Recently, our other business segment growth has slowed and, currently, we expect that to continue, which would reduce capital requirements.

In May 2025, APIC distributed an extraordinary dividend of $26.0 million to Trupanion, Inc.

ZPIC Insurance Company ("ZPIC") and GPIC Insurance Company ("GPIC")

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insurance subsidiary, ZPIC, domiciled in Missouri, and in 2022 we established a new wholly-owned insurance subsidiary, GPIC, domiciled in Canada.

In 2025, we began underwriting an immaterial amount of business, which is expected to increase in the future, generated by GPIC.

We formed these insurance subsidiaries to provide us flexibility as to the insurance entity we use to market and write policies.

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All of the assets and liabilities of WICL Segregated Account AX are legally segregated from other assets and liabilities within WICL, and all shares of the segregated account are owned by Trupanion, Inc.

In March 2025, our parent company received a dividend of $15.6 million from WICL Segregated Account AX as permitted under our agreements with WICL.

Trupanion, Inc.

received dividends of $15.6 million and $7.0 million from WICL Segregated Account AX in March and July 2025, respectively, as permitted under our agreements with WICL.

As required by the Office of the Superintendent of Financial Institutions regulations related to our reinsurance agreement with Accelerant Insurance Company of Canada, we are required to maintain a Canadian Trust account with the greater of CAD $2.0 million or 120% of unearned Canadian premium plus 20% of outstanding Canadian claims, including all incurred but not reported claims.

As of March 31, 2025, the account held CAD $20.4 million.

As of June 30, 2025, the account held CAD $21.9 million.

WICL Segregated Account Trupanion Germany and WICL Segregated Account Trupanion Switzerland were established in the third quarter of 2024 by WICL, with Trupanion, Inc.

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In March 2022, we entered into a credit agreement that provides us with up to $ 150.0 million of credit, including a $ 60.0 million Initial Term Loan that was funded at closing and an aggregate $ 75.0 million of delayed draw term loans funded between December 2022 and September 2023.

In June 2025, we made a $ 14.9 million principal repayment on the Initial Term Loan.

Refer to Note 8, Debt, included in Item 1 of Part I of this report, for further details, including interest and future principal repayments.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis