Lemonade (LMND) AI Stock Analysis

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Lemonade

(NYSE:LMND)

Select Model

Neutral 60 (OpenAI - 5.2)

Rating:60Neutral

Price Target:

$101.00

▲(16.45% Upside)

The score is driven primarily by improving (but still loss-making) financial performance and strong bullish technical momentum. The earnings call adds support via accelerating premium/revenue growth and a clearer profitability path, while valuation remains a key constraint due to negative earnings and no dividend yield.

Positive Factors

Accelerating top-line growth

Sustained double-digit revenue and in-force premium growth signal successful distribution and product-market fit. Over 2–6 months this supports scale benefits, underwriting leverage, and higher lifetime value from cross-sell, improving the odds of reaching operating profitability if margins hold.

Improving underwriting economics

A meaningful rise in gross profit and margins reflects better pricing, risk selection, and loss control—durable drivers of profitability. If maintained, higher gross margins provide room to absorb acquisition costs and invest in growth while moving the business toward sustained positive operating income.

Strong liquidity and low leverage

A conservative balance sheet with minimal debt and a large equity cushion plus substantial cash provides multi-quarter runway against reserve volatility and underwriting losses. This structural financial flexibility supports product rollouts and reinsurance strategies without immediate capital raises.

Negative Factors

Persistent negative cash flow and losses

Ongoing negative operating and free cash flows indicate the business has not yet converted growth into self-sustaining cash generation. Over several months this limits internal funding for reserves, marketing, or product investment and raises reliance on capital markets or reinsurance capacity.

Continued operating losses and rising expenses

Despite margin gains, persistent adjusted EBITDA losses and rising operating costs indicate operating leverage is incomplete. If SG&A and tech expenses grow faster than gross profit, path to sustainable profitability lengthens and capital needs may rise to fund the operating deficit.

Home segment remediation hurting retention

A deliberate remediation of legacy home policies reduces near-term retention and premium growth and can raise combined ratios. Over months this constrains growth momentum in a core product, pressures unit economics, and complicates achievement of stable underwriting profitability.

Lemonade (LMND) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$6.48B

Dividend YieldN/A

Average Volume (3M)1.97M

Price to Earnings (P/E)―

Beta (1Y)1.40

Revenue Growth30.53%

EPS Growth21.82%

CountryUS

Employees1,235

SectorFinancial

Sector Strength70

IndustryInsurance - Property & Casualty

Share Statistics

EPS (TTM)-0.51

Shares Outstanding74,731,026

10 Day Avg. Volume2,412,169

30 Day Avg. Volume1,974,888

Financial Highlights & Ratios

PEG Ratio0.80

Price to Book (P/B)4.39

Price to Sales (P/S)4.95

P/FCF Ratio-125.25

Enterprise Value/Market Cap0.95

Enterprise Value/Revenue9.30

Enterprise Value/Gross Profit21.77

Enterprise Value/Ebitda-38.10

Forecast

1Y Price Target

$77.40

Price Target Upside-10.76% Downside

Rating ConsensusModerate Buy

Number of Analyst Covering7

EPS Forecast (FY)N/A

Revenue Forecast (FY)N/A

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 generates revenue primarily through the sale of insurance policies, charging customers premiums that vary based on the type of coverage selected. The company employs a unique business model where it retains a fixed percentage of the premiums, which is then used to cover operational costs and claims. Any leftover funds after claims are paid out are allocated to charitable causes chosen by the policyholders through the company's Giveback program. Additionally, Lemonade earns revenue from reinsurance arrangements, where it transfers some of its risk to other insurance entities, allowing it to manage large claims while maintaining a stable financial foundation. Strategic partnerships with reinsurers and technology providers also contribute to its revenue stream by enhancing its underwriting capabilities and expanding its market reach.

Lemonade Key Performance Indicators (KPIs)

Any

Customers

Customers
Tracks the number of policyholders, indicating market penetration, brand appeal, and potential for revenue growth through cross-selling and upselling insurance products.

