What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-04-30 compared with 2025-11-06 · 137 added, 226 removed, 386 unchanged (48% of the section changed)

11 unchanged sentences

Within this segment, we also offer products in certain countries in Continental Europe, which are currently underwritten by third parties who pay us commissions that we recognize as revenue.

Going forward our intent is to assume full insurance risk for these products, either through direct underwriting or reinsurance arrangements.

We generate leads for our subscription business segment from a diverse set of member acquisition channels, which we then seek to convert into members through our contact center, website and other direct-to-consumer activities.

These channels include leads from third-parties such as veterinarians and referrals from existing members.

These channels include referrals from third-parties such as veterinarians and existing members.

Veterinary hospitals represent our largest referral source.

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We also receive a significant number of new leads from existing members adding pets and referring their friends and family members.

Our direct-to-consumer acquisition channels serve as important resources for pet owner education and drive new member leads and conversion.

Our direct-to-consumer acquisition channels serve as important resources for pet parent education and drive new member leads and conversion.

We monitor average pet acquisition cost to evaluate the efficiency in acquiring new members and measure effectiveness based on our targeted return on investment.

Our other business segment generates revenue from other product offerings, primarily by underwriting policies on behalf of third parties with whom we generally have a business-to-business relationship.

This business segment has, and targets, a lower margin profile than our subscription segment and is not part of our core business strategy.

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.

This business segment has, and targets, a significantly lower margin profile than our subscription business segment and is not part of our core business strategy.

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

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.

Department of Veterans Affairs program and employer-sponsored programs.

Department of Veterans Affairs program and employer-sponsored programs, primarily for companies with animal health related operations.

Key Operating Metrics

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.

Nine Months Ended September 30,

Total Business:

Total pets enrolled (at period end) 1,654,414 1,688,903

Subscription Business:

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

Monthly average revenue per pet $ 79.84 $ 71.94

Average pet acquisition cost (PAC) $ 278 $ 227

Average monthly retention 98.33 % 98.29 %

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.

Three Months Ended

30, 2025 Jun.

30, 2025 Mar.

31, 2026 Dec.

3 unchanged sentences

31, 2025 Dec.

31, 2024 Sep.

30, 2024 Jun.

Total Business:

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Total pets enrolled.

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

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

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

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

Because our subscription business has a significantly higher margin profile than our other business, changes in the rate of growth of our subscription pet enrollment tend to have a greater impact on our consolidated performance.

Monthly average revenue per pet.

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

As such, our average monthly retention rate as of March 31, 2026 is an average of each month’s retention from April 1, 2025 through March 31, 2026.

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 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):

Nine Months Ended September 30,

Veterinary invoice expense $ 766,157 $ 703,485

Stock-based compensation expense (1)

(2,188) (2,535)

Other business cost of paying veterinary invoices (2)

(247,369) (239,342)

Subscription cost of paying veterinary invoices (non-GAAP) $ 516,600 $ 461,608

% of subscription revenue 71.0 % 73.4 %

Other cost of revenue $ 130,311 $ 119,017

Stock-based compensation expense (1)

(1,661) (1,479)

Other business variable expenses (2)

(62,969) (57,713)

Subscription variable expenses (non-GAAP) $ 65,681 $ 59,825

% of subscription revenue 9.0 % 9.5 %

Technology and development expense $ 26,545 $ 23,083

General and administrative expense 58,325 46,903

Stock-based compensation expense (1)

(18,340) (14,465)

Development expenses (3)

(3,551) (4,307)

Fixed expenses (non-GAAP) $ 62,979 $ 51,214

% of total revenue 5.9 % 5.4 %

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

Stock-based compensation expense (1)

(5,916) (5,426)

Other business pet acquisition expense (2)

Subscription acquisition cost (non-GAAP) $ 56,307 $ 47,568

% of subscription revenue 7.7 % 7.6 %

(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 $0.7 million for the nine months ended September 30, 2025.

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

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

The following table presents the reconciliation of our non-GAAP financial measures from corresponding GAAP measures for each of the last eight fiscal quarters (in thousands):

Three Months Ended

30, 2025 Jun.

