0001691421-25-000124
SEC filingLemonade grew revenue 35% YoY to $164.1M in Q2 2025, reducing net loss by 23% as customer growth and premium per customer increased.
For the three months ended June 30, 2025, Lemonade reported total revenue of $164.1 million, a 35% increase from $122.0 million in the same period last year. The growth was primarily driven by a 26% rise in net earned premium to $112.5 million and an 84% surge in ceding commission income to $30.4 million. Net earned premium benefited from a 26% increase in gross written premium to $284.5 million, fueled by a 24% growth in net added customers and a 4% increase in premium per customer. Gross profit soared to $64.3 million (39% margin) from $30.8 million (25% margin), while adjusted gross profit reached $65.6 million (40% margin vs 27% a year ago). The gross loss ratio improved sharply to 67% from 79%, and the net loss ratio declined to 69% from 79%, aided by reserve releases in the homeowners multi-peril line.
Total expenses increased 17% to $206.7 million, slower than revenue growth. Sales and marketing rose 62% to $59.6 million due to higher brand and performance advertising, while general and administrative expenses fell 13% to $25.8 million, partly from an $11.7 million ERC tax refund. Net loss narrowed 23% to $43.9 million from $57.2 million.
Lemonade does not report segment-level financials but operates across renters, homeowners, pet, car, and life insurance. The company highlighted strong performance in its digital advertising campaigns and partnerships, which drove customer acquisition. Premium per customer increased 4% year-over-year, reflecting multi-policy uptake and a shift toward higher-value products. The reinsurance program remained stable with a 55% cession rate during the period, though the effective cession rate was reduced to 20% effective July 1, 2025, for the renewed program.
Management expects continued investment in sales and marketing to support customer growth, with long-term efficiency improvements as renewals become a larger proportion of business. The company noted that macroeconomic factors, including inflation and geopolitical risks (e.g., Israel conflict), could impact claims costs and pricing. The amended Customer Investment Agreement with General Catalyst provides up to an additional $200 million for growth spend through 2026. As of June 30, 2025, Lemonade had $1.023 billion in cash, cash equivalents, and investments, and believes existing liquidity is sufficient for at least the next 12 months. No specific numeric guidance was provided.
As of June 30, 2025, Lemonade held $386.0M in cash, cash equivalents, and restricted cash, flat year-to-date. Total investments of $645.8M consisted largely of fixed maturities ($624.5M) and short-term investments ($21.3M), with a net unrealized gain of $1.9M. Shareholders' equity fell to $527.1M from $593.4M at year-end 2024, driven by net losses. Unearned premium grew to $509.5M, reflecting business growth.
The company has no disclosed purchase commitments. Guarantees for office leases total $2.7M. A $6.9M assessment from the California FAIR Plan related to January 2025 wildfires was recorded as expense.
No share buybacks or dividends were declared. Debt activity was focused on the Customer Investment Agreement with General Catalyst: outstanding borrowings rose to $123.5M from $83.4M at December 31, 2024, with net proceeds of $40.1M in H1 2025. Capital expenditures were $4.4M (1.4% of revenue). Interest expense on borrowings was $7.3M for the six months.
Lemonade operates as a single reportable segment. Gross written premium (GWP) for H1 2025 totaled $538.7M, up 24.7% from $431.8M in H1 2024. US GWP was $519.7M (96.5%), led by California ($121.7M, 22.6%), Texas ($71.3M, 13.2%), and New York ($52.9M, 9.8%). Europe and UK contributed $19.0M (3.5%). No separate segment profitability was disclosed beyond the consolidated net loss.
For the six months ended June 30, 2025, Lemonade reported a net loss of $106.3M, but net cash used in operating activities was only $41.7M. The difference is primarily due to non-cash charges: stock-based compensation ($25.7M), depreciation and amortization ($9.2M), and provision for bad debt ($8.9M). Working capital changes consumed cash, notably increases in premium receivable ($54.4M) and prepaid reinsurance ($28.0M), partially offset by growth in unearned premiums ($54.5M).
Capital expenditures (capex) were modest at $4.4M, representing about 10.6% of operating cash outflow, indicating low asset intensity. No free cash flow is explicitly stated, and the company did not repurchase shares or pay dividends. Financing activities generated $44.1M, mainly from net borrowings under the financing agreement ($40.1M) and stock exercises ($4.0M).
The operating cash flow trend is stable versus the prior year ($41.5M used), with similar working capital dynamics. The company continues to rely on debt financing to support operations and investment activities.