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Trupanion Inc. (TRUP)
NASDAQ:TRUP
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Trupanion
(NASDAQ:TRUP)
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Rating:64Neutral
Price Target:
$34.00
▲(17.00% Upside)
Action:ReiteratedDate:02/14/26
The score is driven mainly by a clear 2025 financial improvement and constructive 2026 guidance (profitability, cash flow, and growth outlook). These positives are meaningfully offset by weak technical momentum and a demanding valuation (high P/E with no dividend support).
Positive Factors
Scale & Subscription Growth
Trupanion's scale in subscription revenue and pet count creates durable revenue base and distribution leverage. With roughly one million+ pets and sustained subscription growth, recurring premiums support predictable cash flows and higher marginal returns on marketing and tech investments over multiple years.
Strengthening Cash Generation
Consistent positive free cash flow and a large increase in operating cash flow improve financial flexibility and fund reinvestment or debt reduction. Durable cash generation reduces reliance on equity/debt markets and supports sustained investments in distribution and product enhancements.
Improving Unit Economics & Retention
High and improving retention combined with margin expansion indicate customers remain sticky and underwriting/operational levers are working. Better unit economics sustain long-term profitability as customer lifetime values rise and reinvested AOI yields higher returns on acquisition spend.
Negative Factors
Thin, Volatile Profitability
Although 2025 returned to profit, thin net margins and past multi-year losses highlight limited downside protection. Small underwriting or reserve shocks, veterinary inflation, or higher operating costs could quickly erode earnings, making profitability durability a structural concern.
Rising Customer Acquisition Cost / Falling IRR
Higher CAC and declining IRR compress lifetime economics and require either higher pricing or improved retention to sustain returns. If acquisition efficiency doesn't recover, reinvestment capacity will be impaired and growth could become more expensive and less profitable over a multi-quarter horizon.
Lower‑Margin Other Business & International Write‑downs
Exposure to decelerating, low-margin segments and small impairments in international operations highlights limits to diversification and execution risk overseas. Persistent underperformance in adjunct businesses can dilute consolidated margins and consume capital that could otherwise support core subscription growth.
Trupanion (TRUP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.25B
Dividend YieldN/A
Average Volume (3M)502.37K
Price to Earnings (P/E)64.6
Beta (1Y)1.35
Revenue Growth12.50%
EPS GrowthN/A
CountryUS
Employees1,130
SectorFinancial
Sector Strength70
IndustryInsurance - Specialty
Share Statistics
EPS (TTM)0.13
Shares Outstanding43,430,170
10 Day Avg. Volume737,522
30 Day Avg. Volume502,365
Financial Highlights & Ratios
PEG Ratio-0.28
Price to Book (P/B)4.18
Price to Sales (P/S)1.12
P/FCF Ratio21.30
Enterprise Value/Market Cap0.99
Enterprise Value/Revenue0.86
Enterprise Value/Gross Profit4.41
Enterprise Value/Ebitda23.96
Forecast
1Y Price Target
$49.00Price Target Upside68.62% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
EPS Forecast (FY)0.51
Revenue Forecast (FY)$1.58B
Trupanion Business Overview & Revenue Model
Company DescriptionTrupanion, Inc., together with its subsidiaries, provides medical insurance for cats and dogs on a monthly subscription basis in the United States, Canada, Puerto Rico, and Australia. The company operates in two segments, Subscription Business and Other Business. It serves pet owners and veterinarians. The company was formerly known as Vetinsurance International, Inc. changed its name to Trupanion, Inc. in 2013. The company was founded in 2000 and is headquartered in Seattle, Washington.
How the Company Makes MoneyTrupanion generates revenue primarily through the sale of pet insurance policies. The company's revenue model is based on monthly premiums paid by policyholders, which are determined by factors such as the pet's age, breed, and location. Trupanion also earns money through its unique model of direct payments to veterinarians, which streamlines the claims process and enhances customer satisfaction. Key revenue streams include the growth in policyholder numbers, renewals of existing policies, and the expansion of its product offerings. Additionally, partnerships with veterinary clinics and pet retailers help Trupanion reach a broader audience, driving enrollment and contributing to its overall earnings.
Trupanion Key Performance Indicators (KPIs)
Any
Pets Enrolled
Tracks the number of pets covered by Trupanion's insurance plans, indicating market penetration, customer growth, and potential for future revenue.
Tracks the number of pets covered by Trupanion's insurance plans, indicating market penetration, customer growth, and potential for future revenue.
