LMND

Image source: The Motley Fool. Wednesday, July 29, 2026 at 8:00 a.m. ET Chief Executive Officer and Co-Founder - Daniel Schreiber President and Co-Founder - Shai Wininger Chief Financial Officer - Timothy Bixby Senior Vice President of Finance - Nicholas Stead Operator: Hello, everyone. Thank you for joining us, and welcome to the Lemonade Second Quarter 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to the Lemonade team. Please go ahead. Unknown Executive: Good morning, and welcome to Lemonade's Second Quarter 2026 Earnings Call. Joining us on our call today is Daniel Schreiber, CEO and Co-Founder; Shai Wininger, President and Co-Founder; Tim Bixby, Chief Financial Officer; and Nick Stead, SVP Finance. A letter to shareholders covering the company's second quarter 2026 financial results is available on our Investor Relations website at lemonade.com/investor. I would like to remind you that management's remarks made on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent Form 10-K filed with the SEC and our more recent filings with the SEC. Any forward-looking statements made on this call represent our views only as of today, and we undertake no obligation to update them. We will be referring to certain non-GAAP financial measures on today's call, including adjusted EBITDA, adjusted free cash flow and adjusted gross profit, which we believe may be important to investors to assess our operating performance. Reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our letter to shareholders. Our letter to shareholders also includes information about our key performance indicators, including number of customers, in-force premium, premium per customer, annual dollar retention, gross earned premium, gross loss ratio, gross loss ratio ex CAT, trailing 12-month loss ratio and net loss ratio and a definition of each metric, why each is useful to investors and how we use each to monitor and manage our business. With that, I'll turn the call over to Daniel for some opening remarks. Daniel Schreiber: Good morning. I'm happy to report on another excellent quarter, marked by accelerating growth, strong underwriting performance and continued progress towards profitability. In-force premium reached $1.43 billion, growing about 32.5% year-over-year and extending our streak of accelerating growth to 11 consecutive quarters. Revenue grew even faster, increasing 79% to $294 million, and gross profit increased 76% year-over-year to a record $113 million. As a result, adjusted EBITDA loss improved 54% to $19 million, and we remain on track to deliver our first positive adjusted EBITDA quarter in Q4 this year, followed by positive adjusted EBITDA full year 2027. Against that backdrop, we remain confident in our outlook and are reiterating our guidance across IFP and EBITDA while raising our guidance for both gross earned premium and revenue. During the quarter, we also completed our annual reinsurance renewal as well as the extension of our synthetic agents program with important upgrades to each. As it relates to reinsurance, the renewed program modestly increases the share of premiums that we retain while meaningfully strengthening catastrophe protection, including named storm coverage that was largely absent under the expiring structure. The agreement related to our synthetic agent extension provides $0.25 billion in growth financing at roughly 9.8% cost and applies to growth spend in '27 and '28. This amounts to more than 6 percentage points improvement in our cost of capital, materially lowering expected interest expense on a go-forward basis. With the financing of our growth investment improving, let me turn to that spend and its efficiency. Over the past several years, we've substantially increased our growth investments while holding the LTV to CAC ratio stable at roughly 3x, no mean feat. Some of you have noted that this growth spend outpaced the corresponding growth in-force premium. The concern that I understand it is that this gap signals declining efficiency that each incremental growth dollar is buying less premium than once it did. It doesn't, and I'd like to walk you through why. With our direct-to-consumer distribution and predictive LTV models allocating that spend, we ratchet spending up and down and shifted from one product to geography to another in real time in pursuit of those sterling 3x returns. In 2023, as inflationary pressures shrank the opportunities for profitable spend, those controls naturally reduced our growth investments to about $55 million. We implemented rate changes to counter inflation. And as those came online, we added about $15 million of incremental growth spend each year. Now a similar dollar addition to a growing base produces a lower growth rate. So spend growth decelerates by construction. On the premium side, the dynamic pushes the other way. Growth spend is a flow. It's expensed and reset each year. The premium it buys is a stock. Cohorts stay on the books, layered on top of every cohort before them. So while spend growth decelerates, the premium of those dollars created keeps compounding, boosted further by our accelerating cross-sell. The bottom line is this, the observation is accurate, but it doesn't point to any underlying degradation in our efficiency. It's a mathematical artifact of our spending slowdown in response to inflation and our subsequent catch-up spending. Beginning in 2027 and beyond, we expect IFP growth to outpace spend growth, a key driver of operating leverage and profitability. And before I hand over, [indiscernible] this morning's other announcement. At year-end, after more than 9 years as our CFO, Tim Bixby will pass that baton on to Nick Stead, our Senior Vice President of Finance, and Tim will step up to Lemonade's Board of Directors. This transition was years in the making, instigated and paced by Tim himself. And today, almost all of our financial functions already report to Nick. So expect this handover to look like everything else Tim has engineered here, the capital raises, the IPO, 6 years or beat and raise, which is to say planned, disciplined and seamless. Congratulations to both Nick and Tim. With that, I'll hand over to Shai, who will cover a couple of key insights across the business. Over to you, Shai. Shai Wininger: Thanks, Daniel. First, I wanted to update on our LAE ratio, that is the cost of handling claims. This is a key metric when looking at insurance carrier efficiency with an industry average of around 9%. In the second quarter, we delivered our best ever LAE ratio result of 5%. This improvement is a continuation of a multiyear trend made by the growing use of our Lemonade OS technology, which drives AI across the claims operation. It is notable that the gains have been broad-based with record low LAE ratios in the quarter across each of our product lines. Beyond boosting our profitability and pricing power, the LAE ratio is a way to compare our efficiency versus other insurers. And what these numbers show today is that our competitors spend almost twice as much as we do on handling claims, and we're not done here by any means. Next, I wanted to touch on our expansion efforts. In the past 100 days, we launched 14 additional state product combinations, which included both a meaningful push towards nationwide availability for renters product as well as the launch of our autonomous car product in Colorado and Indiana. That's made possible by continued investment in our proprietary technology platform, which reduces the effort required to launch new products and enter new markets. We believe that nationwide availability in renters will unlock a much broader partnership opportunity with potential partners for whom that is a key requirement. On the road map, we expect to see more geographical expansion, most notably with regards to our car product. We have several state launches expected in the near term. And before the end of 2027, I believe our car product will be available to the majority of drivers in the United States. And with that, I hand it off to Tim, who will cover our financial performance in a bit more detail. Tim? Timothy Bixby: Thanks, Shai. Let's start with Q2 results, which were excellent. In-force premium grew more than 32% year-on-year to $1.43 billion, driven by customer growth of 23% and premium per customer growth of 8%. We added about 166,000 new customers in Q2, more than 12% greater than the roughly 148,000 in the prior year quarter. Within our reported gross loss ratio of 60%, our favorable prior period development of 7% was driven primarily by our homeowners, multi-peril and car products. Total CAT impact in the quarter was 3%, excluding CAT prior period development. And on a net basis, we saw 5 points of favorable prior period