Greetings and welcome to Trupanion Fourth Quarter 2020 Results Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I would now like to turn the conference over to your host, Laura Bainbridge, Vice President of Corporate Communications. Thank you. You may now begin. Good afternoon and welcome to Trupanion's Fourth Quarter and 2020 Year-End Financial Results conference call. Participating on today's call are Darryl Rawlings, Chief Executive Officer, and Tricia Plouf and Margi Tooth, who were recently promoted to co-presidents. Similar to prior earnings calls, Margi will be joining Darryl and Tricia for the Q&A portion of today's call. Before we begin, I would like to remind everyone that during today's conference call, we will make certain forward-looking statements regarding the future operations, opportunities, and financial performance of Trupanion within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. 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 our earnings release, which can be found on our investor relations website, as well as the company's most recent reports on Forms 10-K 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, fixed expenses, variable 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 our non-GAAP operating income or margin before new pet acquisition. Unless otherwise noted, margins and expenses will be presented on a non-GAAP basis, which excludes stock-based compensation expense and depreciation expense. These non-GAAP measures are an addition to, and not a substitute for, measures of financial performance prepared in accordance with the U.S. GAAP. Investors are encouraged to review these reconciliations of these non-GAAP financial measures to the most directly comparable GAAP results, which can be found in today's press release or on Trupanion's investor relations website under the quarterly earnings tab. Lastly, I would like to remind everyone that today's call is also available via webcast on Trupanion's investor relations website. A replay will also be available on the site. With that, I will hand the call over to Darryl. Thanks, Laura. Good afternoon. The fourth quarter capped off a strong year for Trupanion. Total revenue grew 31% over the prior year. Adjusted Operating Income totaled $57 million, up 29% over 2019. We invested approximately $44 million of these funds within our subscription business at an estimated Internal Rate of Return of 41%. Our performance in 2020 is a testament to the consistency of our business model, the strength of our positioning in a large under-penetrated market, and the power of the pet. In 2020, against a backdrop of shock and uncertainty, pets reminded us of the importance of unconditional love. From my Zoom screens to yours, pets were everywhere this past year, and not just new pets to the household. While much has been written about the rapid rise in pet ownership, our data suggests a modest single-digit increase. To put this in context, in a typical year with 180 million pets in North America, we'd expect 12 million pets to pass away and about 12 million new pets to be born. This year, we've seen the new pet population grow to approximately 13 million, about a one million increase. Although this small increase has been helpful, the bigger opportunity remains in increasing the overall penetration rate of the category. What COVID did do is accelerate the pet humanization trend that we've been witnessing over the past several decades. We'd expect this will help grow the penetration rate of the category for years to come. Our data suggests veterinary revenue and visits were up in 2020, and we saw strong growth from this important lead source. Outside of the veterinary channel, leads were up across the board, providing additional evidence that we're growing our brand. We're also keeping pets longer than ever before, about 78 months in 2020 compared to 70 months in 2019. The combination of increasing adjusted operating income and improved retention resulted in an impressive 25% year-over-year increase in lifetime value of a pet. Expansion in lifetime value increases our allowable pet acquisition spend, giving us the opportunity to be more aggressive in the deployment of our capital while maintaining our targeted internal rates of return. More broadly, we believe the category of pet medical insurance is growing in acceptance, and we're seeing additional opportunities as a result. I expect to share more details in my upcoming shareholder letter, which should be available in April. Our positioning, coupled with the expansion in our key metrics, sets us up well to continue to grow. This is evident in our fourth quarter results. Total subscription revenue grew 23% in the fourth quarter, led by a 17% increase in subscription-enrolled pets. Underlying this acceleration is net new pet growth, which is a leading indicator for a monthly recurring revenue business. Net pets increased 72% in the quarter, benefiting from increased leads, conversion, and strong retention. Maintaining and improving upon our first-year retention remains an ongoing area of investment and focus. As a reminder, we see lower retention among pets within the first year with Trupanion. Please see my past shareholder letters for more details. Adjusted operating income grew 35% year-over-year to $16.6 million in the quarter. The team was able to