Core Insights - Lemonade, Inc. reported a narrower operating loss of 42 cents per share for Q4 2024, compared to a loss of 60 cents estimated by Zacks and a loss of 61 cents in the previous year [1][4] Financial Performance - Revenues increased by 28.8% year over year to $148.8 million, surpassing the Zacks Consensus Estimate by 2.7% [3] - Gross earned premiums rose by 25% year over year to $226.4 million, driven by an increase in in-force premiums earned [3] - Net investment income reached $9.4 million, marking a 32.4% year-over-year increase [3] Customer Metrics - In-force premium totaled $943.7 million, a 26% increase, attributed to a 20% rise in the number of customers and a 5% increase in premium per customer [4] Expense and Profitability Metrics - Total operating expenses, excluding net loss and loss adjustment expense, increased by 38% year over year to $123.9 million [4] - Adjusted EBITDA was negative $23.8 million, an improvement from negative $28.9 million in the same quarter last year [4] Loss Ratios - The gross loss ratio improved by 1400 basis points year over year to 63, while the net loss ratio improved by 1600 basis points [5] Cash and Assets - Cash and cash equivalents were $385.7 million as of December 31, 2024, up 42.1% from the end of 2023 [6] - Total assets amounted to $1.8 billion, reflecting a 12.8% increase from the end of 2023 [6] Operational Cash Flow - Cash used in operations was $11.4 million in 2024, significantly lower than the $119.1 million used in 2023 [7] - Adjusted free cash flow in Q4 was $26.5 million, compared to an outflow of $11.3 million in the same quarter last year [7] Guidance and Projections - For Q1 2025, in-force premium is projected between $997 million and $1 billion, with gross earned premium expected in the range of $229-$231 million [8] - For the full year 2025, in-force premiums are projected between $1203 million and $1208 million, with revenues anticipated between $655 million and $657 million [9][10]

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Shareholder Letter • Cash Flow: We delivered another strong positive cash flow quarter, generating $27 million of Adj. FCF, and capping our first full year of positive Adj. FCF at $48 million. • Topline: At $944 million, In Force Premium grew 26% YoY — our fifth consecutive quarter of accelerating growth — while revenue grew 29%. • Loss Ratio: Our gross loss ratio for the fourth quarter was 63%, our best result ever. Trailing twelve months ("TTM") gross loss ratio came in at 73%, in line with our target ran ...

Financial Data and Key Metrics Changes - Q4 2024 marked the best quarter ever for the company, with a 26% growth in in-force premium (IFP), marking the fifth consecutive quarter of accelerating topline growth [9][23] - Adjusted free cash flow for Q4 was $27 million, the strongest ever, contributing to a total cash flow positive of $48 million for 2024, the first cash flow positive year [9][10] - The gross loss ratio for Q4 was 63%, improved from 77% in Q4 2023 and 73% in Q3 2024, with a trailing 12-month loss ratio of 73%, a 12-point improvement year-over-year [10][26] - Gross profit doubled year-over-year to $167 million, a record high for the company [11][28] - Net loss for Q4 was $30 million, or a loss of $0.42 per share, compared to a net loss of $42 million or $0.61 per share in the prior year [32] Business Line Data and Key Metrics Changes - In-force premium grew 26% to $944 million, while customer count increased by 20% to 2.4 million [23] - Premium per customer increased by 5% to $388, driven primarily by rate increases [24] - Gross earned premium in Q4 increased by 25% to $226 million, aligning with IFP growth [25] - Annual dollar retention (ADR) was 86%, down one percentage point year-over-year due to efforts to reduce less profitable portions of the home book [24] Market Data and Key Metrics Changes - The company experienced a notable impact from the California wildfires, with an expected $20 million EBITDA impact, despite conservative underwriting strategies mitigating losses [20][118] - The company is currently live in about eight states, covering roughly 25% of the US population, with plans to ramp up significantly through 2025 and 2026 [98] Company Strategy and Development Direction - The company aims for IFP growth of 28% in 2025, with a target cruising velocity in the 30s expected next year [13] - The strategy includes ramping growth spend by approximately 40% year-over-year, while maintaining operational efficiencies [14][37] - The car insurance segment is a top strategic priority, with plans to leverage telematics technology and existing customer base for growth [39][111] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving sustained positive adjusted free cash flow and sequential EBITDA improvement for 2025 [13] - The company is focused on balancing short-term growth with long-term profitability, with a path to EBITDA positivity expected by the end of 2026 [52][106] - Management highlighted the importance of cautious underwriting and product diversification in navigating challenges like the California wildfires [19][71] Other Important Information - The company reported a significant increase in growth spend, with total growth spend in Q4 reaching $36 million, more than double the previous quarter [30] - The company has a total cash, cash equivalents, and investments of approximately $1 billion, showing a continuing positive net cash flow trend [34] Q&A Session Summary Question: What is the path to GAAP net income profitability going forward? - Management indicated that while GAAP profitability is harder to project, it is expected to follow within roughly a year after achieving EBITDA positivity, which is targeted for 2026 [52][54] Question: How does the business mix shift affect LTV to CAC? - Management noted that despite significant mix changes, the LTV to CAC ratio has remained stable, and they will continue to allocate growth spend to maintain this ratio [58][60] Question: Any developments since the Analyst Day? - Management confirmed that everything is on track with the long-term plan, and Q4 results were better than expected, with strong growth in European customers and pet insurance [70][72] Question: What is the expected timing of rate increases during 2025? - Management expects rate increases to be somewhat smooth throughout the year, nearing adequacy across the board [68] Question: How is growth spend expected to change beyond 2025? - Management anticipates growth spend to continue in absolute terms but not at the same growth rate as seen in previous years, allowing for balance as they approach EBITDA breakeven [76][78] Question: What is the breakdown of claims from the California wildfires? - Approximately 90% of claims were renters' claims, but the majority of the dollar impact was from homeowners' policies, with reinsurance significantly mitigating losses [117][118]

