Group 1 - The largest insurance companies in the USA were established nearly a century ago, indicating the industry's long-standing presence and significance [1] - The insurance industry generates trillions of dollars in annual premiums in the USA, highlighting its scale and economic impact [1] - The focus is on identifying and investing in small to mid-cap growth companies in the Canadian and U.S. markets, particularly those in the "new economy" sectors such as software, AI, clean technology, and renewable energy [1] Group 2 - The investment strategy emphasizes long-term investments in high-quality companies that are profitable and cash-generating, especially those in early growth stages [1] - The analyst has over 8 years of active investing experience, primarily in the technology sector, and holds a CFA Charter [1] - The goal is to share top investment ideas through in-depth analyses, focusing on stocks that are undervalued or mispriced relative to their growth potential [1]

[Executive Summary & Q2 2025 Highlights](index=2&type=section&id=Executive%20Summary%20%26%20Q2%202025%20Highlights) [Q2 2025 Performance Overview](index=3&type=section&id=Q2%202025%20Performance%20Overview) Lemonade reported strong Q2 2025 results with accelerating growth, healthy underwriting, and effective expense management, raising full-year guidance - Lemonade achieved its **seventh consecutive quarter of IFP growth acceleration**, alongside **significant improvements** in **gross loss ratio** and **gross profit**[7](index=7&type=chunk)[9](index=9&type=chunk) Q2 2025 Key Financial & Operational Highlights | Metric | Q2 2025 Value | YoY Change | | :----------------------- | :-------------- | :--------- | | In Force Premium (IFP) | $1.08 billion | +29% | | Revenue | $164.1 million | +35% | | TTM Gross Loss Ratio | 70% | -3 points (sequential) | | Q2 Gross Loss Ratio | 67% | -12 points | | Gross Profit | $64.3 million | +109% | | Gross Margin | 39% | +14 points | | Operating Expenses (excl. growth spend) | Declined $1 million | -2% | | Adjusted EBITDA Loss | ($41) million | +5% improvement | | Net Loss | ($44) million | +23% improvement | | Adjusted Free Cash Flow | $25 million | +$23 million | | Cash Flow from Operations | $6 million | +$17 million | [Key Metrics Snapshot](index=2&type=section&id=Key%20Metrics%20Snapshot) Key metrics for Q2 2025 demonstrate significant year-over-year growth in customers and In Force Premium, alongside improved profitability Q2 2025 Key Metrics (in millions) | Metric | Q2 2025 | YoY Change | | :-------------------- | :-------- | :--------- | | Total Customers | 2,693,107 | +24% | | In Force Premium (IFP) | $1,083 | +29% | | Premium Per Customer | $402 | +4% | | Adjusted EBITDA Net Loss | ($41) | Improved from ($43) | | Gross Earned Premium (GEP) | $252 | Increased from $200 | | Adjusted Gross Profit | $64 | Increased from $33 | | Adjusted Free Cash Flow | $25 | Increased from $2 | [Business Performance & Strategic Initiatives](index=4&type=section&id=Business%20Performance%20%26%20Strategic%20Initiatives) [Overall Growth and Operating Leverage](index=4&type=section&id=Overall%20Growth%20and%20Operating%20Leverage) Lemonade achieved accelerating IFP growth and improved loss ratios for seven consecutive quarters, demonstrating operating leverage and nearly tripling gross profit - Lemonade has demonstrated sustained operating leverage through AI and automation, leading to a **significant increase in gross profit** alongside accelerating IFP growth and improving loss ratios[9](index=9&type=chunk) IFP Growth and TTM Gross Loss Ratio Trends | Quarter | IFP YoY Growth Rate | TTM Gross Loss Ratio | | :------ | :------------------ | :------------------- | | Q3 23 | 20% | 88% | | Q4 23 | 22% | 85% | | Q1 24 | 22% | 83% | | Q2 24 | 24% | 79% | | Q3 24 | 26% | 77% | | Q4 24 | 27% | 73% | | Q1 25 | 29% | 73% | | Q2 25 | 29% | 70% | [Lemonade Car Update](index=5&type=section&id=Lemonade%20Car%20Update) Lemonade Car accelerated its growth in Q2 2025 with 12% sequential IFP growth and a 13-point YoY improvement in gross loss ratio to 82%, driven by telematics and expansion - Lemonade Car achieved **12% sequential IFP growth**, outpacing the overall business, driven by successful telematics integration and geographic expansion[10](index=10&type=chunk)[11](index=11&type=chunk)[12](index=12&type=chunk) - The