deploy approximately $14 million of these funds within our subscription business at an estimated 35% internal rate of return, which is the midpoint of our 30%-40% target. The team continues to impress as they demonstrate an ability to invest increasing amounts of capital against our opportunities in this large and under-penetrated market. This sets us up well into 2021 and ahead. With that, I'll hand the call over to Tricia. Thanks, Darryl, and good afternoon, everyone. As Darryl covered some of our 2020 financial highlights, I'll focus the majority of my commentary on our fourth quarter performance. I will also provide our outlook for the first quarter and full year of 2021. I echo Darryl's sentiment that it was a strong quarter for Trupanion. Our outperformance was driven by an acceleration in net pet growth within our subscription business and continued strong performance within our other business. Total revenue for the quarter was $142.7 million, up 35% year-over-year. Within our subscription business, revenue was $106.4 million in the quarter, up 23% year-over-year. Total enrolled subscription pets increased 17% year-over-year to approximately 578,000 pets as of December 31, 2023. Average monthly retention, which is calculated on a trailing 12-month basis, was 98.71% compared to 98.58% in the prior year period. The improvement in retention extended the average pet's life with Trupanion by approximately eight months and is impactful to our calculation of lifetime value and internal rate of return when we look at the unit economics of a single average pet. The increase over the prior year can be attributed to our improved service levels, a focus we spoke about on our last call and has continued through the year. Monthly average revenue per pet for the quarter was $62.03, an increase of 6% year-over-year. In local currency, U.S. ARPU increased 6% and Canadian ARPU increased 4% over the prior year period. We are pleased to deliver continued acceleration in ARPU growth in the quarter, which reflects progress on our pricing initiatives, particularly in the second half of the year. Our subscription cost of revenue includes the cost of paying veterinary invoices and variable expenses. The cost of paying veterinary invoices for our subscription business was 71% of revenue during the quarter. Variable expenses remained consistent with the prior year at 9% of revenue as we continue to focus on the member experience. Subscription gross margin was 20% of revenue in the quarter compared to 19% in the prior year period and within our annual target of 18%-21%. Our other business segment is comprised of revenue from other products and services that generally have a B2B component and different margin profiles than our subscription business. This now includes revenue from the sale of software solutions. In the fourth quarter, we completed a strategic acquisition of a software company that was predominantly focused on improving our back-end processes and adding talent, but also had a small P&L impact. In total, other business revenue was $36.3 million for the quarter, an increase of 92% year-over-year. Growth in the number of pets enrolled in products within this segment increased revenue 87% year-over-year. Additionally, the sale of software solutions contributed 6% to the growth of other revenue. Cost of revenue for our other business segment was $33.3 million compared to $17 million in the prior year quarter. The year-over-year increase is consistent with the increase in segment revenue over the same period. Total fixed expenses, which are shared services that support both our subscription and other lines of business, were 5% of revenue in the quarter, consistent with the prior year period. Adjusted operating income was $16.6 million in the quarter, an increase of 35% over the prior year period, and our net loss was $3.5 million. The vast majority of our adjusted operating income was generated from our subscription business during the quarter at $15.6 million and was 15% of subscription revenue. During the quarter, we deployed $13.8 million of our adjusted operating income to acquire over 47,000 new subscription pets. This resulted in a PAC of $272 in the quarter, an estimated 35% internal rate of return for a single average pet. For more detail on how we calculate internal rate of return and adjusted operating income, please refer to our supplemental financial materials on the investor relations portion of our website. As 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 cost-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. In the quarter, we deployed $0.3 million of our adjusted operating income on these activities. Additional detail can be found within our supplemental financial materials. Adjusted EBITDA was $2.2 million for the quarter, as compared to $3.7 million in the prior year period. Net loss was $3.5 million, or a loss of $0.09 per basic and diluted share, compared to net income of $0.6 million, or $0.02 per basic and diluted share in the prior year period. As a reminder, profitability is impacted during periods of accelerated pet growth, as was the case in 2020. Free Cash Flow in the quarter was $1 million, compared to $2.7 million in the prior year period. Operating cash flow in the quarter was $4 million, compared to $4.5 million in the prior year period. I'll now turn to our