Lemonade Stock Surges 9.3% After Q2 Earnings Exceed Estimates, Robust IFP Guidance

Lemonade's Q2 earnings and revenue topped estimates, driven by accelerating growth, healthy underwriting performance, and expense management excellence. The AI-powered P&C insurer's stock jumped 9.3% in premarket trading, with the company still expecting strong results in its Individual & Family Products (IFP) business.

Lemonade (NYSE:LMND), an AI-powered Property & Casualty (P&C) insurer, reported its Q2 earnings and revenue, which exceeded Wall Street consensus estimates. The company's stock climbed 9.3% in premarket trading following the announcement.

Lemonade's Q2 adjusted EBITDA was -$40.9M, compared to the Visible Alpha estimate of -$41.8M, and -$47.0M in Q1. The company's total revenue for the quarter was $164.1M, surpassing the average analyst estimate of $160.8M. Gross earned premium reached $252.3M, up from $233.6M in the previous quarter and $199.9M a year ago.

The insurer's in-force premium was $1.08B at June 30, 2025, exceeding the Visible Alpha estimate of $1.07B. Lemonade's customer count grew 24% year-over-year (YoY) to 2.69M, while premium per customer was $402 at the end of Q2.

Lemonade also raised its 2025 revenue guidance to $710M-$716M, up from its prior guidance of $661M-$663M. The company expects its 2025 adjusted EBITDA to be -$135M to -$140M. For Q3, Lemonade anticipates adjusted EBITDA of -$34M to -$37M and revenue of $183M-$186M.

The company's strong performance was driven by accelerating growth, healthy underwriting performance, and expense management excellence. Lemonade's Car and Europe business engines continued to show momentum. In the Car insurance segment, the company saw a 25% growth in Q2 compared to Q1, while maintaining marketing efficiency levels.

Lemonade's Q2 GAAP EPS of -$0.60 beat the -$0.80 consensus, marking an improvement from -$0.86 in Q1 and -$0.81 in last year's Q2. The company's net loss ratio was 69%, down from 82% in the previous quarter and 79% in the year-ago quarter.

Lemonade's Q2 adjusted free cash flow was $25.0M, up from -$31.0M in the prior quarter and $2.4M a year ago. The company reaffirmed its 2025 adjusted EBITDA guidance at -$135M to -$140M and expects to exit 2026 with positive adjusted EBITDA.

Lemonade's stock price jumped 9.3% in premarket trading following the announcement, reflecting investors' optimism about the company's strong performance and future prospects.

References:
[1] https://seekingalpha.com/news/4478227-lemonade-stock-jumps-after-q2-earnings-top-estimates-strong-ifp-guidance