Lemonade, Inc. (LMND) delivered the kind of quarterly report that makes short sellers nervous on Thursday, sending shares up more than 12% in premarket trading after beating expectations across the board.
The digital insurance company reported a loss of 29 cents per share for the fourth quarter of fiscal 2025, handily beating the analyst consensus of a 41-cent loss. Revenue came in at $228.1 million, crushing estimates of $215.8 million.
That's a 53% jump in sales year over year, driven by higher gross earned premium, ceding commission income, and a reduced premium cession rate tied to quota share reinsurance. When your top line grows that fast while you're simultaneously narrowing losses, people notice.
The improvement showed up in the bottom line too. Adjusted gross profit climbed 69% year over year to $112.0 million, helped by higher revenue and an improved net loss ratio. The company's adjusted EBITDA loss narrowed to just $4.6 million from $23.8 million in the prior year quarter, reflecting both stronger revenues and better underwriting results.
Lemonade closed the quarter with approximately $1.12 billion in cash, cash equivalents, and investments, giving it plenty of runway.
The Growth Metrics
In-force premium rose 31% year over year to $1.237 billion, while premium per customer increased 7% to $414 million in the quarter. Growth came from all business lines except Homeowners multi-peril. Gross earned premium jumped 28% year over year to $290.2 million in the fourth quarter.
Looking Ahead
For the first quarter, Lemonade expects in-force premium between $1.321 billion and $1.326 billion, with sales of $246 million to $251 million. That compares favorably to the Street estimate of $241.822 million.
For fiscal 2026, the company guided to sales of $1.187 billion to $1.192 billion, ahead of the analyst estimate of $1.158 billion, and in-force premium of $1.625 billion to $1.630 billion.
