Lemonade's revenue jumps 73%, but losses remain stubbornly high
The insurtech company reported $336 million in third-quarter revenue as its customer base expanded 23% and premiums continued to grow. But operating expenses rose 36% year over year, leaving Lemonade with a $44 million net loss despite its rapid expansion.
Insurtech company Lemonade reported accelerating growth in the third quarter, but continued to struggle to narrow its net losses as expenses climbed. Revenue reached $336 million, up 73% from the same quarter last year and ahead of analysts' expectations of $325 million. Gross premiums in force reached $1.55 billion, an increase of 34% year over year. The customer base grew 23% to 3.52 million, while the average premium per customer rose 9% to $440.
Despite the strong growth, Lemonade recorded a net loss of $44 million, broadly in line with the losses reported in recent quarters. Operating expenses climbed to $192 million, up $51 million, or 36%, from the third quarter of last year. They also increased by $10 million compared with the preceding quarter.
Lemonade, which offers home, renters, property, auto and pet insurance, attributed the higher expenses to a strategic decision to invest more heavily in marketing and customer acquisition. Excluding certain accounting items, its adjusted loss was $20 million, in line with analysts' expectations. Cash flow from operations was positive at $7 million. The company ended the quarter with $1.2 billion in cash, equivalent to roughly one-third of its market capitalization. Its shares have fallen 40% since the beginning of the year, leaving it with a market value of approximately $3.4 billion.
In its letter to investors, Lemonade highlighted the role of artificial intelligence in its operations, saying that the integration of AI tools has helped it handle a growing volume of business without a corresponding increase in staffing. The company had 1,321 employees at the end of the quarter, slightly fewer than in the previous quarter and below its headcount four years ago. Over that period, its premiums grew 2.5-fold and its customer base nearly doubled.
Management reaffirmed its target of achieving adjusted EBITDA profitability in the fourth quarter, while expecting premium growth to outpace the increase in marketing expenses. Lemonade also maintained its full-year revenue forecast of $1.2 billion, implying revenue of approximately $345 million in the final quarter of 2026. Its full-year adjusted loss is expected to total around $50 million.
