UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 3, 2021
TRUPANION, INC.
(Exact name of registrant as specified in its charter)

					
Delaware		001-36537		83-0480694	
(State or other jurisdiction of
incorporation)		(Commission
File Number)		(IRS Employer
Identification No.)	
6100 4th Avenue S, Suite 200
Seattle, Washington 98108
(Address of principal executive offices, including zip code)

(855) 727 - 9079
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	
Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered	
Common stock, $0.00001 par value per share	TRUP	The NASDAQ Stock Market LLC	

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02     Results of Operations and Financial Condition.
On November 3, 2021, Trupanion, Inc. (the "Company") issued a press release regarding the Company's financial results for the quarter ended September 30, 2021. A copy of the Company's press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information furnished with this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Exchange Act or under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such a filing.

Item 9.01     Financial Statements and Exhibits.

(d)	Exhibits		
			
	Exhibit No.	Description	
	Exhibit 99.1	Press release issued by Trupanion, Inc. dated November 3, 2021	
	104	Cover Page Interactive Data File (formatted as Inline XBRL)	

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		
TRUPANION, INC.	
		
By:	/s/ Tricia Plouf	
	Name: Tricia Plouf	
	Title: Co-President	
Date: November 3, 2021

Exhibit 99.1

Trupanion Reports Third Quarter 2021 Results

SEATTLE, WA. November 3, 2021-- Trupanion, Inc. (Nasdaq: TRUP), the leading provider of medical insurance for cats and dogs, today announced financial results for the third quarter ended September 30, 2021.

“Q3 marks the continuation of our strong momentum, as shown in our key financial measures. We continue to grow the funds available to us to reinvest in our portfolio and deploy this capital at compounding high rates of return,” said Darryl Rawlings, founder and chief executive officer of Trupanion.

Third Quarter 2021 Financial and Business Highlights

•Total revenue was $181.7 million, an increase of 40% compared to the third quarter of 2020.
•Total enrolled pets (including pets from our other business segment) was 1,104,376 at September 30, 2021, an increase of 37% over the third quarter of 2020.
•Subscription business revenue was $127.1 million, an increase of 28% compared to the third quarter of 2020 (26% on a constant currency basis).
•Subscription enrolled pets was 676,463 at September 30, 2021, an increase of 22% over the third quarter of 2020.
•Net loss was $(6.8) million, or $(0.17) per basic and diluted share, compared to net loss of $(2.6) million, or $(0.07) per basic and diluted share, in the third quarter of 2020. Net loss per share was impacted by $0.10 due to an increase in stock-based compensation and by $0.03 due to an increase in depreciation and amortization when compared to the prior year period.
•Adjusted EBITDA was $2.2 million, compared to adjusted EBITDA of $1.8 million in the third quarter of 2020.
•Operating cash flow was $6.2 million and free cash flow was $3.5 million in the third quarter of 2021. This is compared to operating cash flow of $9.8 million and free cash flow of $8.5 million in the third quarter of 2020.

First Nine Months of 2021 Financial and Business Highlights

•Total revenue was $504.6 million, an increase of 40% compared to the first nine months of 2020.
•Subscription business revenue was $360.7 million, an increase of 28% compared to the first nine months of 2020.
•Net loss was $(28.5) million, or $(0.71) per basic and diluted share, compared to net loss of $(2.3) million, or $(0.07) per basic and diluted share, in the first nine months of 2020. Net loss per share was impacted by $0.38 due to an increase in stock-based compensation and by $0.11 due to an increase in depreciation and amortization when compared to the prior year period. The remaining year-over-year change in earnings per share primarily reflects our accelerated growth and associated acquisition spend in the first nine months of 2021.
•Adjusted EBITDA was $1.2 million, compared to adjusted EBITDA of $9.3 million in the first nine months of 2020.
•Operating cash flow was $2.3 million and free cash flow was $(6.2) million in the first nine months of 2021. This compared to operating cash flow of $17.6 million and free cash flow of $13.1 million in the first nine months of 2020.

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Revenue by Quarter 
Conference Call
Trupanion’s management will host a conference call today to review its third quarter 2021 results. The call is scheduled to begin shortly after 1:30 p.m. PT/ 4:30 p.m. ET. A live webcast will be accessible through the Investor Relations section of Trupanion’s website at http://investors.trupanion.com and will be archived online for 3 months upon completion of the conference call. Participants can access the conference call by dialing 1-877-407-0784 (United States) or 1-201-689-8560 (International). A telephonic replay of the call will also be available after the completion of the call, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (International) and entering the replay pin number: 13723054.

