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Sep 30, 2025
Lemonade Q3 2025 Earnings Report
Lemonade posted accelerating growth and improved profitability metrics in Q3 2025.
Key Takeaways
Lemonade delivered strong Q3 2025 results with 30% growth in In Force Premium, significantly improved gross profit margins, and reduced net loss, driven by enhanced operational efficiency through AI.
In Force Premium reached $1.16 billion, up 30% YoY.
Gross profit more than doubled to $79.9 million, with margin rising to 41%.
Adjusted EBITDA loss improved to ($25.6 million), a 48% YoY improvement.
AI advancements led to notable operational efficiency gains, including a drop in LAE ratio to 7%.
Revenue by Geographic Location
Forward Guidance
Lemonade raised guidance for FY25 across multiple metrics and reaffirmed positive Adj. FCF expectations, with a clear path toward breakeven Adj. EBITDA by Q4 2026.
Positive Outlook
- Raised full-year guidance for revenue, IFP, GEP, and Adj. EBITDA.
- Continued momentum expected in Car segment, including new state launches.
- Ongoing operational efficiency driven by AI with reduced LAE ratio.
- Expected launch in Pennsylvania will bring Lemonade Car to 9 of top 10 U.S. cities.
- Positive Adjusted Free Cash Flow expected for full FY25.
Challenges Ahead
- Annual Dollar Retention fell 2 pts YoY to 85%, due to underwriting adjustments.
- Operating expenses increased to support growth initiatives.
- Adjusted Free Cash Flow decreased YoY from $37.6M to $18.1M.
- Net loss remains although improving ($37.5M in Q3).
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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