Good day, and welcome to the Trupanion Q4 2024 Earnings Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star and then two. Please note this event is being recorded. I would now like to turn the conference over to Gil Melchior, Director of Investor Relations. Please go ahead. Good afternoon, and welcome to Trupanion's Q4 and Full Year 2024 Financial Results Conference Call. Participating on today's call are Margi Tooth, Chief Executive Officer and President, and Fawwad Qureshi, Chief Financial Officer. For ease of reference, we've included a slide presentation to accompany today's discussion, which will be made available on our Investor Relations website under our Quarterly Earnings tab. Before we begin, please be advised that remarks today will contain forward-looking statements. All statements other than statements of historical facts are forward-looking statements. These include, but are not limited to, statements regarding our future operations, key operating metrics, opportunities in financial performance, pricing and veterinary industry inflation, and our ability to remediate our material weaknesses. These statements involve a high degree of known and unknown risks and uncertainties that could cause actual results to differ materially from those discussed. A detailed discussion of these and other risks and uncertainties are included in today's earnings release, as well as the company's most recent reports, including Form 10-K, 10-Q, and 8-K filed with the Securities and Exchange Commission. Today's presentation contains references to non-GAAP financial measures that management uses to evaluate the company's performance, including without limitation, cost of paying veterinary invoices, variable expenses, fixed expenses, adjusted operating income, acquisition costs, internal rate of return, adjusted EBITDA, and free cash flow. When we use the term adjusted operating income or margin, it is intended to refer to a non-GAAP operating income or margin before new pet acquisition and development expenses. Unless otherwise noted, all margins and expenses will be presented on a non-GAAP basis, excluding stock-based compensation expense and depreciation expense. These non-GAAP measures are, in addition to, another substitute for measures of financial performance prepared in accordance with the U.S. GAAP. Investors are encouraged to review the reconciliations of these non-GAAP financial measures to the most directly comparable GAAP results, which can be found in today's press release. Lastly, I would like to remind everyone that today's conference call is also available via webcast on Trupanion's Investor Relations website. A replay will also be available on the site. I will now hand over the call to Margi. Thank you, Gil, and hello everyone. 2024 was a significant year for Trupanion, marked by strong operational and financial execution. We started the year with ambitious goals: to repair and expand our margins and fortify our balance sheet, while simultaneously continuing to enroll pets with less PAC spend. Against these guiding mandates, I'm pleased to report we delivered. Here are some of our 2024 highlights. Subscription revenue grew 20% year over year, and we drove meaningful margin expansion in the subscription business, achieving our industry-leading 71% value proposition for the second consecutive quarter. In the Q4, we achieved the highest quarterly subscription adjusted operating margin in our history, more than doubling our margin from a quarterly low point in early 2023. For the full year of 2024, adjusted operating income grew nearly 40% to a record $114 million. We also generated $39 million in free cash flow, an all-time high, with the vast majority of the improvement being driven by higher adjusted operating income. In our large under-penetrated market, our focus is on growing adjusted operating income and strategically reinvesting at high estimated internal rates of return to help more pets receive the care they need. Time and again, our team has demonstrated their ability to deliver on this objective, and 2024 was no exception. In line with our mission, we reached a major milestone early in the year, protecting more than one million cats and dogs, of which approximately 257,000 were added over the last 12 months, the vast majority of these coming from our flagship Trupanion branded products. Our consistent and proven ability to grow pet count in spite of our purposeful decision to reduce acquisition spend for five consecutive quarters directly illustrates the growing demand and need for our product in support of pet parents today. Trupanion's commitment to our members is at the heart of our business, and upholding our value proposition has been and will continue to be the driving force of our team. In 2024, we continue to invest meaningfully to improve our best-in-class member experience, including advancements in our software that eliminates the need for reimbursement. In doing so, we made significant progress across our claims experience, with record levels of direct payment and speed of traditional claims payment, resulting in a