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Lemonade (LMND)
NYSE:LMND
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Lemonade
(NYSE:LMND)
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Rating:57Neutral
Price Target:
$69.00
▲(3.19% Upside)
Action:ReiteratedDate:03/18/26
The score is driven primarily by improving fundamentals and a constructive earnings-call outlook (strong growth, margin expansion, and an articulated path to EBITDA profitability), offset by still-weak current financial performance (ongoing net losses, negative ROE, and negative annual free cash flow), mixed technical signals, and limited valuation support due to a negative P/E and no dividend yield provided.
Positive Factors
Top-line & In‑Force Growth
Sustained high revenue and in‑force premium growth (nine consecutive quarters of acceleration) indicate durable customer acquisition and scale across products and geographies. Broad-based growth (pet, car, Europe) and rising premium per customer support long-term market share gains and operating leverage as fixed tech costs are spread over a larger base.
Gross Margin Expansion
Material improvement in gross profit and adjusted gross margins reflects better underwriting, pricing and monetization. Higher margins boost retained earnings capacity and capital efficiency, reducing the reliance on external funding for growth and making the path to company-level profitability more achievable if underwriting discipline and reinsurance structures hold.
Liquidity & Cash Generation
A sizable cash balance combined with consecutive positive adjusted free cash flow quarters provides a meaningful runway for planned growth and R&D investments. This liquidity reduces near-term refinancing risk, enables sustained marketing and product investment, and gives management optionality to scale while working toward consistent full‑year cash generation.
Negative Factors
Persistent GAAP Losses & Negative ROE
Ongoing GAAP losses and deeply negative returns on equity have eroded shareholders' capital (equity fell from ~$988M in 2021 to ~$533.6M in 2025). This structural profitability gap reduces the firm's buffer to absorb underwriting shocks, limits retained-capital growth, and keeps the company dependent on operational improvement to restore sustainable shareholder returns.
Annual Negative Free Cash Flow
Although cash burn has materially improved, annual free cash flow remains negative, requiring ongoing reliance on the existing cash stockpile to fund growth and investments. Until the company can convert quarter-level positives into sustained annual FCF, growth plans and R&D/marketing spend present execution risk and could pressure liquidity if performance slips.
Underwriting Quality Masked by Reserve Development
Reported underwriting improvements have been aided by sizable prior‑period reserve releases, which can be one‑time and not indicative of ongoing loss trends. That reliance, combined with ambitious investments in autonomous insurance (uncertain adoption timelines and R&D needs), creates execution and margin risk if reserve tailwinds fade or new product rollouts require sustained spending.
Lemonade (LMND) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.11B
Dividend YieldN/A
Average Volume (3M)2.83M
Price to Earnings (P/E)―
Beta (1Y)1.47
Revenue Growth30.53%
EPS Growth21.82%
CountryUS
Employees1,235
SectorFinancial
Sector Strength70
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)-0.29
Shares Outstanding76,383,440
10 Day Avg. Volume1,817,438
30 Day Avg. Volume2,828,685
Financial Highlights & Ratios
PEG Ratio1.60
Price to Book (P/B)9.58
Price to Sales (P/S)6.93
P/FCF Ratio-197.38
Enterprise Value/Market Cap0.96
Enterprise Value/Revenue6.64
Enterprise Value/Gross Profit14.88
Enterprise Value/Ebitda-33.63
Forecast
1Y Price Target
$69.33Price Target Upside3.68% Upside
Rating ConsensusHold
Number of Analyst Covering9
EPS Forecast (FY)-1.71
Revenue Forecast (FY)$1.19B
Lemonade Business Overview & Revenue Model
Company DescriptionLemonade, Inc. provides various insurance products in the United States and Europe. Its insurance products include stolen or damaged property, and personal liability that protects its customers if they are responsible for an accident or damage to another person or their property. The company also offers renters, homeowners, pet, car, and life insurance products, as well as landlord insurance policies. In addition, it operates as an agent for other insurance companies. The company was formerly known as Lemonade Group, Inc. and changed its name to Lemonade, Inc. Lemonade, Inc. was incorporated in 2015 and is headquartered in New York, New York.