development, of which 2 points were related to CAT. Prior year development, which we report on a net basis, was $12 million favorable in Q2 and $16 million favorable year-to-date. Gross profit increased 76% to $113 million, while adjusted gross profit increased 74% to $114 million for a gross margin and an adjusted gross margin of 38% and 39%, respectively. These metrics use revenue as their denominator. Our adjusted gross profit as compared to gross earned premium was 34% in Q2, up 8 points from 26% in the prior year. Revenue grew 79% to $294 million, while our adjusted EBITDA loss improved to a loss of just $19 million. Notably, revenue grew nearly 50 percentage points faster than IFP due to dynamics related to our sustained trend of increased premium retention at reinsurance renewals in recent years. Importantly, adjusted free cash flow was positive for the fifth consecutive quarter at $19 million and has been positive 8 of the last 9 quarters, while operating cash flow was negative $3 million, following a common seasonal pattern. We ended the quarter with roughly $1.2 billion in cash and investments, of which about $330 million is required to be held as regulatory surplus. Annual dollar retention, or ADR, remained stable sequentially at 85%, continuing to reflect the impact of our prior clean the book actions within our homeowners product line. And as a reminder, ADR is measured relative to prior year's IFP. So while those portfolio actions are now largely behind us, they will continue to impact the reported ADR metric for the next couple of quarters before rolling out of the comparison period. Operating expenses, excluding loss and loss adjustment expense, increased by $53 million or 41% to $182 million in Q2 as compared to the prior year. And now I'll hand it off to Nick, who will walk us down the P&L and break down those expense lines a bit. Nick? Nicholas Stead: Thanks, Tim. Let's do that. Other insurance expense increased year-over-year by $5 million or 25% in Q2 as compared to a 32% growth rate of gross earned premium. This includes certain expenses that are variable in nature, and so typically grows at rates not materially different to that of the top line. Total sales and marketing expense increased by $18 million or 30%, primarily due to increased growth spend as compared to the prior year. In Q2, growth spend was $64 million, up 30% or $15 million as compared to the prior year. Importantly, as we continued to ramp growth spend, marketing efficiency levels remained stable and strong in the second quarter with an LTV to CAC ratio above 3x, in line with prior year. Technology development expense was up by $8 million or 34% year-on-year to $30 million. The growth was driven in roughly equal parts by the SBC impact of recent equity awards to our executives, which were not reflected in the prior year quarter, growth in personnel-related expense and higher software costs supporting our expanding AI capabilities. G&A expense increased 85% as compared to the prior year to $48 million. The year-on-year increase in G&A was driven primarily by a onetime tax refund benefit in the prior year period, the SBC impact of recent multiyear executive equity awards in the current period and growth in interest expense. Excluding those items, the year-over-year growth rate of G&A expense was 2%. Headcount increased slightly by 65 or about 5% year-over-year to 1,339 in Q2. The increase is attributable to net hiring in our product and engineering teams, and we expect that most of the year's net hiring activity is behind us. Net loss was $43 million in Q2 or $0.56 per share as compared to a net loss of $44 million or $0.60 per share in the prior year. Excluding the onetime benefit related to the tax refund I had mentioned from the prior year, the current period net loss result represents a 22% year-over-year improvement. Adjusted EBITDA loss was $19 million in Q2, dramatically improved as compared to a $41 million result in the prior year. Our detailed guidance for Q3 and the updated full year of 2026 is included in our shareholder letter and represents 33% Q3 and full year ISP growth, roughly 9% Q3 revenue growth and 65% full year revenue growth and unchanged a positive full quarter of adjusted EBITDA in the fourth quarter. Based on our third quarter and full year guidance, implied fourth quarter adjusted EBITDA is approximately $8 million. With that, I would like to pass it over to Shai to answer some questions from our retail investors. Shai Wininger: Thanks, Nick. We now turn to our shareholders' questions. We received a question about our IFP growth rate acceleration streak, when it might end and what factors could extend it. 11 consecutive quarters of IFP growth rate acceleration is a remarkable run by any measure, but especially for us as it's roughly 1/4 of our life as a company. What is most notable about that streak though, is that it has never been at the expense of profitability. LTV to CAC ratios remain healthy and strong at roughly 3x and adjusted EBITDA breakeven is precisely on track as compared to prior expectations. Our third quarter and full year guide contemplates the next point of IFP growth up to 33%, but we haven't given precise expectations for 2027 just yet. We have many growth drivers, but perhaps it's helpful to think through the lens of LTV to CAC. When unit economics improve, we are able to invest more aggressively in growth. We see opportunities on both sides of the equation. We seek to increase LTV through sustained momentum in cross-sells, which can drive gains in retention. And we seek to improve CAC efficiency through more granular AI-driven pricing, which can provide a tailwind to conversion rates. We continue to focus on these key drivers that we believe can drive sustainable profitable growth. We received a question around our new car insurance business, specifically the share of customers acquired via marketing versus cross-selling. We continue to deliver excellent growth in our car business, 60% year-over-year in the second quarter. We're seeing strength across both of these channels. In the quarter, we saw both the highest ever period of new business to car and the highest ever period of car sales to existing Lemonade customers. In recent periods, car sales typically represent between 40% to 50% of new to Lemonade car sales. We also received an interesting question around our adapting to new AI models as they come out. One of our core advantages is that we're model agnostic. We're not tied to any one frontier model provider. We continuously benchmark the latest models against one another to identify the best combination of capability and cost for each specific use case. When a new model is released, our teams typically begin evaluating it immediately, where we see performance advantage, moving from evaluation to implementation can happen in a matter of hours. The benefit isn't usually 1 dramatic step change. It's the cumulative effect of incremental improvements. To name a few, those improvements increase automation rates, they reduce human intervention, improve customer experience and lower cost to serve. I believe our system's ability to run multiple models at the same time while constantly evaluating them in real life is an advantage that helps drive the improvements in efficiency and operating leverage you've seen over the past several years. With that, I'll pass it over to the moderator, and we will take some questions from the Street. Operator: Your first question comes from the line of Jason Helfstein from Oppenheimer. Jason Helfstein: I'll have kind of 2 separate questions. So first is, what's the team most excited about right now? Obviously, a number of things going on, product, geo, et cetera? So what are you most excited about? And then just second, as we're all trying to think about how the model spools forward and thinking about potential operating leverage in 2027, 2028 without giving specific guidance, I guess, do we think that gross margins and contribution margins can kind of continue to maintain the current path as you expand product and geo coverage? Just any kind of way, obviously, as we're all trying to think about what that bogey is for 2028 to support valuation. Daniel Schreiber: Jason, good to hear from you. These are exciting times. So there's a lot to be excited about. If I had to pick one, I think I would say car, where we're just seeing kind of all the pistons going, all the quips around car kind of right themselves. But we really are seeing a lot of acceleration, a lot of improvement. There are a lot of changes and implementations and launches being planned and worked on, and we'll elaborate on those during our Investor Day, but there's a lot of reason for ongoing optimism