balance sheet, which we meaningfully strengthened during the quarter. Most notably, we received a $200 million strategic investment with a three-year lockup from Aflac in the fourth quarter, the net proceeds of which were used to fund the strategic software company acquisition I mentioned earlier, as well as to repay all outstanding obligations under our long-term credit facility. As a result, we ended the quarter with cash and investments of over $230 million and no debt. Our balance sheet at year-end also reflects goodwill and intangible assets related to our software acquisitions. The amortization of the intangible assets increased depreciation and amortization expense by $0.6 million in the quarter. Beginning in Q4, we have separated depreciation and amortization from our other operating expenses on our financial statements to make it easier to identify variances compared to the prior year and better align with management's view of operating results. Note that the recent acquisitions are expected to increase depreciation and amortization expense by approximately $1 million per quarter in 2021. In summary, 2020 was a strong year financially. We were able to drive expansion in key metrics, including retention, lifetime value of a pet, and adjusted operating margin, while deploying increasing amounts of our adjusted operating income at strong internal rates of return. The net result was a 33% increase in net pet growth within our subscription business and $57 million of adjusted operating income, or 29% year-over-year growth. Our strong growth was also disciplined at an estimated full-year internal rate of return of 41%. Finally, our strengthened balance sheet sets us up well to execute on the opportunities ahead of us as we move into 2021. We entered the year with strong momentum, which is reflected in our outlook for the full year and first quarter of 2021. For the full year of 2021, total revenue is expected to be in the range of $659 million-$669 million. Subscription revenue for the full year is expected to be in the range of $481-$487 million, representing 25% year-over-year growth at the midpoint. At the midpoint, we expect total adjusted operating income for the year of around $73 million, an increase of 28% over the prior year, with over 90% being generated from our subscription business. Of the $73 million, we would expect to invest approximately $60 million in acquiring pets within our subscription business and expect to spend an additional $2 million -$5 million in the development initiatives discussed earlier, as well as on our other business. Should we have the opportunity to deploy more adjusted operating income while operating within our IRR guardrails of 30%-40%, we will likely choose to do so. For the first quarter, total revenue is expected to be in the range of $151 million-$153 million. Subscription revenue is expected to be in the range of $111 million-$112 million, representing 25% year-over-year growth at the midpoint. Also, please keep in mind that our revenue projections are subject to conversion rate fluctuations, most notably between the U.S. and Canadian currencies. For our first quarter and full-year guidance, we used a 78% conversion rate in our projections, which was the approximate rate at the end of January. Thank you for your time today, and I will now turn the call back over to Darryl. Thanks, Tricia. 2020 was a year unlike any other. The team navigated through a period of unprecedented change and came together in support of every veterinarian and pet owner who placed their trust in Trupanion. For this, I want to say thank you to the team. Look forward to seeing what we can accomplish together in 2021. With that, Margi, Tricia, and I are available for questions. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Mark Argento with Lake Street Capital Markets. Please proceed. Hey, everyone. This is John. I'm from Mark's. I appreciate you taking my question. First of all, just kind of looking back at the past year, maybe could you break out some of the areas where you've seen the highest returns on capital for investments, and if any of that has changed kind of since the pandemic started? Hi, John. We don't break down kind of the categories of our internal rates of return either by channel or by pet or geography. But what I can say is that we saw increased leads and conversion rates across the board, and particularly in the back half of the year. Fair enough. And second question, I know you guys have put a pretty big focus on the customer experience over the past couple of quarters and really ramping that up. I know it'd be early, but has that translated into any kind of data points or takeaways as far as your goals for Nirvana in certain markets? Yeah. We first started talking about this in Q2 and Q3, where the output of the metric that we're looking at is improved retention rates, and then you talk about Nirvana, which is when existing pets or existing members add pets or tell their friends, and if that can offset the amount of pets that are canceling. During the year, we had more markets than ever hit that benchmark, and we'll talk more details about that at the upcoming shareholder meeting, but we are definitely investing more dollars in our customer experience, so it really breaks down into kind of two areas. One is either educating the client at