10-Q 1 trup-20240630.htm 10-Q trup-20240630
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2024
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission File Number: 001-36537
TRUPANION, INC.
(Exact name of registrant as specified in its charter)
Delaware83-0480694
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification Number)
6100 4th Avenue S, Suite 200
Seattle, Washington98108
(855) 727 - 9079
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common stock, $0.00001 par value per shareTRUPThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒
Yes
☐
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒
Yes
☐
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
As of August 2, 2024, there were approximately 42,163,753 shares of the registrant’s common stock outstanding.


TRUPANION, INC.
TABLE OF CONTENTS


Note About Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"), and Section 27A of the Securities Act of 1933, as amended ("Securities Act"). All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “target,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan” and “expect,” and similar expressions that convey uncertainty of future events or outcomes, are intended to identify forward-looking statements.
These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Part II. Item 1A. “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely on forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements for any reason, except as required by law.
Unless otherwise stated or the context otherwise indicates, references to “we,” “us,” “our” and similar references refer to Trupanion, Inc. and its subsidiaries taken as a whole.





PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
TRUPANION, INC.
Condensed Consolidated Statements of Operations
(in thousands, except share data)
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Revenue$314,800 $270,566 $620,921 $526,895 
Cost of revenue:
Veterinary invoice expense(1)
231,102 206,738 464,671 400,875 
Other cost of revenue(1)
43,429 34,455 79,754 70,301 
Total cost of revenue274,531 241,193 544,425 471,176 
Operating expenses:
Technology and development(1)
8,190 5,232 15,150 10,132 
General and administrative(1)
15,253 13,136 29,926 34,153 
New pet acquisition expense(1)
17,874 20,769 34,717 42,411 
Depreciation and amortization4,376 3,253 8,161 6,455 
Total operating expenses45,693 42,390 87,954 93,151 
Loss from investment in joint venture(47)(73)(150)(144)
Operating loss(5,471)(13,090)(11,608)(37,576)
Interest expense3,655 2,940 7,251 5,327 
Other income, net(3,220)(2,078)(6,063)(3,980)
Loss before income taxes(5,906)(13,952)(12,796)(38,923)
Income tax benefit(44)(238)(82)(429)
Net loss$(5,862)$(13,714)$(12,714)$(38,494)
Net loss per share:
Basic and diluted$(0.14)$(0.33)$(0.30)$(0.93)
Weighted average shares of common stock outstanding:
Basic and diluted42,078,271 41,383,411 41,997,683 41,246,411 
(1)Includes stock-based compensation expense as follows:
Veterinary invoice expense$854 $866 $1,778 $1,719 
Other cost of revenue541 441 1,007 906 
Technology and development1,261 627 2,515 1,335 
General and administrative3,861 2,948 7,310 11,167 
New pet acquisition expense2,129 1,755 4,188 3,841 

See accompanying notes to the condensed consolidated financial statements.
1

TRUPANION, INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Net loss$(5,862)$(13,714)$(12,714)$(38,494)
Other comprehensive income (loss):
Foreign currency translation adjustments(185)1,256 (1,517)2,811 
Net unrealized loss on available-for-sale investments(5)(1,103)(657)(612)
Other comprehensive income (loss), net of taxes(190)153 (2,174)2,199 
Comprehensive loss$(6,052)$(13,561)$(14,888)$(36,295)

See accompanying notes to the condensed consolidated financial statements.
2

TRUPANION, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
June 30, 2024December 31, 2023
Assets(unaudited)
Current assets:
Cash and cash equivalents$124,343 $147,501 
Short-term investments152,870 129,667 
Accounts and other receivables, net of allowance for credit loss of $1,019 at June 30, 2024 and $1,085 at December 31, 2023
285,944 267,899 
Prepaid expenses and other assets15,703 17,022 
Total current assets578,860 562,089 
Restricted cash23,250 22,963 
Long-term investments14,119 12,866 
Property, equipment, and internal-use software, net104,022 103,650 
Intangible assets, net15,930 18,745 
Other long-term assets16,737 18,922 
Goodwill43,028 43,713 
Total assets$795,946 $782,948 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$6,630 $10,505 
Accrued liabilities and other current liabilities34,668 34,052 
Reserve for veterinary invoices60,574 63,238 
Deferred revenue252,583 235,329 
Long-term debt - current portion1,350 1,350 
Total current liabilities355,805 344,474 
Long-term debt127,559 127,580 
Deferred tax liabilities2,239 2,685 
Other liabilities4,495 4,487 
Total liabilities490,098 479,226 
Stockholders’ equity:
Common stock: $0.00001 par value per share, 100,000,000 shares authorized; 43,187,817 and 42,159,631 issued and outstanding at June 30, 2024; 42,887,052 and 41,858,866 shares issued and outstanding at December 31, 2023
— — 
Preferred stock: $0.00001 par value per share, 10,000,000 shares authorized; no shares issued and outstanding
— — 
Additional paid-in capital553,122 536,108 
Accumulated other comprehensive income (loss)(1,771)403 
Accumulated deficit(228,969)(216,255)
Treasury stock, at cost: 1,028,186 shares at June 30, 2024 and December 31, 2023
(16,534)(16,534)
Total stockholders’ equity 305,848 303,722 
Total liabilities and stockholders’ equity$795,946 $782,948 

