Shares of Trupanion (TRUP 0.23%) rallied as much as 30% early Friday, then settled to trade up 16.7% as of 2:45 p.m. ET after the pet insurance provider announced better-than-expected third-quarter results.
NASDAQ: TRUP
Key Data Points
On Trupanion's strong quarter, healthy cash flows
Trupanion's quarterly revenue grew 22% year over year, to $285.9 million, while its net loss narrowed to just over $4 million, or $0.10 per share, from a loss of $0.32 per share in last year's third quarter. Analysts, on average, were expecting a wider net loss of $0.31 per share on revenue of $275 million.
Within Trupanion's top line, subscription business revenue grew 20% year over year, to $182.9 million. Other business revenue -- primarily comprised of business-to-business (B2B) contracts as opposed to Trupanion's core direct-to-consumer (DTC) business -- grew 26.5% to $102.9 million. Total enrolled pets also increased 19% year over year to 1,712,177, including a 20% increase in subscription-enrolled pets to 969,322.
Trupanion chairman and CEO Darryl Rawlings lauded the company's healthy cash flows -- including $11 million in operating cash flow and $7 million in free cash flow -- as well as strong execution throughout the business.
What's next for Trupanion stock?
For the fourth quarter, Trupanion expects revenue of $289 million to $295 million, including subscription revenue of $190 million to $195 million. As such, for full-year 2023, Trupanion raised its full-year 2023 revenue guidance to a range of $1.100 billion to $1.108 billion, or growth of 22% at the midpoint -- up from previous guidance for 19% growth and well above the $1.08 billion Wall Street was modeling. That outlook assumes a 20% increase in subscription revenue (at the midpoint) to a range of $711 million to $716 million.
In the end, this was a straightforward beat-and-raise performance from a previously beaten-down insurance stock. With shares of Trupanion still more than 40% below where it started 2023, I think now might be a great time to open or add to a position.
