Delaware
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83-0480694
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Number)
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Title of Each Class
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Name of Exchange on Which Registered
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Common Stock, $0.00001 par value per share
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NASDAQ Stock Market LLC
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Large accelerated filer
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o
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Accelerated filer
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x
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Non-accelerated filer
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o
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(Do not check if smaller reporting company)
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Smaller reporting company
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o
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Emerging growth company
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x
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Page
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16.
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•
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Referrals from third-parties.
We actively promote the value of Trupanion to veterinarians, veterinary affiliates (including purchasing groups and other veterinary membership organizations), corporate employee benefit providers, and shelters and breeders so they can inform their clients on the benefits of Trupanion. For the year ended
December 31, 2017
, 67% of our new pet enrollments were generated from these third-party referrals (excluding referral from existing members).
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Referrals from existing members.
For the year ended
December 31, 2017
,
26%
of our new pet enrollments were generated from existing members adding a pet or referring their friends and family.
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Online.
We believe many of our members spend some time researching options before deciding to purchase our subscription. A significant portion of the members we acquire from online leads come through our paid search marketing, email marketing, social media marketing and search engine optimization initiatives.
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licensing to transact business, and approval and issuance of certificates of authority;
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revoking or suspending previously issued certificates of authority;
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assessing the officers and directors to ensure a minimum level of competency and trustworthiness;
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licensing of individual producers and agents and business entities marketing and selling insurance products;
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licensing of claims adjusters and third-party administrators;
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penalizing for noncompliance with respect to licensing requirements and regulations;
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admitting assets to statutory surplus and regulating the nature of investments;
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regulating premium rate levels for the insurance products offered;
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approving policy forms;
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regulating claims practices; and
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establishing reserve requirements and solvency standards.
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We must file periodic information reports with the NY DFS, including information concerning our capital structure, ownership, financial condition and general business operations.
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New York regulates certain transactions between APIC and our other affiliated entities, including the fee levels payable by APIC to affiliates that provide services to APIC.
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New York law restricts the ability of any one person to acquire certain levels of our voting securities without prior regulatory approval. State insurance holding company regulations generally provide that no person, corporation or other entity may acquire control of an insurance company, or a controlling interest in any parent company of an insurance company, without the prior approval of such insurance company’s domiciliary state insurance regulator. Any person acquiring, directly or indirectly, 10% or more of the voting securities of an insurance company is presumed to have acquired “control” of the company. To obtain approval of any change in control, the proposed acquirer must file with the applicable insurance regulator an application disclosing, among other information, its background, financial condition, the financial condition of its affiliates, the source and amount of funds by which it will effect the acquisition, the criteria used in determining the nature and amount of consideration to be paid for the acquisition, proposed changes in the management and operations of the insurance company and other related matters. In considering an application to acquire control of an insurer, the insurance commissioner generally will consider such factors as the experience, competence and financial strength of the applicant, the integrity of the applicant’s board of directors and executive officers, the acquirer’s plans for the management and operation of the insurer and any anti-competitive results that may arise from the acquisition.
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New York law restricts the ability of APIC to pay dividends to its holding company parent. These restrictions are based in part on the prior year’s statutory income and surplus. In general, dividends up to specified levels are considered ordinary and may be paid without prior approval, and dividends in larger amounts, or extraordinary dividends, are subject to approval by the NY DFS. An extraordinary dividend or distribution is defined as a dividend or distribution that, in the aggregate in any 12-month period, exceeds the lesser of (i) 10% of surplus as of the preceding December 31 or (ii) the insurer’s adjusted net investment income for such 12-month period, not including realized capital gains.
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•
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the continued positive market presence, reputation and growth of our company and of the referral sources;
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the effectiveness of referral sources;
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the decision of any such referral source to support one or more of our competitors;
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the interest of the referral sources’ customers or clients in our subscription;
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the relationship and level of trust between Territory Partners and veterinarians, and between us and the referral source;
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the percentage of the referral sources’ customers or clients that submit applications or use trial certificates to enroll through our website or contact center;
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our ability to implement or maintain any marketing programs, including trial certificates, in any jurisdiction; and
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our ability to work with the referral source to implement any changes in our marketing initiatives, including website changes, infrastructure and technology and other programs and initiatives necessary to generate positive consumer experiences.
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improve our market penetration through efficient and effective sales and marketing programs to attract new members;
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maintain high retention rates;
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increase the lifetime value per pet to, in turn, enable us to spend more on sales and marketing programs;
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maintain positive relationships with veterinarians and other referral sources, and convince them to recommend our subscription;
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maintain positive relationships with and increase the number and efficiency of Territory Partners;
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continue to offer a superior value with competitive features and rates;
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accurately price our subscriptions in relation to actual member costs and operating expenses and achieve required regulatory approval for pricing changes;
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provide our members with superior member service, including timely and efficient payment of veterinary invoices, and by recruiting, integrating and retaining skilled and experienced personnel who can appropriately and efficiently review veterinary invoices and process payments;
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generate new and maintain existing relationships and programs in our other business segment;
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recruit, integrate and retain skilled, qualified and experienced sales department professionals who can demonstrate our value proposition to new and existing members;
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react to changes in technology and challenges in the industry, including from existing and new competitors;
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increase awareness of and positive associations with our brand; and
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successfully respond to any regulatory matters and defend any litigation.
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the competitiveness of our subscription, including its perceived value, simplicity, and fairness;
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changes in consumer shopping behaviors due to circumstances outside of our control, such as economic conditions and consumers’ ability or willingness to pay for our product;
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the quality of and changes to the consumer experience when speaking with us on the phone or using our website;
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regulatory requirements, including those that make the experience on our website cumbersome or difficult to navigate or that hinder our ability to speak with potential members quickly and in a way that is conducive to converting leads, enrolling new pets, and/or resolving member concerns;
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system failures or interruptions in the operation of our abilities to write policies or operate our website or contact center; and
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changes in the mix of consumers who are referred to us through various member acquisition channels, such as veterinary referrals, existing members adding a pet and referring their friends and family members and other third-party referrals and direct-to-consumer acquisition channels.
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the efficacy and viability of our sales and marketing programs;
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the perceived value of our subscription;
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quality of service provided, including the fairness, ease and timeliness of reviewing and paying veterinary invoices;
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actions of our competitors, Territory Partners, veterinarians and other referral sources;
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positive or negative publicity, including regulatory pronouncements and material on the Internet or social media;
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regulatory and other government-related developments; and
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litigation-related developments.
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our ability to retain our current members and grow our member base;
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the level of operating expense we elect to incur related to sales and marketing and technology and development initiatives that are discretionary in nature;
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the effectiveness of our sales and marketing programs;
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our ability to improve veterinarians’ and other third-parties’ willingness to recommend our subscription;
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the timing, volume and amount of veterinary invoices and the adequacy of our related reserve;
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our ability to accurately price our subscription and achieve required regulatory pricing approvals;
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regulatory limitations or other constraints on our ability or our willingness to implement pricing changes;
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the level of demand for and cost of our subscription or competing products;
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fluctuations in applicable foreign currency exchange rates;
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the perceived value of our subscription to veterinarians and pet owners;
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spending decisions by our members and prospective members;
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our costs and expenses, including pet acquisition costs and costs to pay and process veterinary invoices;
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our ability to expand the scope and efficiency of our Territory Partner group;
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our ability to effectively manage our growth;
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the effects of increased competition in our business;
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our ability to keep pace with changes in technology and our competitors;
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the impact of any security incidents or service interruptions;
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costs associated with defending any regulatory action or litigation or with enforcing our intellectual property, contractual or other rights;
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the impact of economic conditions on our revenue and expenses; and
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changes in government regulation affecting our business.
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we may be unable to maintain or secure favorable relationships with strategic partners;
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our strategic partners may not be successful in creating leads;
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we may be unable to convert leads from our strategic partners into enrolled pets;
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our strategic partners could terminate their relationships with us;
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we may not experience a consistent correlation between revenues and expenditures related to the partnership, and
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bad publicity and other issues faced by our strategic partners could negatively impact us.
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reducing the availability of our cash flow for our operations, capital expenditures, future business opportunities and other purposes;
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limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate, which could place us at a competitive disadvantage compared to our competitors that may have less debt;
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limiting our ability to borrow additional funds; and
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increasing our vulnerability to general adverse economic and industry conditions.
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regulatory rules and practices, foreign exchange controls, tariffs, tax laws and treaties that are different than those we operate under in the United States, Canada and Puerto Rico and that carry a greater risk of unexpected changes;
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the costs and resources required to modify our technology and sell our subscription in non-English speaking countries;
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the costs and resources required to modify our subscription appropriately to suit the needs and expectations of residents and veterinarians in such foreign countries;
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our data analytics platform may have limited applicability in foreign countries, which may impact our ability to develop adequate underwriting criteria and accurately price subscriptions in such countries;
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increased expenses incurred in establishing and maintaining office space and equipment for our international operations;
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technological incompatibility;
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fluctuations in exchange rates between the U.S. dollar and foreign currencies in markets where we do business;
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difficulties in attracting and retaining personnel with experience in international operations;
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difficulties in modifying our business model in a manner suitable for any particular foreign country, including any modifications to our Territory Partner model to the extent we determine that our existing model is not suitable for use in foreign countries;
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our lack of experience in marketing to consumers and veterinarians, and encouraging online marketing, in foreign countries;
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our relative lack of industry connections in many foreign countries;
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difficulties in managing operations due to language barriers, distance and time zone differences, staffing, cultural differences and business infrastructure constraints, including difficulty in obtaining foreign and domestic visas;
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application of foreign laws and regulations to us, including more stringent or materially different insurance, employment, consumer and data protection laws;
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the uncertainty of protection for intellectual property rights in some countries;
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greater risk of a failure of foreign employees to comply with applicable U.S. and foreign laws, including antitrust regulations, the U.S. Foreign Corrupt Practices Act and any trade regulations ensuring fair trade practices; and
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general economic and political conditions in these foreign markets.
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No Action Level
: Insurer’s total adjusted capital is equal to or greater than 200% of the Authorized Control Level.
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Company Action Level
: Insurer’s total adjusted capital is less than 200% but greater than 150% of the Authorized Control Level. When at this level, an insurer must prepare and submit a financial plan to the NY DFS for review and approval. Generally, a risk-based capital plan would identify the conditions that contributed to the Company Action Level and include the insurer’s proposed plans for increasing its risk-based capital in order to satisfy the No Action Level. The failure to provide the NY DFS with a risk-based capital plan on a timely basis or the inability of the NY DFS and the insurer to mutually agree on an appropriate risk-based capital plan could trigger a Regulatory Action Level outcome, subject to the insurer’s right to a hearing on the issue.
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Regulatory Action Level
: Insurer’s total adjusted capital is less than 150% but greater than 100% of the Authorized Control Level. When at this level, an insurer generally must provide a risk-based capital plan to the NY DFS and be subject to examination or analysis by the NY DFS to the extent it deems necessary, including such corrective actions as the NY DFS may require.
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Authorized Control Level
: Insurer’s total adjusted capital is less than 100% but greater than 70% of the Authorized Control Level. At this level, the NY DFS generally could take remedial actions that it determines necessary to protect the insurer’s assets, including placing the insurer under regulatory control.
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Mandatory Control Level
: Insurer’s total adjusted capital is less than 70% of the Authorized Control Level. At this level, the NY DFS generally is required to take steps to place the insurer under regulatory control, even if the insurer is still solvent.
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grant and revoke licenses to transact insurance business;
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conduct inquiries into the insurance-related activities and conduct of agents and agencies and others in the sales, marketing and promotional channels;
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require and regulate disclosure in connection with the sale and solicitation of insurance policies;
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authorize how, by which personnel and under what circumstances insurance premiums can be quoted and published and an insurance policy sold;
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approve which entities or individuals can be paid commissions from carriers and the circumstances under which they may be paid;
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regulate the content of insurance-related advertisements, including web pages, and other marketing practices;
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approve policy forms, require specific benefits and benefit levels and regulate premium rates;
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impose fines and other penalties; and
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impose continuing education requirements.
