Lemonade (LMND) Q2 2024 earnings summary

Executive summary

• Achieved 22% year-over-year top-line growth, with gross profit up 155% and adjusted EBITDA loss improving by 18%.

• Revenue grew 17% year-over-year to $122M for Q2 2024, driven by a 24% increase in gross written premium and 14% growth in customers.

• Net loss improved by 15% to $57.2M for Q2 2024, reflecting better loss ratios and reduced catastrophe impact.

• Q2 was net cash flow positive, with expectations for continued positive cash flow except for a one-off in Q4.

• Strategic focus on reducing CAT volatility by shifting product mix, geographic diversification, and selective underwriting.

Financial highlights

• In-force premium (IFP) grew 22% to $839M; customer count rose 14% to 2.2M.

• Premium per customer increased 8% to $387; annual dollar retention reached 88%.

• Gross earned premium up 22% to $200M; revenue up 17% to $122M year-over-year.

• Gross profit reached $30.8M, a 155% increase year-over-year; gross profit margin rose to 25% from 12% a year ago.

• Net loss of $57.2M ($0.81/share), a 15% improvement year-over-year; adjusted EBITDA loss of $43M, improved by 18%.

• Cash, cash equivalents, and investments at $931M at quarter end, up $4M sequentially.

Outlook and guidance

• Q3 2024: IFP expected at $875M–$879M, gross earned premium $208M–$210M, revenue $124M–$126M, adjusted EBITDA loss $58M–$56M.

• Full year 2024: IFP $940M–$944M, gross earned premium $818M–$822M, revenue $511M–$515M, adjusted EBITDA loss $155M–$151M.

• Guidance reflects planned non-renewal of $20M–$25M IFP in CAT-exposed homeowners, expected to boost medium-term profitability.

• Growth spend for 2024 expected between $100M–$110M, with Q3 as the highest spend quarter.

• Q4 2024 expected to be the only quarter with negative net cash flow due to seasonality.