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Trupanion Reports Second Quarter 2025 Results

By Trupanion, Inc. | August 07, 2025, 4:05 PM

SEATTLE, Aug. 07, 2025 (GLOBE NEWSWIRE) -- Trupanion, Inc. (Nasdaq: TRUP), the leading provider of medical insurance for cats and dogs, today announced financial results for the second quarter ended June 30, 2025.

“The second quarter was one of the strongest financial quarters in our history, marked by consistent top-line growth, robust margin expansion and strengthening retention,” said Margi Tooth, Chief Executive Officer and President of Trupanion. “These results create a strong foundation to invest in this globally underpenetrated market and bring the benefits of Trupanion to more pets and pet parents.”

TRUP Q2 ER Photo

Second Quarter 2025 Financial and Business Highlights

  • Total revenue was $353.6 million, an increase of 12% compared to the second quarter of 2024.
  • Total enrolled pets (including pets from our other business segment) was 1,660,455 at June 30, 2025, a decrease of 2% over June 30, 2024.
  • Subscription business revenue was $242.2 million, an increase of 16% compared to the second quarter of 2024.
  • Subscription enrolled pets was 1,066,354 at June 30, 2025, an increase of 4% over June 30, 2024.
  • Net income was $9.4 million, or $0.22 per basic and diluted share, compared to net loss of $(5.9) million, or $(0.14) per basic and diluted share, in the second quarter of 2024. Net income included a realized gain of $7.8 million from the exchange of a preferred stock investment for intellectual property in the second quarter of 2025.
  • Adjusted EBITDA was $16.6 million, compared to adjusted EBITDA of $7.4 million in the second quarter of 2024.
  • Operating cash flow was $15.0 million and free cash flow was $12.0 million in the second quarter of 2025. This compared to operating cash flow of $6.9 million and free cash flow of $4.0 million in the second quarter of 2024.

First Half 2025 Financial and Business Highlights

  • Total revenue was $695.5 million, an increase of 12% compared to the first half of 2024.
  • Subscription business revenue was $475.2 million, an increase of 16% compared to the first half of 2024.
  • Net income was $7.9 million, or $0.19 per basic and $0.18 per diluted share, compared to net loss of $(12.7) million, or $(0.30) per basic and diluted share, in the first half of 2024. Net income included a realized gain of $7.8 million from the exchange of a preferred stock investment for intellectual property in the first half of 2025.
  • Adjusted EBITDA was $28.8 million, compared to adjusted EBITDA of $12.2 million in the first half of 2024.
  • Operating cash flow was $31.0 million and free cash flow was $26.1 million in the first half of 2025. This compared to operating cash flow of $9.3 million and free cash flow of $3.3 million in the first half of 2024.
  • At June 30, 2025, the Company held $319.6 million in cash and short-term investments, including $53.3 million held outside the insurance entities, with an additional $15 million available under its credit facility.

Conference Call
Trupanion’s management will host a conference call today to review its second quarter 2025 results. The call is scheduled to begin shortly after 1:30 p.m. PT/ 4:30 p.m. ET. A live webcast will be accessible through the Investor Relations section of Trupanion’s website at https://investors.trupanion.com/ and will be archived online for 3 months upon completion of the conference call. Participants can access the conference call by dialing 1-844-676-1342 (United States) or 1-412-634-6683 (International). A telephonic replay of the call will also be available after the completion of the call, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (International) and entering the replay pin number: 10200168.