How the Company Makes MoneyLemonade makes money primarily by earning insurance premium revenue on policies it underwrites and by generating investment income on the assets (float) held to pay future claims. Its core revenue stream is premiums collected from policyholders, which are recognized as earned premium over the coverage period; from this it pays claims and claim adjustment expenses, purchases reinsurance, and incurs operating costs (technology, customer acquisition/marketing, and general administration). A significant component of its economics is reinsurance: Lemonade cedes portions of written premium to reinsurers in exchange for transferring part of the claims risk, and it earns ceding commissions from reinsurers that can offset acquisition and other costs. Where Lemonade distributes products but does not retain the full underwriting risk (e.g., certain arrangements involving third-party carriers or fronting structures), it may earn policy or service-related fees/commissions (null). The company’s profitability depends on maintaining an attractive loss ratio (claims relative to premium), effective reinsurance structure and pricing, and controlling acquisition and operating expenses while scaling its in-force premium base.
Lemonade Key Performance Indicators (KPIs)
Any
Revenue by Segment
Breaks down income from different insurance products, revealing which segments are driving growth and where there might be opportunities or challenges.
Breaks down income from different insurance products, revealing which segments are driving growth and where there might be opportunities or challenges.
Data provided by:
The Fly
The FlyLemonade Earnings Call Summary
Earnings Call Date:Feb 19, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 12, 2026
Earnings Call Sentiment Positive
The call presented strong and broad‑based operational and financial momentum: high single‑ and double‑digit top‑line growth, large increases in gross profit and improving adjusted gross margins, robust customer additions, positive free cash flow, and near‑term adjusted EBITDA breakeven trajectory. The company is investing aggressively in growth, AI/telematics (notably autonomous car insurance), and platform initiatives that management expects will compound future advantages. Offsetting this are continued GAAP net losses, rising operating expenses (driven by scaled growth spend and select G&A increases), some reliance on prior period reserve development to improve loss metrics, and uncertainties around the pace of autonomous adoption and the magnitude/timing of R&D investments. Overall, the positives—strong revenue, gross profit expansion, cash generation, and clear product/AI initiatives—materially outweigh the negatives in the near term.Q4-2025 Updates
Positive Updates
Record Quarter: Revenue and In‑Force Premium Growth
In Q4 2025 in‑force premium reached $1,240,000,000, up 31% year‑over‑year, extending nine consecutive quarters of accelerating growth; revenue grew 53% year‑over‑year to $228,000,000.
Strong Profitability Momentum
Gross profit increased 73% year‑over‑year to $111,000,000; adjusted gross profit rose 69% to $112,000,000. Gross margin was ~48% and adjusted gross margin ~49%; adjusted gross profit as a percentage of gross earned premium improved to 39% from 29% (up 10 percentage points).
Near‑Term Profitability and Cash Generation
Adjusted EBITDA loss narrowed to $5,000,000 in Q4 (a $19,000,000 improvement year‑over‑year); adjusted free cash flow was positive $37,000,000 in the quarter (third consecutive positive quarter and six of the last seven). Operating cash flow was $21,000,000 and cash & investments totaled roughly $1,100,000,000 (approximately $250,000,000 held as regulatory surplus). Management reiterated expectations for EBITDA profitability in Q4 2026 and full‑year EBITDA positivity in 2027.
Customer Growth and Premium Per Customer Expansion
Customer count grew 23% year‑over‑year while premium per customer increased ~7%. The company added about 550,000 new customers in 2025, ~35% more than the prior year.
Marketing Efficiency and Scalable Growth Spend
Marketing efficiency remains strong with an LTV‑to‑CAC ratio above 3x. Q4 growth spend was $53,000,000 (up 48% YoY); management expects growth spend to be about $225,000,000 for the year. Revenue growth outpaced IFP growth by more than 20 percentage points (53% vs 31%), indicating improving monetization.
Product and Geographic Momentum
Management highlighted diversified growth: pet and car lines showing growth “in the fifties” (percent), and Europe growing in the triple digits (percent), indicating broad‑based product and regional expansion.