See accompanying notes to the condensed consolidated financial statements.
3


Trupanion, Inc.
Condensed Consolidated Statements of Stockholders' Equity
(in thousands, except share amounts)
(unaudited)
Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Stockholders' Equity
SharesAmount
Balance at April 1, 202442,004,619 $— $544,593 $(223,107)$(1,581)$(16,534)$303,371 
Issuance of common stock in connection with the Company's equity award programs, net of tax withholdings155,012 — (243)— — — (243)
Stock-based compensation expense— — 8,772 — — — 8,772 
Other comprehensive income (loss)— — — — (190)— (190)
Net loss— — — (5,862)— — (5,862)
Balance at June 30, 202442,159,631 $— $553,122 $(228,969)$(1,771)$(16,534)$305,848 
Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Stockholders' Equity
SharesAmount
Balance at April 1, 202341,327,702 $— $511,940 $(196,342)$(4,255)$(16,534)$294,809 
Issuance of common stock in connection with the Company's equity award programs, net of tax withholdings143,036 — 342 — — — 342 
Stock-based compensation expense— — 7,168 — — — 7,168 
Other comprehensive income (loss)— — — — 153 — 153 
Net loss— — — (13,714)— — (13,714)
Balance at June 30, 202341,470,738 $— $519,450 $(210,056)$(4,102)$(16,534)$288,758 

See accompanying notes to the condensed consolidated financial statements.

4

Trupanion, Inc.
Condensed Consolidated Statements of Stockholders' Equity
(in thousands, except share amounts)
(unaudited)
Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Stockholders' Equity
SharesAmount
Balance at January 1, 202441,858,866 $— $536,108 $(216,255)$403 $(16,534)$303,722 
Issuance of common stock in connection with the Company's equity award programs, net of tax withholdings300,765 — (116)— — — (116)
Stock-based compensation expense— — 17,130 — — — 17,130 
Other comprehensive income (loss)— — — — (2,174)— (2,174)
Net loss— — — (12,714)— — (12,714)
Balance at June 30, 202442,159,631 $— $553,122 $(228,969)$(1,771)$(16,534)$305,848 
Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Stockholders' Equity
SharesAmount
Balance at January 1, 202341,013,158 $— $499,694 $(171,562)$(6,301)$(16,534)$305,297 
Issuance of common stock in connection with the Company's equity award programs, net of tax withholdings457,580 — (371)— — — (371)
Stock-based compensation expense— — 20,127 — — — 20,127 
Other comprehensive income (loss)— — — — 2,199 — 2,199 
Net loss— — — (38,494)— — (38,494)
Balance at June 30, 202341,470,738 $— $519,450 $(210,056)$(4,102)$(16,534)$288,758 





5


TRUPANION, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended June 30,
20242023
Operating activities
Net loss$(12,714)$(38,494)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation and amortization8,161 6,455 
Stock-based compensation expense16,798 18,968 
Other, net(318)(585)
Changes in operating assets and liabilities:
Accounts and other receivables(18,226)(33,184)
Prepaid expenses and other assets2,297 (3,213)
Accounts payable, accrued liabilities, and other liabilities(1,727)(6,464)
Reserve for veterinary invoices(2,535)12,439 
Deferred revenue17,554 33,811 
Net cash provided by (used in) operating activities9,290 (10,267)
Investing activities
Purchases of investment securities(81,249)(79,931)
Maturities and sales of investment securities55,678 117,652 
Purchases of property, equipment, and internal-use software(5,945)(9,919)
Other1,062 583 
Net cash provided by (used in) investing activities(30,454)28,385 
Financing activities
Proceeds from debt financing, net of financing fees— 35,130 
Proceeds from exercise of stock options471 653 
Shares withheld to satisfy tax withholding(588)(1,024)
Repayments of debt financing(675)(1,042)
Other(452)— 
Net cash provided by (used in) financing activities(1,244)33,717 
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash, net(463)76 
Net change in cash, cash equivalents, and restricted cash(22,871)51,911 
Cash, cash equivalents, and restricted cash at beginning of period170,464 84,637 
Cash, cash equivalents, and restricted cash at end of period$147,593 $136,548 
Supplemental disclosures
Noncash investing and financing activities:
Purchases of property, equipment, and internal-use software included in accounts payable and accrued liabilities$552 $1,328 
See accompanying notes to the condensed consolidated financial statements.
6

TRUPANION, INC.
Notes to the Condensed Consolidated Financial Statements (unaudited)
1. Nature of Operations and Significant Accounting Policies
Description of Business and Basis of Presentation
Trupanion, Inc. (collectively with its wholly-owned subsidiaries, the "Company") provides medical insurance for cats and dogs in the United States, Canada, Continental Europe, Australia, and Puerto Rico. The Company's data-driven, vertically-integrated approach enables the Company to provide pet owners with products that the Company believes are the highest value medical insurance, priced specifically for each pet’s unique characteristics.
The financial data as of December 31, 2023 was derived from the Company's audited consolidated financial statements. The accompanying unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and, in management's opinion, have been prepared on the same basis as the audited financial statements and include all adjustments, consisting of normal recurring adjustments, necessary for the fair presentation of the Company's financial position, results of operations, comprehensive income (loss), stockholders' equity and cash flows for the interim periods. These unaudited interim consolidated financial statements should be read in conjunction with the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission ("SEC") on February 27, 2024 (the "2023 10-K"). The Company's accounting policies are described in Note 1 to the audited financial statements included in the 2023 10-K. Operating results for the six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the full fiscal year or any other interim period.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from such estimates. See Note 1 to the audited financial statements included in the 2023 10-K for additional discussion of these estimates and assumptions.
Recent Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07 related to improving segment disclosures. This ASU enhances disclosures about significant segment expenses, allows for multiple measures of a segment's profit or loss, and requires additional disclosures about the chief operating decision maker. This ASU is effective for annual periods beginning after December 15, 2023, with early adoption permitted. The Company is still evaluating the impact of this ASU on its consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09 which expands upon the income tax disclosures through changes to the rate reconciliation and income taxes paid information. This ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is still evaluating the impact of this ASU on its consolidated financial statements.

