Lemonade’s gross profit surges 90% as net loss narrows for 2024

Lemonade, a technology-driven insurance company offering home, renters, pet, and auto coverage, saw its gross profit surge 90% year over year in the fourth quarter of 2024, reaching $64 million.

This reflects a significant improvement in its financial performance. However, the company still reported a net loss of $30 million for the quarter, though this was an improvement from the $42.4 million loss in Q4 of the previous year, driven by growth spend.

Lemonade’s underwriting precision and operational efficiency contributed to a significant improvement in its gross loss ratio, which dropped to 63% in Q4 2024 from 77% the previous year.

The company’s overall profitability metrics showed significant improvement. Its net loss ratio fell from 78% in Q4 2023 to 62% in Q4 2024, reflecting improved risk assessment and claims management. The company’s gross profit margin expanded over year to 43%, while adjusted gross profit margin increased to 44% from 31%.

This marked the sixth consecutive quarter of sequential improvement in its trailing twelve months (TTM) gross loss ratio, aligning with its long-term targets. Lemonade credited its AI-driven underwriting model, regulatory rate approvals, and portfolio adjustments for achieving these results.

The company more than doubled its growth investment in 2024, increasing from $55 million in 2023 to $122 million. Despite this, expense management remained disciplined, with core operating expenses (excluding growth spend) increasing by just 2% year over year.

AI-driven customer acquisition strategies helped sustain a high return on investment, with Lemonade maintaining an LTV/CAC ratio above 3:1 and a triple-digit CAC internal rate of return (IRR).

Premium growth remained a key driver of Lemonade’s performance, with In Force Premium (IFP) reaching $944 million by the end of 2024, a 26% increase year over year. Premium per customer also rose from $369 in 2023 to $388 in 2024, highlighting the company’s ability to increase customer value. Total revenue grew, reaching $526.5 million for the full year.

Lemonade acknowledged the impact of the devastating California wildfires in January 2025, estimating approximately $45 million in gross losses and a $20 million impact on Adjusted EBITDA. However, the company emphasised that without its diversified portfolio and underwriting adjustments, the financial impact could have been five times greater.

For 2025, Lemonade expects continued growth, with IFP projected to reach between $938 million and $942 million. The company also forecasts an Adjusted EBITDA loss of $160 million to $155 million for the full year.

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