Lemonade Beats Q2 Revenue Estimates but Shares Drop Over 10% in Early Trading

Digital insurance company Lemonade reported second-quarter revenues of $294 million, surpassing both analyst expectations and its own forecasts. Despite the revenue beat, the company posted a net loss of $43.4 million, nearly unchanged from the same quarter last year, with a net loss per share of 56 cents, in line with analyst predictions. Following the earnings release, Lemonade's stock fell more than 10% in early trading on Wall Street.

The company’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) showed improvement but remained negative at $19 million, compared to a negative $43 million in the prior-year quarter. Lemonade slightly raised its full-year revenue guidance to $1.217 billion from $1.2 billion but maintained its adjusted EBITDA loss forecast of $47 million to $51 million. The company expects to achieve positive adjusted EBITDA of approximately $8 million in the fourth quarter, while the third quarter is projected to still show a negative EBITDA between $20 million and $23 million, with revenues forecasted between $323 million and $326 million, above analyst estimates.

Cash flow from operations was negative $4 million in Q2, but free cash flow was positive at $18.8 million. In a letter to investors, Lemonade described the quarter’s results as "excellent," highlighting strong top-line growth and steady progress toward its first positive EBITDA quarter. The company also announced a CFO transition: Tim Bixby, who has served since 2017, will step down and join the board, with Nick Sted promoted to CFO.

Founded by CEO Daniel Schreiber and President Shai Wininger, Lemonade is traded on the New York Stock Exchange with a market capitalization of $4.8 billion. Over the past year, its stock price has risen about 70%, trading within a wide range of $36 to $97. According to The Wall Street Journal, 12 analysts currently cover Lemonade’s stock, with three positive, six neutral, and three negative ratings, and an average price target implying a modest 3.4% premium to the pre-earnings share price.