Lemonade, an AI-powered digital insurance company, has announced its fourth quarter of 2025 financial results, reporting a net loss of $21.7 million, a 28% improvement compared to the $30.0 million loss seen in the same period last year.
Highlighting a period of significant growth and narrowing losses, Lemonade also reported a 31% increase in force premium (IFP), to $1.24 billion, as compared to Q4 2024. Customer count in Q4 2025 increased by 23% to 2,984,513 as compared to the fourth quarter of 2024.
The company saw its revenue increase 53% to $228 million year-over-year. A significant driver behind this growth was a strategic change to Lemonade’s reinsurance structure.
As of July 2025, the company reduced its quota share cession rate from 55% down to 20%, a shift allowed Lemonade to retain a much larger share of its premiums.
Gross Profit increased 73% year-over-year, to $111 million, due to revenue growth and an 11 percentage point year-over-year improvement in the Gross Loss Ratio to 52%.
Fourth quarter gross earned premium stood at $290.2 million, which increased by $63.8 million or 28% as compared to Q4 2024, primarily due to the increase of IFP earned during the quarter.
Adjusted EBITDA loss was $4.6 million in the quarter, improving $19 million from the $23.8 million loss seen in the fourth quarter 2024.
This year-over-year improvement is primarily attributable to revenue growth and improved underwriting results, partially offset by the increase in growth spend.
Total operating expense in Q4 2025, excluding net loss and loss adjustment expense, of $154.2 million increased by $30.3 million or 24% as compared to the same period last year.
The increase was primarily driven by higher growth spend for customer acquisition. Growth spend, included in sales and marketing expense, was $53.4 million in the quarter, as compared to $36.0 million in the fourth quarter 2024.
Lemonade’s cash, cash equivalents, and investments totalled approximately $1.12 billion at December 31, 2025. As of December 31, 2025, the company was required to hold approximately $250 million of regulatory surplus at our insurance subsidiaries.
“By any measure, the fourth quarter of 2025 was our strongest ever. The quarter was characterized by growth acceleration, underwriting excellence, and operating leverage, and concluded a year in which momentum continued to build across key business drivers,” Lemonade stated.
Adding: “The strength of Q4’s results reflects the compounding nature of our model. Faster growth expands our data advantage, which sharpens our AI-powered segmentation and pricing models. As these models improve, we see stronger unit economics and accelerating gross profit. That gross profit can then be reinvested to drive further growth at attractive returns, reinforcing a powerful flywheel. Simply put, growth is the gift that keeps on giving, said Lemonade.
The company provided optimistic guidance for the coming year, projecting 32% growth and revenue growth exceeding 60%.
Lemonade also reiterated its timeline for reaching a major financial milestone: achieving a positive EBITDA by the fourth quarter of 2026 and full year profitability in 2027.
