Lemonade: Solid Growth in Tough Quarter

Core Insights - Lemonade's fiscal Q1 2025 results exceeded Wall Street expectations for both revenue and earnings per share, indicating a positive trajectory for the company [3][8][10] Financial Performance - Revenue increased from $119.1 million in Q1 2024 to $151.2 million in Q1 2025, marking a 27% growth [2] - Earnings per share declined from -$0.67 to -$0.86, a 28% increase in losses, but still beat expectations [2] - In-force premiums rose by 26% year-over-year, surpassing $1 billion, reaching $1.0 billion [2][3] Customer Growth - The customer base grew by 21%, reaching 2.5 million, with premium per customer increasing by 4% to $396 [4] Underwriting and Loss Ratios - The gross loss ratio improved by 100 basis points to 78%, although it remains above the long-term goal of 75% [5][6] - The gross loss ratio for the trailing 12 months remained flat at 73% [6] Investment in Growth - Growth spending, including sales and marketing, nearly doubled to $38.1 million in the quarter [7] Market Reaction - Despite a year-to-date decline of 18% in shares, the positive earnings results led to an 8% increase in premarket trading [8] Future Outlook - The company maintains its guidance for positive adjusted free cash flow in 2025, despite challenges from natural disasters [10] - There is still a significant distance to achieve non-adjusted positive earnings and cash flow, but progress is being made [11]