Lemonade(US:LMND)2023-08-03 16:00Financial Performance - Total revenue for Q2 2023 was $104.6 million, a 109% increase compared to $50.0 million in Q2 2022[24] - Net earned premium for Q2 2023 was $76.5 million, up from $31.2 million in Q2 2022, representing a 145% growth[24] - Net loss for Q2 2023 was $67.2 million, slightly improved from a net loss of $67.9 million in Q2 2022[24] - For the six months ended June 30, 2023, the net loss was $133.0 million, a slight improvement from a net loss of $142.7 million in the same period of 2022[30] - Adjusted EBITDA for Q2 2023 was $(52.7) million, compared to $(50.3) million in Q2 2022, indicating a slight increase in losses[161] - Adjusted EBITDA for the six months ended June 30, 2023, was $(103.5) million, compared to $(107.7) million for the same period in 2022[206] Assets and Liabilities - Total assets decreased to $1,613.1 million as of June 30, 2023, down from $1,690.7 million as of December 31, 2022[21] - Stockholders' equity decreased to $771.0 million as of June 30, 2023, compared to $866.8 million as of December 31, 2022[21] - Cash, cash equivalents, and restricted cash decreased to $193.8 million as of June 30, 2023, down from $286.5 million as of December 31, 2022[21] - Total liabilities increased to $842.1 million as of June 30, 2023, compared to $823.9 million as of December 31, 2022[21] Investment and Cash Flow - Cash flows from operating activities resulted in a net cash used of $96.7 million, compared to $79.7 million in the prior year[30] - The total cash, cash equivalents, and restricted cash at the end of the period was $193.8 million, down from $286.5 million at the beginning of the period[37] - Net investment income increased by $4.4 million, or 367%, to $5.6 million for the three months ended June 30, 2023, primarily due to a diversified investment portfolio[169] - Cash provided by investing activities was $4.4 million for the six months ended June 30, 2023, compared to cash used of $13.0 million in the same period of 2022[216][217] Premiums and Underwriting - Gross written premium for the three months ended June 30, 2023, was $181.9 million, a significant increase from $126.1 million in the same period of 2022[103] - Net written premium increased by $49.6 million, or 130%, to $87.8 million for the three months ended June 30, 2023, driven by a $55.8 million, or 44%, increase in gross written premium[165] - Ceding written premium increased by $6.2 million, or 7%, to $94.1 million for the three months ended June 30, 2023, primarily due to growth across all products offset by a reduction in participation under Proportional Reinsurance Contracts[164] Expenses - Technology development expenses rose to $24.1 million in Q2 2023, compared to $17.8 million in Q2 2022[24] - General and administrative expense increased by $12.8 million, or 25%, to $63.4 million for the six months ended June 30, 2023, with significant increases in depreciation and occupancy costs[192] - Other insurance expense rose by $9.8 million, or 52%, to $28.6 million for the six months ended June 30, 2023, driven by increased professional fees and acquisition costs[189] Customer Metrics - The number of customers at the end of the period increased to 1,906,408 in Q2 2023, up from 1,579,936 in Q2 2022, representing a year-over-year growth of 21%[146] - In force premium (IFP) reached $686.6 million in Q2 2023, compared to $457.6 million in Q2 2022, marking a 50% increase[146] - Premium per customer increased to $360 in Q2 2023 from $290 in Q2 2022, reflecting a year-over-year growth of 24%[146] Reinsurance - The company maintained proportional reinsurance contracts covering all products and geographies, transferring a specified percentage of the premium to reinsurers[66] - The overall share of proportional reinsurance under the new Reinsurance Program is approximately 55% of premium, with a Per Risk Cap of $750,000[69] - The company decreased the overall share of proportional reinsurance from 75% to 70% effective July 1, 2021, and further to 55% effective July 1, 2022[120] Acquisitions - The acquisition of Metromile was completed on July 28, 2022, for a total purchase consideration of $137.7 million, which included 6,901,934 shares of Lemonade's common stock[39][40] - Metromile contributed $40.3 million in revenue and a net loss of $16.2 million to Lemonade's consolidated results for the six months ended June 30, 2023[45] - The Company completed the acquisition of Metromile, issuing 6,901,934 shares of common stock to Metromile stockholders[75] Future Outlook - The company expects that sales and marketing costs will decrease as a percentage of revenue in the long term as customer acquisition efficiencies improve and the proportion of renewals increases[136] - The company anticipates the effects of inflation impacting its investment portfolio, product pricing, and estimating reserves for unpaid claims and claim expenses[115] - Seasonal patterns are expected to impact customer acquisition rates and claims, with greater demand for insurance coverage typically seen in the third quarter[110]