Lemonade, Inc. reported its financial results for the fourth quarter and full year 2024, highlighting topline growth, improved loss ratios, and positive adjusted free cash flow (Adj. FCF).
The company generated $27 million in Adj. FCF in the fourth quarter, contributing to a total of $48 million for the full year, marking its first full year of positive Adj. FCF.
The company’s in-force premium (IFP) reached $944 million, reflecting 26% year-over-year growth. Revenue increased 29% during the same period. Lemonade’s gross loss ratio for the fourth quarter stood at 63%, its lowest on record.
The trailing twelve-month (TTM) gross loss ratio was 73%, improving by 12 percentage points from the prior year and four percentage points sequentially. The company noted this as its sixth consecutive quarter of sequential improvement in TTM gross loss ratios.
Gross profit for the fourth quarter increased 90% year over year to $64 million, with a margin expansion of 14 percentage points to 43%. Full-year gross profit nearly doubled to $167 million, reflecting 98% year-over-year growth.
Adjusted EBITDA loss improved 18% to ($24) million in the fourth quarter, while net loss improved 29% to ($30) million. The company reported positive adjusted EBITDA, excluding growth spending, for the first time in its history.
The latest results are a step above Lemonade’s overall performance in the prior year. In 2023, the company posted a net loss of $236.9 million, which was already improved from the $297.8 million loss it reported in 2022.
Lemonade also provided an early estimate of the financial impact of the January 2025 wildfires in California. The company expects approximately $45 million in gross losses related to the wildfires, with an estimated adjusted EBITDA impact of $20 million.
The company said that diversification across home, renters, pet, and car insurance, as well as adjustments in catastrophe exposure management, helped mitigate the potential financial impact, which it estimated could have been five times greater without these measures.
A detailed assessment of the wildfire events will be provided in the company’s first-quarter 2025 shareholder letter.
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