About Trupanion
Trupanion is a leader in medical insurance for cats and dogs throughout the United States, Canada and Australia with over 600,000 pets enrolled. For over two decades, Trupanion has given pet owners peace of mind so they can focus on their pet's recovery, not financial stress. Trupanion is committed to providing pet owners with the highest value in pet medical insurance with unlimited payouts for the life of their pets. With its proprietary software, Trupanion is the only provider with the technology to pay veterinarians directly in minutes at the time of checkout. Trupanion is listed on NASDAQ under the symbol "TRUP". The company was founded in 2000 and is headquartered in Seattle, WA. Trupanion policies are issued, in the United States, by its wholly-owned insurance entity American Pet Insurance Company and, in Canada, by Omega General Insurance Company. Trupanion Australia is a partnership between Trupanion and Hollard Insurance Company. For more information, please visit trupanion.com.

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

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

For a detailed discussion of these and other cautionary statements, please refer to the risk factors discussed in filings with the Securities and Exchange Commission (SEC), including but not limited to, Trupanion’s Annual Report on Form 10-K for the year ended December 31, 2020 and any subsequently filed reports on Forms 10-Q and 8-K. All documents are available through the SEC’s Electronic Data Gathering Analysis and Retrieval system at www.sec.gov or the Investor Relations section of Trupanion’s website at http://investors.trupanion.com.

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

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

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Trupanion, Inc.
Consolidated Statements of Operations
(in thousands, except share data)	
	Three Months Ended September 30,		Nine Months Ended September 30,	
	2021		2020		2021		2020	
	(unaudited)	
Revenue:								
Subscription business	$	127,077 			$	99,379 			$	360,742 			$	281,316 		
Other business	54,590 			30,741 			143,870 			78,025 		
Total revenue	181,667 			130,120 			504,612 			359,341 		
Cost of revenue:								
Subscription business(1)	103,754 			81,098 			299,037 			229,114 		
Other business	49,747 			28,433 			131,764 			71,919 		
   Total cost of revenue(2)	153,501 			109,531 			430,801 			301,033 		
Operating expenses:								
Technology and development(1)	4,391 			2,426 			12,201 			6,839 		
General and administrative(1)	8,246 			5,412 			22,897 			15,345 		
Sales and marketing(1)	19,708 			13,344 			58,802 			33,028 		
Depreciation and amortization(3)	2,944 			1,666 			9,195 			4,770 		
Total operating expenses	35,289 			22,848 			103,095 			59,982 		
Gain (loss) from investment in joint venture	(69)			2 			(149)			(84)		
Operating loss	(7,192)			(2,257)			(29,433)			(1,758)		
Interest expense	— 			324 			1 			1,044 		
Other income, net	(61)			(49)			(222)			(533)		
Gain (loss) before income taxes	(7,131)			(2,532)			(29,212)			(2,269)		
Income tax expense (benefit)	(312)			26 			(724)			69 		
Net loss	$	(6,819)			$	(2,558)			$	(28,488)			$	(2,338)		
								
Net loss per share:								
Basic and diluted	$	(0.17)			$	(0.07)			$	(0.71)			$	(0.07)		
	
Weighted average shares of common stock outstanding:								
Basic and diluted	40,283,818 			35,426,742 			40,044,518 			35,193,317 		

(1)Includes stock-based compensation expense as follows:	Three Months Ended September 30,		Nine Months Ended September 30,	
				
	2021		2020		2021		2020	
Cost of revenue	$	1,311 			$	448 			$	5,769 			$	1,060 		
Technology and development	749 			133 			2,213 			366 		
General and administrative	2,271 			1,108 			6,412 			2,912 		
Sales and marketing	2,112 			741 			7,024 			1,972 		
Total stock-based compensation expense	$	6,443 			$	2,430 			$	21,418 			$	6,310 		
								
(2)The breakout of cost of revenue between veterinary invoice expense and other cost of revenue is as follows:	
	Three Months Ended September 30,		Nine Months Ended September 30,	
	2021		2020		2021		2020	
Veterinary invoice expense	$	125,058 			$	91,266 			$	353,210 			$	252,955 		
Other cost of revenue	28,443 			18,265 			77,591 			48,078 		
     Total cost of revenue	$	153,501 			$	109,531 			$	430,801 			$	301,033 		
								
(3)Depreciation and amortization expenses have been reclassified as a separate line item and prior period amounts have been reclassified from their original presentation to conform to the current period presentation. The Company has elected to present depreciation and amortization expenses as a separate line to better align with management's view of the Company's operating results.	

