Lemonade Answering the Biggest Questions

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]