About Trupanion
Trupanion is a leader in medical insurance for cats and dogs throughout the United States, Canada, and certain countries in Continental Europe with over 1,000,000 pets currently enrolled. For over two decades, Trupanion has given pet owners peace of mind so they can focus on their pet's recovery, not financial stress. Trupanion is committed to providing pet parents with the highest value in pet medical insurance with unlimited payouts for the life of their pets. With its patented process, Trupanion is the only North American provider with the technology to pay veterinarians directly in seconds at the time of checkout. Trupanion is listed on NASDAQ under the symbol "TRUP". The company was founded in 2000 and is headquartered in Seattle, WA. Trupanion policies are issued, in the United States, by its wholly owned insurance entity American Pet Insurance Company and, in Canada, by Accelerant Insurance Company of Canada or GPIC Insurance Company. Policies are sold and administered in Canada by Canada Pet Health Insurance Services, Inc. dba Trupanion 309-1277 Lynn Valley Road, North Vancouver, BC V7J 0A2 and in the United States by Trupanion Managers USA, Inc. (CA license No. 0G22803, NPN 9588590). Canada Pet Health Insurance Services, Inc. is a registered damage insurance agency and claims adjuster in Quebec #603927. For more information, please visit trupanion.com.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to, among other things, expectations, plans, prospects and financial results for Trupanion, including, but not limited to, its expectations regarding its ability to continue to grow its enrollments and revenue, and otherwise execute its business plan. These forward-looking statements are based upon the current expectations and beliefs of Trupanion’s management as of the date of this press release, and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. All forward-looking statements made in this press release are based on information available to Trupanion as of the date hereof, and Trupanion has no obligation to update these forward-looking statements.

In particular, the following factors, among others, could cause results to differ materially from those expressed or implied by such forward-looking statements: the ability to achieve or maintain profitability and/or appropriate levels of cash flow in future periods; the ability to keep growing our membership base and revenue; the accuracy of assumptions used in determining appropriate member acquisition expenditures; the severity and frequency of claims; the ability to maintain high retention rates; the accuracy of assumptions used in pricing medical plan subscriptions and the ability to accurately estimate the impact of new products or offerings on claims frequency; actual claims expense exceeding estimates; regulatory and other constraints on the ability to institute, or the decision to otherwise delay, pricing modifications in response to changes in actual or estimated claims expense; the effectiveness and statutory or regulatory compliance of our Territory Partner model and of our Territory Partners, veterinarians and other third parties in recommending medical plan subscriptions to potential members; the ability to retain existing Territory Partners and increase the number of Territory Partners and active hospitals; compliance by us and those referring us members with laws and regulations that apply to our business, including the sale of a pet medical plan; the ability to maintain the security of our data; fluctuations in the Canadian currency exchange rate; the ability to protect our proprietary and member information; the ability to maintain our culture and team; the ability to maintain the requisite amount of risk-based capital; our ability to implement and maintain effective controls, including to remediate material weaknesses in internal controls over financial reporting; the ability to protect and enforce Trupanion’s intellectual property rights; the ability to successfully implement our alliance with Aflac; the ability to continue key contractual relationships with third parties; third-party claims including litigation and regulatory actions; the ability to recognize benefits from investments in new solutions and enhancements to Trupanion’s technology platform and website; our ability to retain key personnel; and deliberations and determinations by the Trupanion board based on the future performance of the company or otherwise.

For a detailed discussion of these and other cautionary statements, please refer to the risk factors discussed in filings with the Securities and Exchange Commission (SEC), including but not limited to, Trupanion’s Annual Report on Form 10-K for the year ended December 31, 2024 and any subsequently filed reports on Forms 10-Q, 10-K and 8-K. All documents are available through the SEC’s Electronic Data Gathering Analysis and Retrieval system at https://www.sec.gov or the Investor Relations section of Trupanion’s website at https://investors.trupanion.com.

Non-GAAP Financial Measures
Trupanion’s stated results may include certain non-GAAP financial measures. These non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in its industry as other companies in its industry may calculate or use non-GAAP financial measures differently. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on Trupanion’s reported financial results. The presentation and utilization of non-GAAP financial measures is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. Trupanion urges its investors to review the reconciliation of its non-GAAP financial measures to the most directly comparable GAAP financial measures in its consolidated financial statements, and not to rely on any single financial or operating measure to evaluate its business. These reconciliations are included below and on Trupanion’s Investor Relations website.

Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a company’s non-cash expenses, Trupanion believes that providing various non-GAAP financial measures that exclude stock-based compensation expense and depreciation and amortization expense allows for more meaningful comparisons between its operating results from period to period. Trupanion offsets new pet acquisition expense with sign-up fee revenue in the calculation of net acquisition cost because it collects sign-up fee revenue from new members at the time of enrollment and considers it to be an offset to a portion of Trupanion’s new pet acquisition expense. Trupanion believes this allows it to calculate and present financial measures in a consistent manner across periods. Trupanion’s management believes that the non-GAAP financial measures and the related financial measures derived from them are important tools for financial and operational decision-making and for evaluating operating results over different periods of time.

Trupanion, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share data)
 
 Three Months Ended June 30, Six Months Ended June 30,
  2025   2024   2025   2024 
 (unaudited)
Revenue:       
Subscription business$242,156  $208,618  $475,220  $409,752 
Other business 111,401   106,182   220,312   211,169 
Total revenue 353,557   314,800   695,532   620,921 
Cost of revenue:       
Subscription business 195,488   175,740   385,333   347,871 
Other business 103,242   98,791   204,269   196,554 
Total cost of revenue(1), (2) 298,730   274,531   589,602   544,425 
Operating expenses:       
Technology and development(1) 8,586   8,190   16,658   15,150 
General and administrative(1) 20,122   15,253   40,014   29,926 
New pet acquisition expense(1) 19,843   17,874   40,359   34,717 
Depreciation and amortization 3,962   4,376   7,753   8,161 
Total operating expenses 52,513   45,693   104,784   87,954 
Loss from investment in joint venture    (47)  (305)  (150)
Operating income (loss) 2,314   (5,471)  841   (11,608)
Interest expense 3,682   3,655   6,893   7,251 
Other (income), net (11,914)  (3,220)  (15,154)  (6,063)
Income (loss) before income taxes 10,546   (5,906)  9,102   (12,796)
Income tax (benefit) expense 1,133   (44)  1,172   (82)
Net income (loss)$9,413  $(5,862) $7,930  $(12,714)
        
Net income (loss) per share:       
Basic$0.22  $(0.14) $0.19  $(0.30)
Diluted$0.22  $(0.14) $0.18  $(0.30)
Weighted average shares of common stock outstanding:       
Basic 42,872,153   42,078,271   42,734,426   41,997,683 
Diluted 43,325,704   42,078,271   43,544,325   41,997,683 
        
(1)Includes stock-based compensation expense as follows:
Three Months Ended June 30,
 Six Months Ended June 30,
 
  2025   2024   2025   2024 
Veterinary invoice expense$774  $854  $1,544  $1,778 
Other cost of revenue 605   541   1,094   1,007 
Technology and development 1,470   1,261   2,621   2,515 
General and administrative 5,047   3,861   9,575   7,310 
New pet acquisition expense 1,560   2,129   4,452   4,188 
Total stock-based compensation expense$9,456  $8,646  $19,286  $16,798 
        
(2)The breakout of cost of revenue between veterinary invoice expense and other cost of revenue is as follows:
 Three Months Ended June 30, Six Months Ended June 30,
  2025   2024   2025   2024 
Veterinary invoice expense$255,580  $231,102  $503,030  $464,671 
Other cost of revenue 43,150   43,429   86,572   79,754 
Total cost of revenue$298,730  $274,531  $589,602  $544,425 
                