Autonomous Insurance Innovation
Launched Lemonade Autonomous Car (initially with Tesla integration). Data shows Tesla FSD miles are more than 50% safer than equivalent human‑driven miles; autonomously driven miles are currently priced at ~50% of human‑driven miles. Pricing dynamically adjusts to software and hardware improvements, positioning Lemonade to capture long‑term AI/telematics advantages.
Negative Updates
GAAP Net Loss and Remaining Adjusted EBITDA Gap
Net loss was $22,000,000 in Q4 (loss of $0.29 per share) versus a $30,000,000 net loss ($0.42 per share) the prior year — an improvement but still a GAAP loss. Adjusted EBITDA remains a small loss of $5,000,000 (near breakeven).
Rising Operating Expenses
Operating expenses excluding loss & loss adjustment expense rose $30,000,000 (24%) to $154,000,000 in Q4. Sales & marketing increased $17,000,000 (35%), growth spend rose 48% YoY to $53,000,000. Technology development expense was up 14% to $25,000,000 and G&A increased 29% to $43,000,000.
Increases in Bad Debt and Other Expense Items
G&A growth included approx. $2,000,000 higher non‑cash stock compensation, roughly $1,000,000 more interest expense, and approx. $5,000,000 higher bad debt expense, contributing to margin pressure in operating expense lines.
Loss Ratio and Reliance on Prior Period Development
Reported gross loss ratio was 52% in Q4, with a favorable prior period development of 9% (driven by non‑CAT prior period development). Prior period development accounted for $11,000,000 favorable in Q4 and ~$30,000,000 favorable for the full year, indicating some underwriting improvement was aided by reserve development.
Guidance Uncertainties and Investment Trade‑offs
Management emphasized conservative guidance tied to "line of sight" and noted material R&D and go‑to‑market investments planned for 2026. These investments could temper near‑term margin improvement if the company leans into higher spend, and autonomous adoption timelines remain uncertain (could take years).
Home Business Clean‑Up and Retention
Annual dollar retention (ADR) was stable at 85% quarter‑over‑quarter amid ongoing "clean‑the‑book" efforts in the homebuzz home business, implying selective underwriting/retention actions that constrain near‑term growth in that segment.
Company Guidance
Management guided that Q1 and full‑year 2026 will see strong top‑line growth (Q1 YoY ~32% with a company goal of 30%+ and an ambition to accelerate quarter‑over‑quarter), cited roughly 60% full‑year revenue growth, and reiterated expectations for a positive EBITDA quarter in Q4 2026 and full‑year EBITDA profitability in 2027; they plan total 2026 growth spend of about $225M (Q1 spending similar to Q4’s ~$53M), expect to maintain marketing efficiency with an LTV‑to‑CAC above 3x, see non‑growth operating expenses rising only in the single digits, and noted ample capital to support growth with roughly $1.1B in cash and investments (about $250M held as regulatory surplus).Lemonade Financial Statement Overview
Summary
Growth is strong and losses/cash burn are improving, supported by low leverage; however, profitability remains negative (ongoing net losses, negative ROE) and free cash flow is still negative on the annual figures provided, with equity trending down over time.Income Statement
Revenue growth is solid over time, with total revenue rising from $94.4M (2020) to $737.9M (2025), including 12.0% growth in 2025 (annual). Profitability is improving but still weak: net losses narrowed to -$165.5M in 2025 from -$202.2M in 2024 and -$297.8M in 2022, and the net margin improved materially to about -22% in 2025 versus roughly -38% in 2024. However, margins remain negative and 2025 shows missing/zero gross profit and operating profit fields, limiting visibility into underwriting/expense efficiency and making earnings quality harder to assess.42
Neutral
Balance Sheet
The balance sheet is conservatively levered: debt-to-equity was modest in 2024 (~0.18) and total debt is shown as $0 in 2025, which reduces financial risk. Equity remains meaningful at ~$533.6M in 2025 against ~$1.93B in assets. The key weakness is persistent value erosion from losses, reflected in consistently negative returns on equity (about -31% in 2025 and ~-34% in 2024), and equity has trended down from ~$988.2M (2021) to ~$533.6M (2025).63
