What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-05 compared with 2026-04-30 · 183 added, 84 removed, 439 unchanged (38% of the section changed)

23 unchanged sentences

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.

We and Pets Best have agreed to end our relationship after the third quarter of 2028.

We expect that enrollment from Pets Best will continue to decline as it rolls off business and engages other third-party underwriters.

Additional products in this segment include the U.S.

1 unchanged sentence

Key Operating Metrics

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

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

Six Months Ended June 30,

Total Business:

Total pets enrolled (at period end) 1,633,131 1,660,455

Subscription Business:

Total subscription pets enrolled (at period end) 1,124,548 1,066,354

Monthly average revenue per pet $ 86.62 $ 78.73

Average pet acquisition cost (PAC) $ 307 $ 272

Average monthly retention 98.37 % 98.29 %

Three Months Ended

30, 2026 Mar.

31, 2026 Dec.

4 unchanged sentences

31, 2024 Sep.

30, 2024 Jun.

Total Business:

27 unchanged sentences

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

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

As such, our average monthly retention rate as of June 30, 2026 is an average of each month’s retention from July 1, 2025 through June 30, 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 table presents the reconciliation of our non-GAAP financial measures from corresponding GAAP measures for each of the last eight fiscal quarters (in thousands):

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

Six Months Ended June 30,

Veterinary invoice expense $ 560,904 $ 503,030

Stock-based compensation expense (1)

(1,048) (1,522)

Other business cost of paying veterinary invoices (2)

(174,687) (161,975)

Subscription cost of paying veterinary invoices (non-GAAP) $ 385,169 $ 339,533

% of subscription revenue 70.5 % 71.4 %

Other cost of revenue $ 89,457 $ 86,572

Stock-based compensation expense (1)

(1,178) (1,082)

Other business variable expenses (2)

(38,964) (42,267)

Subscription variable expenses (non-GAAP) $ 49,315 $ 43,223

% of subscription revenue 9.0 % 9.1 %

Technology and development expense $ 24,048 $ 16,658

General and administrative expense 38,627 40,014

Stock-based compensation expense (1)

(13,820) (11,788)

Development expenses (3)

(3,501) (2,353)

Fixed expenses (non-GAAP) $ 45,354 $ 42,531

% of total revenue 5.8 % 6.1 %

New pet acquisition expense $ 45,416 $ 40,359

Stock-based compensation expense (1)

(2,652) (4,390)

Other business pet acquisition expense (2)

Subscription acquisition cost (non-GAAP) $ 42,723 $ 35,892

% of subscription revenue 7.8 % 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 $0.3 million for the six months ended June 30, 2026.

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

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

Three Months Ended

30, 2026 Mar.

31, 2026 Dec.

4 unchanged sentences

31, 2024 Sep.

30, 2024 Jun.

Veterinary invoice expense $ 279,468 $ 281,436 $ 262,818 $ 263,127 $ 255,580 $ 247,450 $ 245,663 $ 238,814

29 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 March 31, 2026.

Stock-based compensation associated with bonuses was approximately $0.1 million for the three months ended June 30, 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 each of the last eight fiscal quarters:

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

Six Months Ended June 30,

New pet acquisition expense $ 45,416 $ 40,359

Net of sign-up fee revenue (2,184) (2,101)

Stock-based compensation expense (2,652) (4,390)

Other business pet acquisition expense (41) (77)

Pet acquisition expense for commission-based policies (2,227) (1,524)

Net acquisition cost $ 38,312 $ 32,267

Three Months Ended

30, 2026 Mar.

31, 2026 Dec.

4 unchanged sentences

31, 2024 Sep.

30, 2024 Jun.

New pet acquisition expense $ 22,805 $ 22,611 $ 23,103 $ 21,946 $ 19,843 $ 20,516 $ 18,354 $ 18,308

15 unchanged sentences

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.

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.

77 unchanged sentences

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

Three Months Ended March 31,

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

2026 2025 2026 2025

(in thousands)

9 unchanged sentences

Technology and development (1)

12,754 8,586 24,048 16,658

General and administrative (1)

5 unchanged sentences

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

Operating income (loss) 4,776 (1,473)

Operating income 6,376 2,314 11,152 841

Interest expense 1,832 3,682 3,707 6,893

Other (income), net (2,829) (11,914) (5,884) (15,154)

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

Income before income taxes 7,373 10,546 13,329 9,102

Income tax expense 542 1,133 1,618 1,172

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

Net income $ 6,831 $ 9,413 $ 11,711 $ 7,930

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

Three Months Ended March 31,

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

2026 2025 2026 2025

(in thousands)