claims inventory near to all-time lows. Just three months ago, we hit another milestone, surpassing $3 billion in paid veterinary invoices, the last billion being achieved in less than 24 months. This unmatched level of veterinary invoice support directly demonstrates the growing role Trupanion plays in solving the new normal in veterinary care. As we extend our support to an increasing number of pet parents, we remain focused on ensuring members feel confident in the value Trupanion provides. While there is still work to be done refining our pricing across every cohort, such as making necessary rate adjustments where needed and maintaining rates where costs are stabilized, we have reached a solid foundation on which to build. We're pleased to now be largely in a phase of refinement, leading to lower average increases that make budgeting easier for our members. Of course, the real proof of our product is in our member retention, and as we close the year, we saw continued strengthening across all retention cohorts, especially with members receiving a rate increase of over 20%, where most of our business sits today. In fact, Q4 retention for this cohort was among the highest rate of retention for over two years. With rate flow normalizing, we've been adjusting our retention efforts to span across our entire member base, including those in their first year and with rate changes of less than 20%, and we're encouraged by the early improvements this focus is making. Thanks to our strong RPU growth and margin expansion, we saw a 45% increase in our per-pet profit, even with the anticipated pullback in retention. This expansion is what increases our allowable per-pet acquisition costs, ultimately setting the stage for greater investment in pet growth. With regards to hospital performance, we ended 2024 with strong veterinary need volume, an all-time high in veterinary hospitals using our direct payment solution, and over 15,000 active hospitals. Building on this foundation, we took a significant stride forward during the year with the launch of our Veterinary First strategy in international markets, with the introduction of the Trupanion brand in Europe. Pet parents in Germany and Switzerland, which is home to approximately 12,000 veterinary hospitals, will now have access to Trupanion's high-value product and unreplicated vet direct payment solution. We have also continued our minor investment into newer products and channels with the purpose of reaching pet parents where they are, in partnership with household brands to connect with those with differing consumer needs. In our large under-penetrated market, these opportunities enhance our long-term growth potential and, with it, our intrinsic value. To summarize, 2024 was a very strong financial year and a turning point for the company. We made meaningful progress and achieved what we set out to do. We've developed a solid and scalable foundation financially and operationally. So now we'll turn our attention to the year ahead, the final year of our 60-month plan. In 2025, we anticipate steady, sustainable growth in our subscription business. We expect margins to continue to expand and rate changes to normalize, driving increased profit per pet and improved retention. We'll step up our pet acquisition investment in tandem, gradually increasing spend as the year progresses. Our confidence in our margin trajectory is reinforced by recent trends in veterinary inflation, which continue to align with our expectations. Veterinarians typically raise prices at the start of the year, contributing to a seasonal step-up in costs that drives stronger margin performance in the second half of the year. While early into 2025, we're seeing this pattern play out and anticipate a similar yet improved margin journey throughout the next 12 months. At the same time, the progress made over the last quarter, increasing active hospitals and veterinary leads, has reinforced our confidence in our team's ability to accelerate pet growth as we ramp up acquisition investment. Our approach to this acquisition spend is designed to reinforce conversations happening within the hospital, creating a brand halo effect that benefits not just the veterinary channel, but all channels. This investment also plays a key role in improving retention, particularly among first-year members, by reinforcing the value of Trupanion post-enrollment. Having scaled back in this area over the past year, we're beginning to rebuild momentum and brand awareness. Similar to prior years, the majority of our pet acquisition dollars will be reinvested into growing our core Trupanion brand in North America. This remains the foundation of our business and our primary growth engine. Underpinning our anticipated growth is our commitment to ongoing investment in our systems and infrastructure. In 2025, we expect to build on the use of new technology designed to elevate the member experience, retire legacy platforms, and strengthen our control framework to ensure long-term scalability and effectiveness. Along these lines, I'm pleased to share that as part of our 2024 