30, 2025 Mar.

31, 2026 Dec.

3 unchanged sentences

31, 2025 Dec.

31, 2024 Sep.

30, 2024 Jun.

Veterinary invoice expense $ 281,436 $ 262,818 $ 263,127 $ 255,580 $ 247,450 $ 245,663 $ 238,814 $ 231,102

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

Stock-based compensation associated with bonuses was approximately $0.2 million for the three months ended March 31, 2026.

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

6 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 year to date values as well as each of the last eight fiscal quarters:

Nine Months Ended September 30,

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

Net of sign-up fee revenue (3,258) (3,155)

Stock-based compensation expense (5,916) (5,426)

Other business pet acquisition expense (82) (31)

Pet acquisition expense for commission-based policies (2,315) (2,220)

Net acquisition cost $ 50,734 $ 42,193

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:

Three Months Ended

30, 2025 Jun.

30, 2025 Mar.

31, 2026 Dec.

3 unchanged sentences

31, 2025 Dec.

31, 2024 Sep.

30, 2024 Jun.

New pet acquisition expense $ 22,611 $ 23,103 $ 21,946 $ 19,843 $ 20,516 $ 18,354 $ 18,308 $ 17,874

9 unchanged sentences

We operate our subscription business segment similar to other subscription-based businesses, with a focus on achieving a target margin prior to our pet acquisition expense and acquiring as many pets as possible at our targeted average estimated internal rate of return.

Within our subscription business, we also provide "Powered by Trupanion" pet insurance product offerings marketed by third parties, low and medium average revenue per pet products marketed under the brand names Furkin and PHI Direct in Canada, and a Trupanion branded product in Germany and Switzerland.

Within our subscription business, we also currently provide "Powered by Trupanion" pet insurance product offerings marketed by third parties, low and medium average revenue per pet products marketed under the brand names Furkin and PHI Direct in Canada, and a Trupanion branded product in Germany and Switzerland.

We either directly underwrite or assume full insurance risk for these products through reinsurance arrangements.

1 unchanged sentence

Within this segment we also offer products in certain countries in Continental Europe, which are currently underwritten by third parties who pay us commissions that we recognize as revenue.

Going forward our intent is to assume full insurance risk for these products, either through direct underwriting or reinsurance arrangements.

This business segment has and targets, a different margin profile than our subscription business and is not part of our core business strategy.

This business segment has and targets, a significantly lower margin profile than our subscription business and is not part of our core business strategy.

The largest source of revenue within this segment is from our long-standing contractual relationship with 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.

Department of Veterans Affairs program and employer-sponsored programs, primarily for companies with animal health related operations.

We generate revenue in our subscription business segment primarily from subscription payments for our pet medical insurance.

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

We also generate a portion of our subscription business segment revenue through commissions earned in our European markets, where policies are currently underwritten by third parties and Trupanion is acting as an insurance broker.

We generate revenue in our other business segment primarily from writing policies on behalf of third parties where we do not undertake the direct consumer marketing.

This segment also includes revenue from other pet insurance products that have a different margin profile from our subscription business.

We also generate a portion of our subscription business segment revenue through commissions earned in certain European markets, where policies are currently underwritten by third parties and Trupanion is acting as an insurance broker.

We generate revenue in our other business segment primarily from writing policies on behalf of third parties where we do not undertake direct consumer marketing.

This segment also includes revenue from other pet insurance products that have a significantly lower margin profile from our subscription business.

Cost of Revenue

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Other cost of revenue

Other cost of revenue for the subscription business segment includes direct and indirect member service expenses, Territory Partner fees per member renewal, payment processing fees and premium tax expenses.

Other cost of revenue for the subscription business segment includes direct and indirect member service expenses, Territory Partner commissions per member renewal, payment processing fees and premium tax expenses.

Other cost of revenue for the other business segment includes the commissions we pay to unaffiliated general agents, costs to administer the programs in the other business segment and premium taxes on the sales in this segment.

4 unchanged sentences

Technology and development

Technology and development expenses primarily consist of personnel costs and related expenses for our technology staff, which includes information technology development and infrastructure support, including third-party services.