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variations in our operating results, earnings per share, cash flows from operating activities, and key operating metrics, and how those results compare to analyst expectations;
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forward-looking guidance that we provide to the public and industry and financial analysts related to future revenue and profitability, and any change in that guidance or our failure to achieve the results reflected in that guidance;
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the net increases in the number of members, either independently or as compared with published expectations of industry, financial or other analysts that cover our company;
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changes in the estimates of our operating results or changes in recommendations by securities analysts that elect to follow our common stock;
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announcements of changes to our subscription, strategic alliances or significant agreements by us or by our competitors;
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announcements by us or by our competitors of mergers or other strategic acquisitions, or rumors of such transactions involving us or our competitors;
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recruitment or departure of key personnel;
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the economy as a whole and market conditions in our industry;
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trading activity by a limited number of stockholders who together beneficially own a majority of our outstanding common stock;
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the number of shares of our stock trading on a regular basis; and
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any other factors discussed in these risk factors.
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establish a classified board of directors so that not all members of our board are elected at one time;
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permit only the board of directors to establish the number of directors and fill vacancies on the board;
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provide that directors may only be removed “for cause” and only with the approval of two-thirds of our stockholders;
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require super-majority voting to amend some provisions in our restated certificate of incorporation and restated bylaws;
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authorize the issuance of “blank check” preferred stock that our board could use to implement a stockholder rights plan (also known as a “poison pill”);
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eliminate the ability of our stockholders to call special meetings of stockholders;
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prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;
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prohibit cumulative voting; and
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establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
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Fiscal Year 2017
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Fiscal Year 2016
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||||||||||||
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High
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Low
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High
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Low
|
||||||||
1st Quarter
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$
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16.99
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|
|
$
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13.91
|
|
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$
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9.85
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|
$
|
7.82
|
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2nd Quarter
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$
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23.16
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|
$
|
14.39
|
|
|
$
|
15.92
|
|
|
$
|
9.54
|
|
3rd Quarter
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$
|
26.93
|
|
|
$
|
21.00
|
|
|
$
|
16.93
|
|
|
$
|
13.52
|
|
4th Quarter
|
$
|
32.68
|
|
|
$
|
26.08
|
|
|
$
|
17.18
|
|
|
$
|
14.75
|
|
|
7/18/2014
|
|
12/31/2014
|
|
12/31/2015
|
|
12/31/2016
|
|
12/31/2017
|
||||||||||
Trupanion Inc.
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$
|
100.00
|
|
|
$
|
60.79
|
|
|
$
|
85.61
|
|
|
$
|
136.14
|
|
|
$
|
256.75
|
|
S&P Small Cap 600 Index
|
$
|
100.00
|
|
|
$
|
104.67
|
|
|
$
|
101.16
|
|
|
$
|
126.19
|
|
|
$
|
140.99
|
|
NASDAQ-100 Technology Sector Index
|
$
|
100.00
|
|
|
$
|
108.80
|
|
|
$
|
106.25
|
|
|
$
|
131.81
|
|
|
$
|
180.16
|
|
Russell 2000 Index
|
$
|
100.00
|
|
|
$
|
104.61
|
|
|
$
|
98.63
|
|
|
$
|
117.85
|
|
|
$
|
133.34
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2017
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|
2016
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|
2015
|
|
2014
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2013
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||||||||||
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(in thousands)
|
||||||||||||||||||
Consolidated statements of operations data:
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|
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|
|
|
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||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Subscription business
|
|
$
|
218,354
|
|
|
$
|
173,356
|
|
|
$
|
133,406
|
|
|
$
|
103,502
|
|
|
$
|
76,413
|
|
Other business
|
|
24,313
|
|
|
14,874
|
|
|
13,557
|
|
|
12,408
|
|
|
7,416
|
|
|||||
Total revenue
|
|
242,667
|
|
|
188,230
|
|
|
146,963
|
|
|
115,910
|
|
|
83,829
|
|
|||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Subscription business
(1)
|
|
176,883
|
|
|
141,321
|
|
|
109,428
|
|
|
85,169
|
|
|
61,394
|
|
|||||
Other business
|
|
22,734
|
|
|
13,621
|
|
|
12,306
|
|
|
10,867
|
|
|
6,791
|
|
|||||
Total cost of revenue
|
|
199,617
|
|
|
154,942
|
|
|
121,734
|
|
|
96,036
|
|
|
68,185
|
|
|||||
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Subscription business
|
|
41,471
|
|
|
32,035
|
|
|
23,978
|
|
|
18,333
|
|
|
15,019
|
|
|||||
Other business
|
|
1,579
|
|
|
1,253
|
|
|
1,251
|
|
|
1,541
|
|
|
625
|
|
|||||
Total gross profit
|
|
43,050
|
|
|
33,288
|
|
|
25,229
|
|
|
19,874
|
|
|
15,644
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Technology and development
(1)
|
|
9,768
|
|
|
9,534
|
|
|
11,215
|
|
|
9,899
|
|
|
4,888
|
|
|||||
General and administrative
(1)
|
|
16,820
|
|
|
15,205
|
|
|
15,558
|
|
|
14,312
|
|
|
8,652
|
|
|||||
Sales and marketing
(1)
|
|
19,104
|
|
|
15,247
|
|
|
15,231
|
|
|
11,608
|
|
|
9,091
|
|
|||||
Total operating expenses
|
|
45,692
|
|
|
39,986
|
|
|
42,004
|
|
|
35,819
|
|
|
22,631
|
|
|||||
Operating loss
|
|
(2,642
|
)
|
|
(6,698
|
)
|
|
(16,775
|
)
|
|
(15,945
|
)
|
|
(6,987
|
)
|
|||||
Interest expense
|
|
533
|
|
|
218
|
|
|
325
|
|
|
6,726
|
|
|
609
|
|
|||||
Other (income) expense, net
|
|
(1,244
|
)
|
|
(58
|
)
|
|
(9
|
)
|
|
(1,487
|
)
|
|
671
|
|
|||||
Loss before income taxes
|
|
(1,931
|
)
|
|
(6,858
|
)
|
|
(17,091
|
)
|
|
(21,184
|
)
|
|
(8,267
|
)
|
|||||
Income tax (benefit) expense
|
|
(428
|
)
|
|
38
|
|
|
114
|
|
|
(7
|
)
|
|
(92
|
)
|
|||||
Net loss
|
|
$
|
(1,503
|
)
|
|
$
|
(6,896
|
)
|
|
$
|
(17,205
|
)
|
|
$
|
(21,177
|
)
|
|
$
|
(8,175
|
)
|
(1)
|
Includes stock-based compensation expense as follows:
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Cost of revenue
|
|
$
|
594
|
|
|
$
|
275
|
|
|
$
|
263
|
|
|
$
|
315
|
|
|
$
|
230
|
|
Technology and development
|
|
216
|
|
|
246
|
|
|
404
|
|
|
461
|
|
|
351
|
|
|||||
General and administrative
|
|
1,887
|
|
|
1,893
|
|
|
1,889
|
|
|
2,755
|
|
|
680
|
|
|||||
Sales and marketing
|
|
722
|
|
|
532
|
|
|
446
|
|
|
553
|
|
|
677
|
|
|||||
Total stock-based compensation expense
|
|
$
|
3,419
|
|
|
$
|
2,946
|
|
|
$
|
3,002
|
|
|
$
|
4,084
|
|
|
$
|
1,938
|
|
|
|
December 31,
|
||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Consolidated balance sheet data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
25,706
|
|
|
$
|
23,637
|
|
|
$
|
17,956
|
|
|
$
|
53,098
|
|
|
$
|
14,939
|
|
Short-term investments
|
|
37,590
|
|
|
29,570
|
|
|
25,288
|
|
|
22,371
|
|
|
16,088
|
|
|||||
Working capital
|
|
40,692
|
|
|
34,729
|
|
|
30,016
|
|
|
62,111
|
|
|
13,710
|
|
|||||
Total assets
|
|
105,859
|
|
|
82,345
|
|
|
70,917
|
|
|
98,306
|
|
|
51,653
|
|
|||||
Warrant liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,900
|
|
|||||
Current and long-term debt
|
|
9,324
|
|
|
4,767
|
|
|
—
|
|
|
14,900
|
|
|
26,099
|
|
|||||
Total liabilities
|
|
57,425
|
|
|
37,630
|
|
|
25,561
|
|
|
39,031
|
|
|
52,928
|
|
|||||
Common stock and additional paid-in capital
|
|
134,511
|
|
|
129,574
|
|
|
122,844
|
|
|
119,045
|
|
|
5,769
|
|
|||||
Convertible preferred stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31,724
|
|
|||||
Accumulated deficit
|
|
(82,784
|
)
|
|
(81,281
|
)
|
|
(74,385
|
)
|
|
(57,180
|
)
|
|
(36,003
|
)
|
|||||
Total stockholders' equity (deficit)
|
|
48,434
|
|
|
44,715
|
|
|
45,356
|
|
|
59,275
|
|
|
(32,999
|
)
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Other operational data
(1)
:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total subscription pets enrolled (at period end)
|
|
371,683
|
|
|
323,233
|
|
|
272,636
|
|
|
215,491
|
|
|
168,405
|
|
|||||
Total pets enrolled (at period end)
|
|
423,194
|
|
|
343,649
|
|
|
291,818
|
|
|
232,450
|
|
|
182,497
|
|
|||||
Monthly average revenue per pet
|
|
$
|
52.07
|
|
|
$
|
47.82
|
|
|
$
|
45.04
|
|
|
$
|
44.14
|
|
|
$
|
42.56
|
|
Lifetime value of a pet (LVP)
|
|
$
|
727
|
|
|
$
|
631
|
|
|
$
|
591
|
|
|
$
|
591
|
|
|
$
|
619
|
|
Average pet acquisition cost (PAC)
(2)
|
|
$
|
152
|
|
|
$
|
123
|
|
|
$
|
132
|
|
|
$
|
121
|
|
|
$
|
104
|
|
Average monthly retention
|
|
98.63
|
%
|
|
98.60
|
%
|
|
98.64
|
%
|
|
98.69
|
%
|
|
98.65
|
%
|
|
|
|
|
|
(1) For more information about how we calculate total subscription pets enrolled, total pets enrolled, monthly average revenue per pet, lifetime value of a pet, average pet acquisition cost and average monthly retention, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Operating Metrics.”
(2) Average pet acquisition cost is calculated in part based on net acquisition cost, a non-GAAP financial measure. For more information about net acquisition cost and a reconciliation of sales and marketing expenses to net acquisition cost, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures.”