Veterinary invoice expense (2)

$ 505 $ 774 $ 1,065 $ 1,544

Other cost of revenue (2)

620 605 1,189 1,094

Technology and development 2,865 1,470 4,372 2,621

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 March 31,

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

2026 2025 2026 2025

(as a percentage of revenue)

8 unchanged sentences

Loss from investment in joint venture — — — —

Operating income (loss) 1 —

Operating income 2 1 1 —

Interest expense — (1) — (1)

Other (income), net 1 3 1 2

Income (loss) before income taxes 2 —

Income before income taxes 3 3 2 1

Income tax expense — — — —

Net income (loss) 2 % — %

Net income 3 % 3 % 2 % 1 %

Stock-based compensation expense:

Three Months Ended March 31,

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

2026 2025 2026 2025

(as a percentage of revenue)

Veterinary invoice expense (2)

— % — % — % — %

Other cost of revenue (2)

3 unchanged sentences

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

Three Months Ended March 31,

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

2026 2025 2026 2025

(as a percentage of subscription revenue)

1 unchanged sentence

Subscription business cost of revenue 80 81 80 81

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

Three Months Ended March 31, % Change

Comparison of the Three and Six Months Ended June 30, 2026 and 2025

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

2026 2025 2026 2025

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

10 unchanged sentences

Average monthly retention 98.37 % 98.29 % 98.37 % 98.29 %

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.

Three months ended June 30, 2026 compared to three months ended June 30, 2025.

Total revenue increased by $39.4 million, or 11%, to $392.9 million for the three months ended June 30, 2026.

Revenue from our subscription business segment increased by $34.5 million, or 14%, to $276.7 million for the three months ended June 30, 2026.

This increase was primarily due to a 9% 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 58,194 pets, or 5%, to 1,124,548 for the three months ended June 30, 2026, which represented a 1% increase in growth rate of pets enrolled compared to the prior year period's growth rate of 4%.

Revenue from our other business segment increased by $4.8 million, or 4%, to $116.2 million for the three months ended June 30, 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.

Six months ended June 30, 2026 compared to six months ended June 30, 2025.

Total revenue increased by $81.5 million, or 12%, to $777.0 million for the six months ended June 30, 2026.

Revenue from our subscription business segment increased by $70.9 million, or 15%, to $546.1 million for the six months ended June 30, 2026.

This increase was primarily due to a 10% increase in monthly average revenue per pet and an increase in subscription pet months for policies underwritten by Trupanion.

Our subscription pets enrolled increased by 58,194 pets, or 5%, to 1,124,548 for the six months ended June 30, 2026, which represented a 1% increase in growth rate of pets enrolled compared to the prior year period's growth rate of 4%.

Revenue from our other business segment increased by $10.5 million, or 5%, to $230.8 million for the six months ended June 30, 2026.

Cost of Revenue

Three Months Ended March 31, % Change

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

2026 2025 2026 2025

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

19 unchanged sentences

Total subscription pets enrolled (at period end) 1,124,548 1,066,354 5 1,124,548 1,066,354 5

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.

Three months ended June 30, 2026 compared to three months ended June 30, 2025.

Total cost of revenue for our subscription business segment increased by $24.8 million, or 13%, to $220.3 million, for the three months ended June 30, 2026.

This increase was driven by a $21.9 million, or 13%, increase in veterinary invoice expense and a $2.8 million, or 13%, increase in other cost of revenue.

The 14% increase in veterinary invoice expense was driven by a 9% increase in veterinary invoice expense per pet and an increase in total subscription pet months for policies underwritten by Trupanion.

The 13% increase in veterinary invoice expense was driven by an 8% increase in veterinary invoice expense per pet and an increase in total subscription pet months for policies underwritten by Trupanion.

The 13% 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 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 $5.1 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.

Total cost of revenue for our other business segment increased by $4.3 million, or 4%, to $107.5 million for the three months ended June 30, 2026.

This increase was primarily driven by a $2.0 million, or 2%, increase in veterinary invoice expense and a $2.3 million, or 11%, increase in other cost of revenue.

The 2% increase in veterinary invoice expense was primarily driven by a 19% 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.

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

Six months ended June 30, 2026 compared to six months ended June 30, 2025.

Total cost of revenue for our subscription business segment increased by $51.4 million, or 13%, to $436.7 million, for the six months ended June 30, 2026.

This increase was driven by a $45.2 million, or 13%, increase in veterinary invoice expense and a $6.2 million, or 14%, increase in other cost of revenue.

The 13% increase in veterinary invoice expense was driven by a 9% increase in veterinary invoice expense per pet and an increase in total subscription pet months for policies underwritten by Trupanion.