2. Net Loss per Share
Basic net loss per share is computed using the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is calculated using the weighted average number of shares of common stock plus, when dilutive, potential shares of common stock outstanding using the treasury-stock method. Potential shares of common stock outstanding include stock options, unvested restricted stock awards and restricted stock units.
The following potentially dilutive equity securities were not included in the diluted earnings per share of common stock calculation because they would have had an antidilutive effect:
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Stock options379,436 574,151 379,436 574,151 
Restricted stock awards and restricted stock units1,131,801 793,883 1,131,801 793,883 

7

3. Investments
Available-for sale securities are classified as short-term versus long-term investments based on whether they represent the investment of funds available for current operations. All available-for-sale securities are considered short-term in nature, with the exception of certain long-term investments that are being held for statutory requirements. Held-to-maturity securities are classified as short-term versus long-term investments based on the effective maturity dates. The amortized cost, gross unrealized holding gains and losses, and estimates of fair value of long-term and short-term investments by major security type and class of security were as follows as of June 30, 2024 and December 31, 2023 (in thousands):
Amortized
Cost		Gross
Unrealized
Holding
Gains		Gross
Unrealized
Holding
Losses		Fair
Value
As of June 30, 2024
Long-term investments:
Available-for-sale investments
Foreign deposits$13,121 $— $— $13,121 
$13,121 $— $— $13,121 
Held-to-maturity investments
U.S. treasury securities$998 $— $(2)$996 
$998 $— $(2)$996 
Short-term investments:
Available-for-sale investments
U.S. treasury securities$56,664 $103 $(188)$56,579 
Mortgage-backed securities and collateralized mortgage obligations13,422 27 (95)13,354 
Other asset-backed securities16,952 31 (59)16,924 
Corporate bonds41,199 127 (125)41,201 
$128,237 $288 $(467)$128,058 
Held-to-maturity investments
U.S. treasury securities$12,891 $(12)$12,879 
Certificates of deposit11,921 — — 11,921 
$24,812 $— $(12)$24,800 
8

Amortized
Cost		Gross
Unrealized
Holding
Gains		Gross
Unrealized
Holding
Losses		Fair
Value
As of December 31, 2023
Long-term investments:
Available-for-sale investments
Foreign deposits$11,869 $— $— $11,869 
$11,869 $— $— $11,869 
Held-to-maturity investments
U.S. treasury securities$997 $8 $— $1,005 
$997 $8 $— $1,005 
Short-term investments:
Available-for-sale investments
U.S. treasury securities$44,425 $326 $(64)$44,687 
Mortgage-backed securities and collateralized mortgage obligations10,460 69 (75)10,454 
Other asset-backed securities12,422 67 (53)12,436 
Corporate bonds36,404 332 (123)36,613 
$103,711 $794 $(315)$104,190 
Held-to-maturity investments
U.S. treasury securities$13,179 $21 $(15)$13,185 
Certificates of deposit12,298 — — 12,298 
$25,477 $21 $(15)$25,483 
Maturities of investments classified as available-for-sale and held-to-maturity were as follows (in thousands):
 As of June 30, 2024
 Amortized
Cost		Fair
Value
Available-for-sale:
Due under one year$3,599 $3,567 
Due after one year through five years107,385 107,334 
$110,984 $110,901 
Available-for-sale collateralized:
Mortgage-backed securities and collateralized mortgage obligations$13,422 $13,354 
Other asset-backed securities16,952 16,924 
$30,374 $30,278 
Held-to-maturity:
Due under one year$24,812 $24,800 
Due after one year through five years998 996 
$25,810 $25,796 

9

The Company does not expect any credit losses from its held-to-maturity investments, considering the composition of the investment portfolio and the credit loss history of these investments. For available-for-sale investments, the Company determined that there were unrealized losses of $0.5 million and $0.3 million as of June 30, 2024 and December 31, 2023, respectively. As of June 30, 2024, $15.8 million in available-for-sale investments have been in a loss position for more than twelve months, with total unrealized losses of $0.2 million. As of June 30, 2024, $46.7 million available-for-sale investments have been in a loss position for less than twelve months, with total unrealized losses of $0.2 million. As of December 31, 2023, $18.9 million in available-for-sale investments have been in a loss position for more than twelve months, with total unrealized losses of $0.2 million. As of December 31, 2023, $25.9 million available-for-sale investments have been in a loss position for less than twelve months, with total unrealized losses of $0.1 million. These losses relate to interest rate changes. The Company does not expect any credit losses from its available-for-sale investments, considering the composition of the investment portfolio and the credit rating of these investments. For those securities, the Company determined it is not likely to, and does not intend to, sell prior to a potential recovery.
Proceeds from the sales of fixed maturities classified as available-for-sale were $40.2 million and $58.8 million during the six months ended June 30, 2024 and 2023, respectively.

