TRUP

Trupanion has crossed a long-awaited inflection: FY2025 delivered $1.44B revenue (+11.9% YoY), operating income of $13.8M (+245% YoY), $0.45 diluted EPS, and $89.5M of operating cash flow (+85% YoY). The MD&A confirms the underlying mix is improving — subscription pets grew from 1,041,212 to 1,096,173 and monthly ARPU climbed from $72.98 to $80.79 (and to $83.56 in Q4), so the core subscription engine is pricing through veterinary inflation while keeping retention near 98.3%. Long-term debt was paid down 20% to $102M and equity grew 19% to $384M, so the balance sheet is healthier than at any point in the company's history of cumulative losses (accumulated deficit still -$206M per the 10-K).

The filing language, however, undercuts an outright buy. Total pets enrolled actually fell from 1,677,570 to 1,647,565 — the headline growth is entirely mix-driven (higher ARPU on a smaller pet base), as Pets Best run-off in the 'other business' segment masks the subscription gains. Average pet acquisition cost has exploded from $235 to $288 for the year, and $320 in Q4 versus $261 a year prior — a 23% jump that management explicitly flags as a key efficiency metric. The Risk Factors single out 'variable costs of attracting new members through online channels' and the need to 'maintain certain levels of surplus capital' under insurance regs, plus the planned roll-off of the Accelerant fronting relationship in Canada (GPIC will underwrite directly) — a non-trivial operational transition.