Technology and development expenses primarily consist of personnel costs and related expenses for our technology staff, which includes information technology development, security, infrastructure support, and third-party services.

It also includes expenses associated with development in new geographies and new products and offerings.

2 unchanged sentences

New pet acquisition expense

New pet acquisition expenses primarily consist of costs, including personnel costs, to educate veterinarians and consumers about the benefits of Trupanion, to generate leads and to convert leads into enrolled pets, as well as print, online and promotional advertising costs.

New pet acquisition expenses primarily consist of costs to acquire a pet (including costs associated directly to supporting the first year of a member), personnel costs, costs to educate veterinarians and consumers about the benefits of Trupanion, costs to generate leads and to convert leads into enrolled pets, as well as print, online and promotional advertising costs.

Depreciation and amortization

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

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

2025 2024 2025 2024

Three Months Ended March 31,

(in thousands)

9 unchanged sentences

Technology and development (1)

9,887 7,933 26,545 23,083

General and administrative (1)

9 unchanged sentences

Income (loss) before income taxes 5,956 (1,444)

Income tax (benefit) expense 726 39 1,898 (43)

Income tax expense 1,076 39

Net income (loss) $ 4,880 $ (1,483)

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

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

2025 2024 2025 2024

Three Months Ended March 31,

(in thousands)

Veterinary invoice expense (2)

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

Other cost of revenue (2)

585 554 1,679 1,561

Technology and development 1,507 1,151

3 unchanged sentences

( 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

Three Months Ended March 31,

(as a percentage of revenue)

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Income (loss) before income taxes 2 —

Income tax (benefit) expense — — — —

Income tax expense — —

Net income (loss) 2 % — %

Stock-based compensation expense:

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

2025 2024 2025 2024

Three Months Ended March 31,

(as a percentage of revenue)

Veterinary invoice expense (2)

— % — % — % — %

Other cost of revenue (2)

3 unchanged sentences

Total stock-based compensation expense 1 % 2 %

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

2025 2024 2025 2024

Three Months Ended March 31,

(as a percentage of subscription revenue)

1 unchanged sentence

Subscription business cost of revenue 80 81

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

Comparison of the Three Months Ended March 31, 2026 and 2025

Three Months Ended March 31, % Change

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

10 unchanged sentences

Average monthly retention 98.35 % 98.28 %

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.

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.

Three months ended March 31, 2026 compared to three months ended March 31, 2025.

Total revenue increased by $42.1 million, or 12%, to $384.0 million for the three months ended March 31, 2026.

Revenue from our subscription business segment increased by $36.4 million, or 16%, to $269.5 million for the three months ended March 31, 2026.

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.

Our subscription pets enrolled increased by 52,938 pets, or 5%, to 1,105,783 for the three months ended at March 31, 2026, which was consistent with the growth rate of pets enrolled in the prior year period.

Revenue from our other business segment increased by $5.7 million, or 5%, to $114.6 million for the three months ended March 31, 2026.

This increase was primarily driven by a 22% 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 September 30, % Change Nine Months Ended September 30, % Change

2025 2024 2025 2024

Three Months Ended March 31, % Change

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

19 unchanged sentences

Total subscription pets enrolled (at period end) 1,105,783 1,052,845 5

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.

Three months ended March 31, 2026 compared to three months ended March 31, 2025.

Total cost of revenue for our subscription business segment increased by $26.6 million, or 14%, to $216.5 million, for the three months ended March 31, 2026.

This increase was driven by a $23.2 million, or 14%, increase in veterinary invoice expense and a $3.4 million, or 16%, increase in other cost of revenue.

2 unchanged sentences

Subscription business total cost of revenue decreased from 81% to 80% 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.

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 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 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.

Total cost of revenue for our other business segment increased by $5.1 million, or 5%, to $106.1 million for the three months ended March 31, 2026.

This increase was primarily driven by a $10.8 million, or 14%, increase in veterinary invoice expense, partially offset by a $5.7 million, or 26% decrease in other cost of revenue.

The 14% increase in veterinary invoice expense was primarily driven by a 31% 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.

