This is something that we – as we look at this in a more granular level as we started to really look about decentralized approach to management, this is something that we should be expecting to do more and more as we really kind of kick into our decentralized approach just in terms of distribution strategies, different products, different geographies. So while California is one part of our business, it’s not the biggest part of our business and that’s very deliberate as we thought about distribution moving forward to the long-term. So we will calibrate, we’ll keep checking the data and making sure that we have the right value proposition and we’ll adjust as necessary. But right now, as I mentioned, we feel very positive about the relationship with the regulator and we’re encouraged by the dialog and we’ll continue to work with them to do what’s right for our members in the State of California.
Shweta Khajuria: Okay, thank you. And then you mentioned that you pulled back on some of the initiatives that were maybe for the mid to long-term or you weren’t seeing the returns as expected as part of your cost savings or cost cutting? Could you talk about which one specifically those were?
Margi Tooth: Yes, it’s really across the board. So there are some things that we do that ultimately will help us unlock a few tests, so whenever we look at deploying capital, we try and learn new ways of doing things, new avenues, new test, new tactics, as well as, I would say, for some channels, so building things out for the future. So that related to whether it’s a bet, whether it’s breeder, social media, that things that we’re doing in partnership with people and also having teams that are testing new things. So it’s about leveraging as much as we can within the existing team set that we have today and ensuring that the things we’re doing deliver return today rather than a tactic that is a test, that’s not necessarily proven or maybe even driving the results we wanted.
We’ve been a little bit more stringent in the quarter around that and pulling back, so we can be very deliberate with the deployment of capital. It doesn’t harm our core channels, we stayed very true to the vet channel, vet channel we’re holding very strong in the quarter, which is testament to the impact of the product that we have. And it just allows us really to focus and double down on things that we know will drive immediate results and how this being more discipline with our capital deployment. Overall, as Darryl mentioned in his opening remarks, we got 23% more pets with 6% less investments. So, I think in terms of deployments, we’re still being very disciplined and will continue to be as it things a distribution and growth moving forward.
Shweta Khajuria: Okay, thanks, Margi.
Margi Tooth: Thank you.
Operator: The next question comes from Josh Shanker from Bank of America. Please go ahead.
Josh Shanker: Yes, thank you very much. Good afternoon. In terms of thinking about maybe taking California out of the picture for a second, what percentage of your business is rate adequate, where you’ve gotten enough approvals are the states did not require approval such that you feel very comfortable going forward in?
Darryl Rawlings: Hi, Josh. This is Darryl. It’s a very good question. When we look at our total new pets that have come in, we’re really breaking the business down into multiple P&Ls. I kind of our historic subscription business, if you took North America, we break it into about three different markets. Two of those markets, the average new ARPU is about $74, $75 and the other two markets, the average ARPU is about $56. So you could see that there is a dramatic difference. The area where we have the lower ARPU, about $56 is priced adequately to our value proposition today and is actually the areas with the higher ARPU that we have had more margin compression over the last six to nine months. In addition to that, when you look at the new products that we have, which represented about 17% of our total new pets in the quarter.
Most of those are pretty adequately priced for. So the biggest challenge for us is in some of our core subscription products in some of the more expensive areas in the country and that’s where Margin and the team have slowed the growth there. And as we’ve had the approvals, like, we’ve been receiving the opening remarks, we’ve had 30 state approvals in the last quarter. Now we’re able to put our foot back more on the gas, because we’re adequately priced. So it’s something you always have to monitor, but you need to monitor in a very granular way across products, distribution channels, not just by the state, but they’re doing neighborhood level. And for the team to be able to take your average pet acquisition cost of $309 and lower it down to $230 in a single year.
I think it’s a testament to the team and pointing those the, spend in the right direction feel really good about the progress.
