Lemonade, Inc. LMND reported fourth-quarter 2023 operating loss of 61 cents per share, narrower than the Zacks Consensus Estimate of a loss of 79 cents as well as the year-ago loss of 93 cents per share.

Quarterly results reflect improved gross earned premiums, driven by an increase in in-force premium earned and lower expense.

Behind the Q4 Headlines

Revenues increased 30.6% year over year to $115.5 million, driven by an increase in gross earned premium and higher investment income. The top line beat the Zacks Consensus Estimate by 2.1%.

Lemonade, Inc. Price, Consensus and EPS Surprise

Lemonade, Inc. price-consensus-eps-surprise-chart | Lemonade, Inc. Quote

Gross earned premiums soared 20% year over year to $181 million, driven by an increase in in-force premiums earned.

Lemonade’s in-force premium of $747 million jumped 20%, driven by a 12% increase in the number of customers as well as a 7% increase in premium per customer.

Total operating expenses, excluding net loss and loss adjustment expense, decreased 5% year over year to $90 million, attributable to lower employee-related costs.

Adjusted EBITDA was negative $28.9 million, narrower than negative $51.7 million in the year-ago quarter, attributable to higher revenues, an improved loss ratio and lower operating expenses.

The gross loss ratio of 77 improved 1200 basis points year over year, while the net loss ratio improved 1900 basis points. Lemonade estimates the net loss ratio to be less than 75 in the long term.

 

Financial Update

Cash, cash equivalents and investments were $1 billion as of Dec 31, 2023, down 8.9% from 2022 end.

As of Dec 31, LMND had assets worth $1.6 billion, up 3.4% from the level at 2022 end.

Shareholder equity at 2023-end was $708.9 billion, down 18.2% from the 2022-end level.

Cash used in operations was $119.1 million in 2023, lower than $163 million used in 2022.

Q1 Guidance

In-force premium at quarter-end is projected between $789 million and $791 million. Gross earned premium is expected in the range of $183-$185 million. Lemonade expects revenues between $111 million and $113 million. Adjusted EBITDA loss is expected to be between $41 million and $43 million. Capital expenditure is estimated to be $2 million. Shares outstanding are estimated to be 70 million.

2024 View

Lemonade projects in-force premiums between $938 million and $942 million.

Gross earned premium is expected in the range of $815-$820 million.

Revenues are anticipated to be between $505 million and $510 million.

Adjusted EBITDA loss is expected to be in the range of $155-$160 million.

Capital expenditure is estimated to be $10 million. Stock-based compensation expense is estimated to be about $60 million.

Shares outstanding are estimated to be 71 million.