in the sense that in this huge market where we are really just absolutely tiny and have so much headroom, we have advantages that we can sustain and can compound. And vaguely related to that, I'd add a second one, which is a little bit more vague, but there is a strong sense in the team, and I think it's reflected in our results quarter after quarter now, which is that the wins at our back. The machine is doing what it's meant to be doing. These 10 years of hard work at building the technology that we've built is throwing off results, throwing off growth, throwing off gross profit, compounding on a regular basis, all the data infrastructures, the AI infrastructure, some of which Shai mentioned a couple of minutes ago, the brand work that we've built, the team that we've built that this machine is really functioning very, very well, and it's just a pleasure to -- from my vantage point to sit back to some extent and watch it compound and keep doing what it's doing, 11 quarters in a row of acceleration, and we think there's a lot more where that came from going forward. I'll touch on the gross margin question briefly and then see if Tim or Nick wants to add more. But my comment is less by way of a direct answer and more by way of kind of challenging the premise or kind of a little knit, which is to say we are not -- I am not -- we are not focused on gross margin per se. The metric that we focus on, and we do encourage our investors to focus on as well is gross profit because there will be times where we can increase our profitability through shrinking gross margins and times when we cannot. And we're just talking about car, and I've spoken about this repeatedly on prior calls, which is that you see some incredible elasticity of demand in core products like car and our ability to actually shrink gross margins over time. That is to say, to price more aggressively than our competitors because we have a structural advantage that manifests in an entirely different cost structure. (Have a look at what we just announced in terms of LAE, spending something in the ballpark of half as much of our customers' premiums in order to give a better experience in claims.) But that kind of structural advantage allows us to produce a pricing advantage that will allow us to continue to grow and take market share. It will not manifest necessarily as an advantaged play in gross margin, but it will manifest in growing gross profit, which is the more important of the 2 metrics, if you follow my line of thinking. And with that, let me just see if Tim or Nick want to come in as well. Nicholas Stead: Yes. Daniel has it exactly right. And I think from a -- if you kind of translate that to a modeling perspective, the growth drivers for gross profit are clearly the top line growth, the gross loss ratio, and that is really advantaged by the loss adjustment expense improvement that you've seen, and we had a nice deep dive in the materials today, and we've updated you from time to time on that, and that's something we expect to continue. In addition to that, the top line growth accelerating also puts upward pressure on that gross profit. So while we would not expect to see such dramatic loss ratio impact as we've seen historically, something like 30 points of gross loss ratio improvement over time as expected and as planned, but a result of lots of hard work over time, you'll now see the gross loss ratio move around as much more of an output than an input. But the gross profit, I would expect to grow materially in line with top line growth and even mix shift doesn't hurt us, mix shift tends to help us, again, with the loss ratio or the loss adjustment expense looking nice, not only in aggregate, but also if you isolate by product, we see that same dynamic. So even as mix shifts, we'll still see that nice benefit. So, I think we've given you enough breadcrumbs today, we'll continue to do so to kind of model out that gross profit. We'll certainly update in the next quarter and at Investor Day and give a little more detail, but all the trends are quite good there. Daniel Schreiber: And sorry, I'm told that -- I misspoke, Jason. I hope I was understood, nonetheless. But just looking at our LAE, we are at 5% industry is at around 9%. And I was saying that they spend about twice as much of their customers' premiums than we do of our customers' premiums on the bureaucracy of handling claims. And that we tend to believe is probably indicative of a broader trend beyond claims as well. But if I misspoke, I hope I've clarified that. Operator: Your next question comes from the line of Tommy McJoynt from KBW. Thomas Mcjoynt-Griffith: Do you envision the inputs of getting to 30-plus percent in-force premium growth shifting a bit where customer count growth decelerates in the low 20s and premium per customer growth accelerates from the current mid- high single digits? Are those inputs likely to change? Nicholas Stead: Thanks, Tommy. I would expect no material change in the near term as to those relative growth rates. I think customer growth will continue to be the primary driver of IFP growth, but I also would expect the year-over-year growth rates of premium per customer to gradually and modestly increase as has been the recent trend. Thomas Mcjoynt-Griffith: Okay. Got it. And there's been sort of a hot topic in the industry has been around the future of distribution, especially with some of the AI technology enforced today. Over time and what you guys are currently working on, has your approach to complementing your core direct-to-consumer form of marketing with using human independent agents changed at all over time? And has AI either changed your strategy around that? Daniel Schreiber: Tommy, no, not materially. It's much the same. Our focus is on direct-to-consumer. We do have an agent program as well, but that is relatively niche and the overwhelming majority of our sales are direct-to-consumer. We're fine with people using their agents to do their shopping on their behalf. We're actually overly weighted by agentic processes, basically the way the training data that Claude or Gemini or OpenAI's chatbots contain or the materials that they're trained on are materials that we're very proud of. It's the customer feedback, it's the pricing that we have, it's the response times that we offer our customers. So if you do what we have done multiple times, which is see how often those agentic bots or processes will recommend Lemonade or will end up choosing Lemonade, you'll see that we're comfortably overweighted. So from that point of view, we feel quite comfortable with the emerging technologies and see no need to adjust our strategy. Timothy Bixby: There's an interesting analog maybe worth mentioning when you think about our direct-to-consumer efforts and where that is some at times different in Europe, for example, a pretty significant amount of business goes or originates through price comparison websites. And so one of the key learnings in our early time as we built and grew that business was figuring that out. How do we bring our direct-to-consumer advantages to a process where there's a third party in the mix, even if just peripherally or just at the start. And so this is not entirely new to us. Obviously, AI and Agent is a different realm, but it's something with which we have some real experience. The ultimate goal, of course, is to get that consumer into a Lemonade feeling experience as quickly as possible and whether that's through a price comparison website through a small agent testing area where we have some work happening through AI agentic, those are all things with which we have some real experience. Operator: Your next question comes from the line of Ryan Tunis from Cantor Fitzgerald. Ryan Tunis: First of all, congrats to both Tim and Nick. So first question, I guess, just taking a step back, there's -- this seems like a really good quarter in terms of thinking about from a bottom line perspective, right? I mean this new metric in terms of the convergence of the IFP growth and the customer acquisition spend, there's more good commentary on the loss adjustment ratio. You're retaining more of your gross premium that should add operating leverage as well. All that's good. It doesn't sound like to me -- and correct me if I'm wrong, but it doesn't sound like to me that's coming at the expense of how you guys have been talking about growth. I guess that's the first part. And then second part is just the operating expense piece in terms of the relative growth there and how that could contribute to operating leverage in 2027 would be helpful as well. Daniel Schreiber: Ryan, thanks. I'll just comment on the first part and then hand over to Nick for the second part of your