the time or before they enroll or shortly after, and some of those funds show up in our pet acquisition cost. And the other area is about really trying to improve our customer experience from the speed of answering the phones to our 24/7/365 service. And we're investing in areas such as technology, getting our software in more places, more automation. The recent software acquisition that Tricia mentioned are all areas that we're investing in. We're also adding the bodies and people around to make sure that we can continue to try to increase those service levels. The only challenge that you can expect is with accelerated growth, trying to keep up those operational excellence is a big task, but we are kind of investing to try to make that happen. Yeah. I'll just add a couple of things. John, I think, as Darryl said, the main thing with the member experience that we're really trying to keep the momentum going with retention and how that can impact our results, and so that's a big focus for us. And we want to invest more dollars in the member experience, whether it's the claims experience or also just the general experience that our team provides, and so in the guidance, it contemplates for our subscription business for adjusted operating income closer to 14% for the year rather than our target of 15%. And that's the reason why is that focus on the member experience. And that's really what we've learned in 2020, is that if we focus on it, we can see results like retention. And so we really want to double down on that going into 2021. That's driving some of those numbers as this will be a big focus for us and to keep this momentum going. The other thing Darryl mentioned slightly, and it's also a key takeaway of Q4 and some of the investments that we made, is technology, scalability. The main way we have a great member experience long-term is through technology, through more automation. We're investing in that area as well. Great. That's helpful. Thank you, guys, and congrats on a nice quarter and year. Thanks, John. Our next question is from Maria Ripps with Canaccord. Please proceed. Good afternoon, and thanks for taking my questions. And Tricia, Margi, congrats on your expanded roles. First, can you please expand on this new product initiative that you mentioned, and what are those investments, and how should we think about sort of any revenue related to that? Yeah. We first started talking about this, Maria, at our shareholder meeting last year. And you can expect more details in the upcoming shareholder letter and the following shareholder meeting. As the category expands, as we really spent the first 20 years of the company trying to get to operating scale, we've built a lot of foundation: foundation around our data, foundation around our national sales force, what we call Territory Partners, investing in our customer experience to be the only company able to pay hospitals directly at the time of service. And when we look out the next five, 10, 15 years, additional growth channels that we're going to be exploring are expanding into other international markets. It's going to be adding new products that are designed specifically for new distribution channels. The acquisition of the software company will help us take advantage of those areas. But in 2021, the guidance that Tricia provided really doesn't anticipate any of those having any material impact on our P&L in 2021. And 2022 and 2023, we'll start to see it. But really, these are long-term investments. Got it. That's very helpful. And then secondly, if we look at your full-year outlook for subscription, which implies 25%, I think, can you maybe give us some color in terms of what to expect for pet growth versus ARPU expansion? And I believe last quarter you mentioned that you may need to grow ARPU above your sort of normal 5% each range. Can you maybe share with us where you are in that sort of price initiative process and whether you have all the necessary regulatory considerations in place for price increases? Sure. Thanks for the question, Maria. Yeah. I mean, pricing is something that we are constantly monitoring and making sure is as accurate as possible. As we've talked about previously, we really try to price as granularly as possible down to the neighborhood level. And so that pricing, particularly at a neighborhood level, is something that is continuous. We have a large team that focuses on that, and we don't expect that to change. I would highlight that I think we did a good job in 2020 in pricing, and particularly in the second half of the year, moving pricing up closer to 6% versus 5%. And we expect that to continue going into 2021, and we'll remain focused on it. As we've mentioned before, in general, our historical ARPU increases over the past 10 years have been 5% to 6%. With some of the things, corporate consolidation and other pricing trends that we see in the space, we think really we should be, in the foreseeable future, targeting closer to 6%-7%. And our initiatives and kind of analysis of the data is focused on that so that we can be as accurate as possible. The guidance projects us being closer to 6%, getting closer to 6% in 2021. And then the remainder obviously comes from pet growth, as well as some semblance of we're not projecting dramatic improvements in retention, but we obviously have a lot of initiatives