4. Other Investments
Preferred Stock Investment
The Company has invested $7.0 million in the preferred stock of a variable interest entity, Baystride, Inc. ("Baystride"), a U.S.-based privately held corporation operating in the pet food industry. The Company does not have power over the activities that most significantly impact the economic performance of the entity and is, therefore, not the primary beneficiary. The Company has the option to purchase all of the outstanding common stock issued by Baystride in August 2027 at an amount approximating its expected fair value. The preferred stock investment in the entity is redeemable, and therefore, is accounted for as an available-for-sale debt security, and measured at fair value at each balance sheet date — see Note 5.
Additionally, the Company has extended a $7.0 million revolving line of credit to Baystride to fund its inventory purchases, which will increase annually by $2.0 million until the note’s maturity in 2027. Borrowing amounts are subject to limitations based on Baystride’s forecasted revenues and inventory balances. The Company's investment and amounts loaned under the line of credit are recorded in other long-term assets on its consolidated balance sheet. The outstanding loan balance under the line of credit, including accrued interest, was $2.6 million and $4.0 million as of June 30, 2024 and December 31, 2023, respectively. The Company has also entered into a series of agreements to provide ancillary services to, and receive reimbursement from, Baystride at cost. The Company provided $0.1 million and $0.3 million of these services for the six months ended June 30, 2024 and 2023, respectively.
Allowance for Credit Loss
The Company regularly evaluates its investments for expected credit losses. The Company considers past events, current conditions, and reasonable and supportable forecasts in estimating an allowance for credit losses. Additionally, the Company considers the ultimate collection of cash flows from its investments and whether the Company has the intent to sell, or if it is more likely than not the Company would be required to sell the security prior to recovery of its amortized cost. Such evaluations are revised as conditions change and new information becomes available. Based on these considerations, the Company has established an allowance for credit losses related to its preferred stock investment. The following table presents a rollforward of the allowance for credit losses for this investment.
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Balance at beginning of period$(1,674)$— $(1,674)$— 
(Addition to) allowance for credit losses— — — — 
Balance at end of period$(1,674)$— $(1,674)$— 

10

5. Fair Value
Fair Value Disclosures - Investments
The following table summarizes, by major security type, the Company's assets that are measured at fair value on a recurring basis, and placement within the fair value hierarchy (in thousands):
As of June 30, 2024
Fair ValueLevel 1Level 2Level 3
Assets
Money market funds$73,995 $73,995 $— $— 
Fixed maturities:
Mortgage-backed securities and collateralized mortgage obligations13,354 — 13,354 — 
Other asset-backed securities16,924 — 16,924 — 
Corporate bonds41,201 — 41,201 — 
Foreign deposits13,121 13,121 — — 
U.S. Treasury securities56,579 — 56,579 — 
Preferred stock investment5,326 — — 5,326 
Total$220,500 $87,116 $128,058 $5,326 
As of December 31, 2023
Fair ValueLevel 1Level 2Level 3
Assets
Money market funds$67,360 $67,360 $— $— 
Fixed maturities:
Mortgage-backed securities and collateralized mortgage obligations10,454 — 10,454 — 
Other asset-backed securities12,436 — 12,436 — 
Corporate bonds36,613 — 36,613 — 
Foreign deposits11,869 11,869 — — 
U.S. Treasury securities44,687 — 44,687 — 
Preferred stock investment5,326 — — 5,326 
Total$188,745 $79,229 $104,190 $5,326 

The Company measures the fair value of money market funds and foreign deposits, classified as Level 1, based on quoted prices in active markets for identical assets. The Company's fixed maturity investments classified as either Level 1 or Level 2 in the above tables are priced exclusively by external sources, including pricing vendors, dealers/market makers, and exchange-quoted prices. The fair value of the Company's fixed maturity investments classified as Level 2 is based on either recent trades in inactive markets or quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data. Held-to-maturity investments are carried at amortized cost and the fair value and changes in unrealized gains (losses) are disclosed in Note 3, Investments. The fair value of these investments is determined in the same manner as available-for-sale securities and are considered either a Level 1 or Level 2 measurement.
The Company's preferred stock investment (see Note 4) is accounted for as an available-for-sale debt security, and measured at fair value at each balance sheet date. The estimated fair value of the preferred stock investment is a Level 3 measurement, and is based on certain unobservable inputs such as the value of the underlying enterprise, volatility, time to liquidity, and market interest rates. An increase or decrease in any of these unobservable inputs would result in a change in the fair value measurement. The estimated fair value was $5.3 million as of June 30, 2024, unchanged from December 31, 2023, and is recorded in other long-term assets on the Company's consolidated balance sheet.
The Company recognizes transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. There were no transfers between levels for the six months ended June 30, 2024 and the year ended December 31, 2023.
11

The following table presents the change in fair value of the Company’s preferred stock investment carried at fair value and classified as Level 3 as of June 30, 2024 and 2023 (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Balance at beginning of period$5,326 $4,115 $5,326 $4,115 
Changes in fair value included in earnings— — — — 
Balance at end of period$5,326 $4,115 $5,326 $4,115 
Fair Value Disclosures - Other Assets and Liabilities
The Company's other long-term assets balance also included notes receivable of $5.4 million and $6.8 million as of June 30, 2024 and December 31, 2023, respectively, recorded at their estimated collectible amount. The Company estimates that the carrying value of the notes receivable approximates the fair value. The estimated fair value represents a Level 3 measurement within the fair value hierarchy, and is based on market interest rates and the assessed creditworthiness of the third party.
The Company estimates the fair value of long-term debt based upon rates currently available to the Company for debt with similar terms and remaining maturities. This is a Level 3 measurement. Based upon the terms of the debt, the carrying amount of long-term debt approximated fair value at June 30, 2024.

