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Lemonade Q2 Loss Narrower Than Expected, Revenues Rise Y/Y
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Key Takeaways
{\"0\":\"LMND posted Q2 loss of $0.60/share, beating estimates and narrowing from the prior-year loss of $0.81.\",\"1\":\"Revenues rose 35% YoY to $164.1, driven by higher premiums and investment income.\",\"2\":\"Q3 revenue guided to $183-$186M; 2025 revenue outlook at $710-$715M.\"}
Lemonade, Inc. (LMND - Free Report) reported second-quarter 2025 net loss of 60 cents per share, narrower than the Zacks Consensus Estimate of a loss of 81 cents. In the year-ago quarter, LMND had incurred a loss of 81 cents per share. This year-over-year improvement is primarily attributable to higher revenues in the reported quarter, offset by higher growth spend.
The insurer’s results reflected expanded gross margin, higher in-force premium, improved underwriting results, and an increase in net investment income, offset by escalating expenses.
Total operating revenues of Lemonade were $164.1 million, up 35% year over year, driven by an increase in gross earned premium, ceding commission income, and net investment income. The top line beat the Zacks Consensus Estimate by 1.2%.
In force premium increased 29% year over year to $1,083.4 million. This marks the seventh consecutive quarter of growth acceleration.
Net investment income rose 16% year over year to $9.4 million.
Customer count increased 24% year over year to 2,693,107.
Premium per customer was $402 at the end of the second quarter, and grew 4% year over year.
Gross earned premium increased 26% year over year to $252.3 million, primarily due to the increase in IFP earned during the quarter.
Gross profit doubled year over year to $64.3 million, primarily due to the 35% increase in revenues and 10 10-point improvement in net loss ratio. Gross margin improved by 14 points to 39%.
Adjusted gross profit surged 96% year-over-year to $65.6 million, primarily due to the 35% increase in revenue and 10-point improvement in net loss ratio.
Total operating expense, excluding net loss and loss adjustment expense, increased 21% year over year to $129.2 million. The increase was primarily driven by higher growth spend for customer acquisition. It was partially offset by a one-time $11.7 million tax refund received in the second quarter under the Employee Retention Credit (ERC) program.
Adjusted EBITDA loss was $40.9 million compared with the year-ago adjusted EBITDA loss of $43 million. This year-over-year improvement is primarily attributable to revenue growth and improved underwriting results, offset by the increase in growth spend.
LMND’s Financial Update
Lemonade exited the second quarter with cash, cash equivalents, and investments of $1.03 billion, up 1% from 2024-end.
As of June 30, 2025, approximately $277 million is carried by insurance subsidiaries as regulatory surplus.
Adjusted free cash flow surged more than 10-fold year over year to $25 million in the second quarter of 2025.
Net cash used in operating activities was $41.7 million in the first half of 2025.
As of June 30, 2025, total assets increased 4.6% from the end of 2024 to $1.9 billion. Stockholders' equity of $527.1 million decreased 11.2% from the 2024-end level.
LMND’s Q3 Guidance
Lemonade estimates in-force premium in the range of $1,144-$1,147 million.
The insurer expects gross earned premiums in the range of $267-$269 million.
LMND projects revenues in the range of $183-$186 million.
Lemonade estimates adjusted EBITDA loss in the range of $37-$34 million.
LMND projects Stock-based compensation expense to be $17 million.
LMND’s 2025 Guidance
Lemonade estimates in force premium in the range of $1,213-$1,218 million.
The insurer expects gross earned premiums in the range of $1,036-$1,039 million.
LMND projects revenues in the range of $710-$715 million.
Lemonade estimates adjusted EBITDA loss in the range of $ $140-$135 million.
LMND projects Stock-based compensation expense to be $61 million.
MGIC Investment Corporation (MTG - Free Report) reported second-quarter 2025 operating net income per share of 82 cents, which beat the Zacks Consensus Estimate by 17.1%. Moreover, the bottom line increased 6.5% year over year. MGIC Investment recorded total operating revenues of $306 million, which remained flat year over year on higher net investment income, other revenues, and premiums earned. The top line missed the consensus mark by 0.4%.
