Lemonade Q4 Earnings Call Highlights

Core Insights - Lemonade has launched an autonomous auto insurance product designed for vehicles transitioning from human to AI operation, starting with Teslas, which reflects a shift in traditional auto insurance pricing models [2][5] - The company reported a record gross profit of $111 million, a 73% year-over-year increase, and narrowed its adjusted EBITDA loss to $5 million, indicating progress towards profitability [4][5] - Lemonade generated $37 million in positive adjusted free cash flow in Q4, marking the second consecutive year of increased cash reserves [3][10] Financial Performance - In-force premium (IFP) rose to $1.24 billion, up 31% year-over-year, with revenue growing 53% to $228 million [5][9] - The adjusted gross profit increased 69% to $112 million, with a gross margin of 48% and an adjusted gross margin of about 49% [9] - Customer growth was 23%, adding approximately 550,000 new customers, representing a 35% increase from the previous year [7] Investment and Growth Strategy - The company is focusing on AI-driven initiatives to enhance pricing, cross-selling, and overall market execution, aiming to build competitive advantages [13][15] - Management plans to invest significantly in engineering efforts, including a revamped local platform and a cross-selling platform [15] - Cross-selling is identified as an efficient growth lever, with over 5% of customers holding multiple policies, contributing to nearly 20% of IFP [16] Future Guidance - Lemonade anticipates 32% year-over-year top-line growth for Q1 and approximately 60% full-year revenue growth for 2026, with positive adjusted EBITDA expected in Q4 2026 [12] - The company is preparing for an Investor Day scheduled for November to share updates on its vision and AI capabilities [20]