question. But yes, all of that, you highlighted a few things that we're proud of and that are, I think, quite an outlier in terms of the industry. So getting to an OAE of 5% across our book, 7% in our car business. Our car business is just a couple of hundred million dollars in size. The industry is several hundred billion dollars in size. So we're talking about something that is a pro of the industry, and yet we are lapping the industry at large in terms of the efficiency metrics. That's something that I think is indicative of a structural difference that we've been talking about for a while and that now is manifest in the P&L really almost on every line. So definitely, those kinds of metrics, and I'm glad, Ryan, that you're highlighting them, those kind of metrics are exactly the things that drive our growth. We speak about on multiple occasions how we have a bunch of machine learning algorithms, essentially AI, some 50 of them that work in concert in order to allocate our spend. And really, what they're doing is taking all of that information and figuring out what does our cost to serve, what kind of customers are we acquiring, how long will they stay for, what claims behaviors will they have? You throw all of that into the mix and outcomes a lifetime value of the customer. And the way we hunt for those threefold ratios of LTV to CAC is by scouring and competing campaigns, products, geographies against each other in almost an algo trading kind of structure in order to keep finding that growth. And you'll see in the comments in our letter and in our earlier comments that when inflation shrank that pool, our growth shrank down. And now that we're in a much better place, that is an enabler of growth. So the premise of your question is absolutely right. The better we get at each of those metrics that automation, that precision at new products launch in new territories, obviously, the more growth you can expect to see. Nicholas Stead: And Ryan, maybe I can jump in on the second piece of the question around forward expectations for expense growth. And I might take that by line item. I'll start with other insurance expense. That's the line item where we typically see less benefit from leverage. Those are certain line items that are somewhat more variable and so increase more or less in line with premium. Sales and marketing expense typically grows in line with the pace of growth spend. And you're right to mention that insight in the letter where we outlined that in 2027, we expect the growth rate of growth spend to continue to decline below the growth rate of IFT for the year and beyond. And so that's an increasing driver of leverage. And then for both G&A and tech development expense, we see more significant benefit from leverage. And so, I would expect the sequential growth rates for those line items to be quite low. I'd perhaps note the year-over-year growth rate of the upcoming couple of quarters may be somewhat noisy due to the impact of that recent multi-year equity award to our executives that we have mentioned. So perhaps it's helpful to model those growth rates sequentially from the Q2 baseline. Notwithstanding many of those drivers, I'd just mention that these are more or less in line with the way we have been thinking about expenses. And the way you can see that is in the reiteration of our adjusted EBITDA guide for the year and a positive fourth quarter. Ryan Tunis: Very helpful. And just a follow-up, definitely a lot more small ball, but a follow-up is just the pet insurance gross loss ratio looked like it picked up a little bit this quarter. Just curious if there's any notable color around that. Nicholas Stead: Yes, happy to take that one. We are impacted by an industry-wide vet cost inflationary trend. And from our view, that is the primary driver of the modest increase in our pet loss ratio, both sequentially and year-over-year. We are actively taking rate through the system to offset that impact. I'd say notwithstanding the significant rate that is being taken by both us and our competitors, the growth rate of the broader pet insurance market continues to outpace those of the other lines of business where we operate. Operator: Your next question comes from the line of Andrew Andersen from Jefferies. Andrew Andersen: And again, congratulations to you both. On the quarter, Tim, I think I heard you say car produced some favorable development. I don't think that's too different from what some of the larger peers are seeing. But can you maybe just talk about what you're seeing in reserves to release some this quarter even with the book still scaling rapidly here? Timothy Bixby: Yes, that's exactly right. So we've seen a trend in the quarter that was not too dissimilar from a few prior quarters, which is both the home business and the car business primarily had some favorable development, somewhat different causes, car growing significantly and a significantly improved loss ratio over time. It's not uncommon to be somewhat more conservative in reserving as your business changes rapidly, and our business in car has certainly changed absolutely for the better, but also in terms of its growth rate, in terms of its diversity across states and a lot of that has come together to enable us to reanalyze those prior reserves and continue to release. Home is a little different. Home, it's not so much the growth rate. We've actually just kind of edged past our clean the book efforts in home. And so, we've done a couple of things there. One is to really look at from a macro perspective, business that today, we wouldn't write, and that's really been 1.5 years or so in the making and really passed that point. That said, the remaining business was still somewhat conservatively reserved in light of new data and our current understanding of the book and that enabled us to release those reserves. By definition, our forward expectation is today's reserves are exactly right. And we'll kind of see how the subsequent quarters play out, but those were consistent trends. Andrew Andersen: Okay. And recognizing it's early, but you had mentioned at the top of the call, just the autonomous product, car products are live in a couple of states. What have you learned maybe about the frequency or severity of this product relative to the traditional auto book? Timothy Bixby: Awfully, early. And so that's not something we've put any real data out on. And so we'll kind of have to stick with what we've disclosed so far. The good news there is that the trends are positive. We've seen nice reception from those customers who qualify for that product. The end is quite small, but the trends are quite positive. And I think if you look out across the market as we do and see the data that's released not from Lemonade, but across the market, the frequency numbers without question, are significantly -- or not significantly are notably lower. The 50% number that we've quoted is really our number, data-driven through the data that we've analyzed as we put that product together. But the public numbers we're seeing are that amount of savings or greater. So we're quite optimistic about where that product will head. It's a multiyear adoption rate. We'll see how that plays out. And that's probably as much as we can say at this point. Operator: At this time, there are no further questions. This concludes today's call. Thank you all for attending. You may now disconnect. 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Trupanion Inc. TRUP posted decent second-quarter 2026 results, with the top and the bottom lines beating the Zacks Consensus Estimate. However, while the top line improved year over year, the bottom line declined. This pet insurer provides insurance for cats and dogs in the United States, Canada, Continental Europe and Australia. It operates in a large but underpenetrated market. Trupanion is well-poised to grow, courtesy of increased focus on pets’ health and well-being, product launches, extended operating boundaries and a solid capital position. Shares of TRUP have gained 14.4% in the past three months, outperforming its industry, sector and the Zacks S&P 500 composite, in the same time frame. Image Source: Zacks Investment Research Shares of Lemonade Inc. LMND, another seller of pet insurance, have lost 5.7% in the past three months while those of Root Inc. ROOT, a technology-oriented insurance company seeking growth through specialized underwriting and digital customer acquisition, have lost 10.4% in the same time frame. TRUP generated $393 million of revenues, up 11% year over year and beat the consensus estimate by 0.8%.Total enrolled pets (including pets from our other business segment) were 1.6 million as of June 30, 2026, a decrease of 2% year over year. Subscription enrolled pets were 1.1 million as of June 30, 2026, an increase of 5% year over year. Subscription business revenues were $276.7 million, up 14% year over year.Total expenses were $58.7 million, up 12% year over year.Adjusted EBITDA was $19.8 million, up from $16.6 million in the second quarter of 2025. The bottom line came in at 16 cents, beating the estimate by 45% but declining 27% year over year.Operating cash flow was $21 million and free cash flow was $19.2 million in the second quarter.In July 2026, the New York Department of Financial Services approved an extraordinary dividend of $44 million to be paid to Trupanion by its wholly-owned subsidiary, American Pet Insurance Company.  