The 14% 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 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 $9.4 million, or 5%, to $213.7 million for the six months ended June 30, 2026.

This increase was primarily driven by a $12.7 million, or 8%, increase in veterinary invoice expense and partially offset by a $3.3 million, or 8%, decrease in other cost of revenue.

The 8% increase in veterinary invoice expense was primarily driven by a 25% increase in veterinary invoice expense per pet, partially offset by a decrease in pet months in this segment primarily reflecting the expected run-off of pets we historically insured for Pets Best.

Technology and Development Expenses

Three Months Ended March 31, % Change

(in thousands, except percentages)

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

2026 2025 2026 2025

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

Technology and development $ 12,754 $ 8,586 49 % $ 24,048 $ 16,658 44 %

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

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.

Three months ended June 30, 2026 compared to three months ended June 30, 2025.

Technology and development expenses increased by $4.2 million, or 49%, to $12.8 million for the three months ended June 30, 2026.

This increase was primarily due to a $1.4 million increase in stock-based compensation expenses primarily driven by a one-time award modification, a $0.9 million increase in new product exploration and development expense, a $0.8 million increase in general compensation and other employee-related expenses, a $0.6 million reduction in capitalized expenditures related to internally developed software projects, and a $0.5 million increase in IT infrastructure-related expenses.

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

Six months ended June 30, 2026 compared to six months ended June 30, 2025.

Technology and development expenses increased by $7.4 million, or 44%, to $24.0 million for the six months ended June 30, 2026.

This increase was primarily due to a $2.4 million increase in general compensation and other employee-related expenses, a $1.8 million increase in stock-based compensation expenses primarily driven by a one-time award modification, a $1.4 million reduction in capitalized expenditures related to internally developed software projects, a $1.1 million increase in new product exploration and development expenses, and a $0.7 million increase in IT infrastructure related expenses.

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

General and Administrative Expenses

Three Months Ended March 31, % Change

(in thousands, except percentages)

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

2026 2025 2026 2025

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

General and administrative $ 19,525 $ 20,122 (3) % $ 38,627 $ 40,014 (3) %

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

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.

Three months ended June 30, 2026 compared to three months ended June 30, 2025.

General and administrative expenses decreased by $0.6 million, or 3%, to $19.5 million for the three months ended June 30, 2026.

This decrease was primarily driven by decreases of $2.3 million in underwriting fees related to our Canadian business and $0.3 million in stock-based compensation expenses, partially offset by increases of $1.6 million in foreign consumption taxes and $0.3 million in other miscellaneous expenses.

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

Six months ended June 30, 2026 compared to six months ended June 30, 2025.

General and administrative expenses decreased by $1.4 million, or 3%, to $38.6 million for the six months ended June 30, 2026.

This decrease was driven by decreases of $4.8 million in underwriting fees related to our Canadian business and $1.0 million in professional services, partially offset by increases of $1.9 million in foreign consumption taxes, $1.4 million in other miscellaneous expenses and $1.1 million in general compensation and other employee-related expenses.

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

New Pet Acquisition Expense

Three Months Ended March 31, % Change

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

2026 2025 2026 2025

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

4 unchanged sentences

Average pet acquisition cost (PAC) $ 299 $ 276 8 $ 307 $ 272 13

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.

Three months ended June 30, 2026 compared to three months ended June 30, 2025.

New pet acquisition expenses increased by $3.0 million, or 15%, to $22.8 million for the three months ended June 30, 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%.

Six months ended June 30, 2026 compared to six months ended June 30, 2025.

New pet acquisition expenses increased by $5.1 million, or 13%, to $45.4 million for the six months ended June 30, 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%.

Depreciation and Amortization

Three Months Ended March 31, % Change

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

2026 2025 2026 2025

(in thousands, except percentages)

1 unchanged sentence

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

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.

Three months ended June 30, 2026 compared to three months ended June 30, 2025.

Depreciation and amortization expense decreased by $0.3 million, or 7%, to $3.7 million for the three months ended June 30, 2026, primarily driven by fewer internally developed software projects placed in-service during the period.

Six months ended June 30, 2026 compared to six months ended June 30, 2025.

Depreciation and amortization expense decreased by $0.4 million, or 5%, to $7.4 million for the six months ended June 30, 2026, primarily driven by fewer internally developed software projects placed in-service during the period.

Total Other (Income), Net

Three Months Ended March 31, % Change

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

2026 2025 2026 2025

(in thousands, except percentages)

4 unchanged sentences

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

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.

Three months ended June 30, 2026 compared to three months ended June 30, 2025.

