Artificial intelligence (AI)-powered insurance company Lemonade (LMND) saw its stock rally almost 30% on Tuesday after reporting solid Q2 revenue and a lower-than-anticipated loss. The company also raised its full-year revenue guidance while reiterating the 2025 adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) outlook. Investors cheered the improvement in key metrics, including loss ratio and in-force premiums.
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Lemonade’s Stellar Q2 Performance
Lemonade’s Q2 revenue grew 35% year-over-year to $164.1 million, surpassing analysts’ estimate of $160.8 million. Further, in-force premiums surged 29% to $1.08 billion, marking the seventh consecutive quarter of growth acceleration in this key metric. Additionally, the company saw a 24% rise in customer count to 2,693,107 compared to the prior-year quarter.
The company’s net loss narrowed to $0.60 per share in Q2 2025 compared to $0.81 in the prior-year quarter, as higher revenue was partially offset by a rise in growth spend. The Q2 loss was significantly better than the analysts’ consensus estimate of a loss per share of $0.79.
Lemonade attributed its strong performance and outlook to its Car and Europe segments. Specifically, Europe in-force premiums grew by more than 200% year-over-year to $43 million and contributed more than 20% of the net new customers in the quarter.
Wall Street Reacts to Lemonade’s Stellar Q2 Results
Oppenheimer analyst Jason Helfstein reaffirmed a Hold rating on Lemonade stock, as the company’s investment story is “largely unchanged” despite the company’s move to cede less premium to reinsurance partners. The 4-star analyst noted that Lemonade is seeing strong growth in the Car and Europe segments, and is progressing toward profitability. Helfstein reduced his EBITDA estimates but highlighted that Lemonade’s loss ratios continue to improve.
Likewise, William Blair analyst Adam Klauber reaffirmed a Hold rating on LMND stock. The analyst noted the better-than-expected growth in in-force premiums and revenue, reflecting favorable ceding commissions. Klauber added that for 2025, the increased retention supports a faster ramp toward profitability, given greater top-line leverage on operating costs. Consequently, the analyst increased his 2026 revenue estimate to $1.2 billion from $851 million and the adjusted EBITDA estimate to a loss of $30 million, marking an improvement from the previous estimate of a loss of $47 million.
While Klauber is encouraged by Lemonade’s strong underwriting and ramping growth of its auto product, he awaits more progress toward adjusted EBITDA profitability (expected in Q4 2026) before becoming more constructive on the stock.
Is LMND Stock a Buy, Sell, or Hold?
Wall Street has a Moderate Sell consensus rating on Lemonade stock due to profitability concerns. The average LMND stock price target of $33.80 indicates 29.5% downside risk from current levels. However, analysts might revise their price targets/ratings in reaction to the Q2 results.
