Trupanion Q3 2026: Record Cash Flow Despite a Sharp EPS Miss

Trupanion posted $405.6 million in revenue for the third quarter of 2026, beating expectations and growing 10.5% from a year earlier. GAAP EPS of $0.21 came in well short of the $1.01 Wall Street had expected, missing expectations.

Net income rose 58% year over year to $9.28 million, and free cash flow reached a record $28.5 million. The subscription business, which generated $287.9 million in revenue, grew 14% year over year and proved to be the clearest engine of that improvement.

Subscription enrolled pets climbed 6% year over year, and monthly average revenue per subscription pet rose to $88.95. Retention improved for a seventh consecutive quarter, reaching 98.38%, while the subscription adjusted operating income margin expanded to 15.8%. Average pet acquisition cost also fell to $279.

CEO Margi Tooth pointed to the record cash flow and the sustained retention trend as evidence of compounding business quality, and management backed that confidence with capital allocation decisions. Trupanion repurchased approximately 0.8 million shares for about $25 million during the quarter under a $100 million board-authorized buyback program, leaving $75 million in remaining capacity as of September 30, 2026.

One area investors will want to monitor is the total enrolled pet count, which fell 2% year over year due to a decline in the Other Business segment even as the core subscription base grew. Development expenses for pre-revenue product exploration also doubled year over year to $2.4 million, a signal of investment in future initiatives including an alliance with Aflac. The gap between the EPS reported and what analysts modeled is likely to draw scrutiny on what drove the divergence from consensus.