Insurance in force increased 1.9% from the prior-year quarter to $297 billion, which missed the Zacks Consensus Estimate of $299 billion. The insurer witnessed a 4.6% year-over-year increase in primary delinquency to 24,444 loans. Net premiums written increased 1.7% year over year to $237.4 million. The figure was higher than our estimate of $230.9 million. Net investment income decreased 0.8% year over year to $61 million. Our estimate was $67.3 million.
Radian Group Inc. (RDN - Free Report) reported second-quarter 2025 adjusted operating income of 1.01 per share, which beat the Zacks Consensus Estimate by 8.6%. The bottom remained flat year over year. Operating revenues remained flat year over year at $312 million and missed the Zacks Consensus Estimate by 1.5%. Net premiums earned were $237.5 million, down 0.1% year over year. Net investment income decreased 1.4% year over year to $72.7 million.
MI's new insurance written increased 2.9% year over year to $14.3 billion. Primary mortgage insurance in force increased 1.4% year over year to a record $276.7 billion. Persistency — the percentage of mortgage insurance in force that remains in the company’s books after a 12-month period — was 84% as of June 30, 2025, and remained flat year over year.
Principal Financial Group, Inc.’s (PFG - Free Report) second-quarter 2025 operating net income of $2.16 per share beat the Zacks Consensus Estimate by 9%. Moreover, the bottom line increased 33% year over year. Operating revenues declined 9.4% year over year to $3.6 billion due to decreased premiums and other considerations. The metric missed the Zacks Consensus Estimate by 7.8%.
Total expenses decreased 18% year over year to $3.2 billion due to lower benefits, claims, and settlement expenses, dividends to policyholders, and operating expenses. The figure was lower than our estimate of $4.3 billion. As of June 30, 2025, Principal Financial’s AUM amounted to $753 billion, up 7.6% year over year. AUM is included in assets under administration of $1.7 trillion.
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Lemonade Q2 Loss Narrower Than Expected, Revenues Rise Y/Y
Key Takeaways
Lemonade, Inc. (LMND - Free Report) reported second-quarter 2025 net loss of 60 cents per share, narrower than the Zacks Consensus Estimate of a loss of 81 cents. In the year-ago quarter, LMND had incurred a loss of 81 cents per share. This year-over-year improvement is primarily attributable to higher revenues in the reported quarter, offset by higher growth spend.
The insurer’s results reflected expanded gross margin, higher in-force premium, improved underwriting results, and an increase in net investment income, offset by escalating expenses.
Lemonade, Inc. Price, Consensus and EPS Surprise
Lemonade, Inc. price-consensus-eps-surprise-chart | Lemonade, Inc. Quote
Behind Q2 Headlines
Total operating revenues of Lemonade were $164.1 million, up 35% year over year, driven by an increase in gross earned premium, ceding commission income, and net investment income. The top line beat the Zacks Consensus Estimate by 1.2%.
In force premium increased 29% year over year to $1,083.4 million. This marks the seventh consecutive quarter of growth acceleration.
Net investment income rose 16% year over year to $9.4 million.
Customer count increased 24% year over year to 2,693,107.
Premium per customer was $402 at the end of the second quarter, and grew 4% year over year.
Gross earned premium increased 26% year over year to $252.3 million, primarily due to the increase in IFP earned during the quarter.
Gross profit doubled year over year to $64.3 million, primarily due to the 35% increase in revenues and 10 10-point improvement in net loss ratio. Gross margin improved by 14 points to 39%.
Adjusted gross profit surged 96% year-over-year to $65.6 million, primarily due to the 35% increase in revenue and 10-point improvement in net loss ratio.
Total operating expense, excluding net loss and loss adjustment expense, increased 21% year over year to $129.2 million. The increase was primarily driven by higher growth spend for customer acquisition. It was partially offset by a one-time $11.7 million tax refund received in the second quarter under the Employee Retention Credit (ERC) program.
