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Lemonade (LMND)
NYSE:LMND
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Lemonade
(NYSE:LMND)
54Neutral
Positive Factors
Financial Performance
Lemonade sustained adjusted cash flow positivity for the third consecutive quarter and achieved it annually for the first time, indicating strong financial performance.
Future Growth Potential
IFP growth accelerated for the fifth consecutive quarter with guidance suggesting further acceleration to ~28% growth in 2025 and 30%+ in 2026, indicating strong future growth potential.
Revenue Growth
Revenue grew 29% to $149 million, above the estimate.
Negative Factors
Competitive Challenges
The company faces a more competitive environment in auto insurance, which could lead to varying levels of customer acquisition costs.
Expenses
Higher expenses, including interest expense related to LMND's 'Synthetic Agents' program, are estimated for the coming years.
Guidance and Expectations
Guidance for both 1Q25 and full year 2025 was below expectations on premiums, total revenue, and adjusted EBITDA.
Lemonade (LMND) vs. S&P 500 (SPY)
Market Cap
$2.36B
Dividend YieldN/A
Average Volume (3M)2.64M
Price to Earnings (P/E)―
Beta (1Y)2.61
Revenue Growth20.94%
EPS Growth16.23%
CountryUS
Employees1,235
SectorFinancial
Sector Strength81
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)-2.85
Shares Outstanding72,820,080
10 Day Avg. Volume1,755,218
30 Day Avg. Volume2,644,348
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)4.78
Price to Cash Flow (P/CF)45.60
P/FCF Ratio45.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$29.29Price Target Upside-9.79% Downside
Rating ConsensusHold
Number of Analyst Covering8
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 through the premiums paid by its policyholders. The company uses a flat fee model, taking a fixed percentage of the premiums to cover operational costs and profit. The remaining portion of the premiums is used to pay claims and is donated to various charitable causes chosen by the policyholders through Lemonade's Giveback program. This model is designed to minimize conflicts of interest between the company and its customers. Additionally, Lemonade collects interest income on the premiums it holds and generates revenue through reinsurance agreements, where it transfers a portion of the risk to other insurance companies. Key partnerships with reinsurers and a focus on efficient digital operations contribute significantly to Lemonade's earnings.
Lemonade Financial Statement Overview
Summary
Lemonade is showing considerable revenue growth, but persistent losses and cash flow challenges indicate the need for strategic adjustments. The company's strong cash position and absence of debt are positives, though declining equity raises concerns about long-term financial health.Income Statement
Lemonade has demonstrated impressive revenue growth, increasing from $67.3 million in 2019 to $526.5 million in 2024. The revenue growth rate from 2023 to 2024 was approximately 22.5%, indicating strong upward momentum. However, the company has yet to achieve profitability, as evidenced by negative net income throughout the period. The gross profit margin remains strong at 100% due to the nature of their business model. Despite the positive revenue trend, the persistent net losses and negative EBIT margin reflect challenges in achieving operational efficiency.60
Neutral
Balance Sheet
Lemonade's balance sheet shows a strong cash position with cash and cash equivalents of $385.7 million as of 2024. The equity ratio is reasonable at approximately 32.1%, suggesting a balanced capital structure. However, the company has faced declining stockholders' equity over the years, with a significant decrease from $988.2 million in 2021 to $593.4 million in 2024, reflecting accumulated losses. The absence of total debt is a positive sign, indicating no leverage risk, but the reduced equity base poses a concern for financial stability.55
Neutral
Cash Flow
Lemonade has struggled with negative free cash flow, although there was an improvement from -$128.3 million in 2023 to -$20.8 million in 2024. The operating cash flow to net income ratio is negative, indicating operational cash flow challenges. The free cash flow to net income ratio also remains negative, reflecting ongoing cash outflows and the need for improvement in cash generation capabilities. Despite these challenges, the company has managed to secure financing, as evidenced by positive financing cash flows.45
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 526.50M | 429.80M | 256.70M | 128.40M | 94.40M | Gross Profit |
| 526.50M | 429.80M | 256.70M | 128.40M | 94.40M | EBIT |
| -203.90M | -229.80M | -119.10M | -161.70M | -66.10M | EBITDA |
| -183.90M | -209.80M | -106.90M | -158.00M | -64.40M | Net Income Common Stockholders |
| -202.20M | -236.90M | -297.80M | -241.30M | -122.30M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.01B | 264.50M | 1.03B | 1.07B | 577.40M | Total Assets |
| 1.85B | 1.63B | 1.69B | 1.51B | 828.70M | Total Debt |
| 107.20M | 43.10M | 35.20M | 22.30M | 0.00 | Net Debt |
| -268.80M | -221.40M | -247.30M | -248.30M | -570.80M | Total Liabilities |
| 1.26B | 924.40M | 823.90M | 522.30M | 287.70M | Stockholders Equity |
| 593.40M | 708.90M | 866.80M | 988.20M | 541.00M |
| Cash Flow | Free Cash Flow | |||
| -20.80M | -128.30M | -173.10M | -154.00M | -96.10M | Operating Cash Flow |
| -11.40M | -119.10M | -163.00M | -144.60M | -91.70M | Investing Cash Flow |
| 40.60M | 88.70M | 181.10M | -804.80M | 50.10M | Financing Cash Flow |
| 87.70M | 15.40M | 3.60M | 649.60M | 341.10M |
Lemonade Technical Analysis
Negative
32.47
Price Trends
34.48
Negative
36.64
Negative
27.29
Positive
Market Momentum
-0.21
Positive
43.93
Neutral
15.53
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LMND, the sentiment is Negative. The current price of 32.47 is below the 20-day moving average (MA) of 34.94, below the 50-day MA of 34.48, and above the 200-day MA of 27.29, indicating a neutral trend. The MACD of -0.21 indicates Positive momentum. The RSI at 43.93 is Neutral, neither overbought nor oversold. The STOCH value of 15.53 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LMND.
