This article first appeared on GuruFocus .
Release Date: November 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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In-force premium grew 34% year-over-year to $1.55 billion, marking 12 consecutive quarters of accelerating growth.
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Revenue increased 73% to $336 million, and gross profit rose 48% to a record $118 million.
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Adjusted EBITDA loss improved to $20 million, and the company remains on track for its first positive adjusted EBITDA quarter in Q4 2026 and full-year 2027.
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Adjusted free cash flow was positive for the sixth consecutive quarter at $27 million, with operating cash flow also positive at $7 million.
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Cross-sales to existing customers surpassed $100 million year-to-date and are growing at twice the overall IFP growth rate, with no incremental customer acquisition costs.
Negative Points
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Net loss widened to $44 million ($0.56 per share) from $38 million ($0.51 per share) last year, driven by increased stock-based compensation and interest expense.
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Pet loss ratio is experiencing a modest headwind due to inflationary vet costs, which kept the full-year adjusted EBITDA guidance unchanged despite a $16 million revenue guidance raise.
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European loss ratio was elevated in the quarter, with 29 points driven by catastrophes and large losses.
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G&A expenses grew 45% year-over-year, primarily due to increased stock-based compensation, interest expense, and the absence of prior-year one-time benefits.
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Car loss ratio, excluding prior period development, is trending in the low-to-mid 70s range, which is higher than the overall gross loss ratio of 65%.
Q & A Highlights
Q: Jason Helfstein (Oppenheimer) asked how to think about EBITDA pacing into next year and the balance between profitability and exciting growth drivers like car, given the inflection point and slowing marketing spend. A: CFO Tim Bixby explained that history is a good guide, noting a consistent pattern of bottom-line trajectory in the first three quarters followed by a notable step change in Q4, which is expected to continue. He emphasized that while absolute growth spend dollars will increase next year, the growth rate is declining rapidly. The company's bias is always growth, and excess capital will be invested in high ROI, high LTV-to-CAC opportunities, particularly in the car business.
Q: Daniel Lee (Morgan Stanley) noted that full-year revenue guidance was raised by $16 million while adjusted EBITDA guidance remained unchanged, and asked about the drivers behind the Q4 EBITDA guide of $5 million to $9 million. A: CFO Tim Bixby attributed the dynamic primarily to a modest headwind in the pet loss ratio, which is largely under control. The company is taking rate through the system to offset inflationary vet costs, which will flow through the financials in upcoming periods. He highlighted that pet is 40% of the business, demonstrating the resilience of growth due to diversification.
Q: Daniel Lee (Morgan Stanley) asked if Lemonade is seeing any volume from personal AI agents today and about the net impact from agentic AI on the book of business over the next few years. A: CEO Daniel Schreiber stated that while volume isn't there yet, it is a game changer. He explained that Lemonade has automated much of its system, and with consumers getting their own AI agents, the entire system becomes agentic. This favors Lemonade because its agents can handle the rigorous, legalistic appeals from personal agents, unlike incumbents reliant on human-to-human contact. Strategically, he noted that brand advertising moats lose impact when consumers use rational personal agents.
Q: Andrew Anderson (Jefferies) asked which metrics are improving in the newer car cohorts and how their loss ratios and retention compare with prior cohorts at a similar maturity. A: CFO Tim Bixby reported that the calendar quarter car loss ratio was around 63%, with a meaningful benefit from prior period development. Excluding that, the car loss ratio is trending in the low to mid-70s range. New business has a slightly higher loss ratio than renewals, but both frequency and severity are trending healthily and in line with expectations, which is notable given the pace of IFP growth in car.
Q: Andrew Anderson (Jefferies) asked for a breakdown of what is driving the underlying increase in G&A expenses despite lower headcount, and how to think about the run rate into 2027. A: CFO Tim Bixby explained that the primary year-over-year drivers are interest expense, stock-based compensation, and prior-year one-timers. He pointed to Q2 2027 as a key inflection point when the company laps the impact of executive awards, after which stock-based compensation will no longer contribute to year-over-year growth. From that point, he expects significantly moderating year-over-year growth in G&A.
Q: Mike Zaromski (BMO) asked for more color on what is driving the higher pet insurance loss ratio, what actions are being taken, and for color on the European gross loss ratio. A: CFO Tim Bixby attributed the pet loss ratio increase to an inflationary macro dynamic with rising vet costs, and noted the company is actively taking rate, which will take a few quarters to flow through. For Europe, he noted the loss ratio was elevated, with 29 points driven by catastrophes and large losses, but the company is pursuing targeted rate actions. He emphasized that on a trailing 12-month basis, the overall loss ratio is 60%, a healthy level, and that the company solves for total gross profit dollars rather than loss ratio in isolation.
Q: Tommy McJoint (KBW) asked what types of partnerships could be unlocked now that renters is available nationwide, such as with property management companies or embedded referral systems. A: CFO Tim Bixby described it as "more of the same, but even more so," referring to a tier of potential partners with broad reach and a nationwide requirement that previously created a ceiling. He noted the company has always had a stable of partners across four or five verticals, with property management near the top of the list. Nationwide availability opens up a broader world of established players, and he expects consistent improvement and expansion in partner reach over the coming quarters.
Q: Tommy McJoint (KBW) asked what portion of incremental cross-sales is driven by new product launches in new states versus existing customers adding products like pet policies in states where they've been available for years. A: CFO Tim Bixby said cross-sales are coming from both places and performing very well, with the growth rate of cross-sales roughly double that of total in-force premium. He noted the company is expanding penetration within existing cohorts, and when a new state launches, there is a spike in cross-sales as a result. He also noted that the percentage of total IFP that is bundled is fast approaching 20% and has been improving steadily.
Q: Mike Zaromski (BMO) asked as a follow-up on cross-sell whether it is correct that there is not much incremental customer acquisition cost spend on products being cross-sold. A: CFO Tim Bixby confirmed that is a correct assumption. He added that the company remains bullish on its ability to continue driving cross-sales growth that is notably higher than the overall growth of the top-line.
Q: Shai Wininger (President and Co-Founder) addressed shareholder questions on the pace of geographic expansion and whether car state rollout is expected to accelerate, similar to the recent surge in renters launches. A: Shai Wininger noted that three new car states were launched in the past 90 days (Florida, Missouri, Pennsylvania), and the 2026 launch pace across the business is about seven times faster than in prior years due to Lemonade OS. He emphasized there is no TAM constraint, as the current states represent more than half the market with a TAM well north of $100 billion. He expects to offer all products in all 50 states and to continue shortening the cycle time to launch a new car state.
Q: Shai Wininger (President and Co-Founder) addressed shareholder
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
