Lemonade (LMND) investor relations material

Executive summary

• Achieved 11 consecutive quarters of accelerating in-force premium (IFP) growth, reaching $1.43 billion and over 3 million customers, with revenue up 79% to $294 million.

• Leveraged AI to drive price leadership, operational efficiency, and customer satisfaction, positioning as a preferred brand among younger insurance buyers.

• Gross profit rose 76% year-over-year to $113 million, and adjusted EBITDA loss improved 54% to $19 million, with positive adjusted EBITDA expected in Q4 2026 and full-year 2027.

• Raised guidance for gross earned premium and revenue, while reiterating IFP and EBITDA guidance.

• Announced CFO transition: Tim Bixby to join the Board, Nick Stead to become CFO at year-end.

• Entered a New Business Financing Agreement with Hannover Re (Ireland) DAC to provide up to $250 million in capital for sales and marketing growth, with a $150 million cap for 2027 and $250 million for 2028.

Financial highlights

• Revenue grew 79% year-over-year to $294 million; gross profit increased 76% to $113 million.

• Adjusted gross profit was $114 million, with gross margin at 38% and adjusted gross margin at 39%.

• Adjusted EBITDA loss improved to $19 million from $41 million in the prior year.

• Net loss was $43 million ($0.56 per share), a 22% year-over-year improvement excluding prior year tax benefit.

• Adjusted free cash flow positive for the fifth consecutive quarter at $19 million.

• IFP more than doubled since Q2 2023, with quarterly year-over-year growth rates consistently above 18%.

• Ended the quarter with $1.2 billion in cash and investments.

Outlook and guidance

• Q3 and full-year 2026 guidance: 33% IFP growth, 69% Q3 revenue growth, 65% full-year revenue growth.

• Positive adjusted EBITDA expected in Q4 2026, with implied Q4 adjusted EBITDA of $8 million.

• Plans to grow IFP from $1B to $10B by maintaining current strategies, targeting 30%+ IFP growth and sustainable industry-leading gross profit growth.

• Expect IFP growth to outpace spend growth from 2027 onward, driving operating leverage and profitability.

• Car insurance and product bundling expected to be major growth drivers in the next phase.