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Total subscription pets enrolled (at period end)
|
|
371,683
|
|
|
323,233
|
|
|
272,636
|
|
|||
Total pets enrolled (at period end)
|
|
423,194
|
|
|
343,649
|
|
|
291,818
|
|
|||
Monthly average revenue per pet
|
|
$
|
52.07
|
|
|
$
|
47.82
|
|
|
$
|
45.04
|
|
Lifetime value of a pet (LVP)
|
|
$
|
727
|
|
|
$
|
631
|
|
|
$
|
591
|
|
Average pet acquisition cost (PAC)
|
|
$
|
152
|
|
|
$
|
123
|
|
|
$
|
132
|
|
Average monthly retention
|
|
98.63
|
%
|
|
98.60
|
%
|
|
98.64
|
%
|
|
Period Ended
|
||||||||||||||||||||||||||||||
|
Dec. 31, 2017
|
|
Sept. 30, 2017
|
|
Jun. 30, 2017
|
|
Mar. 31, 2017
|
|
Dec. 31, 2016
|
|
Sept. 30, 2016
|
|
Jun. 30, 2016
|
|
Mar. 31, 2016
|
||||||||||||||||
Total subscription pets enrolled (at period end)
|
371,683
|
|
|
359,102
|
|
|
346,409
|
|
|
334,909
|
|
|
323,233
|
|
|
312,282
|
|
|
299,856
|
|
|
287,123
|
|
||||||||
Total pets enrolled (at period end)
|
423,194
|
|
|
404,069
|
|
|
383,293
|
|
|
364,259
|
|
|
343,649
|
|
|
334,070
|
|
|
320,896
|
|
|
307,298
|
|
||||||||
Monthly average revenue per pet
|
$
|
53.17
|
|
|
$
|
52.95
|
|
|
$
|
51.47
|
|
|
$
|
50.50
|
|
|
$
|
49.17
|
|
|
$
|
48.37
|
|
|
$
|
47.39
|
|
|
$
|
46.12
|
|
Lifetime value of a pet (LVP)
|
$
|
727
|
|
|
$
|
701
|
|
|
$
|
654
|
|
|
$
|
637
|
|
|
$
|
631
|
|
|
$
|
624
|
|
|
$
|
622
|
|
|
$
|
603
|
|
Average pet acquisition cost (PAC)
|
$
|
184
|
|
|
$
|
151
|
|
|
$
|
143
|
|
|
$
|
128
|
|
|
$
|
133
|
|
|
$
|
120
|
|
|
$
|
118
|
|
|
$
|
123
|
|
Average monthly retention
|
98.63
|
%
|
|
98.61
|
%
|
|
98.57
|
%
|
|
98.58
|
%
|
|
98.60
|
%
|
|
98.61
|
%
|
|
98.64
|
%
|
|
98.65
|
%
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Sales and marketing expense
|
|
$
|
19,104
|
|
|
$
|
15,247
|
|
|
$
|
15,231
|
|
Net of sign-up fee revenue
|
|
(2,169
|
)
|
|
(2,073
|
)
|
|
(1,983
|
)
|
|||
Excluding:
|
|
|
|
|
|
|
||||||
Stock-based compensation expense
|
|
(722
|
)
|
|
(532
|
)
|
|
(446
|
)
|
|||
Other business segment sales and marketing expense
|
|
(218
|
)
|
|
(218
|
)
|
|
(80
|
)
|
|||
Net acquisition cost
|
|
$
|
15,995
|
|
|
$
|
12,424
|
|
|
$
|
12,722
|
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
Dec. 31, 2017
|
|
Sept. 30, 2017
|
|
Jun. 30, 2017
|
|
Mar. 31, 2017
|
|
Dec. 31, 2016
|
|
Sept. 30, 2016
|
|
Jun. 30, 2016
|
|
Mar. 31, 2016
|
||||||||||||||||
Sales and marketing expense
|
$
|
5,781
|
|
|
$
|
4,862
|
|
|
$
|
4,372
|
|
|
$
|
4,089
|
|
|
$
|
3,951
|
|
|
$
|
3,892
|
|
|
$
|
3,564
|
|
|
$
|
3,840
|
|
Net of sign-up fee revenue
|
(550
|
)
|
|
(558
|
)
|
|
(517
|
)
|
|
(544
|
)
|
|
(526
|
)
|
|
(525
|
)
|
|
(495
|
)
|
|
(527
|
)
|
||||||||
Excluding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Stock-based compensation expense
|
(172
|
)
|
|
(165
|
)
|
|
(198
|
)
|
|
(187
|
)
|
|
(113
|
)
|
|
(172
|
)
|
|
(165
|
)
|
|
(82
|
)
|
||||||||
Other business segment sales and marketing expense
|
(56
|
)
|
|
(51
|
)
|
|
(63
|
)
|
|
(48
|
)
|
|
(62
|
)
|
|
(63
|
)
|
|
(55
|
)
|
|
(38
|
)
|
||||||||
Net acquisition cost
|
$
|
5,003
|
|
|
$
|
4,088
|
|
|
$
|
3,594
|
|
|
$
|
3,310
|
|
|
$
|
3,250
|
|
|
$
|
3,132
|
|
|
$
|
2,849
|
|
|
$
|
3,193
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in thousands)
|
||||||||||
Revenue:
|
|
|
|
|
|
||||||
Subscription business
|
$
|
218,354
|
|
|
$
|
173,356
|
|
|
$
|
133,406
|
|
Other business
|
24,313
|
|
|
14,874
|
|
|
13,557
|
|
|||
Total revenue
|
242,667
|
|
|
188,230
|
|
|
146,963
|
|
|||
Cost of revenue:
|
|
|
|
|
|
||||||
Subscription business
(1)
|
176,883
|
|
|
141,321
|
|
|
109,428
|
|
|||
Other business
|
22,734
|
|
|
13,621
|
|
|
12,306
|
|
|||
Total cost of revenue
|
199,617
|
|
|
154,942
|
|
|
121,734
|
|
|||
Gross profit:
|
|
|
|
|
|
||||||
Subscription business
|
41,471
|
|
|
32,035
|
|
|
23,978
|
|
|||
Other business
|
1,579
|
|
|
1,253
|
|
|
1,251
|
|
|||
Total gross profit
|
43,050
|
|
|
33,288
|
|
|
25,229
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Technology and development
(1)
|
9,768
|
|
|
9,534
|
|
|
11,215
|
|
|||
General and administrative
(1)
|
16,820
|
|
|
15,205
|
|
|
15,558
|
|
|||
Sales and marketing
(1)
|
19,104
|
|
|
15,247
|
|
|
15,231
|
|
|||
Total operating expenses
|
45,692
|
|
|
39,986
|
|
|
42,004
|
|
|||
Operating loss
|
(2,642
|
)
|
|
(6,698
|
)
|
|
(16,775
|
)
|
|||
Interest expense
|
533
|
|
|
218
|
|
|
325
|
|
|||
Other (income) expense, net
|
(1,244
|
)
|
|
(58
|
)
|
|
(9
|
)
|
|||
Loss before income taxes
|
(1,931
|
)
|
|
(6,858
|
)
|
|
(17,091
|
)
|
|||
Income tax (benefit) expense
|
(428
|
)
|
|
38
|
|
|
114
|
|
|||
Net loss
|
$
|
(1,503
|
)
|
|
$
|
(6,896
|
)
|
|
$
|
(17,205
|
)
|
|
|
|
|
|
(1) Includes stock-based compensation expense as follows:
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in thousands)
|
||||||||||
Cost of revenue
|
$
|
594
|
|
|
$
|
275
|
|
|
$
|
263
|
|
Technology and development
|
216
|
|
|
246
|
|
|
404
|
|
|||
General and administrative
|
1,887
|
|
|
1,893
|
|
|
1,889
|
|
|||
Sales and marketing
|
722
|
|
|
532
|
|
|
446
|
|
|||
Total stock-based compensation expense
|
$
|
3,419
|
|
|
$
|
2,946
|
|
|
$
|
3,002
|
|
|
Year Ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
|
(as a percentage of revenue)
|
|||||||
Revenue
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Cost of revenue
|
82
|
|
|
82
|
|
|
83
|
|
Gross profit
|
18
|
|
|
18
|
|
|
17
|
|
Operating expenses:
|
|
|
|
|
|
|||
Technology and development
|
4
|
|
|
5
|
|
|
8
|
|
General and administrative
|
7
|
|
|
8
|
|
|
11
|
|
Sales and marketing
|
8
|
|
|
8
|
|
|
10
|
|
Total operating expenses
|
19
|
|
|
21
|
|
|
29
|
|
Operating loss
|
(1
|
)
|
|
(4
|
)
|
|
(12
|
)
|
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
Other (income) expense, net
|
(1
|
)
|
|
—
|
|
|
—
|
|
Loss before income taxes
|
(1
|
)
|
|
(4
|
)
|
|
(12
|
)
|
Income tax (benefit) expense
|
—
|
|
|
—
|
|
|
—
|
|
Net loss
|
(1
|
)%
|
|
(4
|
)%
|
|
(12
|
)%
|
|
Year Ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
|
(as a percentage of subscription revenue)
|
|||||||
Subscription business revenue
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Subscription business cost of revenue
|
81
|
|
|
82
|
|
|
82
|
|
Subscription business gross profit
|
19
|
%
|
|
18
|
%
|
|
18
|
%
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||
|
(in thousands, except percentages, pet and per pet data)
|
||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||
Subscription business
|
$
|
218,354
|
|
|
$
|
173,356
|
|
|
$
|
133,406
|
|
|
26%
|
|
30%
|
Other business
|
24,313
|
|
|
14,874
|
|
|
13,557
|
|
|
63
|
|
10
|
|||
Total revenue
|
$
|
242,667
|
|
|
$
|
188,230
|
|
|
$
|
146,963
|
|
|
29
|
|
28
|
Percentage of Revenue by Segment:
|
|
|
|
|
|
|
|
|
|
||||||
Subscription business
|
90
|
%
|
|
92
|
%
|
|
91
|
%
|
|
|
|
|
|||
Other business
|
10
|
|
|
8
|
|
|
9
|
|
|
|
|
|
|||
Total revenue
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Total subscription pets enrolled (at period end)
|
371,683
|
|
|
323,233
|
|
|
272,636
|
|
|
15
|
|
19
|
|||
Total pets enrolled (at period end)
|
423,194
|
|
|
343,649
|
|
|
291,818
|
|
|
23
|
|
18
|
|||
Monthly average revenue per pet
|
$
|
52.07
|
|
|
$
|
47.82
|
|
|
$
|
45.04
|
|
|
9
|
|
6
|
Average monthly retention
|
98.63
|
%
|
|
98.60
|
%
|
|
98.64
|
%
|
|
|
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||
|
(in thousands, except percentages, pet and per pet data)
|
||||||||||||||
Cost of Revenue:
|
|
|
|
|
|
|
|
|
|
||||||
Subscription business:
|
|
|
|
|
|
|
|
|
|
||||||
Veterinary invoice expense
|
$
|
155,554
|
|
|
$
|
124,636
|
|
|
$
|
95,420
|
|
|
25%
|
|
31%
|
Other cost of revenue
|
21,329
|
|
|
16,685
|
|
|
14,008
|
|
|
28
|
|
19
|
|||
Total cost of revenue
|
176,883
|
|
|
141,321
|
|
|
109,428
|
|
|
25
|
|
29
|
|||
Gross profit
|
41,471
|
|
|
32,035
|
|
|
23,978
|
|
|
29
|
|
34
|
|||
Other business:
|
|
|
|
|
|
|
|
|
|
||||||
Veterinary invoice expense
|
14,568
|
|
|
8,898
|
|
|
7,904
|
|
|
64
|
|
13
|
|||
Other cost of revenue
|
8,166
|
|
|
4,723
|
|
|
4,402
|
|
|
73
|
|
7
|
|||
Total cost of revenue
|
22,734
|
|
|
13,621
|
|
|
12,306
|
|
|
67
|
|
11
|
|||
Gross profit
|
1,579
|
|
|
1,253
|
|
|
1,251
|
|
|
26
|
|
—