Within our other business segment, fluctuations in other cost of revenue are largely driven by trends in revenue and veterinary invoice expense.

Total cost of revenue for the other business segment remained materially consistent at 93% of segment revenue year-over-year.

Technology and Development Expenses

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

2025 2024 2025 2024

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

Three Months Ended March 31, % Change

(in thousands, except percentages)

Technology and development $ 11,294 $ 8,072 40 %

Percentage of total revenue 3 % 2 %

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.

Three months ended March 31, 2026 compared to three months ended March 31, 2025.

Technology and development expenses increased by $3.2 million, or 40%, to $11.3 million for the three months ended March 31, 2026.

This increase was primarily due to a $1.7 million increase in general compensation and other employee-related expenses, a $0.8 million reduction in capitalized expenditures related to internally developed software projects, and a $0.6 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 September 30, % Change Nine Months Ended September 30, % Change

2025 2024 2025 2024

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

Three Months Ended March 31, % Change

(in thousands, except percentages)

General and administrative $ 19,102 $ 19,892 (4) %

Percentage of total revenue 5 % 6 %

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.

Three months ended March 31, 2026 compared to three months ended March 31, 2025.

General and administrative expenses decreased by $0.8 million, or 4%, to $19.1 million for the three months ended March 31, 2026.

This decrease was driven by decreases of $1.1 million in professional services and $2.4 million in underwriting fees related to our Canadian business, partially offset by an increase of $1.4 million in general compensation and other employee-related expenses and a $1.3 million increase in other miscellaneous expenses.

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

New Pet Acquisition Expense

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

2025 2024 2025 2024

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

Three Months Ended March 31, % Change

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

New pet acquisition expense $ 22,611 $ 20,516 10 %

3 unchanged sentences

Average pet acquisition cost (PAC) $ 315 $ 267 18

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.

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.

Three months ended March 31, 2026 compared to three months ended March 31, 2025.

New pet acquisition expenses increased by $2.1 million, or 10%, to $22.6 million for the three months ended March 31, 2026.

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.

New pet acquisition expense as a percentage of revenue remained constant at 6%.

Depreciation and Amortization

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

2025 2024 2025 2024

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

Three Months Ended March 31, % Change

(in thousands, except percentages)

Depreciation and amortization $ 3,706 $ 3,791 (2) %

Percentage of total revenue 1 % 1 %

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

2025 2024 2025 2024

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

Three months ended March 31, 2026 compared to three months ended March 31, 2025.

Depreciation and amortization expense decreased by $0.1 million, or 2%, to $3.7 million for the three months ended March 31, 2026, and remained consistent at 1% of total revenue year-over-year.

Total Other (Income), Net

Three Months Ended March 31, % Change

(in thousands, except percentages)

Interest expense $ 1,875 $ 3,211 (42) %

Other (income), net (3,055) (3,240) (6)

Total other (income) expense, net $ (740) $ 282 362 $ (9,001) $ 1,470 712

Total other (income), net

$ (1,180) $ (29) 3,969

Percentage of total revenue — % — %

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.

Three months ended March 31, 2026 compared to three months ended March 31, 2025.

Total other (income), net increased by $1.2 million from income of less than $0.1 million to income of $1.2 million for the three months ended March 31, 2026, primarily due to a $1.3 million decrease in interest expense partially offset by lower investment income.

Income Tax Expense

Three months ended March 31, 2026 compared to three months ended March 31, 2025.

Income tax expense increased by $1.1 million from a expense of less than $0.1 million to expense of $1.1 million for the three months ended March 31, 2026, primarily due to the transfer of our Canadian insurance business to GPIC, resulting in an increase in taxable income in Canada.

Stock-Based Compensation

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 $8.3 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.

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

Three months ended March 31, 2026 compared to three months ended March 31, 2025.

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 $25.1 million to $28.8 million for the nine months ended September 30, 2025.

Stock-based compensation expense decreased from $9.8 million to $9.0 million for the three months ended March 31, 2026.

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):

Nine Months Ended September 30,

Three Months Ended March 31,

Net cash provided by operating activities $ 14,594 $ 15,964

Net cash used in investing activities (53,761) (31,914)

Net cash provided by (used in) investing activities 113 (8,973)

Net cash used in financing activities (2,736) (459)

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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 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”.

