Insurtech Lemonade reported a net loss of $43.7 mn in the third quarter of 2026, compared with $37.5 mn a year earlier, as higher operating expenses accompanied accelerating premium and revenue growth.
Revenue increased 73% to $336.1 mn, supported by higher gross earned premium and improved premium retention following reduced quota-share reinsurance cessions. In-force premium (IFP) reached $1.55 bn, representing 34% annual growth and the company’s 12th consecutive quarter of accelerating IFP growth.
- Lemonade’s Q3 2026 revenue rose 73% to $336.1 mn, while in-force premium increased 34% to $1.55 bn and its customer base expanded 23% to 3.52 mn.
- Net loss widened to $43.7 mn from $37.5 mn, although adjusted EBITDA loss narrowed to $20.4 mn and gross profit increased 48% to $118.1 mn.
- The insurer expects its first positive adjusted EBITDA quarter in Q4 2026 and its first full year of positive adjusted EBITDA in 2027, supported by geographic expansion and AI-driven efficiencies.
For the first nine months of 2026, Lemonade reduced its cumulative net loss to $122.9 mn from $143.8 mn in the corresponding period of 2025. Nine-month revenue increased to $888.5 mn from $509.8 mn.
The company reiterated its expectation of reaching positive adjusted EBITDA in the fourth quarter of 2026, followed by its first full year of positive adjusted EBITDA in 2027.
Lemonade Q3 2026 financial results
Gross earned premium increased 33% to $364.1 mn, compared with $274.7 mn in the previous year. Gross profit rose 48% to a quarterly record of $118.1 mn, while adjusted gross profit advanced 49% to $120.5 mn.
The adjusted EBITDA loss narrowed to $20.4 mn from $25.6 mn, reflecting higher gross profit partially offset by increased spending on customer acquisition and other operating costs.
Operating expenses excluding net loss and loss adjustment expenses rose 36% to $191.9 mn from $141.2 mn.
Sales and marketing expenses increased to $82.7 mn from $57.4 mn as Lemonade expanded investment in customer acquisition. Growth spending alone reached $70.6 mn, compared with $46.1 mn a year earlier.
Stock-based compensation increased by $6.1 mn to $23.2 mn, primarily due to multiyear equity awards granted to executives and founders earlier in 2026. Interest expenses also increased.
The company expects IFP growth to substantially exceed growth spending increases beginning in Q4 2026, improving operating leverage.
| Financial metric | Q3 2026 | Q3 2025 |
|---|---|---|
| Revenue | $336.1 mn | $194.5 mn |
| In-force premium | $1.55 bn | $1.16 bn |
| Gross earned premium | $364.1 mn | $274.7 mn |
| Gross profit | $118.1 mn | $79.9 mn |
| Adjusted gross profit | $120.5 mn | $80.9 mn |
| Net loss | ($43.7 mn) | ($37.5 mn) |
| Adjusted EBITDA | ($20.4 mn) | ($25.6 mn) |
| Adjusted free cash flow | $27.0 mn | $18.1 mn |
| Gross loss ratio | 65% | 62% |
Lemonade’s gross profit margin declined to 35% from 41%, although its adjusted gross profit as a percentage of gross earned premium improved to 33% from 29%. Net loss per share was $0.56, compared with $0.51 in Q3 2025.
Customer growth and insurance underwriting performance
Lemonade’s customer base expanded 23% to 3,520,555 policyholders at September 30, 2026, compared with 2,869,900 a year earlier.
Average annualized premium per customer increased 9% to $440 from $403. Annual dollar retention improved to 86%, up one percentage point from both the previous quarter and Q3 2025.
The company’s insurance portfolio continued expanding across homeowners, renters, pet and auto coverage.
Pet insurance remained the largest component of IFP, reaching $603 mn, followed by homeowners multi-peril at $573 mn and car insurance at $265 mn. European operations contributed $83 mn, while other products accounted for $27 mn.
Underwriting results were mixed. The gross loss ratio increased to 65% from 62% a year earlier, while the trailing 12-month gross loss ratio improved to 60% from 67% in Q3 2025.
The gross loss ratio excluding catastrophe losses reached 63%, compared with 56% a year earlier.
By product, homeowners multi-peril recorded a 50% gross loss ratio, compared with 51% in Q3 2025. Car insurance improved to 63% from 76%, while pet insurance deteriorated to 75% from 69%.