audit, we are on track to remediate the two previously identified material weaknesses. This progress towards a successful resolution highlights the diligent efforts of our team in strengthening internal controls and implementing sustainable processes. I want to take a moment to recognize the tremendous work and dedication from everyone involved. In total, if we achieve the growth goal shared today, by the end of our 60-month plan, we would expect our compound annual revenue growth rate to be 23%, robust and just shy of our 25% goal. Growth in adjusted operating income would be near to 20%. This last metric, if delivered, will be a significant achievement given the margin erosion caused by veterinary inflation following the pandemic. Exiting 2025, we expect strong fundamental performance across key metrics, including retention, RPU, and margin, with a gradual step-up in pet growth. Growth in these metrics, along with the expansion in our active hospital base and same-store sales, is central to our business model and long-term value creation. By continuing to drive these core metrics, we aim to create even greater value in the year ahead, setting the stage for sustained momentum in 2026 and beyond. While we still have time to run on our current strategic journey, I go into this final year with tremendous gratitude to the team that has made these results possible. Time and again, this team has demonstrated their commitment to our members and those in our ecosystem, and with it, built a strong track record of success. With that, I'll hand the call over to Fawwad. Thanks, Margi, and good afternoon, everyone. Today, I will share additional details around our Q4 performance, as well as provide our outlook for the Q1 and full year 2025. Total revenue for the quarter was $337.3 million, up 14% year over year. Within our subscription business, revenue was $227.8 million, up 19% year over year, and up 20% on a constant currency basis. Total monthly average revenue per pet for the quarter was $76.02, up 13% over the prior year period. Within our core Trupanion brand, RPU expanded even faster at 14% year over year and 15% on a constant currency basis, marking our highest rate of growth in the company's history. Total subscription pets increased 5% year over year to over 1,041,000 pets as of December 31st. This includes over 51,000 pets in Europe, a majority of which are currently underwritten by third parties. Average monthly retention for the trailing 12 months was 98.25%, down versus last year, which was 98.49%. On a trailing three-month basis, retention was up sequentially from Q3. The subscription business cost of paying veterinary invoices was $159.5 million, resulting in a value proposition of 70%, an improvement from 72.7% in the prior year period. The drivers of this improvement were margin expansion from our ongoing pricing actions and continued efficiency in our cost of processing invoices. These improvements more than offset adverse development from prior periods in the quarter, totaling $0.7 million, or approximately 30 basis points of revenue. As a percentage of subscription revenue, variable expenses were 9.2%, down from 9.6% a year ago. We have made significant investments in technology and are now realizing efficiencies in our contact center on top of the cost improvements in invoice processing I just mentioned. Fixed expenses, as a percentage of revenue, were 5.5%, up from 4.7% in the prior year period, in line with our expectations. This is the result of significant additional investments in internal controls, technology, and SOX compliance. In that regard, we have made substantial progress in remediating the two material weaknesses identified in the 2023 audit. While the final outcome will be determined upon completion of the 2024 audit, we remain on track to remediate these two items, and we expect to file our 10-K on schedule. I would like to extend my gratitude to everyone at Trupanion for their dedication and hard work throughout this process. After the cost of paying veterinary invoices, variable expenses, and fixed expenses, we calculate our adjusted operating income. Our subscription business delivered adjusted operating income of $35 million, an increase of 40% from last year. Subscription adjusted operating margin was 15.3% of subscription revenue. This is up from 13% in the prior year and represents approximately 230 basis points of margin expansion. This represents the highest subscription adjusted operating margin in our company's history. Now I'll turn to our other business segment, which is comprised of revenue from other products and services that generally have a B2B component and a lower margin profile than our subscription business. Our other business revenue was $109.5 million for the quarter, an increase of 5% year over year. We expect growth for this segment to continue to decelerate as one of our partners, Pets Best, has completed its transition to a new underwriter in the majority of U.S. states, and we are no longer enrolling new pets in those geographies. Adjusted operating income for this segment was $0.8 million. Adjusted