4

												
Trupanion, Inc.
Consolidated Balance Sheets
(in thousands, except share data)	
	September 30, 2021		December 31, 2020	
	(unaudited)			
Assets				
Current assets:				
Cash and cash equivalents	$	109,641 			$	139,878 		
Short-term investments	111,885 			89,862 		
Accounts and other receivables	157,945 			99,065 		
Prepaid expenses and other assets	11,077 			8,222 		
Total current assets	390,548 			337,027 		
Restricted cash	6,324 			6,319 		
Long-term investments, at fair value	6,605 			5,566 		
Property and equipment, net	75,432 			72,602 		
Intangible assets, net	23,530 			27,134 		
Other long-term assets	15,688 			16,557 		
Goodwill	32,583 			33,045 		
Total assets	$	550,710 			$	498,250 		
Liabilities and stockholders’ equity				
Current liabilities:				
Accounts payable	$	6,482 			$	6,059 		
Accrued liabilities and other current liabilities	25,865 			22,864 		
Reserve for veterinary invoices	38,750 			28,929 		
Deferred revenue	140,125 			92,547 		
Total current liabilities	211,222 			150,399 		
	
Deferred tax liabilities	3,803 			4,705 		
Other liabilities	3,712 			3,207 		
Total liabilities	218,737 			158,311 		
Stockholders’ equity:				
Common stock: $0.00001 par value per share, 100,000,000 shares authorized; 41,296,940 and 40,363,775 issued and outstanding at September 30, 2021; 40,383,972 and 39,450,807 shares issued and outstanding at December 31, 2020	— 			— 		
Preferred stock: $0.00001 par value per share, 10,000,000 shares authorized; no shares issued and outstanding	— 			— 		
Additional paid-in capital	460,339 			439,007 		
Accumulated other comprehensive loss	2,261 			3,071 		
Accumulated deficit	(119,848)			(91,360)		
Treasury stock, at cost: 933,165 shares at September 30, 2021 and 933,165 shares at December 31, 2020	(10,779)			(10,779)		
Total stockholders’ equity	331,973 			339,939 		
Total liabilities and stockholders’ equity	$	550,710 			$	498,250 		

5

																								
Trupanion, Inc.
Consolidated Statements of Cash Flows
(in thousands)	
	Three Months Ended September 30,		Nine Months Ended September 30,	
	2021		2020		2021		2020	
	(unaudited)	
Operating activities								
Net loss	$	(6,819)			$	(2,558)			$	(28,488)			$	(2,338)		
Adjustments to reconcile net loss to cash provided by operating activities:								
Depreciation and amortization	2,944 			1,666 			9,195 			4,770 		
Stock-based compensation expense	6,443 			2,430 			21,418 			6,310 		
Other, net	(386)			16 			(931)			118 		
Changes in operating assets and liabilities:								
Accounts and other receivables	(17,977)			(11,966)			(58,773)			(38,068)		
Prepaid expenses and other assets	170 			(1,535)			(1,922)			(1,979)		
Accounts payable, accrued liabilities, and other liabilities	5,225 			6,086 			4,353 			6,602 		
Reserve for veterinary invoices	2,984 			4,428 			9,854 			7,692 		
Deferred revenue	13,640 			11,239 			47,596 			34,473 		
Net cash provided by operating activities	6,224 			9,806 			2,302 			17,580 		
Investing activities								
Purchases of investment securities	(18,915)			(17,422)			(62,288)			(43,972)		
Maturities of investment securities	8,486 			9,013 			39,066 			29,817 		
	
Purchases of property, equipment and intangible assets	(2,767)			(1,273)			(8,537)			(4,512)		
Other	25 			(19)			(48)			88 		
Net cash used in investing activities	(13,171)			(9,701)			(31,807)			(18,579)		
Financing activities								
Proceeds from exercise of stock options	698 			2,629 			3,056 			4,296 		
Shares withheld to satisfy tax withholding	(979)			(215)			(3,730)			(656)		
Borrowings from line of credit, net of financing fees	— 			2,478 			— 			6,213 		
Repayments to line of credit	— 			— 			— 			(2,500)		
Other financing	— 			— 			— 			(78)		
Net cash (used in) provided by financing activities	(281)			4,892 			(674)			7,275 		
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash, net	(461)			220 			(53)			(214)		
Net change in cash, cash equivalents, and restricted cash	(7,689)			5,217 			(30,232)			6,062 		
Cash, cash equivalents, and restricted cash at beginning of period	123,654 			31,413 			146,197 			30,568 		
Cash, cash equivalents, and restricted cash at end of period	$	115,965 			$	36,630 			$	115,965 			$	36,630 		

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The following tables set forth our key operating metrics:	
																