Core Insights - Lemonade reported better-than-expected Q4 2024 earnings, with revenue of $148.8 million, surpassing the estimated $144 million, and a narrower EPS loss of -$0.42 compared to the predicted -$0.60, indicating effective cost management and operational efficiencies [2][3] Financial Performance - Revenue increased by 29% year-over-year from $115.5 million in Q4 2023 to $148.8 million in Q4 2024 [3][6] - The gross profit margin improved to 43%, up from 29% in Q4 2023, reflecting a 14 percentage point increase [3] - Adjusted EBITDA loss narrowed to $23.8 million, an improvement from $28.9 million in Q4 2023, marking a 17.6% enhancement [3][7] - Adjusted free cash flow reached $26.5 million, a significant increase of 333.6% from -$11.3 million in Q4 2023 [3] Business Overview - Lemonade operates as a digital-first insurance company utilizing artificial intelligence to enhance operational efficiency and reduce costs [4] - The company emphasizes a customer-centric approach, exemplified by its "Giveback" program, which fosters customer loyalty and retention [4] Market Strategy - The company is focused on expanding its market presence through AI-driven efficiency and improved customer satisfaction [5] - Lemonade's in-force premium reached $944 million, aligning with management's upper guidance, driven by a surge in gross earned premium [6] - The pet insurance segment saw a 57% increase in in-force premium, reaching $283 million, attributed to advancements in AI [8] Future Outlook - For 2025, Lemonade anticipates in-force premium growth between $1.203 billion and $1.208 billion, with projected revenue of $655-$657 million [11] - The company plans to increase growth spending by approximately 40% and deepen its penetration into the car insurance sector [11][12] - Management aims to maintain operating expense stability while enhancing growth expenditures to strengthen its financial position [9]

Core Insights - Lemonade reported strong growth in Q4 FY24, with revenue of $148.8 million, a 29% increase from the previous year, and a gross loss ratio improvement to 63% [2][3][4] Financial Performance - Revenue increased from $115.5 million in Q4 FY23 to $148.8 million in Q4 FY24, representing a 29% growth and beating expectations [2] - Earnings per share improved from a loss of $(0.61) to $(0.41), also beating expectations [2] - In-force premiums rose from $747 million to $944 million, a 26% increase, exceeding expectations [2] - The gross loss ratio improved from 77% to 63%, marking a significant reduction of 1,400 basis points [2][4] Customer and Policy Growth - Lemonade experienced a 20% increase in customer count, alongside a 5% rise in premium per customer [4] - The company has consistently delivered growth in new customers and policies, indicating a positive trend in customer engagement [3] Cash Flow and Expenses - Operating cash flow reached $13.8 million, with $10.6 million converted to free cash flow [5] - Sales and marketing expenses surged by 95% in Q4, contributing to a total increase of $64 million in full-year expenses [7] Market Reaction and Guidance - Following the earnings report, Lemonade shares fell approximately 12% in after-hours trading, reflecting market concerns over future growth expectations [8][9] - Management anticipates in-force premiums to reach $1.26 billion by the end of 2025, indicating a 28% growth but a deceleration compared to 2024 [9] Future Outlook - The company expects to be cash-flow positive for the full year, building on a strong cash-positive second half of 2024 [11] - Management noted a potential $20 million unfavorable impact from California wildfires, which will be addressed in the Q1 report [11]