The board also approved a $100 million share buyback program. For 2026, TRUP expects total revenues in the range of $1.584 billion to $1.601 billion. Subscription revenues are now expected to be between $1.124 billion and $1.133 billion. The midpoint of the range has increased slightly and continues to represent approximately 14% year-over-year growth. The insurer also narrowed the total adjusted operating income range to be between $176 million and $184 million, or19% year-over-year growth at the midpoint.For the third quarter of 2026, total revenues are expected to be in the range of $399 million to $405 million. Subscription revenues are expected to be between $284 million and $287 million, representing approximately 13% year-over-year growth at the midpoint. Total adjusted operating income is expected to be in the range of $44 million to $47 million. This represents approximately 11% growth year over year at the midpoint. The stock is overvalued compared with its industry. It is currently trading at a price-to-book multiple of 3.11, higher than the industry average of 1.86 but lower than the median of 4.28 over the past three years. It has a Value Score of C. Image Source: Zacks Investment Research TRUP shares are more expensive than ROOT but cheaper than LMND. Trupanion has built a differentiated business model centered on high customer retention, recurring subscription revenues and a proprietary technology platform. A key competitive advantage is its direct-pay software, which allows participating veterinary hospitals to receive claim payments at checkout, enhancing the customer experience and strengthening veterinary relationships.The company continues to benefit from strong monthly retention, a growing base of enrolled pets, and higher average revenue per pet (ARPU), driving consistent mid-teens revenue growth. With veterinary care costs rising faster than consumer discretionary income, effective pricing remains critical to sustaining growth while ensuring pet owners can continue to access quality care.International expansion is another important growth driver. As part of its five-year strategy, Trupanion has expanded its presence in Europe, where pet insurance penetration remains relatively low, creating a significant long-term growth opportunity. A larger subscriber base should also improve operating leverage, supporting margin expansion and stronger free cash flow over time.To broaden its addressable market, the company is expanding its product portfolio with offerings such as Chewy and Aflac, which target lower- and mid-ARPU segments, alongside Firkin, Phi Direct, and products tailored for continental Europe. Trupanion has also introduced a branded offering built on its technology platform and partnered with automation providers in Germany and Switzerland to enhance operational efficiency.Supported by a strong capital position and solid operating performance, Trupanion is well positioned to invest in product innovation and international expansion, reinforcing its competitive moat and long-term growth prospects. The Zacks Consensus Estimate for 2026 revenues and earnings indicates year-over-year improvement of 9.9% and 22.2%, respectively. The consensus estimate for 2027 revenues and earnings indicates year-over-year improvement of 8.1% and 25.2%, respectively. TRUP has a Growth Score of B. Image Source: Zacks Investment Research The consensus estimate for 2026 earnings has moved up 1 cent while that for 2027 has moved down 3 cents in the last 30 days.The consensus estimates for LMND’s 2026 and 2027 earnings have witnessed southbound movement in the last 30 days. The consensus estimates for ROOT’s 2026 and 2027 earnings have witnessed no movement in the last 30 days. TRUP is poised to grow in the fast-growing pet insurance market as pet ownership continues to increase and veterinary care costs rise.  Its VGM Score of B instills confidence.Given its premium valuation, muted analyst sentiment and narrowed guidance by management, it is better to adopt a wait-and-see approach for this Zacks Rank #3 (Hold) stock now.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Trupanion, Inc. (TRUP) : Free Stock Analysis Report Lemonade, Inc. (LMND) : Free Stock Analysis Report Root, Inc. (ROOT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Root Inc. ROOT posted decent second-quarter 2026 results, with both the top and bottom lines improving year over year. The company witnessed improved in-force premiums and loss ratio.Root is a technology insurance company focusing on the United States personal auto insurance market. It offers automobile and renters insurance products primarily through websites, mobile applications and partnership channels.Shares of ROOT have gained 5.9% in the past three months, outperforming the Zacks S&P 500 composite but underperforming its industry and sector in the same time frame. Image Source: Zacks Investment Research Shares of Lemonade Inc. LMND, its peer, have lost 4.4% in the past three months while those of Hippo Holdings HIPO, another peer, have rallied 17.7% in the same time frame. Root generated $389 million of revenues, up 2% year over year and $44 million of adjusted EBITDA, up 16% year over year.It exited the quarter with 0.484 million policies in force, up 6% year over year. Gross written premium of $340 million declined 2% while gross earned premium of $368 million declined 1% year over year as the company managed growth with discipline in a competitive Direct market.Partnership and independent agent channels represented about 51% of new writings in the quarter, reflecting continued progress and diversifying growth beyond Direct. Net underwriting margin improved 310 basis points year over year to 7.9%, equivalent to a 92.1% net combined ratio, driven primarily by continued expense discipline. Net expense ratio improved 300 basis points year over year to 26.1%, while net loss and LAE ratio was 66%, broadly in line with the prior-year period. Root bought back $20 million of shares under its $75 million share repurchase authorization. The stock is overvalued compared with its industry. It is currently trading at a price-to-book multiple of 2.93, higher than the industry average of 1.52 but lower than the median of 4.44 over the past three years. It has a Value Score of A. Image Source: Zacks Investment Research ROOT shares are more expensive than HIPO but cheaper than LMND. Root represents a differentiated opportunity in the $350 billion U.S. auto insurance market. Its mobile-first platform combines telematics and artificial intelligence to assess actual driving behavior, enabling more accurate underwriting, stronger risk selection and potentially lower loss ratios.The company’s growth strategy centers on geographic expansion, broader distribution and deeper partnerships. Root aims to launch its products nationwide, increase policies in force, and make coverage accessible through direct, independent-agent, and embedded-insurance channels. To strengthen its agency presence, Root has integrated with leading comparative rating platforms, including EZLynx and PL Rating. Its partnership business is also expanding across the automotive and financial-services sectors, while targeted customer-acquisition investments continue to support direct-channel growth.Root’s financial performance has benefited from disciplined expense management, selective marketing and strong underwriting. Its gross loss ratio remains below the long-term target range of 60%–65%, giving the company flexibility to reduce prices selectively without sacrificing profitability. This margin improvement helped Root achieve its first full year of profitability in 2024.Root’s five-part strategy will offer customers the lowest possible prices. It will enable the company to expand into every state, grow the independent-agency channel, scale embedded-insurance partnerships, and apply its AI capabilities to build a more efficient, automated marketing engine. The Zacks Consensus Estimate for 2026 earnings indicates year-over-year improvement but that for 2027 indicates a year-over-year decline. ROOT has a Growth Score of A. Image Source: Zacks Investment Research The consensus estimate for 2026 and 2027 earnings has witnessed no movement in the last 30 days.The consensus estimates for LMND and HIPO’s 2026 and 2027 earnings have witnessed no movement in the last seven days. Improved underwriting via telematics, lower loss ratios, efficient customer acquisition, and scaling profitable policies through data-driven pricing and retention position ROOT for long-term growth. Its VGM Score of A instills confidence.Given its premium valuation and muted analyst sentiment, it is better to adopt a wait-and-see approach for this Zacks Rank #3 (Hold) stock now.