to do that. But we haven't pre-baked those into our guidance, so it's really maintaining that retention momentum that we currently have. Got it. Thank you both. Our next question is from David Westenberg with Guggenheim Securities. Please proceed. Hi. Thank you for taking my question, and congrats on a great year here. Can you help us reconcile new patient growth at the veterinary clinic? I know you mentioned that new pets was around 13 million versus lost pets at around 12. I am curious because kind of industry data says new patient growth is accelerating or has been quite robust at the practice. And I'm just wondering if that's maybe helped you in the year, and then how to maybe think about that reconciled with, of course, pet adoption. Does that make sense? It does make sense. Hi, Dave. So in terms of the data that we see, while the traffic is definitely up in the veterinary industry in general, there is, as we mentioned, as Darryl mentioned in his remarks, most of that is coming through people visiting as opposed to new pets going in. The bulk of the change that you see there is people are at home with their pets during COVID. They're seeing issues with their pets, and they're taking their pets to vets more frequently. So there's an increased visit pattern there. For us, the way that reconciles with the data we're seeing is naturally, as you're going into the vet more, you're having those conversations, you're taking better care of your pet. And the veterinary channel for us is that kind of core moat that really we've developed those relationships with those vets over years through our territory partner network that's allowed them to appreciate the value of high-quality pet insurance. And so when we think about that coupled with the increased conversation happening at the vet level, people paying more attention to their pets, the power of the pet in the household at times of crisis, they're taking better care of them, as well as that slight increase that we see in new pets coming in. So puppies and kittens, overall penetration rates in general are going up slightly in markets, and we can see that. But it generally is down to people taking better care of their pets in times of crisis. Does that? Got it. Yeah, yeah, yeah. No, no, I got it. So it did help you in the quarter, but the help is because you target the veterinary channel, and the veterinary channel itself was robust, is more than the aggregate new pets. Exactly. Okay. No, that's. Okay. No, that's. I would add to that as well. When you think about the industry in general, having moved to curbside to see the vet lead growth as strong as it was is particularly promising, and I think just reinforces that value of the relationship that we have there because curbside, as many of us know, is particularly challenging for the veterinary industry, but to appreciate the value and the use of the insurance is really good for us. Got it. And second question is for Tricia. And sorry, I missed it. I got a new phone, and it's kind of cutting in and out. When you were giving guidance, I think you said in previous calls you do expect to increase ARPU at 7% versus 6% historically. And I think you said in the commentary, though, again, it was cutting out a little bit, you are expecting retention rates to increase and new pets to grow up, new pet growth. So can you help me? Is it indeed still that 7% or still an increase in ARPU to kind of catch up to that 71% ratio? Still something you're expecting? And should we expect any kind of headwind, or why should there not be a headwind to new pet growth with ARPU going up? Thank you. Yeah. I'll try to cover everything. Let me know if I missed anything. But yeah, I mean, in general, based on what we see in trends and costs and what's going on in the industry and data, ideally, we're executing very well, and we're getting closer to ARPU increases of 7% year- over- year. Now, keep in mind, this is increases where we need them, and we're targeting that 71% value proposition, as you mentioned. Historically, our increases have been between 5% and 6%. And so we're targeting 7% to be closer to where we need to be and kind of stay in that spot that we're targeting. The guidance includes 6% because we won't get to a full year of 7% immediately. So we're going from really a full year at 5% in 2020, and then moving the needle to get closer to 6% in 2021 with the target, with the data we have right now being 7%. And I think, Margi, do you want to talk about the growth side of it? Yeah. No, happy to. So I think when we think about the headwinds and new pet growth, and we look at our performance and the business over the past 12 months, our leads, our conversion rates are up, and our retention rate is up. All of that would suggest that the value proposition, the retention rates being as strong as they are, taking it to seven to eight months, a significant increase through the year means that there is value in the product, and the product is doing what it needs to do. And so the increase in ARPU does not present any headwind to us. Great. Thank you so much. Our next question is from Jon Block with Stifel. Please proceed. Great. Thanks. Good afternoon, everyone. Maybe the first one, just as we think to 2021, and this might build on Maria's question earlier, but the gross adds are really strong in the quarter. We're