The stock market was having a flat day on Tuesday with the Dow Jones Industrial Average slightly higher and the S&P 500 and Nasdaq Composite slightly lower shortly after the market's open. But insurance technology company Lemonade (LMND -2.65%) was a big underperformer, with shares down by more than 12% at 10 a.m. EST.
Lemonade just released its fourth-quarter earnings report. While we expected the year-end customer count to be just over 1 million (the company preannounced this statistic), the rest of the numbers also look quite strong at first glance. Just to run down some of the highlights:
- In-force premium increased 87% year over year to $213 million.
- The average premium per customer grew 20% year over year to $213.
- Gross earned premiums during the fourth quarter increased by 92% from the same quarter a year ago.
- Lemonade's loss ratio fell to 71% from 79% a year ago, which means the business is getting more profitable.
Not only were the numbers strong, but Lemonade also beat analyst expectations on both the top and bottom lines.
However, the news wasn't all good. Although it came in above expectations, Lemonade's revenue actually declined a bit year over year. And the most likely culprit for today's move is Lemonade's outlook. The company is projecting revenue in the $21.5 million to $22.5 million range for the first quarter, which (at the midpoint), is slightly less than analysts had been hoping to hear.
The bottom line is that this was an all-around great earnings report from Lemonade, but it didn't blow the market away -- especially when it comes to the outlook, which is arguably the most important part of any earnings report. Lemonade's stock price has more than doubled over the past six months, so this could be a bit of a short-term "reality check" in an otherwise high-potential disruptor.