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Percentage of Revenue by Segment:
|
|
|
|
|
|
|
|
|
|
||||||
Subscription business:
|
|
|
|
|
|
|
|
|
|
||||||
Veterinary invoice expense
|
71
|
%
|
|
72
|
%
|
|
72
|
%
|
|
|
|
|
|||
Other cost of revenue
|
10
|
|
|
10
|
|
|
10
|
|
|
|
|
|
|||
Total cost of revenue
|
81
|
|
|
82
|
|
|
82
|
|
|
|
|
|
|||
Gross profit
|
19
|
|
|
18
|
|
|
18
|
|
|
|
|
|
|||
Other business:
|
|
|
|
|
|
|
|
|
|
||||||
Veterinary invoice expense
|
60
|
|
|
60
|
|
|
58
|
|
|
|
|
|
|||
Other cost of revenue
|
34
|
|
|
32
|
|
|
32
|
|
|
|
|
|
|||
Total cost of revenue
|
94
|
|
|
92
|
|
|
91
|
|
|
|
|
|
|||
Gross profit
|
6
|
|
|
8
|
|
|
9
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Total subscription pets enrolled (at period end)
|
371,683
|
|
|
323,233
|
|
|
272,636
|
|
|
15
|
|
19
|
|||
Total pets enrolled (at period end)
|
423,194
|
|
|
343,649
|
|
|
291,818
|
|
|
23
|
|
18
|
|||
Monthly average revenue per pet
|
$
|
52.07
|
|
|
$
|
47.82
|
|
|
$
|
45.04
|
|
|
9
|
|
6
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||
|
(in thousands, except percentages)
|
||||||||||||||
Technology and development
|
$
|
9,768
|
|
|
$
|
9,534
|
|
|
$
|
11,215
|
|
|
2%
|
|
(15)%
|
Percentage of total revenue
|
4
|
%
|
|
5
|
%
|
|
8
|
%
|
|
|
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||
|
(in thousands, except percentages)
|
||||||||||||||
General and administrative
|
$
|
16,820
|
|
|
$
|
15,205
|
|
|
$
|
15,558
|
|
|
11%
|
|
(2)%
|
Percentage of total revenue
|
7
|
%
|
|
8
|
%
|
|
11
|
%
|
|
|
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||
|
(in thousands, except pet and per pet data)
|
||||||||||||||
Sales and marketing
|
$
|
19,104
|
|
|
$
|
15,247
|
|
|
$
|
15,231
|
|
|
25%
|
|
—%
|
Subscription Business:
|
|
|
|
|
|
|
|
|
|
||||||
Total subscription pets enrolled (at period end)
|
371,683
|
|
|
323,233
|
|
|
272,636
|
|
|
15
|
|
19
|
|||
Average pet acquisition cost (PAC)
|
$
|
152
|
|
|
$
|
123
|
|
|
$
|
132
|
|
|
24
|
|
(7)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(in thousands)
|
||||||||||
Interest expense
|
|
$
|
533
|
|
|
$
|
218
|
|
|
$
|
325
|
|
Other (income) expense, net
|
|
(1,244
|
)
|
|
(58
|
)
|
|
(9
|
)
|
|||
Total other (income) expense, net
|
|
$
|
(711
|
)
|
|
$
|
160
|
|
|
$
|
316
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(in thousands, except percentages)
|
||||||||||
Income tax (benefit) expense
|
|
$
|
(428
|
)
|
|
$
|
38
|
|
|
$
|
114
|
|
Effective tax rate
|
|
22.2
|
%
|
|
(0.6
|
)%
|
|
(0.7
|
)%
|
Consolidated Statements of Operations Data:
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
Dec. 31, 2017
|
|
Sept. 30, 2017
|
|
Jun. 30, 2017
|
|
Mar. 31, 2017
|
|
Dec. 31, 2016
|
|
Sept. 30, 2016
|
|
Jun. 30, 2016
|
|
Mar. 31, 2016
|
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Subscription business
|
$
|
58,991
|
|
|
$
|
56,493
|
|
|
$
|
52,641
|
|
|
$
|
50,229
|
|
|
$
|
47,422
|
|
|
$
|
44,629
|
|
|
$
|
42,162
|
|
|
$
|
39,143
|
|
Other business
|
7,554
|
|
|
6,625
|
|
|
5,634
|
|
|
4,500
|
|
|
3,918
|
|
|
3,730
|
|
|
3,670
|
|
|
3,556
|
|
||||||||
Total revenue
|
66,545
|
|
|
63,118
|
|
|
58,275
|
|
|
54,729
|
|
|
51,340
|
|
|
48,359
|
|
|
45,832
|
|
|
42,699
|
|
||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Subscription business
(1)
|
47,831
|
|
|
45,215
|
|
|
42,591
|
|
|
41,246
|
|
|
38,528
|
|
|
36,432
|
|
|
34,158
|
|
|
32,203
|
|
||||||||
Other business
|
6,977
|
|
|
6,096
|
|
|
5,333
|
|
|
4,328
|
|
|
3,594
|
|
|
3,427
|
|
|
3,408
|
|
|
3,192
|
|
||||||||
Total cost of revenue
|
54,808
|
|
|
51,311
|
|
|
47,924
|
|
|
45,574
|
|
|
42,122
|
|
|
39,859
|
|
|
37,566
|
|
|
35,395
|
|
||||||||
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Subscription business
|
11,160
|
|
|
11,278
|
|
|
10,050
|
|
|
8,983
|
|
|
8,894
|
|
|
8,197
|
|
|
8,004
|
|
|
6,940
|
|
||||||||
Other business
|
577
|
|
|
529
|
|
|
301
|
|
|
172
|
|
|
324
|
|
|
303
|
|
|
262
|
|
|
364
|
|
||||||||
Total gross profit
|
11,737
|
|
|
11,807
|
|
|
10,351
|
|
|
9,155
|
|
|
9,218
|
|
|
8,500
|
|
|
8,266
|
|
|
7,304
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Technology and development
(1)
|
2,572
|
|
|
2,471
|
|
|
2,322
|
|
|
2,403
|
|
|
2,744
|
|
|
2,339
|
|
|
2,164
|
|
|
2,287
|
|
||||||||
General and administrative
(1)
|
4,546
|
|
|
4,017
|
|
|
4,245
|
|
|
4,012
|
|
|
4,177
|
|
|
3,811
|
|
|
3,495
|
|
|
3,722
|
|
||||||||
Sales and marketing
(1)
|
5,781
|
|
|
4,862
|
|
|
4,372
|
|
|
4,089
|
|
|
3,951
|
|
|
3,892
|
|
|
3,564
|
|
|
3,840
|
|
||||||||
Total operating expenses
|
12,899
|
|
|
11,350
|
|
|
10,939
|
|
|
10,504
|
|
|
10,872
|
|
|
10,042
|
|
|
9,223
|
|
|
9,849
|
|
||||||||
Operating (loss) income
|
(1,162
|
)
|
|
457
|
|
|
(588
|
)
|
|
(1,349
|
)
|
|
(1,654
|
)
|
|
(1,542
|
)
|
|
(957
|
)
|
|
(2,545
|
)
|
||||||||
Interest expense
|
163
|
|
|
124
|
|
|
109
|
|
|
137
|
|
|
81
|
|
|
66
|
|
|
41
|
|
|
30
|
|
||||||||
Other (income) expense, net
|
(5
|
)
|
|
(99
|
)
|
|
(1,112
|
)
|
|
(28
|
)
|
|
(19
|
)
|
|
16
|
|
|
(38
|
)
|
|
(17
|
)
|
||||||||
(Loss) income before income taxes
|
(1,320
|
)
|
|
432
|
|
|
415
|
|
|
(1,458
|
)
|
|
(1,716
|
)
|
|
(1,624
|
)
|
|
(960
|
)
|
|
(2,558
|
)
|
||||||||
Income tax (benefit) expense
|
(482
|
)
|
|
26
|
|
|
4
|
|
|
24
|
|
|
7
|
|
|
13
|
|
|
4
|
|
|
14
|
|
||||||||
Net (loss) income
|
$
|
(838
|
)
|
|
$
|
406
|
|
|
$
|
411
|
|
|
$
|
(1,482
|
)
|
|
$
|
(1,723
|
)
|
|
$
|
(1,637
|
)
|
|
$
|
(964
|
)
|
|
$
|
(2,572
|
)
|
|
|
|
|
|
(1) Includes stock-based compensation expense as follows (in thousands):
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
Dec. 31, 2017
|
|
Sept. 30, 2017
|
|
Jun. 30, 2017
|
|
Mar. 31, 2017
|
|
Dec. 31, 2016
|
|
Sept. 30, 2016
|
|
Jun. 30, 2016
|
|
Mar. 31, 2016
|
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Cost of revenue
|
$
|
162
|
|
|
$
|
170
|
|
|
$
|
149
|
|
|
$
|
113
|
|
|
$
|
60
|
|
|
$
|
83
|
|
|
$
|
66
|
|
|
$
|
66
|
|
Technology and development
|
50
|
|
|
57
|
|
|
59
|
|
|
50
|
|
|
88
|
|
|
67
|
|
|
36
|
|
|
55
|
|
||||||||
General and administrative
|
471
|
|
|
503
|
|
|
482
|
|
|
431
|
|
|
470
|
|
|
454
|
|
|
476
|
|
|
493
|
|
||||||||
Sales and marketing
|
172
|
|
|
165
|
|
|
198
|
|
|
187
|
|
|
113
|
|
|
172
|
|
|
165
|
|
|
82
|
|
||||||||
Total stock-based compensation expense
|
$
|
855
|
|
|
$
|
895
|
|
|
$
|
888
|
|
|
$
|
781
|
|
|
$
|
731
|
|
|
$
|
776
|
|
|
$
|
743
|
|
|
$
|
696
|
|
|
Period Ended
|
||||||||||||||||||||||||||||||
|
Dec. 31, 2017
|
|
Sept. 30, 2017
|
|
Jun. 30, 2017
|
|
Mar. 31, 2017
|
|
Dec. 31, 2016
|
|
Sept. 30, 2016
|
|
Jun. 30, 2016
|
|
Mar. 31, 2016
|
||||||||||||||||
Other Financial and Operational Data
(2)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total subscription pets enrolled (at period end)
|
371,683
|
|
|
359,102
|
|
|
346,409
|
|
|
334,909
|
|
|
323,233
|
|
|
312,282
|
|
|
299,856
|
|
|
287,123
|
|
||||||||
Total pets enrolled (at period end)
|
423,194
|
|
|
404,069
|
|
|
383,293
|
|
|
364,259
|
|
|
343,649
|
|
|
334,070
|
|
|
320,896
|
|
|
307,298
|
|
||||||||
Monthly average revenue per pet
|
$
|
53.17
|
|
|
$
|
52.95
|
|
|
$
|
51.47
|
|
|
$
|
50.50
|
|
|
$
|
49.17
|
|
|
$
|
48.37
|
|
|
$
|
47.39
|
|
|
$
|
46.12
|
|
Lifetime value of a pet (LVP)
|
$
|
727
|
|
|
$
|
701
|
|
|
$
|
654
|
|
|
$
|
637
|
|
|
$
|
631
|
|
|
$
|
624
|
|
|
$
|
622
|
|
|
$
|
603
|
|
Average pet acquisition cost (PAC)
(3)
|
$
|
184
|
|
|
$
|
151
|
|
|
$
|
143
|
|
|
$
|
128
|
|
|
$
|
133
|
|
|
$
|
120
|
|
|
$
|
118
|
|
|
$
|
123
|
|
Average monthly retention
|
98.63
|
%
|
|
98.61
|
%
|
|
98.57
|
%
|
|
98.58
|
%
|
|
98.60
|
%
|
|
98.61
|
%
|
|
98.64
|
%
|
|
98.65
|
%
|
|
Three Months Ended
|
||||||||||||||||||||||
|
Dec. 31, 2017
|
|
Sept. 30, 2017
|
|
Jun. 30, 2017
|
|
Mar. 31, 2017
|
|
Dec. 31, 2016
|
|
Sept. 30, 2016
|
|
Jun. 30, 2016
|
|
Mar. 31, 2016
|
||||||||
|
(as a percentage of revenue)
|
||||||||||||||||||||||
Revenue
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Cost of revenue
|
82
|
|
|
81
|
|
|
82
|
|
|
83
|
|
|
82
|
|
|
82
|
|
|
82
|
|
|
83
|
|
Gross profit
|
18
|
|
|
19
|
|
|
18
|
|
|
17
|
|
|
18
|
|
|
18
|
|
|
18
|
|
|
17
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Technology and development