Trupanion, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
 
 June 30, 2025 December 31, 2024
 (unaudited)  
Assets   
Current assets:   
Cash and cash equivalents$122,742  $160,295 
Short-term investments 196,854   147,089 
Accounts and other receivables, net of allowance for doubtful accounts of $1,357 at June 30, 2025 and $1,117 at December 31, 2024 292,820   274,031 
Prepaid expenses and other assets 16,665   15,912 
Total current assets 629,081   597,327 
Restricted cash 41,729   39,235 
Long-term investments 167   373 
Property, equipment, and internal-use software, net 101,785   102,191 
Intangible assets, net 26,134   13,177 
Other long-term assets 7,904   17,579 
Goodwill 40,989   36,971 
Total assets$847,789  $806,853 
Liabilities and stockholders’ equity   
Current liabilities:   
Accounts payable$8,670  $11,532 
Accrued liabilities and other current liabilities 37,629   33,469 
Reserve for veterinary invoices 52,523   51,635 
Deferred revenue 272,120   251,640 
Long-term debt - current portion 1,350   1,350 
Total current liabilities 372,292   349,626 
Long-term debt 113,116   127,537 
Deferred tax liabilities 2,007   1,946 
Other liabilities 4,920   4,476 
Total liabilities 492,335   483,585 
Stockholders’ equity:   
Common stock: $0.00001 par value per share, 100,000,000 shares authorized; 44,015,958 and 42,987,772 issued and outstanding at June 30, 2025; 43,516,631 and 42,488,445 shares issued and outstanding at December 31, 2024     
Preferred stock: $0.00001 par value per share, 10,000,000 shares authorized; no shares issued and outstanding     
Additional paid-in capital 587,289   568,302 
Accumulated other comprehensive income (loss) 2,657   (2,612)
Accumulated deficit (217,958)  (225,888)
Treasury stock, at cost: 1,028,186 shares at June 30, 2025 and December 31, 2024 (16,534)  (16,534)
Total stockholders’ equity 355,454   323,268 
Total liabilities and stockholders’ equity$847,789  $806,853 
 


Trupanion, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
 
 Three Months Ended June 30, Six Months Ended June 30,
  2025   2024   2025   2024 
 (unaudited)
Operating activities       
Net income (loss)$9,413  $(5,862) $7,930  $(12,714)
Adjustments to reconcile net income (loss) to cash provided by operating activities:       
Depreciation and amortization 3,962   4,376   7,753   8,161 
Stock-based compensation expense 9,456   8,646   19,286   16,798 
Realized gain on nonmonetary exchange of preferred stock investment (7,783)     (7,783)   
Other, net 601   (116)  951   (318)
Changes in operating assets and liabilities:       
Accounts and other receivables (2,050)  (7,508)  (18,015)  (18,226)
Prepaid expenses and other assets (380)  2,010   (584)  2,297 
Accounts payable, accrued liabilities, and other liabilities (536)  3,404   990   (1,727)
Reserve for veterinary invoices (1,710)  (1,650)  697   (2,535)
Deferred revenue 4,051   3,555   19,764   17,554 
Net cash provided by operating activities 15,024   6,855   30,989   9,290 
Investing activities       
Purchases of investment securities (101,125)  (62,056)  (142,000)  (81,249)
Maturities and sales of investment securities 61,022   36,673   94,264   55,678 
Purchases of property, equipment, and internal-use software (2,977)  (2,880)  (4,904)  (5,945)
Other 613   546   1,200   1,062 
Net cash used in investing activities (42,467)  (27,717)  (51,440)  (30,454)
Financing activities       
Repayment of debt financing (15,187)  (337)  (15,525)  (675)
Proceeds from exercise of stock options 303   99   1,327   471 
Shares withheld to satisfy tax withholding (774)  (343)  (1,688)  (588)
Other (230)  (377)  (460)  (452)
Net cash used in financing activities (15,888)  (958)  (16,346)  (1,244)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash, net 1,792   (150)  1,738   (463)
Net change in cash, cash equivalents, and restricted cash (41,539)  (21,969)  (35,059)  (22,871)
Cash, cash equivalents, and restricted cash at beginning of period 206,010   169,562   199,530   170,464 
Cash, cash equivalents, and restricted cash at end of period$164,471  $147,593  $164,471  $147,593 
 


The following tables set forth our key operating metrics.
                
