LMND · Lemonade, Inc.

Lemonade delivered a strong second quarter in 2026, with revenue accelerating 79% year over year to $294 million, driven by a 32% increase in in force premium (IFP) to $1.43 billion and higher premium retention from a reduced quota share cession rate effective since Q3 2025. Gross profit reached a record $113 million, up 76%, while the net loss narrowed slightly to $43.4 million. Adjusted EBITDA loss improved 54% to $18.7 million, reflecting revenue growth and improved underwriting results partially offset by increased growth spend ($64.4 million, up from $49.7 million a year ago).

Operational efficiency gains were evident as the loss adjustment expense (LAE) ratio fell to a record low 5%, compared to 7% a year ago, driven by AI and automation in claims handling. The company highlighted that its LAE ratio is now below the industry average of about 9%. Additionally, Lemonade announced a new 12-month reinsurance program effective July 1, 2026, reducing the effective quota share cession rate from ~20% to ~18% and expanding catastrophe protection to up to $40 million per event. The synthetic agents program was extended with a $250 million financing agreement from Hannover Re at a reduced cost of capital of ~9.8%.

Management provided guidance for Q3 2026 expecting IFP of $1,537-$1,540 million, revenue of $323-$326 million, and an adjusted EBITDA loss of ($23)-($20) million. For the full year 2026, revenue is guided to $1,214-$1,220 million and adjusted EBITDA loss of ($51)-($47) million. The company continues to expect positive adjusted EBITDA in Q4 2026, with the implied Q4 adjusted EBITDA around $8 million. Investors should note the sequential increase in growth spend expected in Q3 to capitalize on car and renters seasonality, but the company expects IFP growth to outpace spend growth in 2027.