operating margin for this segment was 0.8%, down from 2.4% last year. Margin for the quarter was inclusive of a $0.9 million accounts receivable write-down. If we were to exclude this one-off expense, adjusted operating margin would have been approximately in line with the first three quarters of 2024. In total, adjusted operating income was $35.8 million in Q4, up 30% from Q4 last year, and in line with our expectations. We acquired approximately 60,200 new subscription pets in the quarter and deployed $16.9 million to do so. Excluding the pets that are underwritten by a third party, this translated into an average pet acquisition cost of $261 per pet in the quarter, up from $217 in the prior year period. The estimated internal rate of return on this spend was 32% in the quarter, in line with our target of 30%-40%. We also invested $1.3 million in the quarter in development costs. Non-cash expenses in the quarter included $8 million in stock-based compensation, as well as a $5.3 million goodwill impairment charge related to our European businesses. This impairment was taken after completing a detailed business review in which medium-term profit and cash forecasts were lower than previously assumed. We remain excited about our long-term prospects in Europe. As a result, we reported net income for the quarter of $1.7 million, or $0.04 per basic and diluted share, compared to a net loss of $2.2 million, or $0.05 per basic and diluted share in the prior year period. In terms of cash flow, operating cash flow was $23.7 million in the quarter, compared to $17.5 million in the prior year period. Capital expenditures totaled $1.9 million, down from $4 million in Q4 last year. As a result, free cash flow was $21.8 million, an $8.3 million improvement from the prior year's Q4. On our Q3 2023 Earnings Call, we introduced an annual free cash flow target at 2.5% of revenue. We exceeded this goal in 2024 by generating free cash flow of $38.6 million, a margin of 3%. This represents an improvement of $38.2 million over the prior year and puts us in a very strong position to further increase our investments into pet acquisition. Turning to the balance sheet, we ended the quarter with $307.4 million in cash and short-term investments. At the end of the quarter, we maintained $288 million of capital surplus at our insurance subsidiaries. Our largest insurance entity, APIC, maintained $245.5 million of capital surplus, which was $140.2 million above the company action level risk-based capital requirement. This excess capital has increased by $78.2 million since year-end 2023 due to changes in underwriting risk factors used in the calculation of risk-based capital requirements by the NAIC, the retained earnings within APIC, and the slowing growth in our other business. Now I'll turn to our outlook. For the full year of 2025, we expect revenue in the range of $1.379 billion-$1.414 billion. We expect subscription revenue in the range of $961 million-$984 million, representing approximately 14% year-over-year growth at the midpoint and approximately 15% on a constant currency basis. We expect total adjusted operating income to be in the range of $120 million-$140 million, or 14% year-over-year growth at the midpoint. We expect fixed expenses to increase as a percentage of revenue in 2025 due to higher underwriting fees in Canada and continued investments in technology and compliance, but remain committed to our model P&L over the medium and long term. As in 2024, we expect to generate higher margin in our subscription business in the second half versus the first half, and our deployment of pet acquisition dollars should mirror this seasonality. With that as context, I'll move to our Q1 outlook. Total revenue is expected to be in the range of $334 million-$340 million. Subscription revenue is expected to be in the range of $230 million-$233 million. This represents 15% year-over-year growth at the midpoint and 17% on a constant currency basis. Total adjusted operating income is expected to be in the range of $26 million-$29 million. This represents nearly 29% growth year-over-year at the midpoint. As a reminder, our revenue projections are subject to conversion rate movements predominantly between the U.S. and Canadian currencies. For our Q1 and full year guidance, we used a 69% conversion rate in our projections, which was the approximate rate at the end of January. Let me now pass it back to Margi. Thank you, Fawwad. Before we move to questions, I'd like to underscore a comment Fawwad made earlier. The last quarter of 2024 marked the highest subscription adjusted operating margin in the history of Trupanion. While as a growth business, we're always focused on achieving new highs, this one comes with some significant pride and a return to more normalized rate flow for our member base. I fully expect this improvement will benefit our member experience, that in turn will enhance our retention rates and member referrals, which, along with increased RPU and margin expansion, will increase our per-pet profit throughout the year. This gives me confidence that as a