What happened
Shares of the digital car insurer Metromile (MILE +0.00%) had fallen close to 22% as of 10:40 a.m. EDT after the company reported earnings for the second quarter of 2021.
So what
Metromile, which charges premiums based on miles driven, reported a net earnings per share loss in the quarter of $0.33 on total revenue of nearly $29 million. That's an improvement from the second quarter of 2020, and both EPS and revenue beat analyst estimates, but investors were disappointed with the results and the remaining outlook for the year.
At the end of the second quarter, policies in force totaled 95,314, compared to 95,958 at the end of the first quarter. The accidental loss ratio also widened in the quarter from roughly 50% a year ago to more than 74%.
Additionally, management said the company will defer near-term policies in force growth by a few quarters to focus on executing its existing strategy. As a result, the company is only projecting to end the year with more than 100,000 policies in force.
Image source: Getty Images.
Now what
Metromile CEO Dan Preston attributed issues in the quarter to "higher than expected cancellations due to consumer behavioral changes" and "unexpected industrywide regulatory delays." Preston added that "these results are not acceptable to us."
I've always thought Metromile had a pretty innovative concept that could be a disruptor in the auto insurance industry, but this quarter's results were obviously disappointing. The company must now prove out its concept to earn back the faith of investors, so results in future quarters will be important.