Financial Performance - In Force Premium (IFP) reached $944 million, representing a 26% year-over-year growth, marking the fifth consecutive quarter of accelerating growth[11] - Adjusted EBITDA loss improved by 18% year-over-year to ($24) million, while net loss improved by 29% to ($30) million[11] - Gross profit increased by 90% year-over-year to $64 million, with a margin expansion of 14 points to 43%[11] - The gross loss ratio for Q4 was 63%, the best result ever, with a trailing twelve months (TTM) gross loss ratio of 73%, reflecting a 12-point improvement year-over-year[11] - Revenue for Q4 increased by 29% to $148.8 million compared to Q4 2023[55] - Total revenue increased to $526.5 million in 2024, up 22.5% from $429.8 million in 2023[104] - Adjusted gross profit for the year was $174.9 million, representing a 79.5% increase from $97.4 million in 2023, with an adjusted gross profit margin of 33%[104] - The company reported a gross profit margin of 32% for the year, up from 20% in 2023[104] - Total revenue for Q4 2024 was $148.8 million, a 56% increase from $95.2 million in Q4 2023[119] Customer Metrics - Customer count rose by 20% to 2,430,056 compared to Q4 2023[50] - Premium per customer increased by 5% to $388 at the end of Q4 2024[51] - The annual dollar retention (ADR) was 86%, a decrease of 1 percentage point from Q4 2023[52] - The number of customers at the end of Q4 2024 was 2,430,056, representing a 20% increase from 2,026,918 in Q4 2023[119] - The annual dollar retention rate at the end of Q4 2024 was 86%, consistent with the previous year[119] Cash Flow and Investments - The company generated $27 million of Adjusted Free Cash Flow (Adj. FCF) in Q4 2024, capping the first full year of positive Adj. FCF at $48 million[11] - Adjusted free cash flow for the year was $47.6 million, a significant recovery from a loss of $113.4 million in 2023[111] - Cash flow from operating activities showed a significant reduction in loss, decreasing to $11.4 million in 2024 from $119.1 million in 2023[102] - The company generated $40.6 million in net cash from investing activities in 2024, compared to $88.7 million in 2023[102] - Cash, cash equivalents, and restricted cash rose to $385.7 million in 2024, up from $271.5 million in 2023, marking a 42.1% increase[99] Growth and Future Outlook - The company plans for IFP growth of 28% in 2025, with expectations to maintain a cruising velocity above 30% by 2026[44] - The company expects to achieve positive Adj. EBITDA in 2026, despite a projected 40% increase in growth spend and the impact of the wildfires[46] - The company plans to discuss its financial outlook for Q1 and full year 2025 during a teleconference on February 26, 2025[85] Losses and Expenses - The impact of the California wildfires is estimated at approximately $45 million in gross losses and an Adj. EBITDA impact of about $20 million for Q1 2025[36] - The company reported a net loss of $30.0 million for Q4 2024, compared to a net loss of $42.4 million in Q4 2023, indicating a 29.0% improvement[96] - Stock-based compensation expenses increased to $64.5 million in 2024 from $59.9 million in 2023[114] - The company reported a net loss of $202.2 million for the year ended December 31, 2024, compared to a net loss of $236.9 million in 2023, indicating an improvement of approximately 14.0%[102] Premium Metrics - Gross Earned Premium for Q4 was $226.4 million, up 25% from Q4 2023[53] - Gross written premium for Q4 2024 increased to $228.3 million, up 27% from $179.7 million in Q4 2023[116] - Net earned premium for the year ended December 31, 2024, was $370.6 million, up 17.5% from $315.2 million in 2023[96] - In-force premium at the end of Q4 2024 was $943.7 million, up 26% from $747.3 million in Q4 2023[119] - In Force Premium (IFP) increased by 26% to $943.7 million compared to Q4 2023[49] Marketing and Growth Investment - The company’s growth investment increased from $55 million in 2023 to $122 million in 2024, with 80% financed by its Synthetic Agent partner[15] - Sales and marketing expenses for the year were $166.3 million, a significant increase of 63.2% from $101.9 million in 2023[96] Operational Metrics - Adjusted EBITDA for Q4 2024 was $(23.8) million, an improvement from $(51.7) million in Q4 2023[135] - Adjusted EBITDA loss was ($23.8) million, an improvement from ($28.9) million in Q4 2023[60] - The gross loss ratio decreased to 63% in Q4 2024, down from 79% in Q4 2023[141] - Adjusted gross profit margin improved to 29% in Q4 2024, compared to 20% in Q4 2023[130] - The ratio of adjusted gross profit to gross earned premium improved to 21% in 2024, up from 14% in 2023[106]