business and a team, we will exit 2025 with the highest per-pet profit and expanding allowable PAC we have ever seen, giving us the opportunity to return to our historical growth rates in our under-penetrated market. Over 95% of pet parents have yet to make a choice about insurance. The opportunity is enormous, and we will be very well placed for growth. With that, I'll turn it over for questions. We will now begin the question and answer session. To ask a question, you may press Star, then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star and then 2. Also, please limit yourself to one question and one follow-up. The first question comes from Brandon Vazquez with William Blair. Please go ahead. Hi everyone. Thanks for taking the question. Maybe if I can start first on guidance. Fawwad, maybe you can talk to us a little bit about the progression of how subscriber growth may go throughout the year, because I know we've talked in the past about how PAC spend needs to pick up, and then there's a little bit of a delay behind that. So maybe just a little more context on the rest of the three quarters there that we didn't get, if I could, just to make sure we have the models kind of lined up. Yeah, thanks for the question. Let me give you a couple of dimensions in terms of guidance and kind of the thinking behind it. Obviously, it's grounded in the 2024 results, which give us a lot of confidence in terms of being able to continue to grow margin, expand margin as we get into 2025. I think as you pointed out, the thing that we're really excited about is all of the work we did in 2024 to increase financial capacity through free cash flow. It now gives us the ability to invest those dollars. Two years in a row, the company has reduced total PAC dollars, obviously out of necessity. That's been really unusual. If you look at the company's history, I think over the last 10 years, there was only one year where it was flat, as Margi said, and we say constantly we're a growth company. We're going to deploy PAC investment at increasing rates as we go through the year. Our objective or our goal is to try to approach the level of investment that we hit in 2022. On a total dollar basis, that was about $80 million, and that would be a significant step up in investment. It'll be gradual. It'll always be within the guardrails. We want to be prudent as we deploy that capital. But having the financial capacity, having generated the free cash flow, that's given us choices, and we're in a position where when we see great opportunities for investment, and obviously we're seeing those, we can invest. It'll be a progression through the year. I think if you look at mix in terms of how much pricing has contributed, how much pet count has contributed, coming out of last year in Q4, it was about 60% pricing, about 40% related to pet count. So we have been increasing pets. Even over the last two years, gross adds have been north of 500,000. But we have a standard that we've set where we want to continuously grow. And so we're looking for more so in the second half of next year for pet count to contribute more than it would in first half, and that's as a result of deploying those dollars. Great. Maybe on a similar but slightly different angle on that topic of growth through the year, Margi, you made a comment about being in record number of hospitals now. Sometimes they use that as kind of a gauge of accounts that are bought in on the Trupanion kind of model here. What does that mean? What are you guys seeing in terms of vet leads, given that's kind of your leading indicator of as you put more money towards PAC, you kind of go to those vet leads to close more? So talk to us a little bit about vet leads. Anything you can quantify there would be very helpful. Thanks. Yeah, thanks for the question, Brandon. You're absolutely right. As we see the hospital activity increasing, and really our goal is to continue to expand on that quarter over quarter, what that does is it means that we're really getting to more of those pet parents as they go for their wellness visits. They meet the vet for the first time, and they have that introduction of Trupanion. What we're seeing is in Q4, our vet leads overall were up 30% year-over-year. So really strong lead generation from that moat, which is our territory partners, those people that are going into hospitals and having that conversation. What we're now focused on, and to lean into Fawwad's point there, is deploying those pet acquisition dollars to really reinforce the conversion element of Trupanion. So why is pet insurance important to start with? In a very under-penetrated market today, we're still focusing on that education level. We're still helping people to understand what the cost of care is for their pet, and then from there reinforcing from a brand perspective. So the increase in acquisition dollars will allow us to really dip into that bigger brand effect, which we expect will help to pull those leads through the funnel. The great news is for us, our vet volume has always, our vet lead volume has always been high throughout the