GICS Sector : Financial Services
Lemonade, Inc.provides various insurance products in the United States and Europe.Its insurance products include stolen or damaged property, and personal liability that protects its customers if they are responsible for an accident or damage to another person or their property.
Lemonade's Q3 2025 earnings report revealed a robust financial performance, with revenue growing 42% year-on-year to $195 million, driven by a 30% increase in in-force premium to $1.16 billion. The company's gross margin expanded to 41%, resulting in a gross profit of $80 million, more than double the previous year's figure. The adjusted EBITDA loss improved by about 50% to a loss of $26 million. The company's EPS loss was $0.51, beating estimates of $0.72. The strong top-line growth was accompanied by improving profitability metrics, with the gross loss ratio declining to 62%, the lowest ever recorded by the company.
Publication Date: Nov -29
The growth in in-force premium was driven by a 24% increase in customer numbers and a 5% rise in premium per customer. The company's car insurance product saw significant growth, with a 40% increase in the quarter, driven by existing customers, effectively resulting in "CAC-less" acquisition. This growth is transformative for the car's unit economics, as is the 16% year-on-year improvement in car's loss ratio, which came in at 76%. The company's investments in automation have paid off, with a superior level of efficiency resulting in an LAE of 7% on average across all products.
To understand what's priced into Lemonade's stock, we can examine some key valuation metrics. The company's Price-to-Book Ratio stands at 10.91, while the Price-to-Sales Ratio is 9.53. The EV/EBITDA ratio is -29.12, indicating that the company's valuation is sensitive to its EBITDA performance. Given the significant growth in revenue and improving EBITDA loss, these metrics suggest that the market is pricing in a high level of growth for the company.
Lemonade raised its full-year 2025 guidance across in-force premium, gross earned premium, revenue, and EBITDA loss. The company expects to continue its growth trajectory, with in-force premium at December 31 expected to be between $1.218 billion and $1.223 billion. As Daniel Schreiber mentioned, the company is focused on maximizing gross profit dollars rather than taking its foot off the pedal, and is willing to let loss ratio rise in certain segments to spike demand and retention. Analysts estimate next year's revenue growth at 59.4%, indicating a high level of confidence in the company's growth prospects.
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Nov -22
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Lemonade's 13% growth in Insurance and Related Activities is driven by increasing adoption of digital insurance platforms, expansion into new markets, and a growing demand for personalized and affordable insurance products. Additionally, the company's AI-powered underwriting and claims processing, as well as its social impact initiatives, contribute to its growth momentum.
Lemonade's renters insurance provides coverage for personal property, liability, and additional living expenses in case of unexpected events.
Lemonade's homeowners insurance provides coverage for homes, personal property, and liability, with options for flood and earthquake insurance.
Lemonade's condo insurance provides coverage for personal property, liability, and shared building spaces, with options for flood and earthquake insurance.
Lemonade's co-op insurance provides coverage for co-op owners, including personal property, liability, and shared building spaces.
Lemonade's pet insurance provides coverage for veterinary expenses, including accidents, illnesses, and routine care.
Lemonade's term life insurance provides coverage for a specified period, with options for level term life insurance and decreasing term life insurance.
Lemonade, Inc. has a unique product that is not easily substitutable, as it is a premium product with a strong brand reputation.
Lemonade, Inc. has a large customer base, but customers do not have significant bargaining power due to the company's strong brand reputation and premium product offerings.
Lemonade, Inc. has a diversified supplier base, and suppliers do not have significant bargaining power due to the company's large scale of operations.
The lemonade industry is highly competitive, and new entrants can easily enter the market with low barriers to entry, posing a significant threat to Lemonade, Inc.'s market share.
The lemonade industry is highly competitive, with many established players, leading to intense rivalry and competition for market share.
| Value | |
|---|---|
| Debt Weight | 8.76% |
| Debt Cost | 3.95% |
| Equity Weight | 91.24% |
| Equity Cost | 13.05% |
| WACC | 12.25% |
| Leverage | 9.61% |
Value: 7.7
Growth: 6.4
Quality: 9.0
Yield: 1.0
Momentum: 9.5
Volatility: 2.7
1-Year Total Return ->
Value: 6.6
Growth: 8.6
Quality: 7.2
Yield: 0.0
Momentum: 9.5
Volatility: 1.0
1-Year Total Return ->
Value: 7.5
Growth: 4.9
Quality: 5.8
Yield: 6.0
Momentum: 3.5
Volatility: 4.3
1-Year Total Return ->
Value: 6.1
Growth: 2.9
Quality: 7.1
Yield: 0.0
Momentum: 9.5
Volatility: 5.7
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Value: 3.0
Growth: 8.4
Quality: 6.6
Yield: 0.0
Momentum: 7.0
Volatility: 5.3
1-Year Total Return ->
Value: 6.4
Growth: 7.0
Quality: 4.1
Yield: 0.0
Momentum: 10.0
Volatility: 1.0
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