As of March 31, 2026, we had $383.7 million in cash, cash equivalents and short-term investments, of which $324.4 million was held by our insurance entities.

Outside of insurance entities, we held $59.3 million in cash, cash equivalents and short-term investments with an additional $5.0 million available under our 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 nine months ended September 30, 2025.

We repurchased no shares under this program during the three months ended March 31, 2026.

Operating Cash Flows

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.

Net cash provided by operating activities was $14.6 million for the three months ended March 31, 2026, compared to $16.0 million for the three months ended March 31, 2025.

This decrease was primarily driven by timing differences in working capital activities partially offset by improved operating results largely driven by higher revenue and improved subscription business margins.

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

Changes in our reserve for veterinary invoices are driven by multiple factors, including ongoing analysis of claims frequency and severity as well as changes in claims inventory at period end.

Changes in our reserve for veterinary invoices are driven by multiple factors, including ongoing analysis of claims frequency and severity.

Additionally, changes in our accounts payable, accrued liabilities, and other liabilities are primarily due to differences in timing of payments.

Investing Cash Flows

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.

Net cash provided by investing activities was $0.1 million for the three months ended March 31, 2026, primarily consisting of $48.9 million in sales and maturities of investment securities, partially offset by purchases of investment securities of $47.9 million as well as $0.8 million of capital expenditures primarily 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 $9.0 million for the three months ended March 31, 2025, primarily consisting of purchases of investment securities of $40.9 million as well as $1.9 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 $33.2 million in sales and maturities of investment securities.

Financing Cash Flows

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.

Net cash used in financing activities was $2.7 million for the three months ended March 31, 2026, primarily consisting of $2.5 million in repayments on the PNC Facility.

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

Long-Term Debt

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.

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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.

Loans under the PNC Facility 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 makes quarterly principal payments of $2.5 million on the term loan facility.

The Company may voluntarily prepay loans or reduce revolving commitments under the PNC Facility 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 our investments are held by our insurance entities to satisfy risk-based capital requirements (also referred to as minimum capital requirements) of applicable state and federal regulators.

These regulatory requirements provide a method for analyzing the minimum amount of capital (statutory capital and surplus plus other adjustments) appropriate for an insurance company to support its overall business operations, taking into account the risk characteristics of the company’s assets, liabilities and certain other items .

An insurance entity cannot use this capital for general operating expenses without regulatory approval.

An insurance company found to have insufficient statutory capital based on its risk-based or minimum capital test requirements or otherwise fails to satisfy other applicable statutory requirements may be subject to varying levels of additional regulatory oversight.

As of March 31, 2026, our insurance entities collectively held $94.2 million in cash and cash equivalents, to be used for operating expenses of our insurance entities, $230.2 million in short-term investments and $300.7 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.

We are subject to comprehensive regulation and supervision in the jurisdictions where we conduct business, including requirements regarding our capital structure, ownership, financial condition, general business operations, transactions between affiliated entities and payment of dividends from our insurance subsidiaries.

We are also subject to market conduct examinations of our management and operations.

The National Association of Insurance Commissioners ("NAIC") has approved a series of uniform statutory accounting principles applicable in some form in all states.

Developed to ensure insurance companies maintain sufficient capital to pay claims and remain solvent, these principles conservatively value assets and liabilities and usually result in differences from financial statements prepared in accordance with U.S.

The NAIC has also adopted risk-based capital requirements for life, health and property and casualty insurance companies, which require APIC and ZPIC to maintain certain levels of surplus to support our overall business operations in consideration of our size and risk profile.

If we fail to maintain the amount of risk-based capital required, we will be subject to additional regulatory oversight.

To comply with these regulations, we may be required to maintain capital that we would otherwise invest in our growth and operations.

NAIC also has adopted a pet insurance model act to establish regulatory standards for the pet insurance industry, related to how insurers enforce waiting periods, certain policy conditions, and the sale of pet insurance in general.