6. Commitments and Contingencies
Legal Proceedings
From time to time the Company is or may become subject to various legal proceedings arising in the ordinary course of business, including proceedings against members, other entities or regulatory bodies. Estimated liabilities are recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. At this time, the Company does not believe any such matters to be material individually or in the aggregate. These views are subject to change following the outcome of future events or the results of future developments.

7. Reserve for Veterinary Invoices
The reserve for veterinary invoices is an estimate of the future amount the Company will pay for veterinary invoices that have not been processed or received but that are dated as of, or prior to, its balance sheet date. The reserve also includes the Company's estimate of related internal processing costs. The reserve estimate involves actuarial projections, and is based on management's assessment of facts and circumstances currently known, and assumptions about anticipated patterns. The Company uses generally accepted actuarial methodologies, such as paid loss development methods, in estimating the amount of the reserve for veterinary invoices. The reserve is made for each of the Company's segments, subscription and other business, and is continually refined as the Company receives and pays veterinary invoices. Changes in management's assumptions and estimates may have a relatively large impact to the reserve and associated expense.
Reserve for veterinary invoices
Summarized below are the changes in the total liability for the Company's subscription business segment (in thousands):
12

 Six Months Ended June 30,
Subscription20242023
Reserve at beginning of year$31,549 $21,543 
Veterinary invoices during the period related to:
Current year308,158 261,249 
Prior years(323)2,035 
Total veterinary invoice expense307,835 263,284 
Amounts paid during the period related to:
Current year282,043 236,697 
Prior years27,668 20,168 
Total paid309,711 256,865 
Non-cash expenses1,737 1,771 
Reserve at end of period$27,936 $26,191 

The Company had favorable development on veterinary invoice reserves for the subscription business segment of $0.3 million for the six months ended June 30, 2024, and unfavorable development on veterinary invoice reserves of $2.0 million for the six months ended June 30, 2023, both of which were the result of ongoing analysis of recent payment trends.
Summarized below are the changes in total liability for the Company's other business segment (in thousands):
 Six Months Ended June 30,
Other Business20242023
Reserve at beginning of year$31,690 $22,191 
Veterinary invoices during the period related to:
Current year157,764 136,780 
Prior years(928)811 
Total veterinary invoice expense156,836 137,591 
Amounts paid during the period related to:
Current year128,171 109,389 
Prior years27,717 20,382 
Total paid155,888 129,771 
Non-cash expenses— — 
Reserve at end of period$32,638 $30,011 

The Company had favorable development on veterinary invoice reserves for the other business segment of $0.9 million for the six months ended June 30, 2024, and unfavorable development on veterinary invoice reserves of $0.8 million for the six months ended June 30, 2023, both of which were the result of ongoing analysis of recent payment trends.
13

Reserve for veterinary invoices, by year of occurrence
In the following tables, the reserve for veterinary invoices for each segment is presented as the amount (in thousands) by the year to which the veterinary invoice relates, referred to as the year of occurrence.
SubscriptionAs of June 30, 2024
Year of Occurrence
2022 and prior$207 
20233,351 
202424,378 
$27,936 

Other Business As of June 30, 2024
Year of Occurrence
2022 and prior$386 
20232,659 
202429,593 
$32,638 

8. Debt
On March 25, 2022, the Company entered into a credit agreement with Piper Sandler Finance, LLC, acting as the administrative agent, that provides the Company with $150.0 million in credit (the "Credit Facility") consisting of:
(a) an initial term loan in an aggregate principal amount of $60.0 million ("Initial Term Loan"), which was funded at closing;
(b) commitments for delayed draw term loans in an aggregate principal amount not in excess of $75.0 million ("Delayed Draw Term Loans", and together with the Initial Term Loan, the "Term Loans"), which were able to be drawn from time to time until September 25, 2023. On December 29, 2022, February 17, 2023, and September 21, 2023, the Company borrowed Delayed Draw Term loans of $15.0 million, $35.0 million, and $25.0 million, respectively; and
(c) commitments for revolving loans in an aggregate principal amount at any time outstanding not in excess of $15.0 million ("Revolving Loans"), which may be drawn at any time prior to March 25, 2027.
The Credit Facility bears interest at a floating base rate plus an applicable margin. The stated interest rate as of June 30, 2024 was approximately 10.46% for the $60.0 million Initial Term Loan and for the aggregate $75.0 million Term Loans. The Company incurred total debt issuance costs of approximately $5.9 million, which are reported in the consolidated balance sheet as a direct reduction from the carrying amount of the Credit Facility, and are amortized as interest expense over the term of five years.
The Credit Facility is secured by substantially all assets of the Company and its subsidiaries. Proceeds from the Credit Facility may be used for permitted acquisitions and investments, working capital and other general corporate purposes. The Credit Agreement contains financial and other covenants. As of June 30, 2024, the Company was in compliance with all financial and other covenants.
To the extent not previously paid, the Initial Term Loan is due and payable on March 25, 2027, the Delayed Draw Term Loans are due and payable on the earlier of the five-year anniversary of their initial funding or March 25, 2028, and Revolving Loans are due and payable on March 25, 2027. The Company must repay 0.25% of any then-outstanding Term Loans, together with accrued and unpaid interest, on a quarterly basis.
14

Future principal payments on outstanding borrowings as of June 30, 2024 are as follows (in thousands):
Year Ending December 31,June 30, 2024
2024$675 
20251,350 
20261,350 
202772,113 
202857,125 
Thereafter— 
Total$132,613 

