Darryl Rawlings: Well, I think the execution that the team demonstrated is a prime example. It’s completely within our control. We understand our margins are expanding. So the total adjusted operating income is our available pool of cash that we can reinvest. And if we take a couple of percentage points off that and reinvest the rest, and then your positive free cash flow. So completely in our control, in our destiny, and we feel good about it. And as I mentioned before, we are also going to get the benefit of ARPU expansion to help revenue growth in the coming year.
Katie Sakys: Okay. And then shifting gears a little bit, was there any reserve development in this quarter’s invoice ratio?
Wei Li: Hey Katie, this is Wei. Yes. As a reminder, we have – and our insurance companies, we have this intercompany agreement with our operating company, and which makes…
Darryl Rawlings: I think the question was reserves. Did we have any reserves change during the quarter?
Wei Li: No. Actually we didn’t have any insurance reserve change or IVR change during the quarter.
Katie Sakys: Okay. Got it. Thank you.
Operator: The next question comes from John Barnidge of Piper Sandler. Please go ahead.
John Barnidge: Good afternoon, and thank you. I was curious, as we think about the core business and then think about the new partnerships and how you’re dimensioning them going forward. How do we think of a persistency level in the state of TruTopia? I know persistency by channels can change, but on a blended basis, where would you think it settles in as the core portfolio kind of reaches that state?
Margi Tooth: So I think – hi, John, it’s Margi. We are really very happy with the performance we saw in Q3. In terms of the persistency, we’ve got a lot of pets, 209,000 just to reiterate that number – members that have received that higher increase. And we see such staying power. I think Fawwad mentioned earlier, we had 90% of those people staying with us after seeing a 20% plus increase, which is testament to the value proposition and the power of the Trupanion product. And across the business, we’re looking at all of those cohorts, as we always do, and obsess about the member experience to make sure that we can make it as good as it can be. In terms of TruTopia, we’re seeing as we look at our reduced pack spend, the vet channel continues to be the main driver of leads.
The second biggest driver of leads to that is our referral friend, our existing members, adding pets, that has been consistent throughout this period and really helps us to push into that efficiency, which then helps us in terms of TruTopia. So we’re seeing good progress. And I’m happy with how that’s working through the overall book of business at this point in time. And we’ll continue to keep that in our sights and in our mind as we consider the growth of future state. Does that answer your question?
John Barnidge: It does. Thank you very much. I appreciate that. And then I totally understand that the European operation has a different underwriting risk profile and relationship on the P&L. But at some point, you probably want to take the underwriting, the Trupanion, how do you think about input cost trends differing in Europe versus the U.S., Japan versus the U.S. because I know that’s the market you’re planning to enter, I believe mid next year. Thank you for the answers.
Margi Tooth: Yes. I mean, it’s interesting when you look globally across the veterinary landscape, everyone is seeing very similar trends. So, obviously there’s a relativity depending on the economy that we’re operating in at that time. But whether we’re talking about Australia, Canada, the U.S. and any parts of Europe we’re operating in, the veterinary industry is short staffed. They’re all under pressure. And those pressures lead to the cost trends that we’re seeing, because vets have little choice but to increase the prices they’re charging to ensure that they can sustain their businesses. Now, that does vary degrees, as I mentioned. So we talk about the average ARPU for a European member at this point being $25 significantly different to that across North America.
But the value proposition and the value that Trupanion brings is the same no matter where you are. We’re not changing our approach to that $0.71 from $1. We’re making sure that we can give people a product that will help them to take care of their pet the way they need to take care of their pet. And as long as that remains our focus, we absolutely believe that we have a huge opportunity in front of us and happy to see that starting to take hold in Europe with those countries coming online. And you’re right. At some point, we will have that underwriting for Trupanion that’s work in progress, but really happy to get our teeth into what we see there as tremendous opportunities.
John Barnidge: Thank you.
Operator: This is the end of the Q&A session. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