year, where we saw it get to at the end of Q4 and again kind of looking good and healthy in January. It's really a case now for us to take that opportunity, redeploy those PAC dollars to help to step up that growth curve. The next question comes from Jonathan Block with Stifel. Please go ahead. Thanks, guys. Good afternoon. Just the first one, the 2014-2024 gross ads were, you know, quite honestly, pretty far well below us, and they've been modest for an extended period of time now. So, Margi, what do you think this is? Is this like a lead problem, a conversion problem? Maybe if you could just give a little bit more detail and then more specifically when you expect that to really pick up and inflect in 2025. Yeah. Hi, John. Thanks for the question. So for 2024, our big focus, we really had three goals going into the year. The first was margin expansion, second, free cash flow, and third, balance sheet strength, and really kind of reinforcing that financial strength of the company. We achieved all three of those goals, and that margin expansion was absolutely at the top of that list. When we think about what that means for us, it allows us now to pivot to our 2025 goals, which are really very clear for us as a business. One is improving conversion. The second is improving retention. Both of them will help to ultimately drive that higher lifetime value. So as we think about margin expansion now, where our focus has been as a business hasn't been on let's convert more pets in 2024. It's been about those top three goals. We're now pivoting to what Trupanion has historically done very normally. It's in our DNA in terms of helping to convert people, helping to understand why Trupanion. We have a very high lead volume coming into the business, and that hasn't really shifted significantly over the last 18 months as we pull back our PAC spend. But what we did pull back was the dollars that really helped to drive us through the funnel, so drive that pet parent in places where they are. So that might be above-the-line media. It's more social media. It's more getting the eyeballs into the content that we're providing and producing. That hasn't been something that we've been investing in. Even in Q4, while we did see a step up in the back half of the year of our pet acquisition spend, it wasn't meaningful enough to really move the needle. We're now building that up nicely. We have some higher lifetime value coming through. It increases our allowable PAC. And as those PAC dollars build and reinforce, I would expect over the next two quarters to start to see that move nicely. As Fawwad mentioned, at the back half of this year is really where we expect to see the elevation of those PAC dollars and really have them starting to compound for us. That was great. Thank you, and maybe just a little bit of a two-part follow-up. The subscription revenue guidance, I've got 972 at the midpoint, also a little bit below us. Fawwad, I might have missed what you said. Did you say driven 60% price, 40% pets? My apologies. I didn't know if that was for 2025 or prior years. Maybe you can clarify, because I am curious on the split between, you know, call it the RPU contribution and pet growth specific to 2025, and then, Margi, I hate to go back to the pet ads or the gross ads, but at some point, the dynamic needs to shift, right, from being overly dependent on RPU to more pets. So I'm just curious, when we think about the gross ads, do you need those lower RPU plans to be more successful and get at scale so you can do a better job competing for, call it the more cost-sensitive consumer on the margin? Thanks. Yeah, just to touch on the point that I made, and I mentioned also in the call last time, it's an approximate mix of how much is pricing contributing versus how much is gross ads contributing to revenue, and that was a 2024 comment, so full year 2024. And then just to. What about for 2025? Sorry. What about for 2025? Yeah, we haven't necessarily given guidance specifically down to that level of granularity. I think what I can say is, obviously, as we're looking to increase the PAC investment, you know, the historical has been the opposite. It's more pet count driven than pricing driven. Ultimately, we want to get back to that. I would expect that mixed dynamic to shift. How much is going to depend on the pace with which we deploy that PAC dollar? That's going to be the dependency. Okay. And I'll just jump in here and, excuse me, quickly speak to the lower RPU plan. So at a high level, John, I think the biggest opportunity we have as a business today is really helping to really drive our conversion rate. So as we think about where are the biggest opportunities, we already have the leads coming through from our territory partners. Now what we're doing is adding the ability to spend more to drive conversion. Our phone conversion right now is at an all-time high, despite all of the rate increases and the new pet RPU that we have. So we have the content, and we have the ability to engage. This is a product that has to be sold. This is a product people need to understand because it's