|
4
|
|
|
4
|
|
|
4
|
|
|
4
|
|
|
5
|
|
|
5
|
|
|
5
|
|
|
5
|
|
General and administrative
|
7
|
|
|
6
|
|
|
7
|
|
|
7
|
|
|
8
|
|
|
8
|
|
|
8
|
|
|
9
|
|
Sales and marketing
|
9
|
|
|
8
|
|
|
8
|
|
|
8
|
|
|
8
|
|
|
8
|
|
|
8
|
|
|
9
|
|
Total operating expenses
|
19
|
|
|
18
|
|
|
19
|
|
|
19
|
|
|
21
|
|
|
21
|
|
|
20
|
|
|
23
|
|
Operating (loss) income
|
(2
|
)
|
|
1
|
|
|
(1
|
)
|
|
(3
|
)
|
|
(3
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|
(6
|
)
|
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Other (income) expense, net
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(Loss) income before income taxes
|
(2
|
)
|
|
1
|
|
|
1
|
|
|
(3
|
)
|
|
(3
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|
(6
|
)
|
Income tax benefit
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net (loss) income
|
(1
|
)%
|
|
1
|
%
|
|
1
|
%
|
|
(3
|
)%
|
|
(3
|
)%
|
|
(3
|
)%
|
|
(2
|
)%
|
|
(6
|
)%
|
|
Three Months Ended
|
||||||||||||||||||||||
|
Dec. 31, 2017
|
|
Sept. 30, 2017
|
|
Jun. 30, 2017
|
|
Mar. 31, 2017
|
|
Dec. 31, 2016
|
|
Sept. 30, 2016
|
|
Jun. 30, 2016
|
|
Mar. 31, 2016
|
||||||||
|
(as a percentage of subscription revenue)
|
||||||||||||||||||||||
Subscription business revenue
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Subscription business cost of revenue
|
81
|
|
|
80
|
|
|
81
|
|
|
82
|
|
|
81
|
|
|
82
|
|
|
81
|
|
|
82
|
|
Subscription business gross profit
|
19
|
%
|
|
20
|
%
|
|
19
|
%
|
|
18
|
%
|
|
19
|
%
|
|
18
|
%
|
|
19
|
%
|
|
18
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net cash provided by (used in) operating activities
|
$
|
9,666
|
|
|
$
|
5,006
|
|
|
$
|
(10,425
|
)
|
Net cash used in investing activities
|
(13,056
|
)
|
|
(6,508
|
)
|
|
(9,923
|
)
|
|||
Net cash provided by (used in) financing activities
|
5,081
|
|
|
7,672
|
|
|
(14,208
|
)
|
|||
Effect of exchange rates on cash and cash equivalents
|
378
|
|
|
111
|
|
|
(586
|
)
|
|||
Net change in cash, cash equivalents, and restricted cash
|
$
|
2,069
|
|
|
$
|
6,281
|
|
|
$
|
(35,142
|
)
|
|
|
Total
|
|
Less Than
1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More Than
5 Years
|
||||||||||
Long-term debt obligations
(1)
|
|
$
|
9,500
|
|
|
$
|
—
|
|
|
$
|
9,500
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating lease obligations
(2)
|
|
19,201
|
|
|
1,876
|
|
|
4,151
|
|
|
4,455
|
|
|
8,719
|
|
|||||
Capital leases
(3)
|
|
519
|
|
|
519
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other obligations
(4)
|
|
1,625
|
|
|
927
|
|
|
681
|
|
|
17
|
|
|
—
|
|
|||||
Total
|
|
$
|
30,845
|
|
|
$
|
3,322
|
|
|
$
|
14,332
|
|
|
$
|
4,472
|
|
|
$
|
8,719
|
|
|
|
|
|
|
(1) Consists of our revolving line of credit. Excludes interest of the greater of 4.5% or 1.25% plus the prime rate (5.75% at December 31, 2017).
(2) Consists of contractual obligations from non-cancellable office space under operating lease.
(3) Consists of contractual obligations from property and equipment purchased under capital lease.
(4) Consists of contractual obligations from non-cancellable vendor service agreements.
|
•
|
Expected volatility
—We estimate the expected volatility based on the historical volatility of a representative group of publicly traded companies with similar characteristics to us, and our own historical volatility;
|
•
|
Expected term for awards granted to employees
—We have based our expected term for awards issued to employees on the simplified method, as permitted by the SEC Staff Accounting Bulletin No. 110, Share-Based Payment, as we have insufficient historical information regarding our stock options to provide a basis for an estimate;
|
•
|
Risk-free interest rate
—The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the options; and
|
•
|
Expected dividend yield
—We have never declared or paid any cash dividends and do not presently plan to pay cash dividends in the foreseeable future. Consequently, we use an expected dividend yield of zero.
|
|
Page
|
Trupanion, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
|
|||||||||||
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue
|
$
|
242,667
|
|
|
$
|
188,230
|
|
|
$
|
146,963
|
|
Cost of revenue:
|
|
|
|
|
|
||||||
Veterinary invoice expense
|
170,122
|
|
|
133,534
|
|
|
103,324
|
|
|||
Other cost of revenue
|
29,495
|
|
|
21,408
|
|
|
18,410
|
|
|||
Gross profit
|
43,050
|
|
|
33,288
|
|
|
25,229
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Technology and development
|
9,768
|
|
|
9,534
|
|
|
11,215
|
|
|||
General and administrative
|
16,820
|
|
|
15,205
|
|
|
15,558
|
|
|||
Sales and marketing
|
19,104
|
|
|
15,247
|
|
|
15,231
|
|
|||
Total operating expenses
|
45,692
|
|
|
39,986
|
|
|
42,004
|
|
|||
Operating loss
|
(2,642
|
)
|
|
(6,698
|
)
|
|
(16,775
|
)
|
|||
Interest expense
|
533
|
|
|
218
|
|
|
325
|
|
|||
Other (income) expense, net
|
(1,244
|
)
|
|
(58
|
)
|
|
(9
|
)
|
|||
Loss before income taxes
|
(1,931
|
)
|
|
(6,858
|
)
|
|
(17,091
|
)
|
|||
Income tax (benefit) expense
|
(428
|
)
|
|
38
|
|
|
114
|
|
|||
Net loss
|
$
|
(1,503
|
)
|
|
$
|
(6,896
|
)
|
|
$
|
(17,205
|
)
|
|
|
|
|
|
|
||||||
Net loss per share:
|
|
|
|
|
|
||||||
Basic and diluted
|
$
|
(0.05
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
(0.62
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
|
||||||
Basic and diluted
|
29,588,324
|
|
|
28,527,602
|
|
|
27,638,443
|
|
Trupanion, Inc.
Consolidated Statements of Comprehensive Loss
(in thousands)
|
|||||||||||
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net loss
|
$
|
(1,503
|
)
|
|
$
|
(6,896
|
)
|
|
$
|
(17,205
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
277
|
|
|
79
|
|
|
(517
|
)
|
|||
Net unrealized gain on available-for-sale debt securities
|
8
|
|
|
46
|
|
|
4
|
|
|||
Other comprehensive income (loss), net of taxes
|
285
|
|
|
125
|
|
|
(513
|
)
|
|||
Comprehensive loss
|
$
|
(1,218
|
)
|
|
$
|
(6,771
|
)
|
|
$
|
(17,718
|
)
|
Trupanion, Inc.
Consolidated Balance Sheets
(in thousands, except per share data)
|
|||||||
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
25,706
|
|
|
$
|
23,637
|
|
Short-term investments
|
37,590
|
|
|
29,570
|
|
||
Accounts and other receivables
|
20,367
|
|
|
10,118
|
|
||
Prepaid expenses and other assets
|
2,895
|
|
|
2,062
|
|
||
Total current assets
|
86,558
|
|
|
65,387
|
|
||
Restricted cash
|
600
|
|
|
600
|
|
||
Long-term investments, at fair value
|
3,237
|
|
|
2,579
|
|
||
Equity method investment
|
—
|
|
|
271
|
|
||
Property and equipment, net
|
7,868
|
|
|
8,464
|
|
||
Intangible assets, net
|
4,972
|
|
|
4,910
|
|
||
Other long term assets
|
2,624
|
|
|
134
|
|
||
Total assets
|
$
|
105,859
|
|
|
$
|
82,345
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
2,716
|
|
|
$
|
2,006
|
|
Accrued liabilities and other current liabilities
|
7,660
|
|
|
5,416
|
|
||
Reserve for veterinary invoices
|
12,756
|
|
|
9,521
|
|
||
Deferred revenue
|
22,734
|
|
|
13,463
|
|
||
Total current liabilities
|
45,866
|
|
|
30,406
|
|
||
Long-term debt
|
9,324
|
|
|
4,767
|
|
||
Deferred tax liabilities
|
1,002
|
|
|
1,623
|
|
||
Other liabilities
|
1,233
|
|
|
834
|
|
||
Total liabilities
|
57,425
|
|
|
37,630
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock: $0.00001 par value per share, 100,000,000 shares authorized at December 31, 2017 and December 31, 2016, 30,778,796 and 30,121,496 shares issued and outstanding at December 31, 2017; 30,156,247 and 29,498,947 shares issued and outstanding at December 31, 2016
|
—
|
|
|
—
|
|
||
Preferred stock: $0.00001 par value per share, 10,000,000 shares authorized at December 31, 2017 and December 31, 2016, and 0 shares issued and outstanding at December 31, 2017 and December 31, 2016
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
134,511
|
|
|
129,574
|
|
||
Accumulated other comprehensive loss
|
(92
|
)
|
|
(377
|
)
|
||
Accumulated deficit
|
(82,784
|
)
|
|
(81,281
|
)
|
||
Treasury stock, at cost: 657,300 shares at December 31, 2017 and December 31, 2016
|
(3,201
|
)
|
|
(3,201
|
)
|
||
Total stockholders’ equity
|
48,434
|
|
|
44,715
|
|
||
Total liabilities and stockholders’ equity
|
$
|
105,859
|
|
|
$
|
82,345
|
|
Trupanion, Inc.
