#Lemonade Reports Stronger Earnings
Lemonade's Q4 2025 earnings delivered a significant beat on both key metrics: EPS came in at -$0.29 versus the expected -$0.39, a ~26% positive surprise, and revenue reached $228 million against a forecast of ~$216 million. This marks the company's 9th consecutive quarter of accelerating in-force premium growth, which rose 31% year-over-year to $1.24 billion. Revenue grew 53% year-over-year, while gross profit surged 73% to a record $111 million. Guidance for 2026 calls for 32% IFP growth and above 60% revenue growth, well ahead of prior consensus.
Following the announcement, shares jumped approximately 12% in pre-market trading as investors responded positively to the results. Management highlighted $37 million in positive adjusted free cash flow, the second consecutive year of positive adjusted FCF, alongside an adjusted EBITDA loss narrowed to just $5 million, an $81% improvement year-over-year. Lemonade continues to report GAAP losses and remains in investment mode, with ongoing spending in AI, engineering, and platform capabilities, including a newly launched autonomous vehicle insurance product for Tesla owners.
Overall, the earnings report reflects materially improving fundamentals, and investor sentiment following the release was notably positive.
#Investor Takeaway
Lemonade's Q4 results demonstrate strong operational momentum — record gross profit, accelerating premium growth, and narrowing losses. While the company is not yet GAAP profitable, improving unit economics and positive free cash flow suggest the path to profitability is on track. Management targets positive adjusted EBITDA by Q4 2026.
#Market Impact
Shares responded strongly to the announcement, rising ~12% in pre-market trading. The reaction reflected investor confidence in both the beat and the forward guidance, pushing the stock toward its 52-week high range.
#What's Next
Investors should watch Q1 2026 results for confirmation of the 32% IFP growth guidance and progress toward adjusted EBITDA breakeven. Expansion of Lemonade Car — including the autonomous vehicle product — and continued improvement in the gross loss ratio will be key indicators of long-term profitability.