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Dec 31, 2024
Lemonade Q4 2024 Earnings Report
Lemonade reported accelerating topline growth, expense stability, significantly narrowing Adj. EBITDA losses, and positive Adjusted Free Cash Flow in Q4 2024, marking its best quarter ever.
Key Takeaways
Lemonade achieved its best quarter ever in Q4 2024, driven by accelerating topline growth, stable expenses, and significantly reduced Adjusted EBITDA losses. The company reported strong positive Adjusted Free Cash Flow, marking its first full year of positive Adj. FCF.
Delivered $27 million in Adjusted Free Cash Flow (Adj. FCF) in Q4 2024, contributing to a full year of positive Adj. FCF at $48 million.
In Force Premium (IFP) grew 26% year-over-year to $944 million, marking the fifth consecutive quarter of accelerating growth.
Achieved a gross loss ratio of 63% for the fourth quarter, the best result ever, with the trailing twelve months (TTM) gross loss ratio at 73%, within target range.
Gross Profit increased 90% year-over-year to $64 million, with a margin expansion of 14 points to 43%, and FY 2024 gross profit nearly doubled to $167 million.
Forward Guidance
Lemonade expects continued IFP growth and sequential Adjusted EBITDA improvement in 2025, despite an anticipated increase in growth spend and the impact of CA wildfires, remaining on track for positive Adj. EBITDA by the end of 2026.
Positive Outlook
- Guiding for a second consecutive year of positive Adjusted Free Cash Flow (Adj. FCF) in 2025.
- Anticipates IFP growth of 28% in 2025, with sustained acceleration towards a cruising velocity above 30% by 2026.
- TTM gross loss ratio is now within the target range, indicating improved underwriting precision.
- Plans to continue delivering operational efficiencies, demonstrating clear progress towards profitability.
- Remains on track to exit 2026 generating positive Adjusted EBITDA.
Challenges Ahead
- Expected impact of CA wildfires on Q1 2025 results is approximately $45 million in gross losses.
- Estimated Adjusted EBITDA impact of approximately $20 million due to CA wildfires.
- Anticipates a ~40% increase in growth spend in 2025.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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