The insurer, which uses artificial intelligence to draft policies and handle claims, far outpaced the major indexes as the S&P 500 was down 4.2% in August, while the Dow Jones Industrial Average was off 4.1%, and the Nasdaq Composite dropped 4.6%. Lemonade is still down 47% year to date as of Sept. 2, trading at around $22 per share.
The primary catalyst for Lemonade's surge was a strong second-quarter earnings report, released Aug. 8. Lemonade beat earnings and revenue expectations, with a net loss of $67.9 million, or -$1.10 per share, which was better than the consensus estimate of -$1.36 per share. Revenue was up 77% year over year to $50 million, while gross profit was up 15% year over year to $11.3 million.
Lemonade performed well in several other key metrics, too. It grew the number of customers by 31% year over year to roughly 1.6 million, and that helped boost the in-force premium (IFP) -- or aggregate annualized premium for customers -- by 54% to $458 million. Also, the premium per customer was up 18% year over year to $290 due to the increasing prevalence of customers having multiple policies and a shift of the business mix toward products with higher average policy values.
The company also closed on its acquisition of Metromile in late July, expanding Lemonade's offerings into the more lucrative auto insurance business. It brought in 100,000 new customers, licenses to operate in 49 states, and $110 million of additional IFP.
The stock also bumped higher in the ensuing days as two analysts increased their price targets. Specifically, Oppenheimer boosted its target to $35 per share from $30, and maintained its outperform rating, while Barclays increased it to $28 per share from $20.
Oppenheimer analyst Jason Helfstein cited Lemonade's improved path to profitability, driven primarily by gains in upselling and cross-selling, as well as its Metromile acquisition. Metromile opens up seven new markets for Lemonade and provides the opportunity to bundle home and car insurance. But even before Lemonade closed on Metromile, 21% of non-car sales were cross-sells or upsells, up from 19% in the first quarter and 17% from the third quarter of 2021. Metromile should boost that further.
It also bodes well that Lemonade increased its guidance for the rest of the year in several key metrics. IFP is expected to be $610 million to $615 million, up from the previous $535 million to $545 million. Furthermore, revenue is expected to be between $236 million and $239 million, which is also higher than projected. In addition, the earnings before interest, taxes, depreciation, and amortization (EBITDA) loss is now projected to be -$245 million to -$240 million, which is improved from the previous year-end expectations of -$280 million to -$265 million.
These are positive trends for Lemonade as it creeps closer to profitability.