9. Stock-Based Compensation
Stock-based compensation expense includes stock options and restricted stock units granted to employees and other service providers and has been reported in the Company’s consolidated statements of operations depending on the function performed by the employee or other service provider. Stock-based compensation expense recognized in each category of the consolidated statements of operations was as follows (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Veterinary invoice expense$854 $866 $1,778 $1,719 
Other cost of revenue541 441 1,007 906 
Technology and development1,261 627 2,515 1,335 
General and administrative3,861 2,948 7,310 11,167 
New pet acquisition expense2,129 1,755 4,188 3,841 
Total expensed stock-based compensation8,646 6,637 16,798 18,968 
Capitalized stock-based compensation126 531 332 1,159 
Total stock-based compensation$8,772 $7,168 $17,130 $20,127 
Restricted Stock Awards and Restricted Stock Units
A summary of the Company’s restricted stock award and restricted stock unit activity is as follows:
Number of 
Shares		Weighted Average
Grant Date Fair Value per Share
Unvested shares as of December 31, 2023714,382 $66.64 
Granted810,347 27.05 
Vested(357,583)64.69 
Forfeited(35,345)46.16 
Unvested shares as of June 30, 20241,131,801 39.55 

As of June 30, 2024, the Company had 1,131,801 unvested restricted stock units. Stock-based compensation expenses of $46.9 million related to unvested restricted stock units are expected to be recognized over a weighted average period of approximately 2.3 years.
In March 2023, two executives terminated employment with the Company and one executive signed a separation agreement effective June 1, 2023. In conjunction with these departures, the Company accelerated the vesting of certain RSUs as of the termination date and extended the purchase date of certain vested options from 90 to 365 days. These award modifications resulted in the recognition of $4.8 million share-based compensation expense during the six months ended June 30, 2023.
15

Stock Options
A summary of the Company's stock option activity is as follows:
Number of OptionsWeighted Average Exercise Price per ShareAggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2023408,970 $14.09 $6,715 
Granted— — — 
Exercised(29,034)16.21 423 
Forfeited(500)14.93 — 
Outstanding as of June 30, 2024379,436 13.93 5,871 
Exercisable as of June 30, 2024379,436 13.93 5,871 

As of June 30, 2024, stock options outstanding and stock options exercisable had a weighted average remaining contractual life of 2.1 years.

10. Stockholders' Equity
Common Stock and Preferred Stock
As of June 30, 2024, the Company had 100,000,000 shares of common stock authorized and 42,159,631 shares of common stock outstanding. Holders of common stock are entitled to one vote on each matter properly submitted to the stockholders of the Company except those related to matters concerning possible outstanding preferred stock. At June 30, 2024, the Company had 10,000,000 shares of undesignated preferred stock authorized for future issuance and did not have any outstanding shares of preferred stock. The holders of common stock are also entitled to receive dividends as and when declared by the board of directors of the Company (the "Board"), whenever funds are legally available. These rights are subordinate to the dividend rights of holders of any senior classes of stock outstanding at the time. The Company does not intend to declare or pay any cash dividends in the foreseeable future.
Share Repurchase Program
In April 2021, the Board approved a share repurchase program, pursuant to which the Company may, between May 2021 and May 2026, repurchase outstanding shares of the Company's common stock. The Company repurchased no shares during the six months ended June 30, 2024 and 2023, respectively.

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11. Accumulated Comprehensive Income (Loss)
A summary of the components of accumulated other comprehensive income (loss) is as follows (in thousands):
For the three months ended June 30, 2024Foreign Currency TranslationNet Unrealized Gain (Loss) on Available-for-Sale SecuritiesTotal
Balance as of April 1, 2024$(1,408)$(173)$(1,581)
Other comprehensive income (loss)(185)(5)(190)
Balance as of June 30, 2024$(1,593)$(178)$(1,771)
For the three months June 30, 2023Foreign Currency TranslationNet Unrealized Gain (Loss) on Available-for-Sale SecuritiesTotal
Balance as of April 1, 2023$(1,233)$(3,022)$(4,255)
Other comprehensive income (loss)1,256 (1,103)153 
Balance as of June 30, 2023$23 $(4,125)$(4,102)
For the six months ended June 30, 2024Foreign Currency TranslationNet Unrealized Gain (Loss) on Available-for-Sale SecuritiesTotal
Balance as of January 1, 2024$(76)$479 $403 
Other comprehensive income (loss)(1,517)(657)(2,174)
Balance as of June 30, 2024$(1,593)$(178)$(1,771)
For the six months ended June 30, 2023Foreign Currency TranslationNet Unrealized Gain (Loss) on Available-for-Sale SecuritiesTotal
Balance as of January 1, 2023$(2,788)$(3,513)$(6,301)
Other comprehensive income (loss)2,811 (612)2,199 
Balance as of June 30, 2023$23 $(4,125)$(4,102)