 Six Months Ended June 30,            
  2025   2024             
Total Business:               
Total pets enrolled (at period end) 1,660,455   1,699,643             
Subscription Business:               
Total subscription pets enrolled (at period end) 1,066,354   1,020,934             
Monthly average revenue per pet$78.73  $70.76             
Average pet acquisition cost (PAC)$272  $219             
Average monthly retention 98.29%  98.34%            
                
                
 Three Months Ended
 Jun. 30, 2025 Mar. 31, 2025 Dec. 31, 2024 Sep. 30, 2024 Jun. 30, 2024 Mar. 31, 2024 Dec. 31, 2023 Sep. 30, 2023
Total Business:               
Total pets enrolled (at period end) 1,660,455   1,667,637   1,677,570   1,688,903   1,699,643   1,708,017   1,714,473   1,712,177 
Subscription Business:               
Total subscription pets enrolled (at period end) 1,066,354   1,052,845   1,041,212   1,032,042   1,020,934   1,006,168   991,426   969,322 
Monthly average revenue per pet$79.93  $77.53  $76.02  $74.27  $71.72  $69.79  $67.07  $65.82 
Average pet acquisition cost (PAC)$276  $267  $261  $243  $231  $207  $217  $212 
Average monthly retention 98.29%  98.28%  98.25%  98.29%  98.34%  98.41%  98.49%  98.55%
                                


The following table reflects the reconciliation of cash provided by operating activities to free cash flow (in thousands):
        
 Three Months Ended June 30, Six Months Ended June 30,
  2025   2024   2025   2024 
Net cash provided by operating activities$15,024  $6,855  $30,989  $9,290 
Purchases of property, equipment, and internal-use software (2,977)  (2,880)  (4,904)  (5,945)
Free cash flow$12,047  $3,975  $26,085  $3,345 
 


The following tables reflect the reconciliation between GAAP and non-GAAP measures (in thousands except percentages):
  Three months ended June 30, Six Months Ended June 30,
   2025   2024   2025   2024 
Veterinary invoice expense $255,580  $231,102  $503,030  $464,671 
Less:        
Stock-based compensation expense(1)  (758)  (843)  (1,522)  (1,705)
Other business cost of paying veterinary invoices(2)  (82,706)  (75,622)  (161,975)  (156,836)
Subscription cost of paying veterinary invoices (non-GAAP) $172,116  $154,637  $339,533  $306,130 
% of subscription revenue  71.1%  74.1%  71.4%  74.7%
         
Other cost of revenue $43,150  $43,429  $86,572  $79,754 
Less:        
Stock-based compensation expense(1)  (601)  (523)  (1,082)  (943)
Other business variable expenses(2)  (20,531)  (23,091)  (42,267)  (39,589)
Subscription variable expenses (non-GAAP) $22,018  $19,815  $43,223  $39,222 
% of subscription revenue  9.1%  9.5%  9.1%  9.6%
         
Technology and development expense $8,586  $8,190  $16,658  $15,150 
General and administrative expense  20,122   15,253   40,014   29,926 
Less:        
Stock-based compensation expense(1)  (6,393)  (4,949)  (11,788)  (9,208)
Development expenses(3)  (946)  (1,655)  (2,353)  (2,832)
Fixed expenses (non-GAAP) $21,369  $16,839  $42,531  $33,036 
% of total revenue  6.0%  5.3%  6.1%  5.3%
         
New pet acquisition expense $19,843  $17,874  $40,359  $34,717 
Less:        
Stock-based compensation expense(1)  (1,516)  (2,066)  (4,390)  (3,923)
Other business pet acquisition expense(2)  (74)  (10)  (77)  (23)
Subscription acquisition cost (non-GAAP) $18,253  $15,798  $35,892  $30,771 
% of subscription revenue  7.5%  7.6%  7.6%  7.5%
(1) Trupanion employees may elect to take restricted stock units in lieu of cash payment for their bonuses. We account for such expense as stock-based compensation according to GAAP, but we do not include it in any non-GAAP adjustments. Stock-based compensation associated with bonuses was approximately $0.2 million and $0.5 million for the three and six months ended June 30, 2025, respectively.
(2) Excludes the portion of stock-based compensation expense attributable to the other business segment                                                                                                                                                                                                                                                                                                                                                                                    
(3) Consists of costs related to product exploration and development that are pre-revenue and historically have been insignificant.