designed for the life of the pet. So we're doing some testing on this now. We've really only kicked off over the last few weeks. So you'll see some early iterations on our website trying to explain the difference between the Trupanion pricing model and our competition, because when pet parents see Trupanion, they're not necessarily going to see a like-for-like product. And we need to do a much better job of articulating this. Frankly, this is an ongoing thing that we need to really step up the pace for. I will say, to your point, currently the other products, those lower, the other swim lane products, so the PHIs, Furkin of the world that we have, we introduce them to absolutely speak to other pet parents. So depending on where they are in their stage of life and what they're looking for, there's an opportunity for them. They are tiny in terms of the contribution to us at the moment. We haven't focused on that because of margin compression. We've really pivoted to our core. But I would expect to see them play a bigger role over the coming years. It's not where we're going to be focused on in 2025. You should expect more growth in our core business and also kind of really reinforcing the reasons why Trupanion. So we haven't pushed that to a degree in 2024 because of the other things we're focused on. As we move forward, we should see that lift come through. And this is the same, we've always been the same price point. When we think about the delta between us and our competition, it's been the same consistently through this whole period. So I know that we've done it historically, and as we've proven in 2024, when this team focuses on goals, they deliver, and I have no reason to believe that won't happen in 2025. Thanks, guys, for the color. Yeah, thank you. The next question comes from Wilma Burdis with Raymond James. Please go ahead. Hey, good evening. Could you talk a little bit about the outlook for the 2025 adjusted operating margins just based on some quick calculations? I think it appears maybe a bit lower than I would have expected. Am I correct on my calculations, and could you just talk about what's driving that? Thank you. Yeah, I will. I can just give you some commentary just on kind of what is our guidance, what are our major guidance assumptions. I talked about the PAC investment rolling through the year. The other big factor is inflation. So, you know, right now our assumption is inflation will continue at the levels exiting 2024. So we've talked about 15%. And so we're still seeing that and expecting that to roll through next year. Obviously, if we see a reduction in inflation and abatement of that, that would be a significant positive for us. But that's probably the biggest factor in terms of year-over-year improvement. We're still expecting margin expansion, but obviously it's going to be factored into or dependent on the amount of inflation we see. And then in terms of expenses, just to kind of round out the P&L, we are expecting to see leverage across fixed and variable expense. Fixed will be up a bit in first half, largely due to an uptick in our Canada underwriting fees. I talked about in our last call that we wanted to grow into our expense base, and that's absolutely part of our plan for 2025. So we will see combined fixed and variable, see some leverage as the year progresses. And then we're going to continue to target free cash flow generation. So we have our 2.5% free cash flow as a percent of revenue. As we talked about in the prepared remarks, we were able to achieve 3%. That's tremendously important for us. That gives us the capacity to be able to make the investments that we want to make. So we're going to continue to focus on that. And then last thing I would say, there are some currency headwinds from Canada. It's approximately 1% for the full year in terms of subscription revenue growth. There's some of the dimensions of the guidance. And if I can add to that as well, when we think about our overall long-term goal, our long-term goal is still at 15%. And as Fawwad said, we are continuing to see margin expansion through the year. Just to sort of put a finer point on that, our expectation is by the end of 2025, in a two-year period, we will have expanded our margin by over 300 basis points. That's an 80% increase in a two-year period. So it's significant for a margin of our size. And as it expands, keep in mind, so too does our allowable PAC, so does our lifetime value, which is great for growth, which is ultimately where we're intending to get back to in the not-too-distant future. It's not perfectly at 15 for the full year. The reality is at this stage, there's rates of inflation that are very different across the geographies that we're in. At this point now, as we think about filing for rates throughout this year, we're in a stage of refinement. So keep in mind, the first half of 2025 is already benefiting from the rate changes we've pushed through in 2024. The back half of the year is where we'll start to refine those prices. And that's really when you start to see ultimately that retention kick in because you get a