Consolidated Statements of Cash Flows
(in thousands)
|
|||||||||||
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net loss
|
$
|
(1,503
|
)
|
|
$
|
(6,896
|
)
|
|
$
|
(17,205
|
)
|
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
4,232
|
|
|
3,846
|
|
|
2,542
|
|
|||
Stock-based compensation expense
|
3,419
|
|
|
2,946
|
|
|
3,002
|
|
|||
Gain on sale of equity method investment
|
(1,036
|
)
|
|
—
|
|
|
—
|
|
|||
Other, net
|
(383
|
)
|
|
104
|
|
|
(68
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|||||
Accounts and other receivables
|
(10,219
|
)
|
|
(1,830
|
)
|
|
(328
|
)
|
|||
Prepaid expenses and other assets
|
(179
|
)
|
|
48
|
|
|
(905
|
)
|
|||
Accounts payable, accrued liabilities, and other liabilities
|
3,019
|
|
|
1,164
|
|
|
(483
|
)
|
|||
Reserve for veterinary invoices
|
3,149
|
|
|
3,226
|
|
|
1,241
|
|
|||
Deferred revenue
|
9,167
|
|
|
2,398
|
|
|
1,779
|
|
|||
Net cash provided by (used in) operating activities
|
9,666
|
|
|
5,006
|
|
|
(10,425
|
)
|
|||
Investing activities
|
|
|
|
|
|
||||||
Purchases of investment securities
|
(31,920
|
)
|
|
(31,616
|
)
|
|
(24,800
|
)
|
|||
Maturities of investment securities
|
23,372
|
|
|
27,247
|
|
|
20,180
|
|
|||
Proceeds from sale of equity method investment
|
1,402
|
|
|
—
|
|
|
—
|
|
|||
Purchases of property and equipment
|
(3,131
|
)
|
|
(1,941
|
)
|
|
(4,894
|
)
|
|||
Other investments
|
(2,779
|
)
|
|
(198
|
)
|
|
(409
|
)
|
|||
Net cash used in investing activities
|
(13,056
|
)
|
|
(6,508
|
)
|
|
(9,923
|
)
|
|||
Financing activities
|
|
|
|
|
|
|
|||||
Proceeds from exercise of stock options
|
2,545
|
|
|
3,745
|
|
|
1,335
|
|
|||
Taxes paid related to net share settlement of equity awards
|
(1,170
|
)
|
|
(662
|
)
|
|
(643
|
)
|
|||
Proceeds from debt financing, net of financing fees
|
4,400
|
|
|
4,988
|
|
|
(14,900
|
)
|
|||
Other financing
|
(694
|
)
|
|
(399
|
)
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
5,081
|
|
|
7,672
|
|
|
(14,208
|
)
|
|||
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash, net
|
378
|
|
|
111
|
|
|
(586
|
)
|
|||
Net change in cash, cash equivalents, and restricted cash
|
2,069
|
|
|
6,281
|
|
|
(35,142
|
)
|
|||
Cash, cash equivalents, and restricted cash at beginning of period
|
24,237
|
|
|
17,956
|
|
|
53,098
|
|
|||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
26,306
|
|
|
$
|
24,237
|
|
|
$
|
17,956
|
|
Supplemental disclosures
|
|
|
|
|
|
|
|||||
Income taxes paid
|
177
|
|
|
19
|
|
|
139
|
|
|||
Interest paid
|
333
|
|
|
153
|
|
|
155
|
|
|||
Noncash investing and financing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment included in accounts payable and accrued liabilities
|
390
|
|
|
104
|
|
|
98
|
|
|||
Property and equipment acquired under capital lease
|
689
|
|
|
559
|
|
|
—
|
|
|||
Cashless exercise of common stock warrants
|
—
|
|
|
600
|
|
|
—
|
|
•
|
Expected volatility
—The Company estimates the expected volatility based on the historical volatility of a representative group of publicly traded companies with similar characteristics to the Company, and its own historical volatility;
|
•
|
Expected term for awards granted to employees
—The Company has based its expected term for awards issued to employees on the simplified method, as permitted by the SEC Staff Accounting Bulletin No. 110, Share-Based Payment, as the Company has insufficient historical information regarding its stock options to provide a basis for an estimate;
|
•
|
Risk-free interest rate
—The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the options; and
|
•
|
Expected dividend yield
—The Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero.
|
|
As of December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Stock options
|
4,006,399
|
|
|
4,123,023
|
|
|
4,871,949
|
|
Restricted stock awards and restricted stock units
|
256,842
|
|
|
352,996
|
|
|
472,384
|
|
Warrants
|
810,000
|
|
|
810,000
|
|
|
869,999
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Software
|
$
|
17,221
|
|
|
$
|
14,340
|
|
Computer equipment and other
|
3,022
|
|
|
2,470
|
|
||
Property and equipment, at cost
|
20,243
|
|
|
16,810
|
|
||
Less: Accumulated depreciation
|
(12,375
|
)
|
|
(8,346
|
)
|
||
Property and equipment, net
|
$
|
7,868
|
|
|
$
|
8,464
|
|
|
Amortized
Cost |
|
Gross
Unrealized Holding Gains |
|
Gross
Unrealized Holding Losses |
|
Fair
Value |
||||||||
As of December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Foreign deposits
|
$
|
2,237
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,237
|
|
Municipal bond
|
1,000
|
|
|
—
|
|
|
—
|
|
|
1,000
|
|
||||
|
$
|
3,237
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,237
|
|
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
$
|
5,783
|
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
5,779
|
|
Certificates of deposit
|
690
|
|
|
1
|
|
|
—
|
|
|
691
|
|
||||
U.S. government funds
|
31,117
|
|
|
—
|
|
|
—
|
|
|
31,117
|
|
||||
|
$
|
37,590
|
|
|
$
|
1
|
|
|
$
|
(4
|
)
|
|
$
|
37,587
|
|
|
|
|
|
|
|
|
|
||||||||
|
Amortized
Cost |
|
Gross
Unrealized Holding Gains |
|
Gross
Unrealized Holding Losses |
|
Fair
Value |
||||||||
As of December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Foreign deposits
|
$
|
1,587
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,587
|
|
Municipal bond
|
1,000
|
|
|
—
|
|
|
(8
|
)
|
|
992
|
|
||||
|
$
|
2,587
|
|
|
$
|
—
|
|
|
$
|
(8
|
)
|
|
$
|
2,579
|
|
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
$
|
5,791
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,791
|
|
Certificates of deposit
|
707
|
|
|
—
|
|
|
—
|
|
|
707
|
|
||||
U.S. government funds
|
23,072
|
|
|
—
|
|
|
—
|
|
|
23,072
|
|
||||
|
$
|
29,570
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29,570
|
|
|
December 31, 2017
|
||||||
|
Amortized
Cost |
|
Fair
Value |
||||
Available-for-sale:
|
|
|
|
||||
Due after one year through five years
|
2,237
|
|
|
2,237
|
|
||
Due after five years through ten years
|
1,000
|
|
|
1,000
|
|
||
|
$
|
3,237
|
|
|
$
|
3,237
|
|
|
As of December 31, 2017
|
||||||||||
|
Fair Value
|
|
Level 1
|
|
Level 2
|
||||||
Assets
|
|
|
|
|
|
||||||
Restricted cash
|
$
|
600
|
|
|
$
|
600
|
|
|
$
|
—
|
|
Foreign deposits
|
2,237
|
|
|
2,237
|
|
|
—
|
|
|||
Municipal bond
|
1,000
|
|
|
—
|
|
|
1,000
|
|
|||
Money market funds
|
5,167
|
|
|
5,167
|
|
|
—
|
|
|||
Total
|
$
|
9,004
|
|
|
$
|
8,004
|
|
|
$
|
1,000
|
|
|
|
|
|
|
|
||||||
|
As of December 31, 2016
|
||||||||||
|
Fair Value
|
|
Level 1
|
|
Level 2
|
||||||
Assets
|
|
|
|
|
|
||||||
Restricted cash
|
$
|
600
|
|
|
$
|
600
|
|
|
$
|
—
|
|
Foreign deposits
|
1,587
|
|
|
1,587
|
|
|
—
|
|
|||
Municipal bond
|
992
|
|
|
—
|
|
|
992
|
|
|||
Money market funds
|
7,033
|
|
|
7,033
|
|
|
—
|
|
|||
Total
|
$
|
10,212
|
|
|
$
|
9,220
|
|
|
$
|
992
|
|
|
Year Ending December 31,
|
|
|
||||||||||||||||||||||||
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
||||||||||||||
Long-term debt obligations
(1)
|
$
|
—
|
|
|
$
|
9,500
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,500
|
|
Operating lease obligations
(2)
|
1,876
|
|
|
2,035
|
|
|
2,116
|
|
|
2,197
|
|
|
2,258
|
|
|
8,719
|
|
|
19,201
|
|
|||||||
Capital leases
(3)
|
519
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
519
|
|
|||||||
Other obligations
(4)
|
927
|
|
|
562
|
|
|
119
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
1,625
|
|
|||||||
Total
|
$
|
3,322
|
|
|
$
|
12,097
|
|
|
$
|
2,235
|
|
|
$
|
2,214
|
|
|
$
|
2,258
|
|
|
$
|
8,719
|
|
|
$
|
30,845
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||
Subscription
|
|
2017
|
|
2016
|
|
2015
|
||||||
Reserve at beginning of year
|
|
$
|
8,538
|
|
|
$
|
5,384
|
|
|
$
|
4,278
|
|
Veterinary invoices during the period related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
155,623
|
|
|
123,823
|
|
|
95,390
|
|
|||
Prior years
|
|
(69
|
)
|
|
813
|
|
|
30
|
|
|||
Total veterinary invoice expense
|
|
155,554
|
|
|
124,636
|
|
|
95,420
|
|
|||
Amounts paid during the period related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
144,802
|
|
|
115,314
|
|
|
89,768
|
|
|||
Prior years
|
|
7,777
|
|
|
5,832
|
|
|
4,239
|
|
|||
Total paid
|
|
152,579
|
|
|
121,146
|
|
|
94,007
|
|
|||
Non-cash expenses
|
|
454
|
|
|
336
|
|
|
307
|
|
|||
Reserve at end of period
|
|
$
|
11,059
|
|
|
$
|
8,538
|
|
|
$
|
5,384
|
|
|
|
Year Ended December 31,
|
||||||||||
Other Business
|
|
2017
|
|
2016
|
|
2015
|
||||||
Reserve at beginning of year
|
|
$
|
983
|
|
|
$
|
890
|
|
|
$
|
829
|
|
Veterinary invoices during the period related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
14,739
|
|
|
9,027
|
|
|
7,983
|
|
|||
Prior years
|
|
(171
|
)
|
|
(129
|
)
|
|
(79
|
)
|
|||
Total veterinary invoice expense
|
|
14,568
|
|
|
8,898
|
|
|
7,904
|
|
|||
Amounts paid during the period related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
13,053
|
|
|
8,048
|
|
|
7,095
|
|
|||
Prior years
|
|
801
|
|
|
757
|
|
|
748
|
|
|||
Total paid
|
|
13,854
|
|
|
8,805
|
|
|
7,843
|
|
|||
Non-cash expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Reserve at end of period
|
|
$
|
1,697
|
|
|
$
|
983
|
|
|
$
|
890
|
|
|
|
Cumulative veterinary invoice expenses
|
|
Reserve
|
|
Cumulative number of veterinary invoices
|
|||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
As of December 31,
|
|
As of December 31,
|
|||||||||||||||||||
Subscription
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2017
|
|
2017
|
|||||||||||
Year of Occurrence
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
|||||||||||
2014
|
|
$
|
72,100
|
|
|
$
|
72,039
|
|
|
$
|
72,204
|
|
|
$
|
72,222
|
|
|
$
|
27
|
|
|
379,078
|
|
2015
|
|
|
|
$
|
95,661
|
|
|
$
|
96,217
|
|
|
$
|
96,276
|
|
|
$
|
130
|
|
|
475,626
|
|
||
2016
|
|
|
|
|
|
$
|
125,127
|
|
|
$
|
124,910
|
|
|
$
|
535
|
|
|
587,007
|
|
||||
2017
|
|
|
|
|
|
|
|
$
|
156,580
|
|
|
$
|
10,367
|
|
|
656,490
|
|
||||||
|
|
|
|
|
|
|
|
$
|
449,988
|
|
|
$
|
11,059
|
|
|
|
|
|
Cumulative veterinary invoice expenses
|
|
Reserve
|
|
Cumulative number of veterinary invoices
|
|||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
As of December 31,
|
|
As of December 31,
|
|||||||||||||||||||
Other Business
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2017
|
|
2017
|
|||||||||||
Year of Occurrence
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
|||||||||||
