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Lemonade (LMND) Q3 Earnings and Revenues Beat Estimates
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Lemonade, Inc. (LMND - Free Report) reported third-quarter 2021 operating loss of $1.08 per share, narrower than the Zacks Consensus Estimate of a loss of $1.15. The loss was wider than the year-ago loss of 57 cents per share.
Gross earned premiums improved driven by an increase in-force premium earned.
Total revenues doubled year over year to $36 million, driven by an increase in gross earned premium, rise in net investment income & commission income, and a modest reduction in the scope of the quota share program. The top line beat the Zacks Consensus Estimate by 6.2%.
Gross earned premiums soared 86% year over year to $79.6 million, driven by an increase in in-force premium earned.
Lemonade’s in-force premium of $346 million jumped 84%, driven by a 45% increase in the number of customers as well as a 26% increase in premium per customer. Premium per customer increased driven by the continued shift of business mix toward products with higher average policy values, an increasing prevalence of multiple policies per customer, and growth in the overall average policy value.
Total operating expenses, excluding net loss and loss adjustment expense, increased 98% year over year to $82.4 million, attributable to higher sales & marketing, technology development, and general and administrative expenses.
Adjusted EBITDA was negative $51.3 million, wider than negative $27.6 million in the year-ago quarter.
Loss ratio of 77 deteriorated 500 basis points year over year. The company estimates the loss ratio to be less than 75 in the long term.
Financial Update
Cash, cash equivalents, and investments were $1.1 billion at Sep 30, 2021, more than double from 2020 end, largely reflecting the net proceeds from the initial public offering, partially offset by cash used in operations.
As of Sep 30, 2021, Lemonade had assets worth $1.5 billion, up 44.1% from the level at 2020 end.
Shareholder equity at quarter-end was $1 billion, more than double from the 2020-end level.
Cash used in operations was $94.7 million, higher than $71 million used in the year-ago quarter.
Q4 Guidance
In-force premium at quarter-end is projected between $380 and $384 million. Gross earned premium is expected in the range of $88-$89 million. Lemonade expects revenues between $39 million and $40 million. Adjusted EBITDA loss is expected to be $50-$52 million. Capital expenditure is estimated to be $3 million.
2021 View
Lemonade projects in-force premium between $380 million and $384 million (up from $376 million and $382 million guided earlier). Gross earned premium is expected in the range of $291 million to $292 million (up from $279 million to $283 million guided earlier). Revenues are anticipated between $126 million and $127 million (up from $117 million to $120 million guided earlier). Adjusted EBITDA loss is expected to be in the range of $182-$185 million. Capital expenditure is estimated to be $11 million.
Zacks Rank
Lemonade currently carries a Zacks Rank #4 (Sell).
Of the insurance industry players that have reported third-quarter results so far, earnings of Prudential Financial, Inc. (PRU - Free Report) and CNO Financial Group (CNO - Free Report) beat the respective Zacks Consensus Estimate while that of Radian Group (RDN - Free Report) missed the same.
Prudential managed to return capital to its shareholders in the form of share repurchases worth $875 million and dividend worth $451 million in the third quarter.
The Zacks Consensus Estimate for Prudential’s 2021 and 2022 earnings witnessed northbound movement in the past seven days. Its shares have gained 4.1% quarter to date.
CNO Financial rewarded its shareholders with share buybacks to the tune of $115 million and dividends worth $16.3 million during the third quarter.
The Zacks Consensus Estimate for CNO Financial’s 2021 earnings has moved up in the past 30 days. Its shares have gained 5.2% quarter to date.
Radian Group bought back shares worth $158.3 million in the third quarter. The consensus estimate for 2021 has witnessed northbound movement in the past 30 days.Shares of Radian have lost 1.4% quarter to date
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Lemonade (LMND) Q3 Earnings and Revenues Beat Estimates
Lemonade, Inc. (LMND - Free Report) reported third-quarter 2021 operating loss of $1.08 per share, narrower than the Zacks Consensus Estimate of a loss of $1.15. The loss was wider than the year-ago loss of 57 cents per share.
Gross earned premiums improved driven by an increase in-force premium earned.
Lemonade, Inc. Price, Consensus and EPS Surprise
Lemonade, Inc. price-consensus-eps-surprise-chart | Lemonade, Inc. Quote
Behind the Q3 Headlines
Total revenues doubled year over year to $36 million, driven by an increase in gross earned premium, rise in net investment income & commission income, and a modest reduction in the scope of the quota share program. The top line beat the Zacks Consensus Estimate by 6.2%.
Gross earned premiums soared 86% year over year to $79.6 million, driven by an increase in in-force premium earned.
Lemonade’s in-force premium of $346 million jumped 84%, driven by a 45% increase in the number of customers as well as a 26% increase in premium per customer. Premium per customer increased driven by the continued shift of business mix toward products with higher average policy values, an increasing prevalence of multiple policies per customer, and growth in the overall average policy value.
Total operating expenses, excluding net loss and loss adjustment expense, increased 98% year over year to $82.4 million, attributable to higher sales & marketing, technology development, and general and administrative expenses.
Adjusted EBITDA was negative $51.3 million, wider than negative $27.6 million in the year-ago quarter.
Loss ratio of 77 deteriorated 500 basis points year over year. The company estimates the loss ratio to be less than 75 in the long term.
Financial Update
Cash, cash equivalents, and investments were $1.1 billion at Sep 30, 2021, more than double from 2020 end, largely reflecting the net proceeds from the initial public offering, partially offset by cash used in operations.
As of Sep 30, 2021, Lemonade had assets worth $1.5 billion, up 44.1% from the level at 2020 end.
Shareholder equity at quarter-end was $1 billion, more than double from the 2020-end level.
Cash used in operations was $94.7 million, higher than $71 million used in the year-ago quarter.
Q4 Guidance
In-force premium at quarter-end is projected between $380 and $384 million. Gross earned premium is expected in the range of $88-$89 million. Lemonade expects revenues between $39 million and $40 million. Adjusted EBITDA loss is expected to be $50-$52 million. Capital expenditure is estimated to be $3 million.
2021 View
Lemonade projects in-force premium between $380 million and $384 million (up from $376 million and $382 million guided earlier). Gross earned premium is expected in the range of $291 million to $292 million (up from $279 million to $283 million guided earlier). Revenues are anticipated between $126 million and $127 million (up from $117 million to $120 million guided earlier). Adjusted EBITDA loss is expected to be in the range of $182-$185 million. Capital expenditure is estimated to be $11 million.
Zacks Rank
Lemonade currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Multiline Insurers
Of the insurance industry players that have reported third-quarter results so far, earnings of Prudential Financial, Inc. (PRU - Free Report) and CNO Financial Group (CNO - Free Report) beat the respective Zacks Consensus Estimate while that of Radian Group (RDN - Free Report) missed the same.
Prudential managed to return capital to its shareholders in the form of share repurchases worth $875 million and dividend worth $451 million in the third quarter.
The Zacks Consensus Estimate for Prudential’s 2021 and 2022 earnings witnessed northbound movement in the past seven days. Its shares have gained 4.1% quarter to date.
CNO Financial rewarded its shareholders with share buybacks to the tune of $115 million and dividends worth $16.3 million during the third quarter.
The Zacks Consensus Estimate for CNO Financial’s 2021 earnings has moved up in the past 30 days. Its shares have gained 5.2% quarter to date.
Radian Group bought back shares worth $158.3 million in the third quarter. The consensus estimate for 2021 has witnessed northbound movement in the past 30 days.Shares of Radian have lost 1.4% quarter to date