Data provided by:
The Fly
The FlyTrupanion Earnings Call Summary
Earnings Call Date:Feb 12, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 30, 2026
Earnings Call Sentiment Positive
The call highlighted a strong, record 2025 with meaningful margin expansion, robust free cash flow growth, improved retention and accelerating new-pet acquisition — and it included constructive 2026 guidance. Key challenges were higher CAC, a sequential decline in quarterly IRR, continued deceleration of the lower-margin 'other business' segment, and a small adverse reserve development and goodwill impairment. On balance, the positives around revenue growth, AOI expansion, cash generation, retention improvement, and a strengthened balance sheet materially outweigh the noted operational and investment-related headwinds.Q4-2025 Updates
Positive Updates
Record 2025 Financial and Operating Performance
2025 was a record year: nearly $1.0B in subscription revenue, ~15% annual subscription adjusted operating margin, $152.0M operating income for the year, and nearly 1,000,000 pets protected. Over the past 60 months the company added over $900.0M in revenue and generated $518.0M in adjusted operating income.
Quarterly/YoY Revenue and Subscription Growth
Q4 total revenue of $376.9M, up 12% year over year; Q4 subscription revenue $261.4M, up 15% year over year. Total subscription pets increased 5% year over year to >1,096,000 (including ~63,000 in Europe).
Margin Expansion and Adjusted Operating Income Growth
Subscription adjusted operating income in Q4 was $43.1M, up 23% YoY; subscription adjusted operating margin expanded to 16.5% from 15.3% (+120 basis points). Total Q4 AOI was $45.0M, up 20% YoY.
Stronger Retention and Rapid Q4 Net Pet Growth
Trailing twelve-month average monthly retention improved to 98.34% (from 98.25% prior-year Q4) and retention improved in every quarter of 2025. Subscription net pet growth was 50% in Q4 and 10% for the full year; gross pet ads were up 8% YoY in Q4.
Improving Unit Economics and Free Cash Flow
Full-year 2025 free cash flow grew to $75.4M (5.2% of revenue), a 95% increase YoY. Q4 operating cash flow was $29.3M (vs $23.7M prior year) and Q4 free cash flow was $25.3M (vs $21.8M prior year). Balance sheet strengthened with $370.7M in cash & short-term investments and total debt of $111.8M (a $17.1M reduction YoY).
High IRR and Reinvestment Capacity
Full-year blended IRR was 30%; Q4 blended IRR was 23%. The company deployed $21.6M of Q4 AOI to acquire ~65,200 new subscription pets and views AOI as a versatile pool for reinvestment across PAC, new initiatives (e.g., Landspath), technology, international expansion, and debt reduction.
Constructive 2026 Guidance
2026 guidance: total revenue $1.55B–$1.582B; subscription revenue $1.117B–$1.137B (~14% YoY growth at midpoint); total AOI $173M–$187M (~19% YoY growth at midpoint). Q1 2026 guidance implies ~14% YoY subscription revenue growth and ~27% YoY AOI growth at the midpoint.
Negative Updates
Pressure on Vet-Pays/Value Proposition and Adverse Reserve Development
Subscription business cost of paying veterinary invoices in Q4 produced a 'value proposition' metric of 69.1%, slightly below the prior-year period reference (70%). Q4 experienced adverse development of ~$900,000 (~30 basis points).
Rising Customer Acquisition Cost (CAC)
Q4 average pet acquisition cost (excluding MGA-underwritten pets) rose to $320 per pet from $261 in the prior-year quarter, indicating higher spend required to acquire new pets.
Sequential Weakness in Quarterly IRR
Quarterly blended IRR fell to 23% in Q4 (versus historical guardrail of ~30%), marking the second straight quarter the 30% guardrail was missed and continued sequential declines in the quarterly IRR metric.
Other Business Deceleration and Lower Margin
Other business revenue (lower-margin products & services) grew 5% YoY in Q4 to $115.4M but is expected to decelerate further as the company is no longer enrolling new business in most U.S. states for its largest partner; AOI for this segment was only $1.9M (1.6% margin).
One-Year Retention Remains an Opportunity
Management flagged first-year retention as the area with the most opportunity for improvement despite overall retention gains, implying continued focus and potential near-term investment to lift early tenure metrics.
Small Non-Cash and Geographic Charges
Q4 included $9.4M of stock-based compensation and a $1.1M goodwill impairment charge related to European businesses, reflecting expense and a modest write-down in international operations.
