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Lemonade (LMND) delivered a robust Q2 earnings report, sparking a significant surge in its stock price, driven by strong in-force premium growth and a potent short squeeze with 32% of the float shorted. The insurtech’s asset-light, digital, and AI-native model continues to fuel impressive growth, resonating strongly with younger consumers who value its seamless, technology-driven insurance offerings. Despite a challenging competitive landscape, LMND’s Q2 results, and optimistic guidance underscore its ability to scale efficiently.

• In-force premium (IFP), a critical metric measuring the total annualized premium value of active policies underwritten by LMND and those placed with third-party insurers, surged 29% yr/yr to $1.08 bln in Q2, exceeding management’s guidance of $1.061–$1.064 bln. This growth was propelled by LMND’s strategic expansion into high-demand segments like car and pet insurance, which have broadened its product portfolio and customer base.
• Additionally, the company’s aggressive push into European markets, particularly in France, Germany, and the Netherlands, has driven significant traction, with digital advertising campaigns and partnerships boosting customer acquisition and premium per customer, which rose 4% to $402.
• LMND’s guidance further bolstered investor confidence, with Q3 IFP projected at $1.144–$1.147 bln and FY25 IFP forecasted at $1.213–$1.218 bln, both surpassing analyst expectations. Notably, Europe’s IFP skyrocketed over 200% yr/yr to $43 mln in Q2, accounting for more than 20% of net new customers. This international momentum, combined with LMND’s focus on cross-selling car and pet insurance to existing customers and leveraging telematics for higher conversion rates, underpins the company’s strong outlook for continued premium growth.
• The gross loss ratio, another key metric, improved significantly to 67% in Q2, a 12-percentage-point enhancement from 79% in the year-earlier quarter. This reflects LMND’s refined AI-driven underwriting, which has enhanced risk assessment and pricing precision across its diverse product offerings. The company’s ability to manage catastrophic impacts, such as California wildfires, through a thoughtful reinsurance strategy and product mix diversification further supported this improvement, positioning LMND to better balance growth and risk.
• Strong IFP growth and an improving gross loss ratio are driving LMND toward better profitability metrics. In Q2, adjusted EBITDA loss narrowed to $(41) mln from $(43) mln a year ago, signaling operational efficiencies despite heavy growth investments. The company’s Q3 guidance projects a further improvement, with adjusted EBITDA expected at $(37)–$(34) mln, supported by reduced reinsurance costs and a focus on high-lifetime-value customer acquisition, particularly in the car insurance segment.

LMND’s stronger-than-expected Q2 results, marked by robust IFP growth and a significantly improved gross loss ratio, have ignited a powerful short squeeze, propelling the stock higher. These key metrics highlight a company with strong momentum, leveraging its AI-driven model to capture market share and enhance profitability.