more even rate approval for pet parents. And we'd expect to see the majority of our book move into the under 20% rate increase, which we know is good for retention. Okay, thank you. A quick follow-up on that. Just, it sounds like you touched on it, but what are you seeing as far as the pricing that's coming in? It sounds like what you're seeing is that it's in line with the 15% you expected, but I just wanted to confirm that. And then I guess another piece of it, other revenue appears to be rolling off a bit slower than we expected in 2025. Could you just kind of talk about the driver there? Thank you. Yes. And from a vet perspective, right in line with our expectations, we assume 15 coming into the year, and we're so far seeing that. We do expect Q1 is obviously the big quarter when people put their prices through from a vet hospital perspective. So we're monitoring it very closely, but nothing different to our expectations. Yeah. Then in terms of other revenue, as we've talked about over the last four or five quarters, that business is in secular decline. We've had consecutive quarter-over-quarter reductions in pet months. We expect that's going to continue. It's largely RPU-driven, the reason for revenue still being up slightly. But yeah, the pace will be dependent on the pets rolling off. And I would expect that that will continue over the next couple of years as we roll off the book. But for the most part, the increase in revenue that you're seeing is RPU-driven. Pets Best has gone through the same experience. We have, they've seen margin compression and have had to take pricing actions as a result. Okay. Thank you. And the next question comes from John Barnidge with Piper Sandler. Please go ahead. Good afternoon. Thank you for the opportunity. When you talk about the normalization of pricing increases, I'd love to hear a bit more about that. There is a history of your pricing increases on the anniversary, and there's a dynamic where the written needs to earn in. As we get into the second half of the year and that normalization, do you anticipate the earned rate increases for 2025 will remain in excess of 15% throughout the year? Thank you. Yeah. Thank you for the question, John. So we do expect to see rate increases remaining in excess of 15%. So as we think about the pricing flowing through the back half of this year, and again, it does depend on what we're seeing in the Q1 that will dictate our pricing strategy in the back end of the year, but we expect it to be slightly elevated. That being said, it will be less than it has been over the last two years. So that's where we talk about the normalization of rates. It's getting to the realm of where our pet parents typically will sit, and in theory, will then help people to budget for the unexpected cost of pet care because they know what they're going to see from their monthly premium. That in turn will help from a retention perspective. In terms of the rate earning, we expect as that starts to come down, that mix of business potentially will shift slightly, but also that leans into our growth as well. So when we think about the geographies we're growing in, we're going to naturally see a bit of a mixed change anyway because we will start growing more broadly across the geographies we're in today. Does that answer your question? It does. Thank you. And my follow-up question on the goodwill write-down, can you talk about how far off of the markers they were in the decision to write that down? Thank you. Sure. Yeah. So on the goodwill impacts, yeah, it's through our normal process of evaluating goodwill. So this pertains to Smart Paws and PetExpert, the two acquisitions. And in the case of Smart Paws, I think one of the factors was just the delayed launch of Trupanion Europe in Switzerland and Germany to the end of 2024. And so as a result, we had to adjust the valuation model accordingly. And then in the case of PetExpert, we are really trying to focus on fewer markets and as a result, put on hold growth plans in Poland. We're still committed to the business. There are additional countries, Czechia, Slovakia, Belgium. We just happened to kind of push those out because we felt it was more appropriate to focus on the existing business. So those are the drivers of the goodwill charge. How much of the $37 million that remains on the balance sheet is related to those two properties specifically? Thank you. Yeah. The majority of the goodwill that we have today is related to our Aquarium acquisition. The Smart Paws write-down effectively reduced the goodwill on that to zero. There is still some remaining on PetExpert. It wasn't a complete write-down. If I can just add, Fawwad mentioned in the earlier remarks, we're still very excited about this. What we're really eager to do is ensure that we're reinforcing our focus in areas where we see that we have the greatest opportunities today. The long-term roadmap hasn't changed in terms of international expansion. We're really happy to see that we've got that German and Swiss market entry point in the back half of last year, which will help us to build this.