calculating over 30% year over year in the quarter. They were less than 10% in the first half of 2020, and then probably somewhere in between for three Qs. So just when we think about 2021, how do we think about the gross adds year over year? Is 20% plus a fair number? And then how about the cadence of that as the comps were dramatically different throughout 2020? Hi, Jon. I can kick us off. In terms of the flow that you saw back in 2020 with the difference in the quarters, a lot of what was happening in that year, if you look back, is we were doubling down and focusing on the things that we could control. In the middle of the year, the pet growth wasn't what we were focused on. It was member experience, making sure we could be there for our members when they needed it, focusing on the veterinary experience, the partnerships. And so we deliberately decided to focus on the member as opposed to growing. We started gradually as COVID became more of a normality, I suppose. We started to focus on, "Okay, let's see how we can get that growth. How do we start to dip a toe back into that water," as well as maintaining the focus on member, which we did, and we did it very effectively. The team's very skilled, and I think are increasingly skilled on the digital front, helping us to improve that conversion rate. As we look forward in 2021, the cadence of growth we expect to be somewhat consistent, continuing to drive lead volume where we can and conversion rate up where we can. And I'll hand over to Tricia to speak specifically to the pet growth through the year and the 20% that you asked about. Yeah. Yeah. And just echoing, building on what Margi said, we expect good momentum going into the year and then consistency moving through. To your direct question, the year-over-year comps in Q1 and Q2 of last year are lower than the back half of the year. So you'll see that in the growth rates as they model out. And then when we get further into the year, we can update if trends look to be a little different than the visibility we have now. But to answer your question, yes, we've got definitely lower comps and then higher comps that'll impact that calculation. Okay. Thank you for that. Helpful. And then, Tricia, the contribution I might have missed you a little bit. The contribution from the acquisition in the quarter, if you can revisit that, what that was, and what will the SaaS contribution be in 2021? I mean, the guide was ahead on revenues, but right in line with us on subscription revs. And I'm just curious, the contribution from the acquisition full year in 2021 as well. Yeah. Yeah. Thanks for the question. And I'll just take a minute to really highlight this acquisition because we're excited about it. We're excited to acquire Aquarium Software, is the name of the company and the back-end really systems that they can provide to us, as well as solutions that can be sold externally. They're a great company and an excellent team, and we've been very happy so far. Two, the contribution in the two months of this past quarter was small, about $1 million of top-line revenue and about $300,000 in additional operating margin. And this is within the other business segment, is the segment that it's classified in. In terms of strategy, our primary strategy is really to improve Trupanion's back-end systems, build them out so we can better our chances of being able to execute are much better with this team working with us and the solutions that they have. So a lot of the things that Darryl mentioned in terms of products and initiatives, we're excited about this software to support it. So 2021 is primarily focused on getting all of this integrated so that we can execute more fully and also working with that team on the longer-term strategy. But we do have some revenue and other contributions there. So in the other business segment, it's about 4%-5% of the growth of that segment's revenue is projected to come from this business, with all of that in mind, and then obviously modest adjusted operating income profitability from there, with the primary focus in 2021 being on our system. Okay. Great. And last one for me. Increasing ARPU, that's the allowable spend to increase for pet acquisition, if you would. Retention's also improved a good amount. So really, you've had two levers on the LVP. Darryl, can retention improve further from here? You've gotten to very sort of a high bar, if you would. And can it improve further, especially in light of the accelerating gross adds, where to your point, you've talked about a higher year-one churn in the past? We'd love to get your thoughts there. Thanks, guys. Yeah. I mean, our lifetime value improved 25% year- over- year, which is a staggeringly high number for the average pet. In a normal situation where retention stays the same, the lifetime value of a pet would be going up about the same as ARPU, so around 6% or 7%, unless we're able to increase the retention rates. And our retention rates moving from 70 to 78 months in the last year has created a new high water level for ourselves. The question is going to be, can we sustain those with higher growth rates? We're making a lot of investments to try to do that. But to your ultimate question is, where can we go? I ultimately believe that we could get to 99% retention if we could execute perfectly. I think we have roadmaps on