Lemonade's stock slides after digital insurer's soft guidance offsets narrower-than-expected loss

By Ciara Linnane

Company's revenue matches consensus estimates

Lemonade Inc.'s stock tumbled 12.3% in after-hours trade Tuesday, after the digital insurer, which uses AI to power its business, offered soft guidance, offsetting a narrower-than-expected second-quarter loss and revenue that matched estimates.

The company had a net loss of $57.2 million, or 81 cents a share, for the quarter, after a loss of $67.2 million, or 97 cents a share, in the year-earlier period. Revenue rose to $122 million from $104.6 million a year ago.

The FactSet consensus was for a loss of 88 cents a share and revenue of $122 million.

In Force premiums rose 22% to $839.0 million, squeaking ahead of the $838.50 million FactSet consensus.

The company's gross loss ratio, which measures profitability, improved by 15 points to 79%.

Operating costs rose 13%, or by $12 million, mostly due to a rise in growth spend. The company was net cash-flow positive for the quarter and expects to remain so going forward, apart from in the fourth quarter when seasonal cash-flow patterns will set in.

"We expect familiar seasonal patterns to repeat in Q3 & Q4, with accelerating growth spend in Q3, expected to be 3x prior-year amount, and lower loss ratios in Q4," the company said in a statement.

The company is now expecting third-quarter In Force premiums to range from $875 million to $879 million, for roughly 22% growth. The FactSet consensus is for $898.4 million.

It expects revenue of $124 million to $126 million, or about 10% growth. The FactSet consensus is for $134.9 million.

For the full year, it expects In Force premiums of $940 million to $944 million, up about 26% and compared with a FactSet consensus of $942 million. The company expects revenue to range from $511 million to $515 million, while FactSet is expecting $515.1 million.

The stock has gained 40% in the year to date, while the S&P 500 has gained 14%.

-Ciara Linnane

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

07-30-24 2022ET

Copyright (c) 2024 Dow Jones & Company, Inc.