Car segment's gross loss ratio improved significantly to **82% (13 points YoY)**, the lowest since launch, due to precise risk evaluation enabled by telematics[13](index=13&type=chunk) Lemonade Car IFP and Gross Loss Ratio Trends | Quarter | IFP ($m) | Gross Loss Ratio (GLR) | | :------ | :------- | :--------------------- | | Q1 24 | $117 | 95% | | Q2 24 | $123 | 95% | | Q3 24 | $132 | 92% | | Q4 24 | $122 | 83% | | Q1 25 | $134 | 88% | | Q2 25 | $150 | 82% | [Spotlight: Lemonade Europe](index=6&type=section&id=Spotlight%3A%20Lemonade%20Europe) Lemonade's European business is a significant growth engine, with over 200% YoY IFP growth to $43 million in Q2, contributing over 20% of new customers and demonstrating superior efficiency - European operations provide growth diversification, lower catastrophe exposure, and a regulatory environment that accelerates AI model refinement and pricing accuracy[16](index=16&type=chunk) - Europe's IFP grew **over 200% YoY to $43 million** in Q2, contributing **over 20% of net new customers**, with a **15-point YoY improvement in gross loss ratio** to the low 80s[17](index=17&type=chunk) - The European business exhibits **better gross loss ratios (20 points better)** and **double the new business per growth spend dollar** compared to the U.S. at a similar IFP level[19](index=19&type=chunk) Europe IFP Growth Rate | Quarter | IFP ($m) | Growth Rate | | :------ | :------- | :---------- | | Q1 24 | $12 | 50% (approx) | | Q2 24 | $14 | 100% (approx) | | Q3 24 | $19 | 150% (approx) | | Q4 24 | $24 | 200% (approx) | | Q1 25 | $33 | 200% (approx) | | Q2 25 | $43 | >200% | [Reinsurance Program Renewal](index=7&type=section&id=Reinsurance%20Program%20Renewal) Lemonade renewed its reinsurance program, reducing the proportional quota share from 55% to 20% to retain more revenue and gross profit, with revenue growth expected to outpace IFP during the transition - Lemonade reduced its proportional quota share reinsurance cession from **55% to 20%** for the year starting July 1, 2025, aiming to retain more revenue and gross profit[20](index=20&type=chunk) - The reduction in quota share was made possible by consistent improvements in loss ratios and predictable underwriting performance, with no material change to the capital plan due to improved loss ratios and expanded use of Lemonade Re[21](index=21&type=chunk)[23](index=23&type=chunk) - A lower quota share cession will cause revenue growth rates to outpace IFP growth rates during the gradual transition period, as ceded earned premium ramps down from 55% to 20% over several quarters[23](index=23&type=chunk) [Financial Guidance](index=8&type=section&id=Financial%20Guidance) Lemonade raised its full-year 2025 guidance for IFP, GEP, and Revenue, while reiterating Adjusted EBITDA guidance and expecting positive Adjusted Free Cash Flow for FY 2025 - Lemonade raised its FY 2025 guidance for **IFP, GEP, and Revenue**, while maintaining its FY Adjusted EBITDA guidance[24](index=24&type=chunk) - The company expects to achieve **positive Adjusted Free Cash Flow for FY 2025** and **positive Adjusted EBITDA before the end of FY 2026**[25](index=25&type=chunk) Q3 and Full Year 2025 Guidance | Metric (in millions) | Q3 2025 (Low - High) | Full Year 2025 (Low - High) | | :------------------- | :------------------- | :-------------------------- | | In force premium (IFP) | $1,144 - $1,147 | $1,213 - $1,218 | | Gross earned premium (GEP) | $267 - $269 | $1,036 - $1,039 | | Revenue | $183 - $186 | $710 - $715 | | Adjusted EBITDA loss | ($37) - ($34) | ($140) - ($135) | | Stock-based compensation expense | $17 | $61 | | Weighted avg. common shares | 74 | 74 | [Q2 2025 Detailed Financial Results & KPIs](index=9&type=section&id=Q2%202025%20Detailed%20Financial%20Results%20%26%20KPIs) [Key Operating Metrics](index=9&type=section&id=Key%20Operating%20Metrics) In Q2 2025, IFP grew 29% to $1,083.4 million, customer count increased 24%, and revenue rose 35% to $164.1 million, reflecting strong top-line expansion Q2 2025 Key Operating Metrics | Metric | Q2 2025 Value | YoY Change | | :-------------------------- | :-------------- | :--------- | | In Force Premium (IFP) | $1,083.4 million | +29% | | Customers | 2,693,107 | +24% | | Premium per Customer | $402 | +4% | | Annual Dollar Retention (ADR) | 84% | -4 points | | Gross Earned Premium (