Chart InsightsLemonade's customer base has consistently grown, reaching over 2.4 million by the end of 2024. This growth is supported by strategic expansion efforts and increased focus on profitability, as highlighted in their latest earnings call. Despite challenges like the California wildfires and a slight decline in annual dollar retention, Lemonade's operational efficiencies and AI platform are driving strong momentum. The company's positive cash flow and planned 40% increase in growth spending for 2025 suggest continued customer acquisition and market expansion, particularly in car insurance.

Data provided by:

The Fly

Lemonade Earnings Call Summary

Earnings Call Date:Nov 05, 2025

(Q3-2025)

% Change Since: |

Next Earnings Date:Feb 19, 2026

Earnings Call Sentiment Positive

Lemonade reported significant revenue growth and improved profitability metrics, driven by strong performance in the auto segment and operational efficiencies. However, the company continues to face challenges in the home insurance segment and reported an EBITDA loss, though the loss has improved. The positive cash flow and financial position provide a strong foundation for future growth.

Q3-2025 Updates

Positive Updates

Revenue and Growth Metrics

Lemonade's in-force premium grew to $1.16 billion, marking the eighth consecutive quarter of accelerating growth. Revenue was up 42% year-on-year, while in-force premium enjoyed 30% growth.

Automobile Segment Performance

The car segment saw 40% growth with more than half coming from existing Lemonade customers, which led to transformative unit economics and a 16% improvement in the loss ratio year-on-year.

Gross Profit and Margin Improvements

Gross profit more than doubled to $18 million, and gross margin climbed into the 40s. The company achieved a 261% surge in gross profit over the past two years with underlying expenses increasing by single digits.

Operational Efficiency via AI

Lemonade achieved a superior level of efficiency with an LAE of 7% on average across all products due to investment in automation, despite being a relatively small carrier.

Financial Position and Guidance

Adjusted free cash flow was positive for the second consecutive quarter at $18 million. The company ended the quarter with just under $1.1 billion in cash and investments. Revenue guidance for Q4 implies a 49% year-on-year growth rate at the high end.

Negative Updates

Challenges in Home Insurance Segment

Ongoing 'clean the book' exercise in the home insurance segment is impacting retention metrics, though ADR began to improve again.

External Market Challenges

The competitive environment in the pet insurance market is increasing as more carriers are entering the space, though no significant impact has been noted yet.

Continued EBITDA Loss

Despite improvements, the company reported an adjusted EBITDA loss of $26 million in Q3, although this was significantly improved from a $49 million EBITDA loss in the prior year.

Operational Expenses Increase

Operating expenses, excluding loss and loss adjustment expense, increased by 13% to $141 million in Q3 compared to the prior year.

Company Guidance

During the Lemonade Q3 2025 earnings call, the company reported a strong quarter, with an in-force premium of $1.16 billion, marking an eighth consecutive quarter of growth. Revenue increased by 42% year-on-year, while gross profit more than doubled to $18 million, with a gross margin in the 40s. The company highlighted a 30% growth in in-force premium and a company-wide gross loss ratio of 62%, the lowest ever recorded. Lemonade's car segment saw a 40% growth, with half of the new car customers being existing Lemonade clients, leading to a CAC-less acquisition. The company emphasized its focus on maximizing gross profit dollars rather than specific loss ratios, noting a 261% surge in gross profit over the past two years, while underlying expenses increased only by single digits. Lemonade also noted its LAE ratio at 7%, showcasing operational efficiency, and shared plans to halve this ratio again as the business doubles. Looking forward, Lemonade expects to achieve EBITDA profitability by Q4 2026, with Q4 revenue guidance implying a 49% growth rate year-on-year at the high end of the guidance range.

Lemonade Financial Statement Overview

Summary

Financial fundamentals are improving but still below average overall. Revenue growth is accelerating (TTM revenue $658.6M) and gross margin is in the low-40% range, with losses and cash burn narrowing versus prior years. However, the company remains unprofitable (negative operating profit and net income) and still has negative operating/free cash flow in TTM (about -$23.4M / -$32.9M), despite a strong balance sheet with effectively no debt and a solid equity cushion.

