Lemonade(US:LMND)2025-05-06 20:46Financial Performance - Total revenue for Q1 2025 was $151.2 million, a 27% increase from $119.1 million in Q1 2024[22]. - Net earned premium increased to $104.3 million in Q1 2025, up 24% from $84.4 million in Q1 2024[22]. - Net loss for Q1 2025 was $62.4 million, compared to a net loss of $47.3 million in Q1 2024, representing a 32% increase in losses[22]. - Total expenses for Q1 2025 were $212.6 million, a 29% increase from $164.3 million in Q1 2024[22]. - The adjusted gross profit for Q1 2025 was $46.0 million, compared to $36.7 million in Q1 2024, representing an increase of approximately 25.3%[140]. - The gross profit margin decreased to 26% in Q1 2025 from 29% in Q1 2024[140]. - The net loss for the three months ended March 31, 2025, was $(62.4) million, compared to $(47.3) million in the same period of 2024[140]. - The gross loss ratio improved slightly to 78% in Q1 2025 from 79% in Q1 2024[140]. Assets and Liabilities - Total assets as of March 31, 2025, were $1,856.6 million, slightly up from $1,849.1 million as of December 31, 2024[19]. - Total liabilities increased to $1,311.1 million as of March 31, 2025, compared to $1,255.7 million as of December 31, 2024[19]. - Stockholders' equity decreased to $545.5 million as of March 31, 2025, down from $593.4 million at the end of 2024[19]. - Cash, cash equivalents, and restricted cash decreased to $319.7 million from $385.7 million at the end of 2024, a decline of 17%[28]. - The company’s cash and cash equivalents as of March 31, 2025, were $309.2 million, down from $376.0 million as of December 31, 2024, a decrease of approximately 17.7%[36]. - As of March 31, 2025, the total fair value of financial assets was $676.1 million, an increase from $634.9 million as of December 31, 2024, representing a growth of approximately 6.5%[49]. Investment Performance - The company's net investment income for the three months ended March 31, 2025, was $9.5 million, an increase of 25% compared to $7.6 million for the same period in 2024[43]. - Investments in fixed maturities had a fair value of $655.6 million as of March 31, 2025, compared to $607.4 million as of December 31, 2024, representing an increase of approximately 7.9%[40]. - The company reported pre-tax net realized capital losses of less than $0.1 million for both the three months ended March 31, 2025, and March 31, 2024[44]. - The investment portfolio is primarily composed of fixed income securities issued by the U.S. government and government agencies, with a focus on short durations[204]. - As of March 31, 2025, none of the company's fixed maturity securities were unrated or rated below investment grade[206]. Customer and Market Growth - As of March 31, 2025, the company had 2,545,496 customers, an increase from 2,095,275 customers at the end of March 2024, representing a growth of approximately 21.5%[140]. - The in-force premium at the end of March 2025 was $1,007.8 million, up from $794.2 million in March 2024, indicating a growth of about 26.8%[140]. - Gross written premium for the U.S. market was $244.8 million in Q1 2025, representing 96.3% of total gross written premium, compared to $202.5 million or 98.5% in Q1 2024[99]. - The company operates in a single reportable segment, providing personal property and casualty insurance products primarily in the U.S. and Europe, including the UK[96]. Expenses and Costs - Sales and marketing expense increased by $12.8 million, or 42%, to $43.2 million for the three months ended March 31, 2025, primarily due to brand and performance advertising[168]. - General and administrative expense increased by $6.1 million, or 20%, to $35.9 million for the three months ended March 31, 2025, with interest expense related to borrowings increasing significantly[170]. - Other insurance expense rose by $8.8 million, or 51%, to $26.1 million for the three months ended March 31, 2025, driven by growth in earned premium and California FAIR Plan assessment charges[167]. Reinsurance and Risk Management - The overall share of proportional reinsurance under the Reinsurance Program is approximately 55% of premium, with a per risk cap of $750,000[61]. - The reinsurance program effective July 1, 2023, ceded approximately 55% of premium, with a limit of $5,000,000 per occurrence for non-hurricane catastrophe losses[114]. - The company aims to minimize volatility in its business model through reinsurance and a "Giveback" program, which donates excess premiums to nonprofits selected by customers[104]. Tax and Compliance - The consolidated effective tax rate was (1.7)% for the three months ended March 31, 2025, compared to (4.7)% for the same period in 2024[87]. - Unrecognized tax benefits related to tax positions decreased to $10.0 million as of March 31, 2025, from $14.3 million as of March 31, 2024, a decline of 30.4%[88]. - The company does not believe it is a party to any pending legal proceedings likely to have a material adverse effect on its business[213]. Future Outlook - The company expects to continue investing in technology development to enhance existing products and develop new ones, which will drive long-term profitability[133]. - The company expects existing cash and cash equivalents to be sufficient to meet working capital and liquidity needs over the next 12 months[187]. - The company does not have any current plans for material capital expenditures beyond current operating requirements[199].