Core Insights - Lemonade Inc. (LMND) is anticipated to show revenue growth in Q2 2025, with expected revenues of $162.4 million, reflecting a 33.1% increase year-over-year [1][9] - The company's earnings are projected to remain flat, with a consensus estimate of a loss of 81 cents, which has widened by 2 cents in the past week [2] Revenue and Earnings Estimates - The Zacks Consensus Estimate for LMND's second-quarter revenues is $162.4 million, indicating a 33.1% increase from the previous year [1][9] - The expected loss per share is pegged at 81 cents, with a narrower estimate of 79 cents indicating a positive Earnings ESP of +2.40% [2][5] Earnings Surprise History - LMND has a strong earnings surprise history, having beaten the Zacks Consensus Estimate in the last four quarters with an average surprise of 12.52% [3] Factors Influencing Q2 Results - The in-force premium is expected to improve, projected between $1.061 billion and $1.064 billion, driven by customer growth and the Metromile acquisition [6][9] - Premium per customer is likely to increase to $402 million due to rate hikes, and gross written premium is expected to rise from successful digital advertising and partnerships [7] - Investment income is anticipated to benefit from a diversified portfolio, with a consensus estimate of $9.7 million [7] Expense Expectations - Sales and marketing expenses are expected to rise due to increased brand and performance advertising [8] - General and administrative expenses are likely to increase due to higher interest expenses from financing agreements [10]

Core Insights - Lemonade's AI-driven insurance model has gained over 2.5 million customers, reflecting a growing trend in customer preference for efficient insurance solutions [1][2][7] - The company aims to increase its in-force premium (IFP) tenfold to $10 billion over the next decade, indicating ambitious growth plans [3][19] - Lemonade's upcoming financial results for Q2 2025 are anticipated to provide further insights into its growth trajectory and could positively impact stock performance [4][16] Business Model and Customer Experience - Lemonade operates in various insurance markets, including renters, homeowners, life, pet, and car insurance, utilizing AI chatbots for quick quotes and claims processing [6][7] - The company has achieved a record 2.5 million policyholders, marking a 21% year-over-year increase, and its IFP surpassed $1 billion for the first time [7][11] - AI models are employed to enhance customer experience and operational efficiency, predicting policyholder behavior and optimizing marketing resources [8][9][10] Financial Performance and Projections - Lemonade's revenue for Q1 was $151.2 million, exceeding guidance, leading to an increased full-year revenue forecast for 2025 to $662 million [12][13] - The gross loss ratio was 73%, below the target of 75%, indicating effective risk management [11] - Adjusted EBITDA losses increased by 38% year-over-year to $47 million in Q1, primarily due to one-off effects from California wildfires [14][15] Valuation and Investment Potential - Lemonade's stock has risen 32% since the Q1 report, with expectations for further gains if Q2 results are strong [16][19] - The stock is currently trading at a price-to-sales (P/S) ratio of 5.2, near its lowest since going public, suggesting potential for further appreciation [17] - Management projects a compound annual growth rate of 30% for IFP over the next decade, making it an attractive long-term investment opportunity [19]

Core Viewpoint - The market anticipates Lemonade (LMND) to report flat earnings with a quarterly loss of $0.81 per share, while revenues are expected to increase by 33.1% to $162.39 million compared to the previous year [1][3]. Earnings Report Expectations - The earnings report is scheduled for August 5, and if the results exceed expectations, the stock may rise; conversely, missing estimates could lead to a decline [2]. - Management's discussion during the earnings call will significantly influence the stock's immediate price change and future earnings expectations [2]. Estimate Revisions - The consensus EPS estimate has been revised 1.67% higher in the last 30 days, indicating a collective reassessment by analysts [4]. - The Most Accurate Estimate for Lemonade is higher than the Zacks Consensus Estimate, resulting in a positive Earnings ESP of +2.40% [12]. Earnings Surprise Prediction - A positive Earnings ESP is a strong indicator of an earnings beat, especially when combined with a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) [10]. - Lemonade currently holds a Zacks Rank of 2, suggesting a high likelihood of beating the consensus EPS estimate [12]. Historical Performance - In the last reported quarter, Lemonade was expected to post a loss of $0.94 per share but actually reported a loss of -$0.86, resulting in a positive surprise of +8.51% [13]. - Over the past four quarters, Lemonade has consistently beaten consensus EPS estimates [14]. Conclusion - While an earnings beat may not solely dictate stock movement, betting on stocks expected to exceed earnings expectations can enhance the odds of success [15][16]. - Lemonade is viewed as a compelling candidate for an earnings beat, but investors should consider other influencing factors before making investment decisions [17].