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12. Segments
The Company has two aggregated reporting segments: subscription business and other business. The subscription business segment consists of products that have been created to meet the needs of their distribution channels and have similar target margin profiles. This segment generates revenue primarily from subscription fees related to the Company's direct-to-consumer products. The other business segment generates revenue primarily by underwriting policies on behalf of third parties. The Company does not undertake marketing efforts for these policies and has a business-to-business relationship with these third-parties. The other business segment also includes other products and insurance software solutions that have a different margin profile from the Company’s subscription business segment.
The chief operating decision maker reviews revenue and operating income (loss) to evaluate segment performance. Revenue, veterinary invoice expense, other cost of revenue, and new pet acquisition expenses are generally directly attributed to each segment. Other operating expenses, such as technology and development expense, general and administrative expense, and depreciation and amortization, are generally allocated proportionately based on revenue in each segment. Interest and other expenses and income taxes are not allocated to the segments, nor included in the measure of segment profit or loss. The Company does not analyze discrete segment balance sheet information related to long-term assets.
Operating income (loss) of the Company’s segments were as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Subscription business:
Revenue$208,618 $173,253 $409,752 $338,463 
Veterinary invoice expense155,480 134,295 307,835 263,283 
Other cost of revenue20,260 17,225 40,036 34,328 
Technology and development5,428 3,350 9,998 6,508 
General and administrative10,108 8,411 19,749 19,484 
New pet acquisition expense17,862 20,707 34,688 42,298 
Depreciation and amortization2,900 2,083 5,385 4,147 
Subscription business operating loss(3,420)(12,818)(7,939)(31,585)
Other business:
Revenue106,182 97,313 211,169 188,432 
Veterinary invoice expense75,622 72,443 156,836 137,592 
Other cost of revenue23,169 17,230 39,718 35,973 
Technology and development2,762 1,882 5,152 3,624 
General and administrative5,145 4,725 10,177 14,669 
New pet acquisition expense12 62 29 113 
Depreciation and amortization1,476 1,170 2,776 2,308 
Other business operating loss(2,004)(199)(3,519)(5,847)
Loss from investment in joint venture(47)(73)(150)(144)
Operating loss(5,471)(13,090)(11,608)(37,576)
Interest expense3,655 2,940 7,251 5,327 
Other income, net(3,220)(2,078)(6,063)(3,980)
Loss before income taxes$(5,906)$(13,952)$(12,796)$(38,923)

18

The following table presents the Company’s revenue by geographic region of the member (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
United States$263,220 $228,673 $519,193 $445,598 
Canada and other51,580 41,893 101,728 81,297 
Total revenue$314,800 $270,566 $620,921 $526,895 
Substantially all of the Company’s long-lived assets were located in the United States as of June 30, 2024 and December 31, 2023.


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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
We provide medical insurance for cats and dogs in the United States, Canada, Continental Europe, Australia, and Puerto Rico. Through our data-driven, vertically-integrated approach, we develop and offer high value medical insurance products, priced specifically for each pet’s unique characteristics and coverage level. Our growing and loyal membership base provides us with highly predictable and recurring revenue.
We operate in two aggregated reporting segments: subscription business and other business. We generate revenue in our subscription business segment primarily by subscription fees from direct-to-consumer products. We operate our subscription business segment similar to other subscription-based businesses, with a focus on achieving a target margin prior to our new 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 and, in Canada, low and medium average revenue per pet products marketed under the brand names, Furkin and PHI Direct. We are the underwriter and provide a full suite of services and support for these products. They are designed to align with the target margin profile of our subscription business segment. Within our subscription business segment, we also offer products in Continental Europe, which are currently underwritten using third-party underwriters.
Our other business segment is comprised of revenue from other product offerings with third parties with whom we generally have a business-to-business relationship. This business segment has a different margin profile than our subscription segment and includes revenue from underwriting policies on behalf of third parties and revenue from other products and insurance software solutions. This segment of our business is not part of our core business strategy and generally has a lower margin. Over time, it is reasonable to expect changes to this segment that may impact the revenue contribution due to a partner or partners rolling off to the new underwriters.
We generate leads for our subscription business segment from a diverse set of member acquisition channels, which we then 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. Veterinary hospitals represent our largest referral source. We engage our “Territory Partners” to have face-to-face visits with veterinarians and their staff. Territory Partners are dedicated to cultivating direct veterinary relationships and building awareness of the benefits of high quality medical insurance to veterinarians and their clients. Veterinarians then educate pet owners, who visit our website or call our contact center to learn more about, and potentially enroll in, Trupanion. 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. We monitor average pet acquisition cost to evaluate the efficiency in acquiring new members and measure effectiveness based on our targeted return on investment.
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Key Operating Metrics
The following tables set forth total pets enrolled 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,
20242023
Total Business:
Total pets enrolled (at period end)1,699,643 1,679,659 
Subscription Business:
Total subscription pets enrolled (at period end)1,020,934 943,958 
Monthly average revenue per pet$70.76 $64.00 
Lifetime value of a pet, including fixed expenses$450 $470 
Average pet acquisition cost (PAC)$219 $241 
Average monthly retention98.34 %98.61 %
Three Months Ended
Jun. 30, 2024Mar. 31, 2024Dec. 31, 2023Sep. 30, 2023Jun. 30, 2023Mar. 31, 2023Dec. 31, 2022Sep. 30, 2022
Total Business:
Total pets enrolled (at period end)1,699,643 1,708,017 1,714,473 1,712,177 1,679,659 1,616,865 1,537,573 1,439,605 
Subscription Business:
Total subscription pets enrolled (at period end)1,020,934 1,006,168 991,426 969,322 943,958 906,369 869,862 808,077 
Monthly average revenue per pet$71.72 $69.79 $67.07 $65.82 $64.41 $63.58 $63.11 $63.80 
Lifetime value of a pet, including fixed expenses$450 $428 $419 $428 $470 $541 $641 $673 
Average pet acquisition cost (PAC)$231 $207 $217 $212 $236 $247 $283 $268 
Average monthly retention98.34 %98.41 %98.49 %98.55 %98.61 %98.65 %98.69 %98.71 %