Company Guidance
For full-year 2026 Trupanion guided total revenue of $1,550M–$1,582M, subscription revenue of $1,117M–$1,137M (about 14% year‑over‑year growth at the midpoint), and total adjusted operating income of $173M–$187M (about 19% YoY at the midpoint), assuming veterinary inflation in line with current trends and using a 73% conversion rate for guidance; for Q1 2026 they projected total revenue of $376M–$382M, subscription revenue of $265M–$268M (≈14% YoY at the midpoint), and adjusted operating income of $38M–$41M (≈27% YoY at the midpoint), while noting pricing will remain a primary revenue driver though at a lower contribution than in 2025 as gross ads and pet‑count contribution are expected to increase.Trupanion Financial Statement Overview
Summary
Strong 2025 turnaround with sharp revenue growth, a return to profitability, improving leverage (lower debt-to-equity), and two consecutive years of positive free cash flow. Key risk is durability: margins are still thin and results have been historically volatile.Income Statement
Revenue has scaled meaningfully over the period, accelerating sharply in 2025 (annual revenue growth of ~282.5%) after moderate growth in 2024 (~16.0%). Profitability also inflected positively in 2025, with positive operating profit and net income (net margin ~1.35%) versus losses in 2022–2024. The key weakness is that profitability remains thin and historically volatile, with several years of negative margins before the recent turn, leaving less cushion if underwriting costs or operating expenses rise.67
Positive
Balance Sheet
Leverage looks manageable, with debt-to-equity improving to ~0.29 in 2025 from ~0.40 in 2024, supported by rising equity. Returns also moved back into positive territory in 2025 (return on equity ~5.1%) after multiple years of negative returns. The main watch-out is that the company has relied on increased debt versus earlier years with minimal/zero debt, and returns are still modest for the industry given the thin profit margin.72
Positive
Cash Flow
Cash generation strengthened materially: operating cash flow rose to ~$89.5M in 2025 (from ~$48.3M in 2024), and free cash flow improved to ~$75.4M. Importantly, free cash flow has stayed positive for two consecutive years (2024–2025), a clear improvement from negative/free-cash-flow weakness in 2021–2023. A limitation is that cash-flow performance has been choppy historically (including negative operating cash flow in 2022), and free cash flow relative to net income is solid but not exceptionally high in 2025 (~0.84).78
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.44B | 1.29B | 1.11B | 905.18M | 698.99M |
| Gross Profit | 410.33M | 178.80M | 131.02M | 122.19M | 104.35M |
| EBITDA | 51.59M | 21.33M | -20.48M | -29.01M | -23.25M |
| Net Income | 19.43M | -9.63M | -44.69M | -44.67M | -35.53M |
Balance Sheet | |||||
| Total Assets | 915.04M | 806.85M | 782.95M | 671.63M | 562.58M |
| Cash, Cash Equivalents and Short-Term Investments | 370.73M | 307.38M | 277.17M | 222.41M | 213.41M |
| Total Debt | 111.78M | 128.89M | 128.93M | 69.46M | 0.00 |
| Total Liabilities | 531.11M | 483.58M | 479.23M | 366.33M | 230.38M |
| Stockholders Equity | 383.94M | 323.27M | 303.72M | 305.30M | 332.20M |
Cash Flow | |||||
| Free Cash Flow | 75.36M | 38.57M | 358.00K | -25.09M | -4.90M |
| Operating Cash Flow | 89.49M | 48.29M | 18.64M | -8.00M | 7.46M |
| Investing Cash Flow | -95.89M | -13.46M | 7.64M | -67.52M | -51.91M |
| Financing Cash Flow | -22.86M | -3.96M | 59.13M | 60.74M | -1.13M |
Trupanion Technical Analysis
Negative
29.06
Price Trends
34.29
Negative
37.15
Negative
42.71
Negative
Market Momentum
-1.42
Positive
33.36
Neutral
22.71
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TRUP, the sentiment is Negative. The current price of 29.06 is below the 20-day moving average (MA) of 31.44, below the 50-day MA of 34.29, and below the 200-day MA of 42.71, indicating a bearish trend. The MACD of -1.42 indicates Positive momentum. The RSI at 33.36 is Neutral, neither overbought nor oversold. The STOCH value of 22.71 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TRUP.
Trupanion Risk Analysis
Trupanion disclosed 56 risk factors in its most recent earnings report. Trupanion reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Trupanion Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $438.69M | 12.52 | 13.12% | 4.20% | 13.47% | 26.15% | |
73 Outperform | $709.10M | 14.35 | 16.95% | 6.64% | -1.73% | -18.36% | |
69 Neutral | $947.72M | 16.60 | 5.86% | 2.94% | 1.69% | -52.43% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
64 Neutral | $1.25B | 64.60 | 5.50% | ― | 12.50% | ― | |
63 Neutral | $653.59M | 15.24 | 10.46% | 1.31% | 4.44% | 22.40% | |
63 Neutral | $717.49M | 7.73 | 25.65% | ― | 34.48% | ― |
* Financial Sector Average
TRUP
Trupanion
29.06
-4.35
-13.02%
AMSF
Amerisafe
37.63
-9.38
-19.95%
EIG
Employers Holdings
39.18
-8.78
-18.31%
ITIC
Investors Title Company
217.80
-1.50
-0.68%
TIPT
Tiptree Financial
17.06
-2.68
-13.58%
HIPO
Hippo Holdings
28.39
1.06
3.88%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.