	Nine Months Ended September 30,													
														
	2021		2020													
Total Business:																
Total pets enrolled (at period end)	1,104,376 			804,251 														
Subscription Business:																
Total subscription pets enrolled (at period end)	676,463 			552,909 														
Monthly average revenue per pet	$	63.43 			$	59.77 														
Lifetime value of a pet, including fixed expenses	$	697 			$	615 														
Average pet acquisition cost (PAC)	$	281 			$	237 														
Average monthly retention	98.72 	%		98.69 	%													

	Three Months Ended	
	Sept. 30, 2021		Jun. 30, 2021		Mar. 31, 2021		Dec. 31, 2020		Sept. 30, 2020		Jun. 30, 2020		Mar. 31, 2020		Dec. 31, 2019	
Total Business:																
Total pets enrolled (at period end)	1,104,376 			1,024,226 			943,854 			862,928 			804,251 			744,727 			687,435 			646,728 		
Subscription Business:																
Total subscription pets enrolled (at period end)	676,463 			643,395 			609,835 			577,957 			552,909 			529,400 			508,480 			494,026 		
Monthly average revenue per pet	$	63.60 			$	63.69 			$	62.97 			$	62.03 			$	60.87 			$	59.40 			$	58.96 			$	58.58 		
Lifetime value of a pet, including fixed expenses	$	697 			$	681 			$	684 			$	653 			$	615 			$	597 			$	535 			$	523 		
Average pet acquisition cost (PAC)	$	280 			$	284 			$	279 			$	272 			$	261 			$	199 			$	247 			$	222 		
Average monthly retention	98.72 	%		98.72 	%		98.73 	%		98.71 	%		98.69 	%		98.66 	%		98.59 	%		98.58 	%	

																								
The following table reflects the reconciliation of cash provided by operating activities to free cash flow (in thousands):	
								
	Three Months Ended September 30,		Nine Months Ended September 30,	
	2021		2020		2021		2020	
Net cash provided by operating activities	$	6,224 			$	9,806 			$	2,302 			$	17,580 		
Purchases of property and equipment	(2,767)			(1,273)			(8,537)			(4,512)		
Free cash flow	$	3,457 			$	8,533 			$	(6,235)			$	13,068 		

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The following table reflects the reconciliation between GAAP and non-GAAP measures (in thousands except percentages):	
		Three Months Ended September 30,		Nine Months Ended September 30,	
		2021		2020		2021		2020	
Veterinary invoice expense		$	125,058 			$	91,266 			$	353,210 			$	252,955 		
Excluding:									
Stock-based compensation expense		(769)			(337)			(3,740)			(760)		
Other business cost of paying veterinary invoices		(34,432)			(19,394)			(91,605)			(49,865)		
Subscription cost of paying veterinary invoices		$	89,857 			$	71,535 			$	257,865 			$	202,330 		
% of subscription revenue		70.7 	%		72.0 	%		71.5 	%		71.9 	%	
									
Other cost of revenue		$	28,443 			$	18,265 			$	77,591 			$	48,078 		
Excluding:									
Stock-based compensation expense		(542)			(111)			(2,029)			(300)		
Other business variable expenses		(15,315)			(9,039)			(40,159)			(22,054)		
Subscription variable expenses		$	12,586 			$	9,115 			$	35,403 			$	25,724 		
% of subscription revenue		9.9 	%		9.2 	%		9.8 	%		9.1 	%	
									
Technology and development expense		$	4,391 			$	2,426 			$	12,201 			$	6,839 		
General and administrative expense		8,246 			5,412 			22,897 			15,345 		
Excluding:									
Stock-based compensation expense		(3,020)			(1,241)			(8,625)			(3,278)		
Development expenses1		(919)			— 			(2,861)			— 		
Business combination transaction costs2		— 			— 			(82)			— 		
Fixed expenses		$	8,698 			$	6,597 			$	23,530 			$	18,906 		
% of total revenue		4.8 	%		5.1 	%		4.7 	%		5.3 	%	
									
Sales and marketing expense		$	19,708 			$	13,344 			$	58,802 			$	33,028 		
Excluding:									
Stock-based compensation expense		(2,112)			(741)			(7,024)			(1,972)		
Other business acquisition cost		(134)			(265)			(423)			(619)		
Subscription acquisition cost		$	17,462 			$	12,338 			$	51,355 			$	30,437 		
% of subscription revenue		13.7 	%		12.4 	%		14.2 	%		10.8 	%	
									
Technology and development		$	4,391 			$	2,426 			$	12,201 			$	6,839 		
Excluding:									
Stock-based compensation expense		(749)			(133)			(2,213)			(366)		
Technology expenses		(2,723)			(2,293)			(7,127)			(6,473)		
Development expenses1		$	919 			$	— 			$	2,861 			$	— 		
% of total revenue		0.5 	%		— 	%		0.6 	%		— 	%	
									
1As we enter the next phase of our growth, we expect to invest in initiatives that are pre-revenue, including adding new products and international expansion. These development expenses are costs related to product exploration and development that are pre-revenue and historically have been insignificant. We view these activities as uses of our adjusted operating income separate from pet acquisition spend.	
2These one-time expenses related to our acquisition of a software business, primarily related to legal and transaction costs incurred.	

