Lemonade (LMND) Q3 2024 earnings summary

Executive summary

• In-Force Premium (IFP) grew 24% year-over-year to $889 million, with customer count up 17% to 2.31 million and revenue up 19% to $137 million.

• Gross profit increased 71% year-over-year to $38 million, with gross profit margin up to 27% and gross loss ratio improving by 10 points to 73%.

• Net cash flow was $48 million, with positive cash flow from operations of $16 million and free cash flow positive at $14 million.

• Net loss increased 10% to $(68) million, and Adjusted EBITDA loss was $(49) million, mainly due to a near tripling of growth spend.

• Gross loss ratio improved for the fifth consecutive quarter, with double-digit improvements in four of the last five quarters.

Financial highlights

• Gross earned premium rose 23% to $213 million, and net earned premium was $95.7 million, up 11% year-over-year.

• Gross written premium increased 26% to $268.9 million, reflecting strong customer and premium per customer growth.

• Gross profit margin improved to 27%, and adjusted gross profit margin reached 28% in Q3 2024.

• Cash, cash equivalents, and investments totaled $979 million at quarter end.

• Net cash used in operating activities for the nine months ended September 30, 2024 was $25.2 million, a significant improvement from $103.0 million in the prior year period.

Outlook and guidance

• Q4 2024 guidance: IFP of $940–$944 million, gross earned premium of $222–$225 million, revenue of $144–$146 million, adjusted EBITDA loss of $29–$25 million.

• Full-year 2024 guidance: IFP of $940–$944 million, gross earned premium of $823–$826 million, revenue of $522–$524 million, adjusted EBITDA loss of $155–$151 million.

• Adjusted EBITDA profitability targeted for 2026, with positive net cash flow expected exiting 2024.

• Management believes existing cash and investments will be sufficient to meet working capital and capital expenditure needs for at least the next 12 months.