Although U.S.

federal law generally does not directly regulate the insurance industry, various federal regulatory and legislative changes have been proposed in the past and could be proposed in the future, including proposed federal regulation that could supplement or replace the current system of state regulation of insurers.

It is not possible to predict whether any of these proposals might be adopted, or the effect federal involvement in insurance may have on us.

American Pet Insurance Company ("APIC")

The majority of our investments are held by our insurance entities to satisfy risk-based capital requirements of our regulators based on requirements published by the National Association of Insurance Commissioners ("NAIC").

The NAIC requirements provide a method for analyzing the minimum amount of risk-based capital (statutory capital and surplus plus other adjustments) appropriate for an insurance company to support its overall business operations, taking into account the risk characteristics of the company’s assets, liabilities and certain other items .

An insurance company found to have insufficient statutory capital based on its risk-based capital ratio may be subject to varying levels of additional regulatory oversight depending on the level of capital inadequacy.

APIC must hold certain capital amounts in order to comply with the statutory regulations and, therefore, we cannot use these amounts for general operating purposes without regulatory approval.

As our business grows, the amount of capital we are required to maintain to satisfy our risk-based capital requirements will also increase, though risk-based capital requirements also take our overall rate of growth into consideration.

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.

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.

APIC, our wholly-owned insurance subsidiary domiciled in New York, underwrites all of our policies in the U.S.

As our business in the U.S.

grows, the amount of capital we are required to maintain to satisfy our risk-based capital requirements will also increase, though risk-based capital requirements also take our overall rate of growth into consideration.

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

In February 2026, APIC distributed an extraordinary dividend of $14.9 million to Trupanion, Inc.

APIC's primary regulator is the New York Department of Financial Services ("NY DFS").

ZPIC Insurance Company ("ZPIC")

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

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.

ZPIC, our wholly-owned insurance subsidiary domiciled in Missouri, has not yet begun underwriting activity, but we have funded its required statutory capital.

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

ZPIC's primary regulator is the Missouri Department of Commerce and Insurance ("MODCI").

GPIC Insurance Company ("GPIC")

GPIC, our wholly-owned insurance subsidiary domiciled in Canada underwrites the majority of our policies in Canada.

We are continuing to transition the remaining portion of our insurance activity in Canada to GPIC from a fronting arrangement with Accelerant Insurance Company of Canada (formerly Omega General Insurance Company) ("Accelerant").

Pursuant to the Canadian Office of the Superintendent of Financial Institutions ("OSFI") regulations, we have contributed CAD $29.5 million to GPIC as of March 31, 2026, as the required statutory capital for this subsidiary.

The capital we maintain at GPIC is, and for the foreseeable future may continue to be, more than the amount that we historically held subject to our fronting arrangement with Accelerant.

Under the terms of our agreements with Accelerant, we retain any financial risk associated with our Canadian business.

Accelerant's Canadian insurance operations are supervised and regulated by Canadian federal, provincial and territorial governments and Accelerant is a fully licensed insurer in all of the Canadian provinces and territories in which we do business.

As we transition more of the business to GPIC, the amount we are required to fund in the Canadian trust account will be reduced (as discussed below).

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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WICL Segregated Account AX was established by WICL, with Trupanion, Inc.

as the shareholder, to enter into a reinsurance agreement with Accelerant Insurance Company of Canada, formerly known as Omega General Insurance Company.

as the shareholder, to enter into a reinsurance agreement with Accelerant for our business activity in Canada.

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.

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 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.

received dividends of $3.3 million from WICL Segregated Account AX in February 2026, as permitted under our agreements with WICL.

As required by OSFI regulations related to our reinsurance agreement with Accelerant, we are required to maintain a Canadian Reinsurance 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, 2026, the account held CAD $2.9 million which we expect will continue to 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 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.

In November 2025, we entered into the PNC Agreement, which provides up to $ 120.0 million of credit, including $ 100.0 million term loan and $ 20.0 million revolving loan facility.

We used the proceeds under the PNC Agreement to repay all amounts due and outstanding under our Prior Credit Facility.

The PNC Agreement will require us to repay the underlying obligations over a three-year term at SOFR plus a margin.

Refer to Note 7, 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