The following tables reflect the reconciliation of GAAP measures to non-GAAP measures (in thousands, except percentages):
 Three Months Ended June 30, Six Months Ended June 30,
  2025   2024   2025   2024 
Operating income (loss)$2,314  $(5,471) $841  $(11,608)
Non-GAAP expense adjustments       
Acquisition cost 18,327   15,808   35,969   30,793 
Stock-based compensation expense(1) 9,268   8,381   18,782   15,780 
Development expenses(2) 946   1,656   2,353   2,833 
Depreciation and amortization 3,962   4,376   7,753   8,161 
Loss from investment in joint venture    (47)  (305)  (150)
Total adjusted operating income (non-GAAP)$34,817  $24,797  $66,003  $46,109 
        
Subscription Business:       
Subscription operating income (loss)$4,523  $(3,420) $5,590  $(7,939)
Non-GAAP expense adjustments       
Acquisition cost 18,253   15,798   35,892   30,771 
Stock-based compensation expense(1) 7,248   6,631   15,017   12,512 
Development expenses(2) 648   1,097   1,610   1,871 
Depreciation and amortization 2,714   2,900   5,297   5,385 
Subscription adjusted operating income (non-GAAP)$33,386  $23,006  $63,406  $42,600 
        
Other Business:       
Other business operating loss$(2,209) $(2,004) $(4,444) $(3,519)
Non-GAAP expense adjustments       
Acquisition cost 74   10   77   22 
Stock-based compensation expense(1) 2,020   1,750   3,765   3,268 
Development expenses(2) 298   559   743   962 
Depreciation and amortization 1,248   1,476   2,456   2,776 
Other business adjusted operating income (non-GAAP)$1,431  $1,790  $2,597  $3,510 
(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 $0.2 million and $0.5 million for the three and six months ended June 30, 2025, respectively.
(2) Consists of costs related to product exploration and development that are pre-revenue and historically have been insignificant.
 


The following tables reflect the reconciliation of GAAP measures to non-GAAP measures (in thousands, except percentages):
  Three Months Ended June 30,
 Six Months Ended June 30,
   
   2025   2024   2025   2024 
Subscription revenue $242,156  $208,618  $475,220  $409,752 
Subscription cost of paying veterinary invoices  172,116   154,637   339,533   306,130 
Subscription variable expenses  22,018   19,815   43,223   39,222 
Subscription fixed expenses*  14,636   11,160   29,058   21,800 
Subscription adjusted operating income (non-GAAP) $33,386  $23,006  $63,406  $42,600 
         
Other business revenue $111,401   106,182  $220,312  $211,169 
Other business cost of paying veterinary invoices  82,706   75,622   161,975   156,836 
Other business variable expenses  20,531   23,090   42,267   39,588 
Other business fixed expenses*  6,733   5,679   13,473   11,236 
Other business adjusted operating income (non-GAAP) $1,431  $1,791  $2,597  $3,509 
         
Revenue $353,557  $314,800  $695,532  $620,921 
Cost of paying veterinary invoices  254,822   230,259   501,508   462,966 
Variable expenses  42,549   42,905   85,490   78,810 
Fixed expenses*  21,369   16,839   42,531   33,036 
Total business adjusted operating income (non-GAAP) $34,817  $24,797  $66,003  $46,109 
         
As a percentage of revenue: Three Months Ended June 30, Six Months Ended June 30,
   2025   2024   2025   2024 
Subscription revenue  100.0%  100.0%  100.0%  100.0%
Subscription cost of paying veterinary invoices  71.1%  74.1%  71.4%  74.7%
Subscription variable expenses  9.1%  9.5%  9.1%  9.6%
Subscription fixed expenses*  6.0%  5.3%  6.1%  5.3%
Subscription adjusted operating income (non-GAAP)  13.8%  11.0%  13.3%  10.4%
         
Other business revenue  100.0%  100.0%  100.0%  100.0%
Other business cost of paying veterinary invoices  74.2%  71.2%  73.5%  74.3%
Other business variable expenses  18.4%  21.7%  19.2%  18.7%
Other business fixed expenses*  6.0%  5.3%  6.1%  5.3%
Other business adjusted operating income (non-GAAP)  1.3%  1.7%  1.2%  1.7%
         
Revenue  100.0%  100.0%  100.0%  100.0%
Cost of paying veterinary invoices  72.1%  73.1%  72.1%  74.6%
Variable expenses  12.0%  13.6%  12.3%  12.7%
Fixed expenses*  6.0%  5.3%  6.1%  5.3%
Total business adjusted operating income (non-GAAP)  9.8%  7.9%  9.5%  7.4%
         
*Fixed expenses represent shared services that support both our subscription and other business segments and, as such, are generally allocated to each segment pro-rata based on revenues.
 