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Root, Inc. (ROOT) : Free Stock Analysis Report Lemonade, Inc. (LMND) : Free Stock Analysis Report Hippo Holdings Inc. (HIPO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Lemonade Inc. LMND posted decent second-quarter 2026 results, with both the top and bottom lines improving year over year. Though the top line beat the Zacks Consensus Estimate, the bottom line matched the same. The company witnessed improved in-force premiums and loss ratio.Lemonade offers renters, homeowners, pet, car and life insurance, backed by artificial intelligence and behavioral economics. It operates through full-stack insurance carriers in the United States, the United Kingdom and Europe. Its primary competitive advantage lies in its fully digital operating model.Shares of Lemonade have lost 6.5% in the past three months, outperforming the industry, its sector, as well as the Zacks S&P 500 composite in the same time frame.  LMND shares are trading at a discount to their 52-week high. Image Source: Zacks Investment Research Shares of Root Inc. ROOT and Hippo Holdings HIPO, some other multiline insurers, have rallied 5.6% and 17.7% in the past three months, respectively. Revenues of $294.4 million increased 79% year over year, driven by growth in gross earned premium and higher premium retention rate. In-force premium (IFP) increased 32% year over year to $1.43 billion. Gross earned premium of $332.4 million increased 32% year over year primarily due to an increase in IFP.Total operating expense, excluding net loss and loss adjustment expense, of $182.2 million increased 41% year over year.Adjusted EBITDA loss was $18.7 million, narrower than a loss of $40.9 million in the second quarter of 2025. This improvement was primarily attributable to revenue growth and improved underwriting results, partially offset by the increase in growth spend. Net loss ratio improved 800 basis points to 61%.The bottom line came in at a loss of 56 cents per share, narrower than a loss of 60 cents per share incurred in the year-ago quarter. Adjusted free cash flow was $18.8 million, lower than $25 million in the year-ago quarter. Lemonade expects revenues to be $323-$326 million in the third quarter and $1.214-$1.220 billion in 2026. In-force premium is expected between $1,537 and $1,540 million in the third quarter and $1,632-$1,639 million in 2026.Adjusted EBITDA loss is estimated to be $20 to $23 million in the third quarter and $47 to $51 million in 2026. The stock is overvalued compared with its industry. It is currently trading at a price-to-book multiple of 7.87, higher than the industry average of 3.03 and the median of 4.13 over the past three years. It has a Value Score of F. Image Source: Zacks Investment Research LMND shares are more expensive than ROOT and HIPO. Lemonade is a technology-focused insurer that leverages artificial intelligence, data analytics and automation to improve efficiency and support a scalable, low-cost operating model. Initially concentrated on renters and homeowners insurance, the company has expanded into auto, pet and life coverage, aided by the Metromile acquisition. This broader product portfolio has diversified revenues and reduced dependence on any single insurance line.Its multi-product approach supports cross-selling, strengthens customer lifetime value and creates recurring revenues. Strong retention and customer engagement continue to drive growth, with management projecting revenue increases of 32% for the second quarter and 33% for full-year 2026. Auto insurance remains a key growth engine, supported by additional state launches and higher brand investment.In-force premium reached $1.43 billion in the second quarter, representing the 11th consecutive quarter of accelerating growth. Lemonade’s AI- and automation-led platform enables the company to scale efficiently, supporting management’s long-term target of $10 billion in IFP. From 2027 onward, IFP growth is expected to exceed spending growth, creating meaningful operating leverage.Geographic expansion, particularly for auto insurance, should broaden Lemonade’s addressable market. Following several planned state launches, management expects its auto product to be available to most U.S. drivers by the end of 2027.Lemonade’s reinsurance program transfers a significant share of claims exposure to partners, helping limit earnings volatility. Meanwhile, proprietary AI tools, including AI Maya and AI Jim, streamline underwriting and claims handling, improving efficiency and keeping loss-adjustment expenses relatively low.Profitability is challenged, but the outlook is improving. Margins are expanding, free cash flow has turned positive, and management expects to achieve adjusted EBITDA profitability in the fourth quarter of 2026 and in 2027. The Zacks Consensus Estimate for 2026 and 2027 earnings and revenues indicate year-over-year improvements. LMND has a Growth Score of A. Image Source: Zacks Investment Research However, the consensus estimate for 2026 and 2027 earnings has moved 5 cents and 8 cents south, respectively, in the last seven days. Image Source: Zacks Investment Research The consensus estimates for ROOT’s and HIPO’s 2026 and 2027 earnings witnessed no movement in the last seven days. Lemonade is poised for long-term growth, banking on a combination of technology, automation and expanding product offerings.However, given its premium valuation and muted analyst sentiment, it is better to hold on to this Zacks Rank #3 (Hold) stock now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Lemonade, Inc. (LMND) : Free Stock Analysis Report Root, Inc. (ROOT) : Free Stock Analysis Report Hippo Holdings Inc. (HIPO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Lemonade, Inc. (NYSE:LMND) shares fell more than 7% in pre-market trading after the AI-powered insurance company released its second-quarter 2026 results, with investors reacting negatively despite revenue outperforming expectations. The sell-off reflected concerns that the company’s outlook failed to justify the high expectations already priced into the stock, following a strong rally earlier in the year. Ahead of the earnings release, analysts had expected Lemonade to report a quarterly loss of around $0.57 per share, while investors were looking for results capable of supporting the company’s ambitious growth outlook. Although revenue exceeded expectations, the market response suggested investors were disappointed that the company’s guidance did not provide a stronger catalyst for further gains. The negative reaction came after Lemonade had previously raised its full-year outlook and reaffirmed its expectation of achieving positive adjusted EBITDA during the fourth quarter of 2026. Investor sentiment had become increasingly mixed ahead of the earnings announcement. Earlier this month, Morgan Stanley analyst Bob Huang downgraded Lemonade to Equal Weight from Overweight and assigned a price target of $75 per share, arguing that while the company’s operating momentum remained solid, additional catalysts would be needed to justify its valuation. Keefe Bruyette maintained an Underperform rating with a $48 price target, while Piper Sandler reiterated its Neutral rating with a $75 target. Market participants had also noted recent insider selling activity, adding to the cautious tone before the quarterly results. Despite the market reaction, Lemonade has continued to improve its underwriting performance. The company’s gross loss ratio declined to 62% during the first quarter of 2026, compared with 83% two years earlier, reflecting improvements in its artificial intelligence models for pricing insurance policies and forecasting claims. These operational improvements have supported the company’s longer-term strategy of improving profitability while continuing to expand its customer base. Shares had already retreated significantly from their 52-week high of $99.90 before the earnings announcement, leaving investors particularly sensitive to any signs of slowing momentum. Combined with cautious analyst sentiment and the absence of a stronger-than-expected outlook, the latest results prompted a sharp decline in the stock despite revenue exceeding market forecasts. Investors are likely to remain focused on whether Lemonade can continue improving profitability while delivering the growth required to support its premium valuation. Lemonade stock price