Income Statement

Neutral

Top-line momentum is improving, with revenue rising to $658.6M in TTM (Trailing-Twelve-Months) and growth accelerating versus 2024. Profitability is also moving in the right direction: gross margin improved to ~42.7% in TTM and losses have narrowed meaningfully versus 2021–2023 levels. However, the company remains structurally unprofitable with negative operating profit and net income in both TTM and the last several annual periods, keeping overall earnings quality and visibility below average.

Balance Sheet

Positive

The balance sheet looks relatively conservative on leverage, with debt trending down and effectively zero total debt in TTM (Trailing-Twelve-Months), supported by a sizable equity base (~$516.2M). Total assets are stable around ~$1.9B, which provides financial flexibility. The key weakness is ongoing value erosion from losses, reflected in persistently negative returns on equity, which can pressure capital over time if profitability doesn’t improve.

Cash Flow

Neutral

Cash flow is improving but still negative: operating cash flow and free cash flow remain in the red in TTM (Trailing-Twelve-Months) (about -$23.4M and -$32.9M, respectively), though this is far better than the sizable outflows seen in 2022–2023. Free cash flow has been trending positively versus prior years, suggesting better cost control and/or working-capital dynamics. Still, continued cash burn means the business has not yet reached self-funding operations.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	658.60M	526.50M	429.80M	256.70M	128.40M	94.40M
Gross Profit	281.40M	172.70M	90.20M	28.40M	22.90M	20.40M
EBITDA	-160.80M	-183.90M	-209.80M	-282.60M	-229.90M	-119.10M
Net Income	-173.80M	-202.20M	-236.90M	-297.80M	-241.30M	-122.30M
Balance Sheet
Total Assets	1.92B	1.85B	1.63B	1.69B	1.51B	828.70M
Cash, Cash Equivalents and Short-Term Investments	355.50M	1.01B	937.70M	1.03B	1.07B	577.40M
Total Debt	0.00	107.20M	43.10M	35.20M	22.30M	0.00
Total Liabilities	1.40B	1.26B	924.40M	823.90M	522.30M	287.70M
Stockholders Equity	516.20M	593.40M	708.90M	866.80M	988.20M	541.00M
Cash Flow
Free Cash Flow	-32.90M	-20.80M	-128.30M	-173.10M	-154.00M	-96.10M
Operating Cash Flow	-23.40M	-11.40M	-119.10M	-163.00M	-144.60M	-91.70M
Investing Cash Flow	-67.70M	40.60M	88.70M	181.10M	-804.80M	50.10M
Financing Cash Flow	103.10M	87.70M	15.40M	3.60M	649.60M	341.10M

Lemonade Technical Analysis

Technical Analysis Sentiment

Positive

Last Price86.73

Price Trends

50DMA

79.29

Positive

100DMA

68.59

Positive

200DMA

54.44

Positive

Market Momentum

MACD

3.53

Negative

RSI

53.86

Neutral

STOCH

58.68

Neutral

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 86.73 is above the 20-day moving average (MA) of 84.20, above the 50-day MA of 79.29, and above the 200-day MA of 54.44, indicating a bullish trend. The MACD of 3.53 indicates Negative momentum. The RSI at 53.86 is Neutral, neither overbought nor oversold. The STOCH value of 58.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (68)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PLMR	83 Outperform	$3.28B	19.28	22.24%	―	54.41%	52.71%
PGR	76 Outperform	$121.97B	10.82	―	2.20%	18.35%	32.36%
ROOT	70 Neutral	$963.18M	19.92	17.02%	―	38.50%	―
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
LMND	60 Neutral	$6.48B	-36.50	-31.34%	―	30.53%	21.82%
KMPR	52 Neutral	$2.31B	10.29	9.03%	3.15%	4.51%	-8.29%

* Financial Sector Average

Performance Comparison

LMND

Lemonade

86.73

53.56

161.47%

PGR

Progressive

208.00

-25.78

-11.03%

KMPR

Kemper

39.41

-25.83

-39.59%

PLMR

Palomar Holdings

123.59

16.56

15.47%

ROOT

Root

62.13

-44.07

-41.50%

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.Date of analysis: Jan 23, 2026