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Lemonade (LMND) Q4 Earnings Top Estimates on Higher Premiums

Lemonade, Inc. LMND reported fourth-quarter 2023 operating loss of 61 cents per share, narrower than the Zacks Consensus Estimate of a loss of 79 cents as well as the year-ago loss of 93 cents per share.

Quarterly results reflect improved gross earned premiums, driven by an increase in in-force premium earned and lower expense.

Behind the Q4 Headlines

Revenues increased 30.6% year over year to $115.5 million, driven by an increase in gross earned premium and higher investment income. The top line beat the Zacks Consensus Estimate by 2.1%.

Lemonade, Inc. Price, Consensus and EPS Surprise

Lemonade, Inc. Price, Consensus and EPS Surprise
Lemonade, Inc. Price, Consensus and EPS Surprise

Lemonade, Inc. price-consensus-eps-surprise-chart | Lemonade, Inc. Quote

Gross earned premiums soared 20% year over year to $181 million, driven by an increase in in-force premiums earned.

Lemonade’s in-force premium of $747 million jumped 20%, driven by a 12% increase in the number of customers as well as a 7% increase in premium per customer.

Total operating expenses, excluding net loss and loss adjustment expense, decreased 5% year over year to $90 million, attributable to lower employee-related costs.

Adjusted EBITDA was negative $28.9 million, narrower than negative $51.7 million in the year-ago quarter, attributable to higher revenues, an improved loss ratio and lower operating expenses.

The gross loss ratio of 77 improved 1200 basis points year over year, while the net loss ratio improved 1900 basis points. Lemonade estimates the net loss ratio to be less than 75 in the long term.

 

Financial Update

Cash, cash equivalents and investments were $1 billion as of Dec 31, 2023, down 8.9% from 2022 end.

As of Dec 31, LMND had assets worth $1.6 billion, up 3.4% from the level at 2022 end.

Shareholder equity at 2023-end was $708.9 billion, down 18.2% from the 2022-end level.

Cash used in operations was $119.1 million in 2023, lower than $163 million used in 2022.

Q1 Guidance

In-force premium at quarter-end is projected between $789 million and $791 million. Gross earned premium is expected in the range of $183-$185 million. Lemonade expects revenues between $111 million and $113 million. Adjusted EBITDA loss is expected to be between $41 million and $43 million. Capital expenditure is estimated to be $2 million. Shares outstanding are estimated to be 70 million.

2024 View

Lemonade projects in-force premiums between $938 million and $942 million.

Gross earned premium is expected in the range of $815-$820 million.

Revenues are anticipated to be between $505 million and $510 million.

Adjusted EBITDA loss is expected to be in the range of $155-$160 million.

Capital expenditure is estimated to be $10 million. Stock-based compensation expense is estimated to be about $60 million.

Shares outstanding are estimated to be 71 million. 

Zacks Rank

Lemonade currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Assurant, Inc. AIZ reported fourth-quarter 2023 net operating income of $4.58 per share, which beat the Zacks Consensus Estimate by 23.4%. The bottom line surged 41.8% year over year.

Total revenues increased 12.4% year over year to $3 billion due to higher net earned premiums, fees and other income and net investment income. The top line beat the Zacks Consensus Estimate by 7.9%.  Adjusted EBITDA, excluding reportable catastrophes, increased 29% to $382.4 million.

Assurant expects adjusted EBITDA, excluding reportable catastrophes, to increase by mid-single digits, driven by both Global Lifestyle and Global Housing, at similar growth rates. Adjusted EPS, excluding catastrophes, is expected to grow modestly below adjusted EBITDA, excluding catastrophe growth, primarily reflecting an increase in depreciation expense from strategic technology investments. Corporate and Other adjusted EBITDA loss is expected to be approximately $105 million as the company continues to drive expense leverage.

Prudential Financial, Inc. PRU reported fourth-quarter 2023 adjusted operating income of $2.58 per share, which missed the Zacks Consensus Estimate by 3.3%. However, the bottom line rose 3.6% year over year.

Total revenues of $13 billion increased 6.7% year over year. The increase in revenues was due to higher premiums and net investment income. However, it missed the Zacks Consensus Estimate by 0.3%. Total benefits and expenses amounted to $11.7 billion, which increased 7.2% year over year in the fourth quarter.

MetLife, Inc. MET reported fourth-quarter 2023 adjusted operating earnings of $1.93 per share, which fell short of the Zacks Consensus Estimate by 1%. The bottom line improved 21% year over year. Adjusted operating revenues of MET climbed 21.5% year over year to $18.7 billion in the quarter under review. The top line outpaced the consensus mark by 3.6%.

Adjusted premiums, fees and other revenues, excluding pension risk transfer (PRT), were $11.8 billion. The figure rose 8% year over year. The adjusted expense ratio, excluding total notable items related to adjusted other expenses and PRT, improved 60 basis points year over year to 20.6% in the quarter under review



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