For the quarter ended June 2026, Lemonade (LMND) reported revenue of $294.4 million, up 79.4% over the same period last year. EPS came in at -$0.56, compared to -$0.60 in the year-ago quarter. The reported revenue compares to the Zacks Consensus Estimate of $289 million, representing a surprise of +1.87%. The company has not delivered EPS surprise, with the consensus EPS estimate being -$0.56. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how Lemonade performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: In force premium (end of period): $1.43 billion compared to the $1.43 billion average estimate based on five analysts. Customers (end of period): 3,308,666 versus 3,340,447 estimated by four analysts on average. Net loss ratio: 61% versus 69.8% estimated by four analysts on average. Premium per Customer (end of period): $433.00 compared to the $426.43 average estimate based on four analysts. Gross loss ratio: 60% versus 64.3% estimated by four analysts on average. Total Revenue- Net investment income: $9.7 million versus the five-analyst average estimate of $9.61 million. The reported number represents a year-over-year change of +3.2%. Total Revenue- Ceding commission income: $20.4 million compared to the $26.16 million average estimate based on five analysts. The reported number represents a change of -32.9% year over year. Total Revenue- Commission and other income: $12.3 million versus $11.75 million estimated by five analysts on average. Compared to the year-ago quarter, this number represents a +4.2% change. Total Revenue- Net earned premium: $252 million compared to the $241.38 million average estimate based on five analysts. The reported number represents a change of +124% year over year. View all Key Company Metrics for Lemonade here>>> Shares of Lemonade have returned -4.5% over the past month versus the Zacks S&P 500 composite's +1.9% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Lemonade, Inc. (LMND) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. In Force Premium (IFP): $1.43 billion, up 32.5% year over year. Revenue: $294 million, increased 79% year over year. Gross Profit: $113 million, up 76% year over year. Adjusted EBITDA Loss: Improved 54% to $19 million. Gross Loss Ratio: 60% with favorable prior period development of 7%. Adjusted Gross Margin: 39%. Adjusted Free Cash Flow: Positive $19 million for the fifth consecutive quarter. Operating Expenses: $182 million, increased by 41% year over year. Net Loss: $43 million or $0.56 per share, improved 22% year over year. Customer Growth: 23% increase, adding about 166,000 new customers. Premium Per Customer Growth: 8% increase. LAE Ratio: Improved to 5%, below the industry average of 9%. Cash and Investments: Approximately $1.2 billion, with $330 million as regulatory surplus. Warning! GuruFocus has detected 2 Warning Sign with LMND. Is LMND fairly valued? Test your thesis with our free DCF calculator. Release Date: July 29, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Lemonade Inc (NYSE:LMND) reported a 32.5% year-over-year growth in in-force premium, reaching $1.43 billion, marking 11 consecutive quarters of accelerating growth. Revenue increased by 79% to $294 million, and gross profit rose by 76% year-over-year to a record $113 million. The company improved its adjusted EBITDA loss by 54% to $19 million and is on track to achieve its first positive adjusted EBITDA quarter in Q4 2026. Lemonade Inc (NYSE:LMND) achieved its best-ever LAE ratio of 5%, significantly below the industry average of 9%, indicating superior efficiency in handling claims. The company expanded its geographical reach by launching 14 additional state product combinations, including the introduction of its autonomous car product in Colorado and Indiana. Despite improvements, Lemonade Inc (NYSE:LMND) still reported a net loss of $43 million in Q2 2026, although this was a slight improvement from the previous year. Operating expenses, excluding loss and loss adjustment expense, increased by 41% to $182 million in Q2, which could impact future profitability. The company's Pet insurance segment experienced a modest increase in the gross loss ratio due to industry-wide vet cost inflation. There is concern over the efficiency of growth spending, as some investors noted that growth spend outpaced the corresponding growth in in-force premium. The transition of CFO responsibilities from Tim Bixby to Nick Stead, while planned, introduces potential uncertainty in financial leadership. Q: What factors could extend Lemonade's IFP growth rate acceleration streak, and when might it end? A: Shai Wininger, President and Co-Founder, explained that the 11 consecutive quarters of IFP growth rate acceleration have not come at the expense of profitability. The company maintains healthy LTV to CAC ratios and is on track for adjusted EBITDA breakeven. Growth is driven by improving unit economics, cross-sales momentum, and AI-driven pricing, which enhance conversion rates. Q: How is Lemonade adapting to new AI models, and what advantages does this provide? A: Shai Wininger highlighted that Lemonade is model agnostic, continuously benchmarking new AI models to optimize capability and cost. This approach allows for rapid implementation of performance improvements, enhancing automation, reducing human intervention, and lowering costs, which collectively improve efficiency and operating leverage. Q: What excites the Lemonade team most currently, and how do they view future operating leverage? A: Daniel Schreiber, CEO, expressed excitement about the Car product, noting significant improvements and growth potential in a vast market. He emphasized the company's structural advantages, such as a lower LAE ratio, which enable competitive pricing and market share growth. The focus is on gross profit rather than gross margin, leveraging structural advantages to drive growth. Q: How does Lemonade view the future of distribution with AI technology, and has their strategy changed? A: Daniel Schreiber stated that Lemonade's focus remains on direct-to-consumer sales, with a niche agent program. The company is comfortable with AI-driven agentic processes, as they often favor Lemonade due to its strong customer feedback and pricing. Lemonade's strategy remains unchanged, leveraging its direct consumer advantages. Q: How does Lemonade plan to achieve operating leverage in 2027, and what are the expectations for expense growth? A: Nick Stead, SVP Finance, explained that operating leverage will be driven by slower growth in growth spend compared to IFP growth. Sales and marketing expenses will align with growth spend, while G&A and tech development expenses will benefit from leverage. Sequential growth rates for these expenses are expected to be low, contributing to operating leverage. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in Lemonade, Inc.? Here are five stocks we like better. Lemonade reported strong Q2 growth: In-force premium rose 32.5% year over year to $1.43 billion, while revenue increased 79% to $294 million and gross profit climbed 76% to a record $113 million. Profitability remains on schedule: The adjusted EBITDA loss narrowed to $19 million, adjusted free cash flow was positive for the fifth consecutive quarter, and management reaffirmed its expectation for positive adjusted EBITDA in Q4 2026 and for full-year 2027. Expansion and efficiency continued: Lemonade launched 14 new state-product combinations, car insurance grew 60%, and its claims-handling expense ratio fell to a record-low 5%; the company also secured $250 million in growth financing at an approximately 9.8% cost. Can Trupanion Turn Pet Insurance Loyalty Into Real Earnings? Lemonade (NYSE:LMND) reported second-quarter results marked by accelerating in-force premium growth, higher revenue and gross profit, and a narrower adjusted EBITDA loss, while reaffirming its expectation to reach positive adjusted EBITDA in the fourth quarter of 2026. Chief Executive Officer and Co-founder Daniel Schreiber said in-force premium reached $1.43 billion, up about 32.5% from a year earlier. The result extended the company’s streak of accelerating growth to 11 consecutive quarters. Revenue rose 79% to $294 million, while gross profit increased 76% to a record $113 million. → This Tiny AI Supplier Could Be More Important Than the Chipmakers Lemonade’s Sweet Results