Insurtech Lemonade, a digital insurance

Insurtech Lemonade has reported a net loss in Q1 2024 of $47.3 million, marking an improvement of 28% on last year’s figure, while its in-force premium (IFP) grew 22% year on year (YoY) to $794 million and gross loss ratio refined 8 points to 79%.

In Q1 2024, Lemonade reported a gross earned premium of $187.9 million, a 22% increase from $154.2 million in Q1 2023, attributed primarily to the rise in IFP earned during the quarter.

The company’s total revenue for the same period reached $119.1 million, up 25% from $95.2 million in the previous year, driven by gains in gross earned premium, ceding commission income, and net investment income.

The gross profit for the first quarter of 2024 stood at $34.7 million, a significant 110% increase from $16.5 million in Q1 2023.

The adjusted EBITDA loss improved by 33% to $33.9 million, compared to a loss of $50.8 million in the corresponding quarter of the previous year.

Insurtech Lemonade released Q1 2024 results

Insurtech Lemonade released Q1 2024 results:
  • Revenue: Q1 2024 revenue increased 25% year-over-year to $119 million.
  • Net Loss: Q1 net loss improved to $47 million, a 28% better performance compared to Q1 2023.
  • Earnings Per Share (EPS): Loss of $0.67 per share in Q1 2024, improved from a loss of $0.95 per share in Q1 2023.
  • Adjusted EBITDA: Loss reduced by 33% to $34 million in Q1 2024 from $51 million in Q1 2023.
  • Gross Profit: Increased by 110% to $35 million in Q1 2024 from the previous year.
  • Gross Loss Ratio: Improved to 79% in Q1 2024 from 87% in Q1 2023.
  • Premium per Customer: Rose by 8% to $379.
  • Annual Dollar Retention (ADR): Increased to 88%, up by 1 percentage point from last year.
  • Gross Earned Premium: Grew 22% to $188 million in Q1 2024.
  • Operating Expenses: Increased only 2% year-over-year to $98 million, despite significant revenue growth.
  • Headcount: Reduced by 11% year-over-year, aligning with efficiency improvements.
  • Cash Flow: Projected to be net cash flow positive by the end of 2024.

Looking ahead to the end of 2024, Lemonade projects a continued growth trajectory. The company expects the in-force premium to be between $940 million and $944 million, reflecting a 26% year-over-year increase.

Similarly, it forecasts a gross earned premium ranging from $818 million to $822 million, up about 22% from the previous year.

Positive Points

  • Top-line growth of 22% year-over-year, indicating strong revenue increase.
  • Adjusted EBITDA loss improved by 33%, showing better operational efficiency.
  • Gross profit more than doubled compared to the previous year, highlighting effective cost management and operational leverage.
  • Quarterly loss ratio improved to 79%, down from 87% the previous year, reflecting better claims management and underwriting precision.
  • Projected to be net cash flow positive by the end of the year, driven by technological advancements and operational efficiencies.

Negative Points

  • Despite improvements, the company still reported a net loss of $47 million for the quarter.
  • Operating expenses, excluding loss and loss adjustment expense, increased by 2% year-over-year, indicating ongoing costs that could impact profitability.
  • Total sales and marketing expense increased by 8%, which could pressure the operating margins if not accompanied by proportional revenue growth.
  • The company is still navigating through the complexities of rate filings and regulatory approvals, which can impact growth and operational flexibility.

Revenue is anticipated to reach between $511 million and $515 million, marking a 20% growth.

Lemonade predicts an improvement in adjusted EBITDA loss, estimating a reduction to between $155 million and $151 million, which represents a 13% improvement from the previous year.

Peter Sonner   by Peter Sonner