2014
|
|
$
|
5,966
|
|
|
$
|
5,889
|
|
|
$
|
5,888
|
|
|
$
|
5,895
|
|
|
$
|
—
|
|
|
34,587
|
|
2015
|
|
|
|
$
|
7,974
|
|
|
$
|
7,846
|
|
|
$
|
7,850
|
|
|
$
|
—
|
|
|
46,900
|
|
||
2016
|
|
|
|
|
|
$
|
9,028
|
|
|
$
|
8,844
|
|
|
$
|
11
|
|
|
59,243
|
|
||||
2017
|
|
|
|
|
|
|
|
$
|
14,741
|
|
|
$
|
1,686
|
|
|
95,182
|
|
||||||
|
|
|
|
|
|
|
|
$
|
37,330
|
|
|
$
|
1,697
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Veterinary invoice expense
|
$
|
355
|
|
|
$
|
234
|
|
|
$
|
219
|
|
Other cost of revenue
|
239
|
|
|
41
|
|
|
44
|
|
|||
Technology and development
|
216
|
|
|
246
|
|
|
404
|
|
|||
General and administrative
|
1,887
|
|
|
1,893
|
|
|
1,889
|
|
|||
Sales and marketing
|
722
|
|
|
532
|
|
|
446
|
|
|||
Total stock-based compensation
|
$
|
3,419
|
|
|
$
|
2,946
|
|
|
$
|
3,002
|
|
|
|
Year Ended December 31,
|
||||
|
|
2017
|
|
2016
|
|
2015
|
Valuation assumptions:
|
|
|
|
|
|
|
Expected term (in years)
|
|
6.25
|
|
5.04-6.25
|
|
3.0-6.25
|
Expected volatility
|
|
37.1%-39.8%
|
|
37.6%-42.1%
|
|
37.2%–49.4%
|
Risk-free interest rate
|
|
1.8%-2.2%
|
|
1.1%-2.0%
|
|
1.1%–2.0%
|
Expected dividend yield
|
|
—%
|
|
—%
|
|
—%
|
|
Number
of
Options
|
|
Weighted Average
Exercise
Price per Share
|
|
Aggregate
Intrinsic
Value
(in thousands)
|
|||||
Outstanding as of December 31, 2014
|
5,112,556
|
|
|
$
|
3.19
|
|
|
$
|
21,116
|
|
Granted
|
698,764
|
|
|
7.84
|
|
|
—
|
|
||
Exercised
|
(632,829
|
)
|
|
2.12
|
|
|
3,703
|
|
||
Forfeited
|
(306,542
|
)
|
|
7.65
|
|
|
—
|
|
||
Outstanding as of December 31, 2015
|
4,871,949
|
|
|
3.71
|
|
|
29,644
|
|
||
Granted
|
666,664
|
|
|
13.37
|
|
|
—
|
|
||
Exercised
|
(1,119,367
|
)
|
|
3.35
|
|
|
11,980
|
|
||
Forfeited
|
(296,223
|
)
|
|
8.14
|
|
|
—
|
|
||
Outstanding as of December 31, 2016
|
4,123,023
|
|
|
5.06
|
|
|
43,185
|
|
||
Granted
|
657,339
|
|
|
17.74
|
|
|
—
|
|
||
Exercised
|
(670,823
|
)
|
|
3.80
|
|
|
10,392
|
|
||
Forfeited
|
(103,140
|
)
|
|
12.25
|
|
|
—
|
|
||
Outstanding as of December 31, 2017
|
4,006,399
|
|
|
7.16
|
|
|
88,578
|
|
||
|
|
|
|
|
|
|||||
Exercisable at December 31, 2017
|
2,998,099
|
|
|
$
|
4.50
|
|
|
$
|
74,278
|
|
|
|
Weighted Average Grant Date Fair Value per Share
|
|
Fair Value
of Options
Vested (in thousands)
|
||||
Year:
|
|
|
|
|
||||
2015
|
|
$
|
3.46
|
|
|
$
|
3,276
|
|
2016
|
|
$
|
5.64
|
|
|
$
|
4,645
|
|
2017
|
|
$
|
7.25
|
|
|
$
|
6,313
|
|
|
|
Number of
Shares
|
|
Weighted Average
Grant Date Fair Value per
Share
|
|||
Unvested shares as of December 31, 2014
|
|
584,385
|
|
|
$
|
4.77
|
|
Granted
|
|
2,385
|
|
|
7.26
|
|
|
Vested
|
|
(119,262
|
)
|
|
4.80
|
|
|
Forfeited
|
|
—
|
|
|
—
|
|
|
Unvested shares as of December 31, 2015
|
|
467,508
|
|
|
4.77
|
|
|
Granted
|
|
—
|
|
|
—
|
|
|
Vested
|
|
(116,877
|
)
|
|
4.77
|
|
|
Forfeited
|
|
—
|
|
|
—
|
|
|
Unvested shares as of December 31, 2016
|
|
350,631
|
|
|
4.77
|
|
|
Granted
|
|
23,659
|
|
|
30.19
|
|
|
Vested
|
|
(116,877
|
)
|
|
4.77
|
|
|
Forfeited
|
|
(571
|
)
|
|
30.19
|
|
|
Unvested shares as of December 31, 2017
|
|
256,842
|
|
|
$
|
4.77
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Subscription business
|
$
|
218,354
|
|
|
$
|
173,356
|
|
|
$
|
133,406
|
|
Other business
|
24,313
|
|
|
14,874
|
|
|
13,557
|
|
|||
|
242,667
|
|
|
188,230
|
|
|
146,963
|
|
|||
Veterinary invoice expense:
|
|
|
|
|
|
||||||
Subscription business
|
155,554
|
|
|
124,636
|
|
|
95,420
|
|
|||
Other business
|
14,568
|
|
|
8,898
|
|
|
7,904
|
|
|||
|
170,122
|
|
|
133,534
|
|
|
103,324
|
|
|||
Other cost of revenue:
|
|
|
|
|
|
||||||
Subscription business
|
21,329
|
|
|
16,685
|
|
|
14,008
|
|
|||
Other business
|
8,166
|
|
|
4,723
|
|
|
4,402
|
|
|||
|
29,495
|
|
|
21,408
|
|
|
18,410
|
|
|||
Gross profit:
|
|
|
|
|
|
||||||
Subscription business
|
41,471
|
|
|
32,035
|
|
|
23,978
|
|
|||
Other business
|
1,579
|
|
|
1,253
|
|
|
1,251
|
|
|||
|
43,050
|
|
|
33,288
|
|
|
25,229
|
|
|||
|
|
|
|
|
|
||||||
Technology and development
|
9,768
|
|
|
9,534
|
|
|
11,215
|
|
|||
General and administrative
|
16,820
|
|
|
15,205
|
|
|
15,558
|
|
|||
Sales and marketing:
|
|
|
|
|
|
||||||
Subscription business
|
18,886
|
|
|
15,029
|
|
|
15,151
|
|
|||
Other business
|
218
|
|
|
218
|
|
|
80
|
|
|||
|
19,104
|
|
|
15,247
|
|
|
15,231
|
|
|||
Operating loss
|
$
|
(2,642
|
)
|
|
$
|
(6,698
|
)
|
|
$
|
(16,775
|
)
|
|
|
As of December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Statutory net income
|
|
$
|
7,507
|
|
|
$
|
4,081
|
|
|
$
|
1,386
|
|
Statutory capital and surplus
|
|
37,190
|
|
|
30,451
|
|
|
26,068
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Current:
|
|
|
|
|
|
|
||||||
U.S. federal & state
|
|
$
|
183
|
|
|
$
|
25
|
|
|
$
|
31
|
|
Foreign
|
|
15
|
|
|
13
|
|
|
84
|
|
|||
|
|
198
|
|
|
38
|
|
|
115
|
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
U.S. federal & state
|
|
(620
|
)
|
|
—
|
|
|
—
|
|
|||
Foreign
|
|
(6
|
)
|
|
—
|
|
|
(1
|
)
|
|||
|
|
(626
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Income tax (benefit) expense
|
|
$
|
(428
|
)
|
|
$
|
38
|
|
|
$
|
114
|
|
|
|
Year Ended December 31,
|
|||||||
|
|
2017
|
|
2016
|
|||||
Deferred tax assets:
|
|
|
|
|
|||||
Unearned premium reserves
|
|
$
|
966
|
|
|
$
|
918
|
|
|
Accruals and reserves
|
|
606
|
|
|
782
|
|
|||
Net operating loss carryforwards
|
|
18,211
|
|
|
22,632
|
|
|||
Depreciation and amortization
|
|
317
|
|
|
535
|
|
|||
Equity compensation
|
|
1,024
|
|
|
1,137
|
|
|||
Credits
|
|
208
|
|
—
|
|
—
|
|
||
Other
|
|
270
|
|
|
101
|
|
|||
Total deferred tax assets
|
|
21,602
|
|
|
26,105
|
|
|||
Deferred tax liabilities:
|
|
|
|
|
|||||
Deferred costs
|
|
(183
|
)
|
|
(226
|
)
|
|||
Intangible assets
|
|
(1,002
|
)
|
|
(1,623
|
)
|
|||
Total deferred tax liabilities
|
|
(1,185
|
)
|
|
(1,849
|
)
|
|||
Total deferred taxes
|
|
20,417
|
|
|
24,256
|
|
|||
Less deferred tax asset valuation allowance
|
|
(21,419
|
)
|
|
(25,879
|
)
|
|||
Net deferred tax liability
|
|
$
|
(1,002
|
)
|
|
$
|
(1,623
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Balance, beginning of year
|
|
$
|
120
|
|
|
$
|
80
|
|
|
$
|
65
|
|
Increases to tax positions related to prior periods
|
|
91
|
|
|
—
|
|
|
—
|
|
|||
Increases to tax positions related to the current year
|
|
116
|
|
|
40
|
|
|
15
|
|
|||
Balance, end of year
|
|
$
|
327
|
|
|
$
|
120
|
|
|
$
|
80
|
|
|
|
|
|
|
(1) The Company recorded a tax benefit as of December 31, 2017, as a result of the Tax Act. See "Note 15" for additional information regarding this tax benefit.
(2) The Company sold an equity method investment during the second quarter of 2017. See "Note 1" for additional information regarding the sale.
|
|
|
TRUPANION, INC.
|
|
|
|
By:
|
|
/s/ Darryl Rawlings
|
|
|
Darryl Rawlings
Chief Executive Officer and President
|
|
|
|
|
|
|
|
|
|
Date: February 13, 2018
|
|
/s/ Darryl Rawlings
|
|
|
Darryl Rawlings
Chief Executive Officer and President
(Principal Executive Officer)
|
|
|
|
Date: February 13, 2018
|
|
/s/ Tricia Plouf
|
|
|
Tricia Plouf
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
|
|
Date: February 13, 2018
|
|
/s/ Murray Low
|
|
|
Murray Low
Chairman of the Board of Directors |
|
|
|
Date: February 13, 2018
|
|
/s/ Chad Cohen
|
|
|
Chad Cohen
Director |
|
|
|
Date: February 13, 2018
|
|
/s/ Michael Doak
|
|
|
Michael Doak
Director |
|
|
|
Date: February 13, 2018
|
|
/s/ Robin Ferracone
|
|
|
Robin Ferracone
Director |
|
|
|
Date: February 13, 2018
|
|
/s/ Dan Levitan
|
|
|
Dan Levitan
Director |
|
|
|
Date: February 13, 2018
|
|
/s/ H. Hays Lindsley
|
|
|
H. Hays Lindsley
Director |
|
|
|
Date: February 13, 2018
|
|
/s/ Glenn Novotny
|
|
|
Glenn Novotny
Director |
|
|
|
Date: February 13, 2018
|
|
/s/ Howard Rubin
|
|
|
Howard Rubin
Director |
Exhibit
|
|
|
|
Incorporated by Reference
|
|
Filed/Furnished
|
||||||
Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Exhibit Filing Date
|
|
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-Q
|
|
001-36537
|
|
3.1
|
|
8/28/2014
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8-K
|
|
001-36537
|
|
3.1
|
|
6/3/2016
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-Q
|
|
001-36537
|
|
3.2
|
|
8/28/2014
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-1
|
|
333-196814
|
|
4.1
|
|
6/16/2014
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-1
|
|
333-196814
|
|
4.4
|
|
6/16/2014
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8-K
|
|
001-36537
|
|
99.1
|
|
2/8/2018
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-1
|
|
333-196814
|
|
10.1
|
|
6/16/2014
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-1
|
|
333-196814
|
|
10.2
|
|
6/16/2014
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-1
|
|
333-196814
|
|
10.3
|
|
6/16/2014
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-1
|
|
333-196814
|
|
10.4
|
|
6/16/2014
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-1
|
|
333-196814
|
|
10.6
|
|
6/16/2014
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-1
|
|
333-196814
|
|
10.8
|
|
6/16/2014
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-Q
|
|
001-36537
|
|
10.2
|
|
5/5/2016
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-K
|
|
001-36537
|
|
10.13
|
|
2/15/2017
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-K
|
|
001-36537
|
|
10.14
|
|
2/15/2017
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8-K
|
|
001-36537
|
|
10.1
|
|
2/8/2018
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-K
|
|
001-36537
|
|
10.15
|
|
2/15/2017
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-Q
|
|
001-36537
|
|
10.1
|
|
5/2/2017
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-Q
|
|
001-36537
|
|
10.1
|
|
11/2/2017
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-Q
|
|
001-36537
|
|
10.2
|
|
11/2/2017
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-K
|
|
001-36537
|
|
10.13
|
|
2/24/2015
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-K
|
|
001-36537
|
|
10.14
|
|
2/24/2015
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-K
|
|
001-36537
|
|
10.15
|
|
2/24/2015
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-K
|
|
001-36537
|
|
10.16
|
|
2/24/2017
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-K
|
|
001-36537
|
|
10.17
|
|
2/24/2017
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
+
|
Indicates a management contract or compensatory plan or arrangement.