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The following tables reflect the reconciliation of acquisition cost and net acquisition cost to sales and marketing expense (in thousands):	
																
	Nine Months Ended September 30,													
														
	2021		2020													
Sales and marketing expenses	$	58,802 			$	33,028 														
Excluding:																
Stock-based compensation expense	(7,024)			(1,972)														
Acquisition cost	51,778 			31,056 														
Net of:																
Sign-up fee revenue	(3,792)			(2,373)														
Other business segment sales and marketing expense	(423)			(619)														
Net acquisition cost	$	47,563 			$	28,064 														
																
	Three Months Ended	
	Sept. 30, 2021		Jun. 30, 2021		Mar. 31, 2021		Dec. 31, 2020		Sept. 30, 2020		Jun. 30, 2020		Mar. 31, 2020		Dec. 31, 2019	
Sales and marketing expenses	$	19,708 			$	19,390 			$	19,704 			$	14,809 			$	13,344 			$	9,242 			$	10,442 			$	9,212 		
Excluding:																
Stock-based compensation expense	(2,112)			(2,181)			(2,731)			(801)			(741)			(675)			(556)			(547)		
Acquisition cost	17,596 			17,209 			16,973 			14,008 			12,603 			8,567 			9,886 			8,665 		
Net of:																
Sign-up fee revenue	(1,268)			(1,260)			(1,264)			(919)			(827)			(781)			(765)			(730)		
Other business segment sales and marketing expense	(134)			(118)			(171)			(201)			(265)			(191)			(163)			(152)		
Net acquisition cost	$	16,194 			$	15,831 			$	15,538 			$	12,888 			$	11,511 			$	7,595 			$	8,958 			$	7,783 		

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The following tables reflect the reconciliation of adjusted EBITDA to net income (loss) (in thousands):	
																
	Nine Months Ended September 30,													
														
	2021		2020													
Net loss	$	(28,488)			$	(2,338)														
Excluding:																
Stock-based compensation expense	21,418 			6,310 														
Depreciation and amortization expense	9,195 			4,770 														
Interest income	(257)			(545)														
Interest expense	1 			1,044 														
Other non-operating expenses	2 			98 														
Income tax (benefit) expense	(724)			69 														
Business combination transaction costs	82 			— 														
(Gain) loss from equity method investment	6 			(117)														
Adjusted EBITDA	$	1,235 			$	9,291 														
																
	Three Months Ended	
	Sept. 30, 2021		Jun. 30, 2021		Mar. 31, 2021		Dec. 31, 2020		Sept. 30, 2020		Jun. 30, 2020		Mar. 31, 2020		Dec. 31, 2019	
Net (loss) income	$	(6,819)			$	(9,221)			$	(12,448)			$	(3,502)			$	(2,558)			$	1,353 			$	(1,133)			$	636 		
Excluding:																
Stock-based compensation expense	6,443 			6,527 			8,448 			2,602 			2,430 			2,227 			1,653 			1,771 		
Depreciation and amortization expense	2,944 			3,158 			3,093 			2,301 			1,666 			1,723 			1,381 			1,274 		
Interest income	(85)			(84)			(88)			(83)			(74)			(134)			(337)			(516)		
Interest expense	— 			3 			(2)			337 			324 			341 			379 			375 		
Other non-operating expenses	(1)			3 			— 			1 			2 			44 			52 			(22)		
Income tax (benefit) expense	(312)			(195)			(217)			44 			26 			17 			26 			157 		
Business combination transaction costs	— 			— 			82 			522 			— 			— 			— 			— 		
(Gain) loss from equity method investment	— 			6 			— 			— 			— 			(117)			— 			— 		
Adjusted EBITDA	$	2,170 			$	197 			$	(1,132)			$	2,222 			$	1,816 			$	5,454 			$	2,021 			$	3,675 		

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Contacts:

Investors:
Laura Bainbridge, Vice President, Corporate Communications
206.607.1929
InvestorRelations@trupanion.com
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