Lemonade, an artificial intelligence-driven digital insurance company, announced its financial results for the fourth quarter of 2025, with a net loss of US$21.7 million, a 28% improvement from the US$30 million loss in the same period last year.
Lemonade highlighted a period of significant growth and shrinking losses, with reported mandatory premiums (IFP) up 31% compared to the fourth quarter of 2024, to $1.24 billion. The number of customers in the fourth quarter of 2025 increased by 23% compared to the fourth quarter of 2024, reaching 2,984,513.
The company’s revenue grew 53% year over year to $228 million. A significant driver behind this growth has been strategic changes in Lemonade Re’s structure.
The company will reduce its quota share transfer rate from 55% to 20% through July 2025, a shift that allows Lemonade to retain a larger share of premiums.
Gross profit increased 73% year-on-year to US$111 million due to revenue growth and an increase in gross loss rate by 11 percentage points year-on-year to 52%.
Gross premiums written in the fourth quarter were $290.2 million, an increase of $63.8 million, or 28%, compared to the fourth quarter of 2024, primarily due to higher IFP revenue in the quarter.
Adjusted EBITDA loss for the quarter was $4.6 million, a decrease of $19 million from the $23.8 million loss in the fourth quarter of 2024.
This year-over-year improvement was primarily attributable to improved revenue growth and underwriting results, partially offset by higher growth expenses.
Total operating expenses (excluding net loss and loss adjustment expenses) for the fourth quarter of 2025 were $154.2 million, an increase of $30.3 million, or 24%, from the same period last year.
This increase was primarily due to increased customer acquisition spending. Growth expenses, including sales and marketing expenses, were $53.4 million in the quarter, compared with $36.0 million in the fourth quarter of 2024.
Lemonade had approximately $1.12 billion in cash, cash equivalents and investments as of December 31, 2025. The company is required to hold approximately $250 million in regulatory surplus at its insurance subsidiaries as of December 31, 2025.
Lemonade said: “The fourth quarter of 2025 was our strongest quarter ever by any measure. The quarter was characterized by accelerated growth, superior underwriting and operating leverage, and ended a year in which key business drivers continued to strengthen.”
Adding: “The strength of Q4 results reflects the compounding nature of our model. Faster growth expands our data advantage, which enhances our AI-driven segmentation and pricing models. As these models improve, we see stronger unit economics and accelerated gross profit growth. Gross profits can then be reinvested to drive further growth at attractive returns, reinforcing a strong flywheel. Simply put, growth is the gift that keeps on giving,” Lemonade said.
The company gave optimistic guidance for the coming year, projecting growth of 32% and revenue growth of more than 60%.
Lemonade also reiterated its timeline for achieving major financial milestones: positive EBITDA by the fourth quarter of 2026 and full-year profitability in 2027.