Positive
Cash Flow
Cash burn has improved significantly versus prior years: operating cash flow was -$16.5M in 2025 and -$11.4M in 2024, much better than -$163.0M in 2022 and -$144.6M in 2021. Free cash flow is still negative (-$25.9M in 2025; -$20.8M in 2024), and 2025 free cash flow declined versus 2024 (about -21% growth), signaling that the path to sustained self-funding operations is not yet secured. While free cash flow is less negative than net income in recent years, the company remains dependent on maintaining liquidity until profitability improves.46
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 737.90M | 526.50M | 429.80M | 256.70M | 128.40M |
| Gross Profit | 297.20M | 172.70M | 90.20M | 28.40M | 22.90M |
| EBITDA | -145.70M | -183.90M | -209.80M | -282.60M | -229.90M |
| Net Income | -165.50M | -202.20M | -236.90M | -297.80M | -241.30M |
Balance Sheet | |||||
| Total Assets | 1.93B | 1.85B | 1.63B | 1.69B | 1.51B |
| Cash, Cash Equivalents and Short-Term Investments | 1.11B | 1.01B | 937.70M | 1.03B | 1.07B |
| Total Debt | 189.30M | 107.20M | 43.10M | 35.20M | 22.30M |
| Total Liabilities | 1.39B | 1.26B | 924.40M | 823.90M | 522.30M |
| Stockholders Equity | 533.60M | 593.40M | 708.90M | 866.80M | 988.20M |
Cash Flow | |||||
| Free Cash Flow | -25.90M | -20.80M | -128.30M | -173.10M | -154.00M |
| Operating Cash Flow | -16.50M | -11.40M | -119.10M | -163.00M | -144.60M |
| Investing Cash Flow | -89.10M | 40.60M | 88.70M | 181.10M | -804.80M |
| Financing Cash Flow | 106.60M | 87.70M | 15.40M | 3.60M | 649.60M |
Lemonade Technical Analysis
Positive
66.87
Price Trends
70.10
Negative
71.01
Negative
59.26
Positive
Market Momentum
-2.90
Negative
59.09
Neutral
81.80
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LMND, the sentiment is Positive. The current price of 66.87 is above the 20-day moving average (MA) of 55.68, below the 50-day MA of 70.10, and above the 200-day MA of 59.26, indicating a neutral trend. The MACD of -2.90 indicates Negative momentum. The RSI at 59.09 is Neutral, neither overbought nor oversold. The STOCH value of 81.80 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LMND.
Lemonade Risk Analysis
Lemonade disclosed 68 risk factors in its most recent earnings report. Lemonade reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Lemonade Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $3.18B | 18.22 | 22.79% | ― | 54.41% | 52.71% | |
76 Outperform | $119.40B | 13.18 | 40.02% | 2.20% | 18.35% | 32.36% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
58 Neutral | $725.49M | 52.81 | 14.21% | ― | 38.50% | ― | |
57 Neutral | $5.11B | -30.89 | -31.19% | ― | 30.53% | 21.82% | |
56 Neutral | $1.77B | -74.49 | 9.03% | 3.15% | 4.51% | -8.29% |
* Financial Sector Average
LMND
Lemonade
66.87
32.92
96.97%
PGR
Progressive
203.79
-62.27
-23.40%
KMPR
Kemper
30.20
-34.96
-53.66%
PLMR
Palomar Holdings
119.05
-11.12
-8.54%
ROOT
Root
46.66
-104.14
-69.06%
Lemonade Corporate Events
Delistings and Listing Changes
Lemonade Metromile merger warrants near February 2026 expiry
Neutral
Jan 27, 2026
Lemonade, Inc., which operates a technology-focused consumer insurance platform, issued 7,846,646 warrants with an exercise price of $218.51 as part of its November 8, 2021 merger agreement with Metromile, Inc. These Lemonade warrants, listed on the NYSE under the LMND-WS ticker, are scheduled to expire on February 9, 2026 at 5:00 p.m. Eastern Time, and the exchange has notified the company that trading in the warrants will be suspended after the market close on February 5, 2026 to allow for timely settlement ahead of expiration, affecting warrant holders’ remaining window to exercise or trade these instruments.
The most recent analyst rating on (LMND) stock is a Hold with a $101.00 price target. To see the full list of analyst forecasts on Lemonade stock, see the LMND Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.