Refresh Market Appetite: Rebound Ahead “We remain on track to deliver our first positive adjusted EBITDA quarter in Q4 of this year, followed by a positive adjusted EBITDA full year 2027,” Schreiber said. The company reiterated its guidance for in-force premium and adjusted EBITDA, while raising guidance for gross earned premium and revenue. Management said its updated outlook calls for 33% in-force premium growth in both the third quarter and full year, approximately 69% revenue growth in the third quarter and 65% revenue growth for the full year. → Refiner Stocks Are Near Record Highs—Can Iran-Driven Margins Keep Them There? MarketBeat Week in Review – 01/19 - 01/23 Lemonade also maintained its expectation for a positive adjusted EBITDA result in the fourth quarter. Chief Financial Officer Tim Bixby said the company’s third-quarter and full-year guidance implies fourth-quarter adjusted EBITDA of approximately $8 million. Schreiber said Lemonade completed its annual reinsurance renewal, which modestly increased the portion of premiums retained by the company while strengthening catastrophe coverage. The updated structure includes named-storm protection that was largely absent under the prior arrangement, he said. → Innovative ETF Strategies That Are Paying Off This Summer The company also extended its synthetic agents program, securing $250 million in growth financing for spending in 2027 and 2028 at an approximately 9.8% cost. Schreiber said the financing represents more than six percentage points of improvement in the company’s cost of capital and is expected to reduce future interest expense. Schreiber addressed investor questions about the relationship between growth spending and in-force premium, saying the differing growth rates do not indicate deteriorating marketing efficiency. He said the company has maintained an approximately 3x lifetime-value-to-customer-acquisition-cost ratio while increasing growth investments. According to Schreiber, growth spending is expensed annually, while the premiums generated by acquired customer cohorts remain on the books and accumulate over time. He said the company expects in-force premium growth to exceed growth-spend growth beginning in 2027, supporting operating leverage and profitability. Senior Vice President of Finance Nick Stead said growth spend totaled $64 million in the second quarter, up 30%, or $15 million, from a year earlier. Sales and marketing expense rose 30% to reflect the higher spending, while the LTV-to-CAC ratio remained above 3x. Stead said Lemonade expects growth-spend growth to continue declining below the rate of in-force premium growth in 2027 and beyond. He also said general and administrative expense and technology-development expense should provide more significant operating leverage, though year-over-year comparisons in upcoming quarters could be affected by executive equity awards. Lemonade reported a gross loss ratio of 60% in the quarter, including 7 percentage points of favorable prior-period development, primarily related to its homeowners multi-peril and car products. Catastrophe impact was 3%, excluding catastrophe prior-period development. On a net basis, the company recorded five percentage points of favorable prior-period development, including two points related to catastrophe. Bixby said favorable prior-year development totaled $12 million for the quarter and $16 million year to date. President and Co-founder Shai Wininger highlighted the company’s 5% loss-adjustment-expense ratio, which measures the cost of handling claims. Wininger described it as Lemonade’s best result to date and said it reflected wider use of the company’s technology and artificial intelligence in claims operations. He said the result was a record low across each of Lemonade’s product lines. “Our competitors spend almost twice as much as we do on handling claims,” Wininger said, referring to an industry average LAE ratio of around 9%. The company launched 14 additional state-product combinations during the past 100 days, including a push toward nationwide renters-insurance availability and the launch of its autonomous-car product in Colorado and Indiana. Wininger said Lemonade expects further car-insurance state launches and believes the product will be available to a majority of U.S. drivers before the end of 2027. Car insurance grew 60% year over year in the second quarter, according to management. Cross-sales represented between 40% and 50% of new-to-Lemonade car sales in recent periods. Adjusted EBITDA loss narrowed to $19 million from $41 million in the prior-year quarter. Net loss was $43 million, or $0.56 per share, compared with a $44 million loss, or $0.60 per share, a year earlier. Excluding a prior-year one-time tax refund benefit, Stead said the current-quarter net loss represented a 22% year-over-year improvement. Adjusted free cash flow was positive $19 million, marking the fifth consecutive positive quarter and the eighth positive quarter in the last nine. Operating cash flow was negative $3 million, which Bixby said followed a common seasonal pattern. Lemonade ended the quarter with approximately $1.2 billion in cash and investments, including about $330 million required as regulatory surplus. Customer count grew 23% year over year, and the company added approximately 166,000 customers during the quarter, compared with roughly 148,000 in the year-earlier period. Premium per customer increased 8%, while annual dollar retention remained sequentially stable at 85%. At year-end, Bixby will step down as CFO after more than nine years and join Lemonade’s board of directors. Stead, currently the company’s SVP of Finance, will succeed him as CFO. Schreiber said the transition had been planned over several years and that most financial functions already report to Stead. Lemonade, Inc (NYSE: LMND) is a New York–based technology-driven insurance carrier that leverages artificial intelligence and behavioral economics to streamline the purchase and management of policies. Founded in 2015, the company offers renters, homeowners, pet, term life and car insurance products tailored for digitally savvy consumers. By automating underwriting and claims processing through chatbots and machine learning, Lemonade aims to deliver a more transparent and user-friendly experience than traditional insurers. The company's product suite includes standalone policies for renters and homeowners, customizable pet insurance plans, and term life coverage with simple online applications. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Lemonade Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

Lemonade has gotten torched over the last six months - since January 2026, its stock price has dropped 29.4% to $68.21 per share. This might have investors contemplating their next move. Is now the time to buy Lemonade, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free. Even though the stock has become cheaper, we’re sitting this one out for now. Here are three reasons why LMND doesn’t excite us, plus one stock we’d rather own. Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business. For Lemonade, its two-year annual EPS growth of 17% was higher than its five-year trend. Its improving earnings are an encouraging data point, but a caveat is that its EPS is still in the red. We consider book value per share (BVPS) a critical metric for insurance companies. BVPS represents the total net worth per share, providing insight into a company’s financial strength and ability to meet policyholder obligations. To the detriment of investors, Lemonade’s BVPS declined at a 16.2% annual clip over the last two years. Return on equity, or ROE, represents the ultimate measure of an insurer’s effectiveness, quantifying how well it transforms shareholder investments into profits. Over the long term, insurance companies with robust ROE metrics typically deliver superior shareholder returns through a balanced approach to capital management. Over the last five years, Lemonade has averaged an ROE of negative 30.1%, a bad result not only in absolute terms but also relative to the majority of insurers putting up 20%+. It also shows that Lemonade has little to no competitive moat. Lemonade isn’t a terrible business, but it doesn’t pass our quality test. Following the recent decline, the stock trades at 10.8× forward P/B (or $68.21 per share). Investors with a higher risk tolerance might like the company, but we think the potential downside is too great. We’re fairly confident there are better stocks to buy right now. We’d recommend looking at a dominant aerospace business that has perfected its M&A strategy. ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time. Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.