Lemonade Achieves 31% In Force Premium Growth

By Chris Stiles • Thursday, February 19 16:05 • Permanent Link

In the fourth quarter of 2025, Lemonade achieved significant growth and improvement across various key financial metrics. The in force premium (IFP) grew by 31% to reach $1.24 billion, extending the streak of IFP growth acceleration to nine consecutive quarters. The revenue also surged by 53% to $228 million.

The gross profit increased by 73% year-over-year (YOY) to $111 million, attributed to the 53% revenue growth and an 11 percentage point YOY improvement in the gross loss ratio to 52%. Adjusted EBITDA improved by $19 million to ($5) million, and the net loss in the quarter was ($22) million, 28% improved YOY.

The company generated $37 million of adjusted free cash flow and $21 million of cash flow from operations, reflecting the compounding nature of Lemonade's model. The company added 1.2 million customers since Q3 2022 while reducing headcount by 6%, showcasing sustained operating leverage driven by AI and automation.

Furthermore, Lemonade provided guidance for the upcoming year, expecting IFP growth of 32% and a >50% improvement in adjusted EBITDA loss compared to 2025. The company also reiterated its expectation of positive adjusted EBITDA for the full fourth quarter of 2026, with 2027 expected to be its first full year of adjusted EBITDA profitability.

These results reflect Lemonade's continued strong momentum and strategic initiatives, underlining its focus on growth and scaling operations through AI-driven strategies.

In terms of specific product lines, Lemonade's pet, Europe, and car segments have exhibited rapid growth and strong underwriting performance, contributing significantly to the company's gross profit. Notably, pet insurance sustained an IFP growth rate in the mid-50s for the second consecutive year, while Europe delivered the tenth consecutive quarter of triple-digit IFP growth.

The company's strategy for 2026 emphasizes deploying AI across channels, products, and geographies to drive rapid gross profit growth while investing in enhanced cross-sale platforms, automated pricing engines, and real-time, autonomous optimization to improve acquisition efficiency, pricing accuracy, and lifetime value.

Following these announcements, the company's shares moved -0.97%, and are now trading at a price of $79.41. If you want to know more, read the company's complete 8-K report here.

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