What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-08-07 · 121 added, 102 removed, 491 unchanged (31% 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.

Going forward, we expect that enrollment from Pets Best will continue to decline as it engages other third-party underwriters.

Additional products in this segment include the U.S.

2 unchanged sentences

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,

Nine Months Ended September 30,

Total Business:

6 unchanged sentences

Three Months Ended

30, 2025 Jun.

30, 2025 Mar.

4 unchanged sentences

31, 2024 Dec.

31, 2023 Sep.

Total Business:

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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 June 30, 2025 is an average of each month’s retention from July 1, 2024 through June 30, 2025.

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

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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,

Nine Months Ended September 30,

Veterinary invoice expense $ 766,157 $ 703,485

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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.

Stock-based compensation associated with bonuses was approximately $0.7 million for the nine months ended September 30, 2025.

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

1 unchanged sentence

Three Months Ended

30, 2025 Jun.

30, 2025 Mar.

4 unchanged sentences

31, 2024 Dec.

31, 2023 Sep.

Veterinary invoice expense $ 263,127 $ 255,580 $ 247,450 $ 245,663 $ 238,814 $ 231,102 $ 233,569 $ 217,739

16 unchanged sentences

(6,551) (6,393) (5,396) (5,277) (5,258) (4,949) (4,258) (3,797)

Non-recurring transaction or restructuring expenses (3)

— — — — — — — (8)

Development expenses (3)

11 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 $0.2 million for the three months ended June 30, 2025.

Stock-based compensation associated with bonuses was approximately $0.2 million for the three months ended September 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.

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

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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,

Nine Months Ended September 30,

New pet acquisition expense $ 62,305 $ 53,025

5 unchanged sentences

Three Months Ended

30, 2025 Jun.

30, 2025 Mar.

4 unchanged sentences

31, 2024 Dec.

31, 2023 Sep.

New pet acquisition expense $ 21,946 $ 19,843 $ 20,516 $ 18,354 $ 18,308 $ 17,874 $ 16,843 $ 17,189

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

1 unchanged sentence

Veterinary invoice expense (2)

$ 677 $ 847 $ 2,221 $ 2,625

Other cost of revenue (2)

585 554 1,679 1,561

Technology and development 1,705 1,259 4,326 3,774

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Total stock-based compensation expense $ 9,499 $ 8,340 $ 28,785 $ 25,138

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

( 2) Veterinary invoice expense and Other cost of revenue together comprise stock-based compensation expense included within Total cost of revenue.

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

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Stock-based compensation expense:

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

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

1 unchanged sentence

Veterinary invoice expense (2)

— % — % — % — %

Other cost of revenue (2)

3 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

2 unchanged sentences

Subscription business cost of revenue 79 81 81 84

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

Comparison of the Three and Nine Months Ended September 30, 2025 and 2024

Three Months Ended September 30, % Change Nine Months Ended September 30, % Change

2025 2024 2025 2024

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Average monthly retention 98.33 % 98.29 % 98.33 % 98.29 %

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.

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

Total revenue increased by $39.5 million, or 12%, to $366.9 million for the three months ended September 30, 2025.

Revenue from our subscription business segment increased by $33.7 million, or 15%, to $252.7 million for the three months ended September 30, 2025.

This increase was primarily due to a 10% 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 $5.8 million, or 5%, to $114.2 million for the three months ended September 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.

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.

Nine months ended September 30, 2025 compared to nine months ended September 30, 2024.

Total revenue increased by $114.1 million, or 12%, to $1,062.5 million for the nine months ended September 30, 2025.

Revenue from our subscription business segment increased by $99.2 million, or 16%, to $727.9 million for the nine months ended September 30, 2025.

This increase was primarily due to an 11% increase in monthly average revenue per pet and an increase in subscription pet months for policies underwritten by Trupanion.

Revenue from our other business segment increased by $14.9 million, or 5%, to $334.5 million for the nine months ended September 30, 2025.

Cost of Revenue

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

Three Months Ended September 30, % Change Nine Months Ended September 30, % Change

2025 2024 2025 2024

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Total subscription pets enrolled (at period end) 1,082,412 1,032,042 5 1,082,412 1,032,042 5

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.

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

Total cost of revenue for our subscription business segment increased by $23.4 million, or 13%, to $200.8 million, for the three months ended September 30, 2025.

This increase was driven by a $21.4 million, or 14%, increase in veterinary invoice expense and a $2.0 million, or 9%, increase in other cost of revenue.

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The 9% 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 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.

Subscription business total cost of revenue decreased from 81% to 79% 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 $5.4 million, or 5%, to $106.1 million for the three months ended September 30, 2025.

This increase was driven by a $2.9 million, or 3%, increase in veterinary invoice expense and a $2.5 million, or 14%, increase in other cost of revenue.

The 3% increase in veterinary invoice expense was primarily driven by a 9% 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.

Within our other business segment, fluctuations in other cost of revenue are largely driven by trends in revenue and veterinary invoice expense and remained materially consistent as a percentage of segment revenue year-over-year.

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.

Nine months ended September 30, 2025 compared to nine months ended September 30, 2024.

Total cost of revenue for our subscription business segment increased by $60.9 million, or 12%, to $586.1 million, for the nine months ended September 30, 2025.

This increase was driven by a $54.6 million, or 12%, increase in veterinary invoice expense and a $6.2 million, or 10%, 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 12% increase in veterinary invoice expense was driven by a 7% increase in veterinary

invoice expense per pet and an increase in total subscription pet months for policies underwritten by Trupanion.

The 10% 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.

Subscription business total 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 $13.1 million, or 4%, to $310.4 million for the nine months ended September 30, 2025.

This increase was driven by an $8.0 million, or 3%, increase in veterinary invoice expense and a $5.1 million, or 9% 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 June 30, % Change Six Months Ended June 30, % Change

Three Months Ended September 30, % Change Nine Months Ended September 30, % Change

2025 2024 2025 2024

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

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.

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

Technology and development expenses increased by $2.0 million, or 25%, to $9.9 million for the three months ended September 30, 2025.

This increase was primarily due to a $1.5 million increase in general compensation and other employee-related expenses, a $0.3 million reduction in capitalized expenditures related to internally developed software projects and a $0.2 million increase in new product exploration and development expenses.

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

Nine months ended September 30, 2025 compared to nine months ended September 30, 2024.

Technology and development expenses increased by $3.5 million, or 15%, to $26.5 million for the nine months ended September 30, 2025.

This increase was primarily due to a $3.1 million increase in general compensation and other employee-related expenses, a $0.8 million reduction in capitalized expenditures related to internally developed software projects, partially offset by a $0.6 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 June 30, % Change Six Months Ended June 30, % Change

Three Months Ended September 30, % Change Nine Months Ended September 30, % Change

2025 2024 2025 2024

2 unchanged sentences

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

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.

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

General and administrative expenses increased by $1.3 million, or 8%, to $18.3 million for the three months ended September 30, 2025.

This increase was driven by an increase of $3.0 million in general compensation and other employee-related expenses, partially offset by a $1.1 million decrease in professional services and a $0.6 million decrease in underwriting fees related to our Canadian business.

General and administrative expenses remained constant at 5% of total revenue year-over-year.

Nine months ended September 30, 2025 compared to nine months ended September 30, 2024.

General and administrative expenses increased by $11.4 million, or 24%, to $58.3 million for the nine months ended September 30, 2025.

This increase was driven by increases of $9.6 million in general compensation and other employee-related expenses and $2.8 million in underwriting fees related to our Canadian business, partially offset by a $0.7 million decrease in professional services and a $0.3 million decrease in other miscellaneous expenses.

General and administrative expenses remained constant at 5% of total revenue year-over-year.

New Pet Acquisition Expense

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

Three Months Ended September 30, % Change Nine Months Ended September 30, % Change

2025 2024 2025 2024

5 unchanged sentences

Average pet acquisition cost (PAC) $ 290 $ 243 19 $ 278 $ 227 22

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.

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

New pet acquisition expenses increased by $3.6 million, or 20%, to $21.9 million for the three months ended September 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.

Nine months ended September 30, 2025 compared to nine months ended September 30, 2024.

New pet acquisition expenses increased by $9.3 million, or 18%, to $62.3 million for the nine months ended September 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.

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Depreciation and Amortization

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

Three Months Ended September 30, % Change Nine Months Ended September 30, % Change

2025 2024 2025 2024

2 unchanged sentences

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

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.

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

Depreciation and amortization expense decreased by $0.3 million, or 8%, to $4.1 million for the three months ended September 30, 2025, primarily driven by fewer internally developed software projects placed in-service during the period.

Nine months ended September 30, 2025 compared to nine months ended September 30, 2024.

Depreciation and amortization expense decreased by $0.7 million, or 6%, to $11.8 million for the nine months ended September 30, 2025, primarily driven 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

Three Months Ended September 30, % Change Nine Months Ended September 30, % Change

2025 2024 2025 2024

4 unchanged sentences

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

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.

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

Total other (income) expense, net increased by $1.0 million from expense of $0.3 million to income of $0.7 million for the three months ended September 30, 2025, primarily due to a $1.0 million decrease in interest expense.

Nine months ended September 30, 2025 compared to nine months ended September 30, 2024.

Total other (income) expense, net increased by $10.5 million from expense of $1.5 million to income of $9.0 million for the nine months ended September 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 and a $1.4 million decrease in interest expense.

Stock-Based Compensation

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

Three months ended September 30, 2025 compared to three months ended September 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 $8.6 million to $9.5 million for the three months ended June 30, 2025.

Stock-based compensation expense increased from $8.3 million to $9.5 million for the three months ended September 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.

Nine months ended September 30, 2025 compared to nine months ended September 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.

Stock-based compensation expense increased from $25.1 million to $28.8 million for the nine months ended September 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.

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

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash provided by operating activities $ 60,226 $ 24,585

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Our primary requirements for liquidity are paying veterinary invoices, funding and growing our operations, funding our capital requirements, investing in new member acquisition, investing in enhancements to our member experience, and servicing debt.

We have certain contractual obligations in the normal course of business, including obligations and commitments relating to our Credit Facility, non-cancellable vendor purchase agreements, as well as future payments of veterinary invoices.

We have certain contractual obligations in the normal course of business, including obligations and commitments relating to our credit arrangements, non-cancellable vendor purchase agreements, as well as future payments of veterinary invoices.

Refer to Note 7, Reserve for Veterinary Invoices, included in Item 1 of Part I of this report, for further details on anticipated cash outflows.

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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 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.

As of September 30, 2025, we had $348.5 million in cash, cash equivalents and short-term investments, of which $290.0 million was held by our insurance entities.

Outside of insurance entities, we held $58.5 million in cash, cash equivalents and short-term investments with an additional $15.0 million available under our Credit Facility.

In November 2025, we repaid the Credit Facility in full with proceeds from our PNC facility.

See “—Long Term Debt—PNC Facility”.

In April 2021, our board of directors approved a share repurchase program, pursuant to which we may, between May 2021 and May 2026, repurchase outstanding shares of our common stock.

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 six months ended June 30, 2025.

We repurchased no shares under this program during the nine months ended September 30, 2025.

Operating Cash Flows

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.

Net cash provided by operating activities was $60.2 million for the nine months ended September 30, 2025, compared to $24.6 million for the nine months ended September 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.

2 unchanged sentences

Investing Cash Flows

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.

Net cash used in investing activities was $53.8 million for the nine months ended September 30, 2025, primarily consisting of purchases of investment securities of $183.0 million as well as $10.2 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 $137.8 million in sales and maturities of investment securities.

Net cash used in investing activities was $31.9 million for the nine months ended September 30, 2024, primarily consisting of purchases of investment securities of $107.4 million as well as $7.9 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 $81.8 million in sales and maturities of investment securities.

Financing Cash Flows

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.

Net cash used in financing activities was $17.8 million for the nine months ended September 30, 2025, primarily consisting of $15.7 million in repayments on the Credit Facility.

Net cash used in financing activities was $2.3 million for the nine months ended September 30, 2024, primarily consisting of $1.0 million in repayments on the Credit Facility, as well as $1.4 million in shares withheld to satisfy tax withholding.

Long-Term Debt

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

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 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.

Prior Credit Facility

As of September 30, 2025, our credit facility provided us with up to $ 150.0 million of credit, and we had outstanding term loans totaling $116.2 million under the Credit Facility.

In November 2025, we repaid all amounts under the Credit Facility from proceeds from our new PNC facility.

In November 2025, we entered into a credit agreement (the "PNC Agreement") with PNC Bank, National Association, as the administrative agent.

The PNC Agreement provides for a term loan facility of $100.0 million and a revolving credit facility of $20.0 million (collectively, the "PNC Facility").

The PNC Facility matures in November 2028.

Loans under the Credit Facilities bear interest at a reference rate plus an applicable margin, which will generally be the SOFR reference rate plus 2.75% per annum.

The Company will make quarterly principal payments of $2.5 million on the Term Facility.

The Company may voluntarily prepay loans or reduce revolving commitments under the Credit Facilities at any time without premium or penalty.

The loans under the PNC Agreement are secured by substantially all of our assets.

The PNC Agreement contains financial and other covenants, including quarterly financial ratios, and it includes limitations on, among other things, indebtedness, liens, investments, and mergers or similar transactions.

As of September 30, 2025, our insurance entities collectively held $96.3 million in cash and cash equivalents, to be used for operating expenses of our insurance entities, $193.7 million in short-term investments and $297.8 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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In May 2025, APIC distributed an extraordinary dividend of $26.0 million to Trupanion, Inc.

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

GPIC Insurance Company ("GPIC")

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

In the third quarter of 2025, GPIC began underwriting a material portion of our business in Canada.

We are finalizing a transition of our Canadian underwriting from a fronting arrangement with Accelerant Insurance Company of Canada (formerly Omega General Insurance Company) to GPIC.

We formed GPIC to provide us flexibility as to the insurance entity we use to market and write policies, as part of our vertical integration approach.

Pursuant to Office of the Superintendent of Financial Institutions regulations, we have contributed CAD $18.2 million to GPIC as the required statutory capital for this subsidiary.

The capital we maintain at GPIC approximates the amount that we historically held subject to our fronting arrangement.

ZPIC Insurance Company ("ZPIC")

In 2021, we established a new wholly-owned U.S.

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.

We have funded the required statutory capital to each of these new subsidiaries.

insurance subsidiary, ZPIC, domiciled in Missouri.

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

We have funded the required statutory capital to this subsidiary.

Wyndham Insurance Company (SAC) Limited ("WICL") Segregated Account AX, Wyndham Insurance Company (SAC) Limited Segregated Account Trupanion Germany and Wyndham Insurance Company (SAC) Limited Segregated Account Trupanion Switzerland

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

As of September 30, 2025, the account held CAD $11.5 million, which we expect will decrease as we rollover our Canadian book of business to GPIC.

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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We enter into long-term contractual obligations and commitments in the normal course of business, consisting primarily of debt obligations and non-cancellable vendor service agreements.

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.

In March 2022, we entered into the Credit Facility, which provided 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.

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

In November 2025, we repaid all amounts under the Credit Facility with proceeds from our new PNC Facility, which will require us to repay the underlying obligations over a three-year term at SOFR plus a margin less than that in the Credit Facility.

See “—Long Term Debt—PNC Facility”.

Critical Accounting Policies and Significant Estimates

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What changed 10-Q

Item 2. Management’s Discussion and Analysis