how to get there. I would not speculate in a model that we're going to get there anytime soon, but internally, I think that's where we think perfection would be. And we're going to put our money and resources behind the team to try to achieve that, but don't expect it over the next couple of years. With the accelerated growth, if we can maintain the 98.7% or the 78 months in 2021, that would be a really impressive result. Okay. Perfect. I'll take the rest offline. Thanks, guys. Our next question is from Andrew Cooper with Raymond James. Please proceed. Thanks for the question, guys. Maybe just to go a little bit different way, thinking about 2021, one of the things we've heard from a lot of peers in the animal health space, not necessarily insurance, was about limited access to clinics. And so just as we think about the growth in 2020 and then looking at 2021, is there anything to consider in terms of Trupanion Express installations potentially having been a little bit tougher to do this year because you did have a little bit more limited access to those new clinics, whereas where you already had the software installed or stronger existing relationships? I think is the assumption that maybe that's what drove more of the growth appropriate? And just how do we think about that going forward? Yeah. Hi, Andrew. It's a good question so I would say if we look back at 2020, we obviously had a very strong year and as you point out, one of the areas that we did slow down on was our install rate for our software. As we look forward to 2021, what we've seen is an increase in usage of it so those that had it really started to use it, and the adoption rate then sort of snowballed from there. There are a couple of ways in which that happens. One of them is naturally within the community, veterinarians having conversations around how do you deal with curbside? How do you deal with the phenomenon that we're going through today? But also for members having that experience because it removes the burden on them, and they can take care of their pets. So we are seeing, despite the natural hazards that you have with not being able to get into the clinic, hospitals are still installing. That is still a focus of the business, and it's something that we are driving hard to ensure that that member experience is there because we know the benefit it gives us overall. So we've learned a lot from 2020, and we've got a lot of tactics in the pipeline to be exploring how do you get that install rate higher in 2021. And one of them is through word-of-mouth recommendation, which we're starting to see come through nicely. Darryl, anything to add? Nope. Great. That's helpful and then a lot's already been asked, so maybe just a quick update. The Florida trial has been out in the market for a little while now. Do you feel like you're at the point, given that a lot of the churn typically happens in that first year, do you feel like you're at the point where you've seen some results that give you confidence one way or the other? Anything to add about that program or potential other tweaks to a broader rollout of a little bit different plan or anything like that? Yeah. That's a great question. So on a broad level, we're always looking to improve and simplify what we have out there as a product. Our products are built for use in the veterinary hospitals to make sure it's as strong and simple as possible and can give the highest and broadest coverage. Our goal with the new product is to see if we can have a product that's got an increased distribution, so increased lead volume, better conversion, increase in ARPU, and therefore longer retention and higher lifetime value. We're seeing some positive signs. Our business is complicated, so it's not just a case of putting the product out there and letting it sit. We need to keep monitoring that data. We don't have anything stable and long-term metric-wise that we'd want to share at this point, but it has been just shy of a year. So it'll be a year in March. We're encouraged by what we see, and it takes time to get it right. But as soon as we're in a position where we can share more about that, we'll do that. We just keep watching and monitoring it in the meantime. Great. I'll stop there. Appreciate the questions. Our final question is from Greg Gibas with Northland Securities. Please proceed. Hey, Darryl, Tricia, and Margi. Thanks for taking the questions. Sorry if I missed this, but with respect to your guidance, what are your kind of thoughts or assumptions around vet lead volumes, where they go from maybe Q4 levels? What are you expecting regarding lead volume growth from that channel? When you talk about Q4, I mean, the big standout was not just the number of new pets that we enrolled, but the net pet growth. It's 71% year-over-year net pet growth. It's a super high number. We saw increases in leads and conversions across the board. We also saw increases in retentions. And as we go into the guidance of 2020, we expect continued growth in our leads and conversions from the vet channel to existing members telling their friends. And we're going to be investing more dollars to try to maintain these higher retention rates, and we'll have to see how they play out during the year. Okay. Sounds good. I don't think we touched too much on this, but regarding the partnership with Aflac, how's