Core Viewpoint - Lemonade's stock experienced significant growth in 2024 but has seen a slowdown in 2025, raising concerns among shareholders about its volatility. However, the company's innovative use of AI and its growing customer base suggest potential for future growth, making it a candidate for investment consideration [1]. Group 1: Business Model and Technology - Lemonade utilizes artificial intelligence (AI) and machine learning to effectively price insurance policies with minimal human intervention, enhancing its digital business model [3]. - The company has seen a 21% year-over-year increase in membership, surpassing 2.5 million customers in the first quarter of 2025 [3]. Group 2: Financial Metrics - In-force premium, a key metric for insurance companies, rose by 27% year over year in the first quarter, while the average premium per customer increased by 4% to $396 [4]. - The gross loss ratio remained stable at 73% in the latest quarter, down from 83% the previous year, indicating a positive trend in loss management [5]. Group 3: Future Outlook - Adjusted free cash flow turned positive in 2024, with management projecting positive adjusted EBITDA before the end of 2026 and positive net income expected in 2027, which could lead to a significant increase in stock value [6].

Group 1 - Schaeffer's Investment Research celebrates its 44th anniversary and expresses gratitude to subscribers by releasing a free report on top stock picks for 2025 [1] Group 2 - Lemonade Inc (NYSE:LMND) shares are up over 15% year to date, recovering from a significant correction where the stock dropped more than 50% from November to April [2] - The stock has broken above the previously resistant $38 level and is trending upward after a brief drop below the 200-day moving average [3] - Short interest for LMND stands at 30.6% of the available float, indicating a potential for bullish sentiment if bearish analysts begin to change their outlook [3]

Company Performance - Lemonade (LMND) has achieved a year-to-date performance of approximately 13.7%, outperforming the average gain of 8.2% in the Finance sector [4] - The Zacks Consensus Estimate for LMND's full-year earnings has increased by 1% over the past 90 days, indicating improving analyst sentiment [3] - Lemonade is categorized under the Insurance - Multi line industry, which consists of 43 stocks and has an average year-to-date gain of about 5%, further highlighting LMND's superior performance [5] Industry Comparison - The Finance group, which includes 870 companies, is currently ranked 8 within the Zacks Sector Rank, which evaluates 16 different sector groups [2] - Acadian Asset Management (AAMI), another stock in the Finance sector, has returned 43.5% year-to-date, showcasing strong performance alongside Lemonade [4] - The Financial - Miscellaneous Services industry, which includes Acadian Asset Management, has only gained 3.1% since the beginning of the year, indicating that LMND is performing better than this industry as well [6]

Core Insights - The S&P 500 is nearing its previous highs, leading to increased difficulty in stock selection due to elevated valuations [1] - MMMT Wealth, founded by Oliver, focuses on investment strategies and stock analysis, primarily through insights gathered from investor calls, presentations, and financial news [1] - Oliver has 5 years of investing experience and 4 years as a CPA, emphasizing the importance of thorough research in identifying high-quality businesses [1] Company Overview - MMMT Wealth was established in 2023, with a mission to provide insights on investment strategies and stock evaluations [1] - The firm operates mainly in the financial services sector, including private equity, hedge funds, and asset management [1] Investment Philosophy - The investment approach is centered on a 3-5 year time horizon, focusing on the potential life-changing impact of even a few well-chosen investments [1] - Oliver's passion for investing drives the commitment to extensive research and analysis of the best businesses globally [1]

Company Overview - Lemonade has experienced significant growth since going public, with its stock increasing over 160% in the past year [1] - The company utilizes artificial intelligence (AI) to disrupt traditional insurance models, enhancing customer experience through digital processes and machine learning [2] Customer Growth and Metrics - As of Q1 2025, Lemonade had over 2.5 million customers, reflecting a 21% year-over-year increase [4] - The average premium per customer rose by 4% year-over-year to $396, contributing to an in-force premium (IFP) that surpassed $1 billion for the first time, marking a 27% increase from the previous year [4] Profitability Metrics - Lemonade is not yet profitable, but its loss ratio has improved, with Q1 loss ratio at 78%, down one percentage point from the previous year [5] - The trailing-12-month loss ratio was 73%, aligning with the company's short-term target of 75% [5] Future Outlook - CEO Dan Schreiber believes Lemonade will outperform traditional insurance competitors as it continues to leverage its AI technology [7] - The company is positioned to benefit from advancements in AI, which could significantly enhance operational efficiency and profitability in the coming years [9][10] Marketing and Customer Acquisition - Currently, Lemonade is in a scaling phase, investing heavily in marketing to acquire new customers, with the expectation that future revenue will exceed customer acquisition costs [11] - The lifetime value of customers is crucial, as long as Lemonade maintains customer satisfaction and retention [11] Financial Projections - Management anticipates reporting positive adjusted EBITDA by the end of 2026, with a goal of achieving positive net income by the end of 2027 [12] - Despite expected net losses of $1.97 per share next year, the long-term outlook suggests that Lemonade will grow larger and become profitable over the next five years [13]