What happened
Shares of Lemonade (LMND 7.35%) were looking refreshing to investors today, jumping on better-than-expected results in its first-quarter earnings report as the insurance disruptor topped estimates on the top and bottom lines.
As of 1:08 p.m. ET, the stock was up 23.2%.
NYSE: LMND
Key Data Points
So what
Lemonade continues to put up strong growth as it attempts to disrupt the massive insurance industry. In-force premium, meaning premiums that are currently active, rose 56% to $653 million and its customer base grew 23% to 1.86 million.
Revenue in the period jumped from 114% to $95.2 million, which easily beat estimates at $88.2 million.
The company's gross loss ratio, another key metric, also improved, falling three percentage points to 87%, showing it paid out 87% of its premiums in claims. Additionally, gross earned premiums jumped 61% to $154 million. Altogether, those numbers show the company delivered broad-based growth and is improving its unit economics.
On the bottom line, adjusted earnings before interest, taxes depreciation, and amortization (EBITDA) loss narrowed from $57.4 million to $50.8 million. Under generally accepted accounting principles (GAAP), its loss per share narrowed from $1.21 to $0.95, which beat expectations of a loss of $1.13.
In its shareholder letter, management said: "The first quarter of 2023 was strong, clocking solid performance across our key metrics. Notwithstanding persistent inflation and heightened frequency of severe weather events, the primary dials with which we monitor our business all moved in the right direction."
Now what
Looking ahead, the company guided for revenue of $392 million to $396 million for the full year, better than the consensus at $380.6 million, representing a 53.4% increase at the midpoint. It also raised its adjusted EBITDA loss forecast from between $240 million and $245 million to between $200 million and $205 million.
While the company is still delivering strong top-line growth, profitability still seems to be a long way away. The stock still has significant upside potential, but investors will have to be patient as it works to improve the bottom line.