Total other (income), net decreased by $7.2 million from income of $8.2 million to income of $1.0 million for the three months ended June 30, 2026, primarily due to a $7.8 million realized gain recognized on the nonmonetary exchange of our Baystride preferred stock investment for intellectual property during 2025 and an increase in foreign currency losses of $0.9 million.

These decreases in income were partially offset by a decrease in interest expense of $1.9 million.

Six months ended June 30, 2026 compared to six months ended June 30, 2025.

Total other (income), net decreased by $6.1 million from income of $8.3 million to income of $2.2 million for the six months ended June 30, 2026, 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 in 2025 and an increase in foreign currency losses of $1.6 million.

These decreases in income were partially offset by a decrease in interest expense of $3.2 million.

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 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 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.

Three months ended June 30, 2026 compared to three months ended June 30, 2025.

Income tax expense decreased $0.6 million from $1.1 million to $0.5 million for the three months ended June 30, 2026, primarily due to the initial transfer of our Canadian insurance business to GPIC in the prior year quarter, which resulted in a true-up to the annual effective tax rate for the three months ended June 30, 2025.

Six months ended June 30, 2026 compared to six months ended June 30, 2025.

Income tax expense increased $0.4 million from $1.2 million to $1.6 million for the six months ended June 30, 2026, primarily due to a change in the jurisdictional makeup of income and losses.

Liquidity and Capital Resources

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

Three Months Ended March 31,

Six Months Ended June 30,

Net cash provided by operating activities $ 35,578 $ 30,989

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

Net cash used in investing activities (22,430) (51,440)

Net cash used in financing activities (5,308) (16,346)

10 unchanged sentences

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

As of March 31, 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.

As of June 30, 2026, we had $398.5 million in cash, cash equivalents and short-term investments, of which $344.1 million was held by our insurance entities.

Outside of insurance entities, we held $54.4 million in cash, cash equivalents and short-term investments with an additional $3.5 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 three months ended March 31, 2026.

In April 2021, our board of directors (the "Board") approved a share repurchase program, pursuant to which we could repurchase outstanding shares of our common stock, between May 2021 and May 2026.

In June 2026, the Board approved a new share repurchase program, pursuant to which we are authorized to repurchase up to an aggregate of $100.0 million of our outstanding shares of common stock, with no expiration date.

We are not obligated to repurchase any specific number or dollar amount of shares, and the timing and actual number of shares repurchased will depend on a variety of factors, including our compliance with the PNC Facility, available cash, cash flow from operations, stock price, general economic, business and market conditions, and alternative investment opportunities.

We repurchased no shares during the six months ended June 30, 2026.

Operating Cash Flows

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.

Net cash provided by operating activities was $35.6 million for the six months ended June 30, 2026, compared to $31.0 million for the six months ended June 30, 2025.

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

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

2 unchanged sentences

Investing Cash Flows

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.

Net cash used by investing activities was $22.4 million for the six months ended June 30, 2026, primarily consisting of purchases of investment securities of $120.0 million as well as $2.7 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 $100.2 million in sales and maturities of investment securities.

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.

Financing Cash Flows

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.

Net cash used in financing activities was $5.3 million for the six months ended June 30, 2026, primarily consisting of $5.0 million in repayments on the PNC Facility.

Net cash used in financing activities was $16.3 million for the six months ended June 30, 2025, primarily consisting of $15.5 million in repayments on the Prior Credit Facility, as well as $1.7 million in shares withheld to satisfy tax withholding, partially offset by $1.3 million in proceeds from exercise of stock options.

Long-Term Debt

3 unchanged sentences

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.

We make quarterly principal payments of $2.5 million on the term loan facility.

We 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.

4 unchanged sentences

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.

As of June 30, 2026, our insurance entities collectively held $94.9 million in cash and cash equivalents, to be used for operating expenses of our insurance entities, $249.2 million in short-term investments and $298.0 million in other current assets.

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

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Recently, our other business segment growth has slowed, and 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.

In February 2026 and August 2026, APIC distributed extraordinary dividends of $14.9 million and $10.0 million to Trupanion, Inc., respectively.

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

6 unchanged sentences

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.

Pursuant to the Canadian Office of the Superintendent of Financial Institutions ("OSFI") regulations, we have contributed CAD $38.9 million to GPIC as of June 30, 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.

1 unchanged sentence

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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Trupanion, Inc.

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

received dividends of $3.3 million and $5.0 million from WICL Segregated Account AX in February and May 2026, respectively, 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.

As of June 30, 2026, the account held CAD $2.0 million.

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

11 unchanged sentences

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 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.

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

9 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis