Lemonade rallies on strong results, shows AI is paying off
Insurtech cuts claims costs, boosts premiums 31%, and tops $5B valuation.
Lemonade ended 2025 with the positive momentum that characterized it throughout the year. The Israeli insurtech company’s stock jumped 15% in pre-market trading on Wall Street on Thursday after publishing strong fourth-quarter and full-year results. The company’s market value now exceeds $5 billion, after the stock gained 70% over the past 12 months.
At a time when investors are concerned that artificial intelligence could disrupt many software companies, Lemonade is showing tangible signs that it is successfully leveraging AI to its advantage. Over the past 13 quarters, the company has reduced its workforce by 6% while adding 1.2 million new customers. It has also significantly lowered the cost of processing pet insurance claims, cutting the average cost by 68%, from $44 to $14.
In addition to pet insurance, Lemonade sells homeowners, renters, and auto insurance policies across several U.S. states. As the company has expanded, it has improved its loss ratio, which declined to 52% in the fourth quarter, compared with 62% in the previous quarter, reflecting improved underwriting performance.
In the fourth quarter, gross premiums grew 31% to $1.24 billion, while revenue increased 53% to $228 million. For full-year 2025, revenue reached $738 million, up from $526 million in 2024. By year-end, Lemonade had 3 million customers, a 23% increase compared to the end of 2024.
Profitability remains Lemonade’s main challenge. The company reported a net loss of $165 million in 2025, an improvement from a loss of $202 million in 2024.
Looking ahead to 2026, Lemonade expects continued growth, projecting a 33% increase in gross premiums to $1.6 billion. Revenue is forecast to reach approximately $1.36 billion, although the company expects to remain unprofitable. Adjusted EBITDA loss is projected at $48-52 million, representing roughly a 50% improvement compared to 2025.