Core Viewpoint - Analysts expect Lemonade (LMND) to report a quarterly loss of $0.60 per share, reflecting a year-over-year increase of 1.6%, with revenues projected at $144.95 million, up 25.5% from the previous year [1] Earnings Estimates - The consensus EPS estimate has been revised 31.2% lower over the last 30 days, indicating a collective reevaluation by analysts [1][2] - Changes in earnings estimates are crucial for predicting investor reactions and have shown a strong correlation with short-term stock performance [2] Key Metrics Forecast - Analysts project 'Net investment income' to reach $8.69 million, a year-over-year increase of 22.4% [4] - 'Ceding commission income' is expected to be $23.40 million, reflecting a 27.2% increase year-over-year [4] - 'Commission income' is forecasted at $9.16 million, indicating a significant year-over-year change of 50.1% [4] Premium and Loss Ratios - The average estimate for 'Net earned premium' is $103.90 million, showing a year-over-year change of 23.8% [5] - The consensus for 'In force premium (end of period)' is $945.59 million, compared to $747.30 million a year ago [5] - Analysts estimate the 'Gross loss ratio' to be 73.2%, down from 77% in the previous year [5] - The estimated 'Net loss ratio' is 73.7%, compared to 78% reported in the same quarter last year [6] Customer Metrics - The consensus among analysts predicts 'Customers (end of period)' to reach 2,382,044, up from 2,026,918 a year ago [6] - 'Premium per Customer (end of period)' is expected to be $397.10, compared to $369 in the same quarter last year [7] Market Performance - Lemonade shares have returned +4.1% over the past month, contrasting with the Zacks S&P 500 composite's -0.5% change [7] - With a Zacks Rank 3 (Hold), LMND is anticipated to mirror overall market performance in the near future [7]

Core Viewpoint - Lemonade has shown significant recovery and growth potential after a steep decline in stock price, with nearly 80% gain in the past three months, driven by positive earnings results and an optimistic investor day presentation [2][3]. Financial Performance - The third quarter earnings report highlighted progress towards profitability, with positive cash flow and expectations for adjusted EBITDA profitability by 2026 [4]. - Lemonade's in-force premium grew by 24% year over year, an acceleration from the previous year's 18% growth rate [5]. - The gross loss ratio improved to 73%, surpassing management's target for the first time, and gross profit margin expanded by eight percentage points year over year [5]. Growth Strategy - Management aims to scale in-force premium from $1 billion to $10 billion, with auto insurance expected to be a major growth driver [5][6]. - Lemonade has previously grown its business tenfold in six years and believes it can achieve a 30% annualized growth rate, potentially reaching the $10 billion target in less than nine years [7]. Future Potential - If Lemonade can accelerate its growth rate towards the 30% target and maintain a loss ratio below 75% for several quarters, there could be further upside for the stock [8].

Core Insights - The current tech revolution is centered around artificial intelligence (AI), which is projected to add $15.7 trillion to the global economy by 2030, potentially surpassing the value created during the early internet boom [2] Group 1: Upstart - Upstart has seen its stock price increase by 235% over the last two years, yet it remains 85% below its record high from 2021, indicating significant volatility in the AI market [4] - The company utilizes an AI-powered algorithm that analyzes over 1,600 data points to assess borrowers, resulting in double the number of loan approvals at an average interest rate that is 38% cheaper compared to traditional methods [5] - In Q3 2024, Upstart originated 186,786 unsecured personal loans, a 65% increase year-over-year, with projected revenue of $599 million for the full year, marking a 16% increase from 2023 [7] - Analysts predict Upstart's revenue could rise by 37% to $820 million in 2025, with a significant growth opportunity in the $3 trillion U.S. loan market [8] - To reclaim its record high from 2021, Upstart's stock would need to increase by 603%, highlighting the risks associated with its current valuation and market conditions [9] Group 2: Lemonade - Lemonade's stock has increased by 191% from its 2023 low but remains 81% below its record level from 2021, reflecting the volatility in the insurance sector [10] - The company serves over 2.3 million customers and utilizes AI to streamline the insurance process, allowing quotes in 90 seconds and claims processing in three minutes [11] - Lemonade's in-force premium (IFP) reached a record high of $889 million in Q3 2024, a 24% increase from the previous year, demonstrating effective scaling despite a 7% reduction in workforce [13] - The gross loss ratio improved to 73%, the best in four years, indicating the success of Lemonade's AI models [14] - The company aims to exceed $1 billion in IFP by early 2025 and plans to grow this figure by 30% annually, potentially reaching $10 billion in nine years [15] - With 70% of its customers under 35 years old, Lemonade is well-positioned to capture a younger demographic, which could lead to long-term financial growth [16] - Theoretically, if Lemonade achieves its growth targets, its stock could increase tenfold, providing substantial returns for long-term investors [17]