Lemonade(LMND) - 2024 Q4 - Annual Results

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]