Lemonade Risk Analysis
Lemonade disclosed 79 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
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $4.95B | 9.23 | 9.91% | ― | -15.68% | -47.11% | |
76 Outperform | $4.45B | 102.06 | 60.58% | ― | 20.37% | 111.74% | |
70 Outperform | $2.08B | 87.48 | 10.41% | ― | 158.57% | ― | |
69 Neutral | $3.33B | ― | 2.80% | ― | 56.54% | ― | |
64 Neutral | $14.24B | 10.27 | 8.97% | 4.33% | 16.38% | -11.94% | |
62 Neutral | $651.87M | ― | -10.95% | ― | 77.44% | 85.53% | |
54 Neutral | $2.36B | ― | -31.05% | ― | 20.94% | 16.23% |
* Financial Sector Average
Performance Comparison
LMND
Lemonade
32.47
15.91
96.07%
ESGR
Enstar Group
332.37
25.85
8.43%
GSHD
GooseHead Insurance
118.40
53.22
81.65%
ROOT
Root
136.93
76.41
126.26%
HIPO
Hippo Holdings
25.99
6.72
34.87%
OSCR
Oscar Health
13.30
-1.39
-9.46%
Lemonade Earnings Call Summary
Earnings Call Date: Feb 25, 2025 | % Change Since: 1.50% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Positive
The earnings call highlighted Lemonade's record-breaking financial performance in Q4 2024, with significant growth in gross profit and cash flow positivity. While there are challenges such as the impact of California Wildfires and a slight decline in annual dollar retention, the company's strategic positioning and operational efficiencies indicate a strong potential for future growth. The overall sentiment is positive, with more emphasis on achievements and future projections than on the challenges faced.Highlights
Best Quarter and Year to Date
Q4 2024 was Lemonade's best quarter ever across KPIs, marking a 26% IFP growth. 2024 was their best year with cash flow positive results of $48 million.
Record Gross Profit Growth
Gross profit doubled year-over-year to $167 million, indicating significant margin expansion and operational efficiency.
Positive Adjusted Free Cash Flow
Lemonade achieved a positive adjusted free cash flow of $27 million in Q4 2024, ensuring a cash flow positive year overall.
Improved Loss Ratios
The trailing 12-month gross loss ratio ended at 73%, a 12-point improvement year-over-year, contributing to margin expansion.
Strong Operational Leverage
Operating expenses excluding growth spend declined in inflation-adjusted terms, and EBITDA was positive for the first time in Q4.
Guidance for Further Growth
For 2025, Lemonade expects IFP growth of 28% and plans to ramp growth spend by approximately 40% year-over-year.
Lowlights
Impact of California Wildfires
The California Wildfires are expected to have a $20 million EBITDA impact in 2025, with a gross loss estimate significantly higher than actual experience.
Slight Decline in Annual Dollar Retention
Annual dollar retention (ADR) was 86%, down one percentage point year-over-year, impacted by efforts to reduce less profitable portions of the homebook.
Challenges in Car Insurance Expansion
While car insurance is a strategic priority, the expansion is still limited to eight states, with considerable testing needed before large-scale growth.
High Operating Expenses
Operating expenses excluding loss and loss adjustment increased by 38% to $124 million in Q4, driven by an increase in growth spend.
Company Guidance
In the Lemonade Fourth Quarter 2024 earnings call, the company provided optimistic guidance for 2025, expecting in-force premium (IFP) growth of 28% as they scale operations and focus on profitability. Their 2024 results showed a 26% increase in IFP, a gross loss ratio of 63%, and a record adjusted free cash flow of $48 million, marking their first cash-flow-positive year. Despite the impact of the California wildfires, which is expected to have a $20 million EBITDA impact, Lemonade aims to maintain a positive adjusted free cash flow and improve EBITDA sequentially in 2025. The company plans to increase growth spend by 40% year-over-year, focusing on expanding their car insurance product and leveraging their AI platform to drive operational efficiencies. As they navigate inflationary pressures and catastrophe (CAT) events, Lemonade emphasizes their cautious underwriting and strong reinsurance programs, positioning them well for continued growth and margin expansion.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.