Total pets enrolled and total subscription pets enrolled include pet enrollments in European markets, where policies are currently underwritten by third parties and Trupanion is acting as an insurance broker. Per pet metrics, however, exclude these European policies, as their revenue is currently earned from commissions, as opposed to the gross underwriting premiums earned by the remainder of our subscription business.
Total pets enrolled. Total pets enrolled reflects the number of subscription pets and pets enrolled in one of the insurance products offered in 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.
Total subscription pets enrolled. Total subscription pets enrolled reflects the number of pets in active memberships at the end of each period presented. We monitor total subscription pets enrolled because it provides an indication of the growth of our subscription business.
Monthly average revenue per pet. Monthly average revenue per pet is calculated as amounts billed in a given period for subscriptions divided by the total number of subscription pet months in the period. Total subscription pet months in a period represents the sum of all subscription pets enrolled for each month during the period. We monitor monthly average revenue per pet because it is an indicator of the per pet unit economics of our subscription business.
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Lifetime value of a pet, including fixed expenses. Lifetime value of a pet, including fixed expenses, is calculated based on subscription revenue less cost of revenue from our subscription business segment for the 12 months prior to the period end date excluding stock-based compensation expense related to cost of revenue from our subscription business segment, sign-up fee revenue, and the change in deferred revenue between periods. This amount is also reduced by the fixed expenses related to our subscription business, which are the pro-rata portion of general and administrative and technology and development expenses, less stock-based compensation, based on revenues. This amount, on a per pet basis, is multiplied by the implied average subscriber life in months. Implied average subscriber life in months is calculated as the quotient obtained by dividing one by one minus the average monthly retention rate. We monitor lifetime value of a pet, including fixed expenses, to estimate the value we might expect from new pets over their implied average subscriber life in months, if they behave like the average pet in that respective period. When evaluating the amount of pet acquisition expenses we may want to incur to attract new pet enrollments, we refer to the lifetime value of a pet, including fixed expenses, as well as our estimated internal rate of return calculation for an average pet, which also includes an estimated surplus capital charge, to inform the amount of acquisition spend in relation to the estimated payback period.
Average pet acquisition cost. Average pet acquisition cost ("PAC") is calculated as net acquisition cost divided by the total number of new subscription pets enrolled in that period. Net acquisition cost, a non-GAAP financial measure, is calculated in a reporting period as new pet acquisition expense, excluding stock-based compensation expense, other business segment expense, offset by sign-up fee revenue. We exclude stock-based compensation expense because the amount varies from period to period based on number of awards issued and market-based valuation inputs. We offset sign-up fee revenue because it is a one-time charge to new members collected at the time of enrollment used to partially offset initial setup costs, which are included in new pet acquisition expenses. We exclude other business segment pet acquisition expense because that does not relate to subscription enrollments. We monitor average pet acquisition cost to evaluate the efficiency in acquiring new members and measure effectiveness based on our targeted return on investment.
Average monthly retention. Average monthly retention is measured as the monthly retention rate of enrolled subscription pets for each applicable period averaged over the 12 months prior to the period end date. As such, our average monthly retention rate as of June 30, 2024 is an average of each month’s retention from July 1, 2023 through June 30, 2024. 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. We monitor average monthly retention because it provides a measure of member satisfaction and allows us to calculate the implied average subscriber life in months.

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Non-GAAP Financial Measures
In addition to our results determined in accordance with U.S. GAAP, we believe the following non-GAAP financial measures are useful in evaluating our operating performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that these non-GAAP financial measures, when taken collectively, may be helpful to investors in providing consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for, the directly comparable financial measures prepared in accordance with GAAP.
We calculate these non-GAAP financial measures by excluding certain non-cash or non-recurring expenses. We exclude non-recurring transactions and restructuring expenses as they are not indicative of our operating performance. We exclude stock-based compensation as it is non-cash in nature. Although stock-based compensation expenses are expected to remain recurring expenses for the foreseeable future, we believe excluding them allows investors to make meaningful comparisons between our recurring core business operating results and those of other companies. We define non-GAAP development expenses as operating expenses incurred to develop new products and offerings that are pre-revenue. 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.

23

The following tables present the reconciliation of our non-GAAP financial measures from corresponding GAAP measures for the periods presented (in thousands):
Six Months Ended June 30,
20242023
Veterinary invoice expense$464,671 $400,875 
Less:
Stock-based compensation expense(1)
(1,705)(1,695)
Other business cost of paying veterinary invoices(4)
(156,836)(137,592)
Subscription cost of paying veterinary invoices (non-GAAP)$306,130 $261,588 
% of subscription revenue74.7 %77.3 %
Other cost of revenue$79,754 $70,301 
Less:
Stock-based compensation expense(1)
(943)(876)
Other business variable expenses(4)
(39,589)(35,973)
Subscription variable expenses (non-GAAP)$39,222 $33,452 
% of subscription revenue9.6 %9.9 %
Technology and development expense$15,150 $10,132 
General and administrative expense29,926 34,153 
Less:
Stock-based compensation expense(1)
(9,208)(12,318)
Non-recurring transaction or restructuring expenses(2)
— (4,167)
Development expenses(3)
(2,832)(1,823)
Fixed expenses (non-GAAP)$33,036 $25,977 
% of total revenue5.3 %4.9 %
New pet acquisition expense$34,717 $42,411 
Less:
Stock-based compensation expense(1)
(3,923)(3,754)