Adjusted EBITDA loss was $40.9 million compared with the year-ago adjusted EBITDA loss of $43 million. This year-over-year improvement is primarily attributable to revenue growth and improved underwriting results, offset by the increase in growth spend.
LMND’s Financial Update
Lemonade exited the second quarter with cash, cash equivalents, and investments of $1.03 billion, up 1% from 2024-end.
As of June 30, 2025, approximately $277 million is carried by insurance subsidiaries as regulatory surplus.
Adjusted free cash flow surged more than 10-fold year over year to $25 million in the second quarter of 2025.
Net cash used in operating activities was $41.7 million in the first half of 2025.
As of June 30, 2025, total assets increased 4.6% from the end of 2024 to $1.9 billion. Stockholders' equity of $527.1 million decreased 11.2% from the 2024-end level.
LMND’s Q3 Guidance
Lemonade estimates in-force premium in the range of $1,144-$1,147 million.
The insurer expects gross earned premiums in the range of $267-$269 million.
LMND projects revenues in the range of $183-$186 million.
Lemonade estimates adjusted EBITDA loss in the range of $37-$34 million.
LMND projects Stock-based compensation expense to be $17 million.
LMND’s 2025 Guidance
Lemonade estimates in force premium in the range of $1,213-$1,218 million.
The insurer expects gross earned premiums in the range of $1,036-$1,039 million.
LMND projects revenues in the range of $710-$715 million.
Lemonade estimates adjusted EBITDA loss in the range of $ $140-$135 million.
LMND projects Stock-based compensation expense to be $61 million.
Zacks Rank
Lemonade currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Multi-Line Insurers
MGIC Investment Corporation (MTG - Free Report) reported second-quarter 2025 operating net income per share of 82 cents, which beat the Zacks Consensus Estimate by 17.1%. Moreover, the bottom line increased 6.5% year over year. MGIC Investment recorded total operating revenues of $306 million, which remained flat year over year on higher net investment income, other revenues, and premiums earned. The top line missed the consensus mark by 0.4%.
Insurance in force increased 1.9% from the prior-year quarter to $297 billion, which missed the Zacks Consensus Estimate of $299 billion. The insurer witnessed a 4.6% year-over-year increase in primary delinquency to 24,444 loans. Net premiums written increased 1.7% year over year to $237.4 million. The figure was higher than our estimate of $230.9 million. Net investment income decreased 0.8% year over year to $61 million. Our estimate was $67.3 million.
Radian Group Inc. (RDN - Free Report) reported second-quarter 2025 adjusted operating income of 1.01 per share, which beat the Zacks Consensus Estimate by 8.6%. The bottom remained flat year over year. Operating revenues remained flat year over year at $312 million and missed the Zacks Consensus Estimate by 1.5%. Net premiums earned were $237.5 million, down 0.1% year over year. Net investment income decreased 1.4% year over year to $72.7 million.
MI's new insurance written increased 2.9% year over year to $14.3 billion. Primary mortgage insurance in force increased 1.4% year over year to a record $276.7 billion. Persistency — the percentage of mortgage insurance in force that remains in the company’s books after a 12-month period — was 84% as of June 30, 2025, and remained flat year over year.
Principal Financial Group, Inc.’s (PFG - Free Report) second-quarter 2025 operating net income of $2.16 per share beat the Zacks Consensus Estimate by 9%. Moreover, the bottom line increased 33% year over year. Operating revenues declined 9.4% year over year to $3.6 billion due to decreased premiums and other considerations. The metric missed the Zacks Consensus Estimate by 7.8%.
Total expenses decreased 18% year over year to $3.2 billion due to lower benefits, claims, and settlement expenses, dividends to policyholders, and operating expenses. The figure was lower than our estimate of $4.3 billion. As of June 30, 2025, Principal Financial’s AUM amounted to $753 billion, up 7.6% year over year. AUM is included in assets under administration of $1.7 trillion.