Lemonade reported fourth‑quarter 2025 revenue of $228.1 million, a 53% year‑over‑year increase that surpassed consensus estimates of $216.26 million to $218.1 million by roughly $10 million, or 4.5–5.5%. The jump reflects a 31% rise in in‑force premium to $1.237 billion and a 23% increase in customer count to 2.98 million, driven largely by growth in pet and car insurance lines.
The company posted a quarterly earnings‑per‑share loss of $0.29, beating analyst expectations of a loss between $0.39 and $0.41 per share by $0.10–$0.12, or about 25–35%. The improvement follows a Q4 2024 loss of $0.42 and a Q3 2025 loss of $0.51, indicating a steady narrowing of the loss margin as revenue expands and costs are controlled.
Gross loss ratio fell to a record low of 52% in Q4 2025, while gross profit and adjusted gross profit margins rose to 48% and 49%, respectively. Adjusted gross profit as a percentage of earned premium climbed to 39%, up 10 points from 29% a year earlier. Adjusted EBITDA loss shrank to $5 million from $24 million in the prior year, and management guided 2026 revenue to $1.187 billion–$1.192 billion versus consensus of $1.16 billion, with an adjusted EBITDA loss of $48 million–$52 million versus a consensus of $50.8 million. The guidance signals confidence that the company will achieve positive adjusted EBITDA in Q4 2026 and full‑year profitability in 2027.
Segment‑level data show that pet and car insurance contributed significantly to the revenue growth, while the company’s AI‑driven underwriting and claims processing continue to improve efficiency. Customer acquisition and retention remain strong, with the annual dollar retention rate holding at 85% and more than 5% of policyholders carrying multiple Lemonade products, supporting the 31% premium growth.
CEO Daniel Schreiber said the quarter’s results “reflect the compounding nature of our model. Faster growth expands our data advantage, which sharpens our AI‑powered segmentation and pricing models.” CFO Tim Bixby noted the adjusted EBITDA loss “was $5 million in Q4, dramatically improved versus a $24 million EBITDA loss in the prior year.” Management reiterated its expectation of positive adjusted EBITDA in Q4 2026 and full‑year profitability in 2027, underscoring confidence in the company’s path to profitability.
Investors reacted positively to the earnings beat, robust 2026 guidance, and improving financial metrics such as the narrowed adjusted EBITDA loss and record‑low gross loss ratio, all of which reinforce confidence in Lemonade’s AI‑driven model and its trajectory toward profitability.
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