Adjusted operating income is a non-GAAP financial measure that adjusts operating income (loss) to remove the effect of acquisition cost, development expenses, non-recurring transaction or restructuring expenses, and gain (loss) from investment in joint venture. Non-cash items, such as stock-based compensation expense and depreciation and amortization, are also excluded. Acquisition cost, development expenses, gain (loss) from investment in joint venture, stock-based compensation expense, and depreciation and amortization are expected to remain recurring expenses for the foreseeable future, but are excluded from this metric to measure scale in other areas of the business. Management believes acquisition costs primarily represent the cost to acquire new subscribers and are driven by the amount of growth we choose to pursue based primarily on the amount of our adjusted operating income period over period. Accordingly, this measure is not indicative of our core operating income performance. We also exclude development expenses, gain (loss) from investment in joint venture, stock-based compensation expense, and depreciation and amortization because we do not view those items as reflective of our core operating income performance.

Management uses adjusted operating income and the margin on adjusted operating income to understand the effects of scale in its non-acquisition cost and development expenses and to plan future advertising expenditures, which are designed to acquire new pets. Management uses this measure as a principal way of understanding the operating performance of its business exclusive of acquisition cost and new product exploration and development initiatives.  Management believes disclosure of this metric provides investors with the same data that the Company employs in assessing its overall operations and that disclosure of this measure may provide useful information regarding the efficiency of our utilization of revenues, return on advertising dollars in the form of new subscribers and future use of available cash to support the continued growth of our business.

The following tables reflect the reconciliation of adjusted EBITDA to net loss (in thousands):
                
 Six Months Ended June 30,            
  2025   2024             
Net Income (loss)$7,930  $(12,714)            
Excluding:               
Stock-based compensation expense 18,782   15,779             
Depreciation and amortization expense 7,753   8,161             
Interest income (5,940)  (6,180)            
Interest expense 6,893   7,251             
Income tax (benefit) expense 1,172   (82)            
Realized gain on nonmonetary exchange of preferred stock investment (7,783)               
Adjusted EBITDA$28,807  $12,215             
                
 Three Months Ended
 Jun. 30, 2025 Mar. 31, 2025 Dec. 31, 2024 Sep. 30, 2024 Jun. 30, 2024 Mar. 31, 2024 Dec. 31, 2023 Sep. 30, 2023
Net Income (loss)$9,413  $(1,483) $1,656  $1,425  $(5,862) $(6,852) $(2,163) $(4,036)
Excluding:               
Stock-based compensation expense 9,268   9,514   8,036   8,127   8,381   7,398   6,636   6,585 
Depreciation and amortization expense 3,962   3,791   3,924   4,381   4,376   3,785   3,029   2,990 
Interest income (3,105)  (2,835)  (2,999)  (3,232)  (3,135)  (3,045)  (2,842)  (2,389)
Interest expense 3,682   3,211   3,427   3,820   3,655   3,596   3,697   3,053 
Income tax (benefit) expense 1,133   39   38   39   (44)  (38)  130   (43)
Goodwill impairment charges       5,299                
Non-recurring transaction or restructuring expenses                      8 
Gain from equity method investment          (33)           (110)
Realized gain on nonmonetary exchange of preferred stock investment (7,783)                     
Adjusted EBITDA$16,570  $12,237  $19,381  $14,527  $7,371  $4,844  $8,487  $6,058 
 

Contacts:

Investors:
Laura Bainbridge, Senior Vice President, Corporate Communications
Gil Melchior, Director, Investor Relations
[email protected]

An infographic accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/f6477832-396a-4546-a27c-6b35c14193b7


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