|
†
|
Registrant has omitted portions of the referenced exhibit pursuant to a request for confidential treatment under Rule 24b-2 promulgated under the Exchange Act. The omitted portions of this exhibit have been filed separately with the SEC.
|
*
|
This certification is deemed not filed for purpose of section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
|
Trupanion, Inc.
Condensed Statements of Comprehensive Loss
(Parent Company Only, in thousands)
|
||||||||||||
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Expenses:
|
|
|
||||||||||
Veterinary invoice expense
|
|
$
|
354
|
|
|
$
|
269
|
|
|
$
|
226
|
|
Other cost of revenue
|
|
239
|
|
|
41
|
|
|
44
|
|
|||
Technology and development
|
|
528
|
|
|
531
|
|
|
628
|
|
|||
General and administrative
|
|
4,204
|
|
|
3,627
|
|
|
3,852
|
|
|||
Sales and marketing
|
|
889
|
|
|
871
|
|
|
621
|
|
|||
Total expenses
|
|
6,214
|
|
|
5,339
|
|
|
5,371
|
|
|||
Operating loss
|
|
(6,214
|
)
|
|
(5,339
|
)
|
|
(5,371
|
)
|
|||
Interest expense
|
|
529
|
|
|
218
|
|
|
325
|
|
|||
Other (income) expense, net
|
|
(4,101
|
)
|
|
23
|
|
|
(2
|
)
|
|||
Loss before equity in undistributed earnings of subsidiaries
|
|
(2,642
|
)
|
|
(5,580
|
)
|
|
(5,694
|
)
|
|||
Income tax benefit (expense)
|
|
5,302
|
|
|
—
|
|
|
—
|
|
|||
Equity in undistributed earnings of subsidiaries
|
|
(4,163
|
)
|
|
(1,316
|
)
|
|
(11,511
|
)
|
|||
Net loss
|
|
$
|
(1,503
|
)
|
|
$
|
(6,896
|
)
|
|
$
|
(17,205
|
)
|
Other comprehensive income (loss), net of taxes:
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss) of subsidiaries
|
|
285
|
|
|
125
|
|
|
(513
|
)
|
|||
Other comprehensive income (loss)
|
|
285
|
|
|
125
|
|
|
(513
|
)
|
|||
Comprehensive loss
|
|
$
|
(1,218
|
)
|
|
$
|
(6,771
|
)
|
|
$
|
(17,718
|
)
|
Trupanion, Inc.
Condensed Balance Sheets
(
Parent Company Only)
(In thousands, except per share data)
|
||||||||
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Assets
|
|
|
||||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
1,105
|
|
|
$
|
3,401
|
|
Accounts and other receivables
|
|
2,261
|
|
|
1,492
|
|
||
Prepaid expenses and other assets
|
|
295
|
|
|
106
|
|
||
Total current assets
|
|
3,661
|
|
|
4,999
|
|
||
Restricted cash
|
|
600
|
|
|
600
|
|
||
Equity method investment
|
|
—
|
|
|
271
|
|
||
Property and equipment, net
|
|
661
|
|
|
1,070
|
|
||
Intangible assets, net
|
|
4,795
|
|
|
4,773
|
|
||
Other long term assets
|
|
2,488
|
|
|
—
|
|
||
Advances to and investments in subsidiaries
|
|
47,209
|
|
|
40,086
|
|
||
Total assets
|
|
$
|
59,414
|
|
|
$
|
51,799
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable, accrued liabilities, and other liabilities
|
|
$
|
654
|
|
|
$
|
492
|
|
Total current liabilities
|
|
654
|
|
|
492
|
|
||
Long-term debt
|
|
9,324
|
|
|
4,767
|
|
||
Deferred tax liabilities
|
|
1,002
|
|
|
1,622
|
|
||
Other liabilities
|
|
—
|
|
|
203
|
|
||
Total liabilities
|
|
10,980
|
|
|
7,084
|
|
||
Stockholders’ equity:
|
|
|
|
|
||||
Common stock: $0.00001 par value per share, 100,000,000 shares authorized at December 31, 2017 and December 31, 2016, 30,778,796 and 30,121,496 shares issued and outstanding at December 31, 2017; 30,156,247 and 29,498,947 shares issued and outstanding at December 31, 2016
|
|
—
|
|
|
—
|
|
||
Preferred stock: $0.00001 par value per share, 10,000,000 shares authorized at December 31, 2017 and December 31, 2016, and 0 shares issued and outstanding at December 31, 2017 and December 31, 2016
|
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
|
134,511
|
|
|
129,574
|
|
||
Accumulated other comprehensive loss
|
|
(92
|
)
|
|
(377
|
)
|
||
Accumulated deficit
|
|
(82,784
|
)
|
|
(81,281
|
)
|
||
Treasury stock, at cost: 657,300 shares at December 31, 2017 and December 31, 2016
|
|
(3,201
|
)
|
|
(3,201
|
)
|
||
Total stockholders’ equity
|
|
48,434
|
|
|
44,715
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
59,414
|
|
|
$
|
51,799
|
|
Trupanion, Inc.
Condensed Statements of Cash Flows
(Parent Company Only, in thousands)
|
||||||||||||
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Operating activities
|
|
|
||||||||||
Net loss
|
|
$
|
(1,503
|
)
|
|
$
|
(6,896
|
)
|
|
$
|
(17,205
|
)
|
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
|
|
|
|
|
|
|
||||||
Loss attributable to investments in subsidiaries
|
|
4,163
|
|
|
1,316
|
|
|
11,511
|
|
|||
Depreciation and amortization
|
|
697
|
|
|
251
|
|
|
126
|
|
|||
Stock-based compensation expense
|
|
3,419
|
|
|
2,946
|
|
|
3,002
|
|
|||
Gain on sale of equity method investment
|
|
(1,036
|
)
|
|
—
|
|
|
—
|
|
|||
Other, net
|
|
(380
|
)
|
|
58
|
|
|
21
|
|
|||
Changes in operating assets and liabilities
|
|
743
|
|
|
1,742
|
|
|
(1,383
|
)
|
|||
Net cash provided by (used in) operating activities
|
|
6,103
|
|
|
(583
|
)
|
|
(3,928
|
)
|
|||
Investing activities
|
|
|
|
|
|
|
||||||
Proceeds from sale of equity method investment
|
|
1,402
|
|
|
—
|
|
|
—
|
|
|||
Purchases of property and equipment
|
|
(135
|
)
|
|
1
|
|
|
(149
|
)
|
|||
Advances to and investments in subsidiaries
|
|
(12,168
|
)
|
|
(9,333
|
)
|
|
(19,900
|
)
|
|||
Other investments
|
|
(2,668
|
)
|
|
—
|
|
|
(300
|
)
|
|||
Net cash used in investing activities
|
|
(13,570
|
)
|
|
(9,332
|
)
|
|
(20,349
|
)
|
|||
Financing activities
|
|
|
|
|
|
|
||||||
Proceeds from exercise of stock options
|
|
2,545
|
|
|
3,745
|
|
|
1,335
|
|
|||
Taxes paid related to net share settlement of equity awards
|
|
(1,170
|
)
|
|
(662
|
)
|
|
(643
|
)
|
|||
Proceeds from (repayment of) debt financing, net of financing fees
|
|
4,400
|
|
|
4,988
|
|
|
(14,900
|
)
|
|||
Other financing
|
|
(604
|
)
|
|
(195
|
)
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
|
5,170
|
|
|
7,876
|
|
|
(14,208
|
)
|
|||
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash, net
|
|
—
|
|
|
—
|
|
|
(517
|
)
|
|||
Net change in cash, cash equivalents, and restricted cash
|
|
(2,296
|
)
|
|
(2,039
|
)
|
|
(39,002
|
)
|
|||
Cash, cash equivalents, and restricted cash at beginning of period
|
|
4,001
|
|
|
6,040
|
|
|
45,042
|
|
|||
Cash, cash equivalents, and restricted cash at end of period
|
|
$
|
1,705
|
|
|
$
|
4,001
|
|
|
$
|
6,040
|
|
Supplemental disclosures
|
|
|
|
|
|
|
||||||
Interest paid
|
|
333
|
|
|
153
|
|
|
155
|
|
|||
Noncash investing and financing activities:
|
|
|
|
|
|
|
||||||
Property and equipment acquired under capital lease
|
|
471
|
|
|
—
|
|
|
—
|
|
|||
Cashless exercise of common stock warrants
|
|
—
|
|
|
600
|
|
|
—
|
|
A.
|
100% of the commission charged by the producing Broker, plus;
|
B.
|
4.00% of gross premium on the subject Business, representing reimbursement for premium taxes, plus;
|
C.
|
$1,125,000 for the calendar year ended December 31, 2018, representing the Reinsured's
|
|
/s/ Philip H. Cook
|
Chief Executive Officer
|
|
/s/ Andrew McComb
|
President
|
in Hamilton, Bermuda
|
Subsidiary
|
|
Incorporation
|
American Pet Insurance Company
|
|
United States, New York
|
Trupanion Managers USA, Inc.
|
|
United States, Arizona
|
Trupanion Brokers Ontario, Inc.
|
|
Canada, Ontario
|
Wyndham Insurance Company (SAC), Ltd.
|
|
Bermuda
|
(1)
|
Registration Statement (Form S-8 No. 333-197514) pertaining to the 2014 Equity Incentive Plan, 2014 Employee Stock Purchase Plan, and 2007 Equity Compensation Plan of Trupanion, Inc.,
|
(2)
|
Registration Statement (Form S-8 No. 333-202270) pertaining to the 2014 Equity Incentive Plan and 2014 Employee Stock Purchase Plan of Trupanion, Inc., and
|
(3)
|
Registration Statement (Form S-8 No. 333-209550) pertaining to the 2014 Equity Incentive Plan and 2014 Employee Stock Purchase Plan of Trupanion, Inc.
|
1.
|
I have reviewed this Annual Report on Form 10-K of Trupanion, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
1.
|
I have reviewed this Annual Report on Form 10-K of Trupanion, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
1.
|
the Annual Report of Trupanion, Inc. on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
the information contained in such Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Trupanion, Inc.
|
1.
|
the Annual Report of Trupanion, Inc. on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
the information contained in such Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Trupanion, Inc.
|