Trupanion, Inc.

Good day and welcome to the Trupanion Fourth Quarter 2025 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touchtone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Gil Melchior, Director of Investor Relations. Please go ahead.

Good afternoon, and welcome to Toupanian's fourth quarter and full year 2025 Financial Results Conference call. Participating on today's call are Margie Toof, Chief Executive Officer and President, and Farouk Qureshi, Chief Financial Officer. For ease of reference, we've included a slide presentation to accompany today's discussion, which will be made available on our investor relations website under our quarterly earnings tab. Before we begin, please be advised that remarks today will contain forward-looking statements. All statements other than statements of historical facts are forward-looking statements. These include, but are not limited to, statements regarding our future operations, key operating metrics, opportunities and financial performance, pricing, and veterinary industry inflation. These statements involve a high degree of known and unknown risks and uncertainties that could cause actual results to differ materially from those discussed. A detailed discussion of these and other risks and uncertainties are included in today's earnings release, as well as the company's most recent reports, including forms 10-K, 10-Q, and 8-K, filed with the Securities and Exchange Commission. Today's presentation contains references to non-GAAP financial measures that management uses to evaluate the company's performance, including without limitation, cost of paying veterinary invoices, variable expenses, fixed expenses, adjusted operating income, acquisition costs, internal rate of return, adjusted EBITDA, and free cash flow. When we use the term adjusted operating income or margin, it is intended to refer to a non-GAAP operating income or margin before new pet acquisition and development expenses. Unless otherwise noted, all margins and expenses will be resented on a non-GAAP basis and excluding stock-based compensation expense and depreciation expense. These non-GAAP measures are in addition to another substitute for measures of financial performance prepared in accordance with the U.S. GAAP. Investors are encouraged to review the reconciliations of these non-GAAP financial measures to the most directly comparable GAAP results, which can be found in today's press release. Lastly, I would like to remind everyone that today's conference call is also available via webcast onto Pennant's Investor Relations website. The replay will also be available on the site. I will now hand over the call to Margie.

Thanks, Gil, and thank you everyone for joining us this afternoon. 2025 was a record year for the company, and I was especially pleased with the fourth quarter, which marked a strong close to the year and a solid launchpad for our next strategic plan. Over the past 60 months, we added over $900 million in revenue and generated $518 million in adjusted operating income. We ended the year with nearly 1 million pets protected under the Trupanion brand and have now paid over $3.5 billion in veterinary invoices on behalf of our members over our history, a testament to our mission and the need we serve in today's market. I'd like to take a moment to thank our entire team for their efforts. The strength of our mission and our commitment to each other reinforce our confidence as we move on to our next strategic plan. Turning to our 2025 highlights, we ended the year with nearly $1 billion in subscription revenue and delivered approximately 15% annual subscription adjusted operating margin, reflecting the strength and consistency of our model. Our performance translated into $152 million of adjusted operating income, which funded $83 million of pet acquisition and investments in development spend during the course of the year to support long-term growth. The increase of 33% year-on-year in adjusted operating income reflects meaningful progress in aligning pricing with the value we deliver. These actions directly translated into a substantial improvement in per pet margins and lifetime value while continuing to honor our commitment to our member value proposition, which we believe remains sustainably the highest in the industry for the life of the pet. Our ongoing commitment to our pricing promise and to a strong member experience has been reflected in steadily improving retention. Retention is a key driver of long-term growth in adjusted operating income, and that commitment paid off in 2025, with trailing 12-month retention improving in every single quarter. We saw a similar strengthening in new pet acquisition, with gross pet ads also accelerating throughout 2025 and ending Q4 up 8% year-on-year. Stronger retention and stepped-up acquisition together drove subscription net pet growth of 50% in Q4 and 10% for the full year. As operating margins improved, we intentionally leaned further into new pet acquisition, reflecting our confidence that today's higher per pet margin and lifetime value profile support a more aggressive posture. This resulted in a blended Q4 2025 IRR of 23%, while our full-year blended IRR was 30%. From our strong financial footing, we expect another year of consistent revenue growth with margins at our annual operating target. Combined, this translates into meaningful growth in AOI that we can reinvest with consistency and intention while continuing to generate substantial free cash flow. We expect to continue investing in our market reach by educating pet parents, redefining our message, and rolling out targeted product enhancements all aimed at strengthening Trupanion's position in the animal health ecosystem. Our veterinary channel, which remains our heartland for distribution, continues to play a critical role in educating pet parents about the value of medical insurance. This is most notably supported by a long-standing territory partner model, with nearly 200 TPs in the field every day, whose close partnerships with veterinary teams help bring the Trupanion value proposition to life. More broadly, awareness of pet medical insurance continues to rise as pet parents increasingly seek coverage earlier, reflecting a clearer understanding of the true cost of care and a stronger desire to be financially prepared. This growing demand reinforces our focus on reaching pet parents earlier in the decision-making journey and often even before they first visit the veterinarian. Doing so will require sustained investment in brand awareness and education with returns that build over time. Though still early, we're encouraged by the role Brandspend can play in helping facilitate the movement of pet parents through the sales funnel, and we will continue to test and refine our approach to drive maturing leads, conversion, and retention over time. Against this backdrop, Trupanion's model directly addresses a growing need for reliable, sustainable coverage for unexpected veterinary care. Our commitment to our mission remains unchanged. helping ensure pets receive the care they need and the veterinarians can practice the medicine they're trained to deliver. With that, I'll turn it over to Ford.