that progressing? You mentioned previously that that deal is kind of taking a while to ramp to reach its full potential. So just wondering, I guess, for an updated timeline on when we'd see a noticeable impact from that partnership. Yeah. Well, as a reminder, Aflac is now one of our largest shareholders with just under 10% ownership of the company. And we really look at it in, there's two markets. Aflac has a long, long history in Japan, and we're going to be exploring bringing Trupanion into Japan, and that's going to take us several years to do it. I can tell you overall, there's nothing in our guidance that implies any impact from Aflac in 2021. But in the North American side, I'll let Margi talk to that. She's closer to it than I am. Yeah. Thanks, Darryl. So really, kind of when we think about the North American side, specifically in the US market, we've got three different stages, and we talk about timeline. If I can, the first one that will be first to market would be direct-to-consumer. We wouldn't expect that to have any impact this year, really, particularly. So that would be just going straight on the aflac.com website. Beyond that, we then have two other markets. One of them would be leveraging the expertise and the power of Aflac as a partner from the relationships they have with the large and medium-sized businesses through their technology and their broker infrastructure. So working at launching something in 2022. It will be initially a slow launch and slow rollout to see kind of how does that work, what do we see from that. So maybe if we're successful and we execute well, we'll see some small benefit from that in 2022. And then in 2023, the third part of that core is looking at how do we go after the small businesses. So working with a 20,000-strong Aflac army of agents who work specifically with the small businesses across the American market, which we wouldn't be doing until 2023. So we have a very tiered release program. We're working really closely with the team. They're a great team, really good partnership, and seeing some really good signs in terms of the roadmap and the skills. And really kind of building on that core competency that we believe we have, which is developing the right product for the right channel with a partner that understands the workplace benefits so well. So really encouraged by what we see. Early stages yet, but a solid timeline built out and developed. Got it. That's helpful, Margi. Last one for me, just relating to those pre-revenue initiatives. Tricia, I think you said it was $0.3 million in the quarter, so pretty small at this point. But how much do we expect those initiatives to increase going forward? And could you maybe talk about some of the bigger initiatives that fall in there? Yeah. I'll start high level, and then I'll let Darryl or Margi talk to the specific initiatives if they want to highlight any. In general, this will ebb and flow every year as opportunities arise and timing of when things launch with the partnership with Aflac and other things ramping up as we look to the next five years and what we want to execute on. We're really starting to focus here. And one thing is we've spent a lot of time, particularly the last five years, scaling the business, focusing on hitting margin targets. And now we have the opportunity to think more strategically and more broadly, and we have the funds available to invest in these initiatives. So that's really at the core of what we're doing. In the next year, that combined with kind of the sales and marketing expense related to the other business, just typically not more than a million or so. We expect to be in the $2 million-$5 million range, and part of it just depends on how quickly some of these timelines and product development, like Margi mentioned, how quickly they go. From a big-picture perspective, though, these new initiatives, we want to make sure they have the opportunity to generate, when they launch, 30%-40% internal rates of return, as well as targeting a 15% adjusted operating margin similar to our current subscription business, so we're looking at it through all those lenses. Anything to highlight, Darryl? Yeah. Just that for the impact on the business, we don't need to be doing these for the next couple of years to hit our growth goals. But we're making these investments to think about making meaningful impacts to our P&L in the five, 10, 15-year range. And they include international expansion, working with distribution partners where they can be powered by Trupanion, meaning they get access to us paying hospitals directly, our data, the same value proposition, but us designing specific products that meet the needs for those distribution channels. And we just see a lot of opportunity ahead of us, and we're going to be planting those seeds over the next couple of years. Because we've now broken it out into the P&L, over the next year or two, we'll be able to start to talk about what those short-term investments look like and why we're making those investments. Look forward to my shareholder letter in April to provide more. But long term, we would expect that they're going to act more like our subscription business with 15% margin targets and 30%-40% internal rate of return. Great. That's helpful. Thank you. That does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.