Less than two weeks ago, the share price of insurance company Lemonade (NYSE: LMND) was at an all-time low, but since then it has changed direction. After the release of its first quarter financials, the share price shot up 47% within three sessions. The financials were published after the close on Wall Street last Wednesday, and in following days the share price rose from $11.10 to $16.30, giving the company a market cap of over $1.1 billion, up by more than $350 million.
Lemonade, founded and managed by Daniel Schreiber and Shai Wininger, is a digital insurance company operating in the US. It provides insurance to landlords and tenants, car insurance, life insurance, personal liability insurance, and insurance of pets. In the first quarter of this year, Lemonade beat the consensus analysts’ estimates, and it raised its annual guidance; this, as the company pointed out, despite the effects of inflation and the occurrence of natural disasters in the first quarter.
First quarter revenue was $95.2 million, 115% more than in the first quarter of 2022. The company’s net quarterly loss fell 2% to $658 million, and adjusted EBITDA was a negative $50.8 million, which compares with negative EBITDA of $57.4 million in the corresponding quarter of 2022. At the end of the first quarter this year, Lemonade had $993 million cash.
Lemonade reported 23% growth in its customer base in the quarter to 1.86 million, and 26% growth in average premiums per customer, leading to growth of 56% in IFP (in-force premiums, defined as "aggregate annualized premium for customers as of the period end date") to $653 million. For the second quarter, Lemonade expects IFP of $665-668 million, revenue of $96-98 million and negative EBITDA of $55-58 million. For 2023 as a whole, the company’s updated guidance is for IFP of $700-705 million at the end of the year, annual revenue of $392-396 million, and negative EBITDA of $00-205 million.
Like many technology companies, Lemonade stresses its artificial intelligence (AI) activity. In a letter to shareholders it states that it will report later on the impact of generative AI on its business. Meanwhile it says that the use of AI continues to make its operations more efficient, and that half of all claims are processed entirely automatically using AI.
"In the third quarter of 2022 we turned a page and since then we have been marching on a positive trend towards profitability," Wininger said. "We achieved our goals for the first quarter beyond expectations and reported growth in all parameters, and our guidance has therefore been updated accordingly. Lemonade was founded and operates on the basis of AI, which reduces our costs daily. In the light of that, we estimate that over the next eighteen months investors will see significant savings in the company’s cost structure, while at the same time service improves."
Another digital insurance company with Israeli roots is Hippo Holdings (NYSE: HIPO), which released its quarterly financials yesterday. Hippo reported a 62% rise in revenue to $39.8 million, and a net loss for the quarter of $69.8 million, or $3.01 per share. EBITDA was a negative $52.1 million, which compares with negative EBITDA of $48.5 million in the first quarter of 2022. Hippo sees 45% revenue growth
Published by Globes, Israel business news - en.globes.co.il - on May 10, 2023.
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