The European portfolio recorded a 104% gross loss ratio, compared with 70% a year earlier. The net loss ratio remained unchanged at 64%.
Lemonade expands car insurance to 14 US states
Lemonade accelerated geographic expansion during 2026, introducing 25 new product-state combinations. Its renters insurance product achieved nationwide availability, which the company expects to support distribution partnerships that previously required broader geographic coverage.
Following launches in Missouri, Florida and Pennsylvania, Lemonade’s car insurance product is available in 14 states covering more than 50% of the US population.
The insurer attributed faster expansion to Lemonade OS, its proprietary technology platform, which allows new markets and insurance products to be introduced with less incremental operating overhead.
Lemonade Autonomous Car has also expanded to six states. The company recently extended eligibility to Tesla vehicles equipped with earlier-generation HW3 hardware and updated software.
Customers using Tesla’s supervised Full Self-Driving system receive a 30% lower rate for miles driven with the technology engaged on HW3 vehicles. For newer HW4-equipped vehicles, the corresponding discount is 50%.
Lemonade reported early conversion rates for its autonomous car product exceeding twice those typically recorded for its broader auto insurance offering.
AI efficiencies support Lemonade’s operating leverage
Lemonade ended September with 1,321 employees, down 1% from the preceding quarter.
The company said its workforce is now smaller than four years earlier, despite increasing IFP by more than 2.5 times and approximately doubling its customer base.
Management attributed part of this productivity improvement to AI applications and automation across its operations.
Lemonade also identified personal AI agents as a potential future distribution channel for insurance. As consumers increasingly delegate purchasing decisions to AI systems, the insurer expects competition to place greater emphasis on premiums, coverage and service quality rather than traditional brand recognition and distribution networks.
The company is developing additional capabilities to support insurance transactions conducted through AI agents and plans to provide more information at its November 17 investor day in New York.
Lemonade raises 2026 revenue and premium guidance
Lemonade maintained its full-year IFP forecast while increasing its revenue and gross earned premium guidance.
For Q4 2026, the company expects revenue between $342 mn and $346 mn, gross earned premium of $379 mn-$383 mn and IFP of $1.632 bn-$1.639 bn.
Adjusted EBITDA is forecast to turn positive, reaching $5 mn-$9 mn in the final quarter. For the full year, Lemonade projects revenue of $1.231 bn-$1.235 bn and gross earned premium of $1.382 bn-$1.386 bn.
| Financial guidance | Q4 2026 | Full year 2026 |
|---|---|---|
| In-force premium | $1.632-$1.639 bn | $1.632-$1.639 bn |
| Gross earned premium | $379-$383 mn | $1.382-$1.386 bn |
| Revenue | $342-$346 mn | $1.231-$1.235 bn |
| Adjusted EBITDA | $5-$9 mn | ($51)-($47) mn |
| Stock-based compensation | $24 mn | $93 mn |
The company expects adjusted EBITDA to remain negative for 2026 overall, with a projected full-year loss of $47 mn-$51 mn. Management nevertheless maintains its forecast of positive adjusted EBITDA for the full year 2027.
Cash flow and capital position
Lemonade reported $27 mn in adjusted free cash flow during Q3 2026, an improvement of $8.9 mn from the previous year.
Operating cash flow increased to $7.3 mn from $4.5 mn. Free cash flow before financing-related adjustments was $1.9 mn, compared with $2.6 mn in Q3 2025.
For the first nine months of 2026, operating cash flow turned positive at $3.3 mn, compared with an outflow of $37.2 mn a year earlier.
Adjusted free cash flow for the nine-month period increased to $63.2 mn from $12.1 mn. The company held approximately $1.2 bn in cash, cash equivalents and investments at September 30, including about $350 mn required as regulatory surplus at its insurance subsidiaries.
Total assets reached $2.09 bn, compared with $1.93 bn at the end of 2025. Stockholders’ equity declined to $471.8 mn from $533.6 mn over the same period.
Borrowings under financing agreements increased to $231.6 mn from $158.1 mn at year-end 2025.
Lemonade’s fourth-quarter outlook depends on continued premium expansion, improved marketing efficiency and operating leverage, with the company targeting its first positive adjusted EBITDA quarter before the end of 2026.
