Lemonade reported second-quarter 2025 results showing continued growth in premiums, revenue, and profitability measures, with notable expansion in its European business.
In-force premium (IFP) reached $1.08 billion as of June 30, up 29% from the prior-year quarter. Revenue rose 35% to $164.1 million, driven by higher gross earned premium, ceding commission income, and net investment income.
Gross earned premium for the quarter increased 26% to $252.3 million. Customer count rose 24% year over year to 2.69 million, while premium per customer grew 4% to $402.
The company’s trailing twelve-month gross loss ratio improved by three points sequentially to 70%, within its target range. The second-quarter gross loss ratio was 67%, down 12 points from a year earlier. Gross profit doubled year over year to $64.3 million, with gross margin up 14 points to 39%. Adjusted gross profit totaled $65.6 million, a 96% increase from the prior year.
Total operating expenses excluding loss and loss adjustment expense were $129.2 million, up 21% from a year earlier, mainly due to a $24 million increase in growth spend, which rose 93% to $49.7 million.
The increase was partially offset by an $11.7 million one-time tax refund under the Employee Retention Credit program. Excluding growth spend, operating expenses declined 2% from the prior year.
Net loss for the quarter was $43.9 million, a 23% improvement from the $57.2 million loss in the second quarter of 2024. Adjusted EBITDA loss was $40.9 million, compared to a $43 million loss in the prior-year quarter.
Adjusted free cash flow was $25 million, up from $2 million a year earlier. Cash, cash equivalents, and investments totaled $1.03 billion at the end of the quarter, with $277 million held as regulatory surplus by the company’s insurance subsidiaries.
Lemonade also recently implemented a significant shift in its reinsurance strategy, reducing its cession rate from roughly 55% to 20% beginning July 1, 2025, to retain more risk internally. The company said the move reflects stronger underwriting performance and improving margins.
Growth in its auto segment has also been a contributor, with Lemonade Car posting sequential IFP increases earlier this year. The company reported that cross-selling to existing customers more than doubled year over year, aided by telematics-driven pricing, which improved conversion rates by about 60% in certain states.
The latest quarter follows a milestone in 2024 when Lemonade recorded $48 million in adjusted free cash flow for the year, its first positive annual result, alongside a 12‑point improvement in the trailing twelve‑month gross loss ratio.
The company’s broader portfolio now spans renters, homeowners, condo, car, pet health, and term life insurance across the US and multiple European markets, with recent international expansion including a partnership to distribute homeowners coverage in France with BNP Paribas Cardif.
Lemonade reported that its European operations, active in Germany, France, the UK, and the Netherlands, served more than 250,000 renters and homeowners as of the quarter end.
The company said Europe accounted for more than 20% of net new customers in the second quarter, with IFP in the region growing over 200% year over year to $43 million. The gross loss ratio for the European segment landed in the low 80s, 15 points better than a year earlier.
Lemonade noted that, at the point when its US business reached $50 million in IFP, the gross loss ratio there was more than 20 points higher than in Europe today, and the European business currently generates twice the new business per dollar of growth spend.
The company said it sees further potential in Europe through increased market penetration, new product offerings, and expanded cross-selling. It cited lower catastrophe exposure and a regulatory framework that allows faster pricing and underwriting adjustments as factors supporting growth in the region.
Annual dollar retention across the company was 84%, down four points from the prior year, which it attributed mainly to the non-renewal of policies that did not meet underwriting standards.
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