Lemonade remains a money-loser, but the digital insurer continues to take steps toward building a sustainable business. One of those key areas is in advertising spend.

In the company’s Q1 2021 earnings released earlier in May, the New York-based company’s net losses reached $49 million during the quarter, versus $36.5 million a year ago. But Lemonade’s losses have continued in part because of ramped up investment in national and international expansion.

Underscoring that growth, Lemonade reported nearly 1.1 million customers as of the 2021 first quarters, versus 729,325 in Q1 2020.

Advertising and Marketing

Lemonade disclosed in its Q1 2021 shareholder letter a “significant year-over-year increase in advertising investment levels” compared to last year.

That jump was part of a reported $55.1 million in operating expenses during Q1, excluding net loss and loss adjustment expense. The number is 25 percent higher than the previous year, a trend Lemonade said is driven in part by marketing expense. General and administrative expense due to hiring and more products to sell, technology development and other expenses were also in play.

Sales and marketing costs themselves surpassed $29.1 million in the 2021 first quarter, compared to $19.2 million in the 2020 first quarter


Lemonade asserts that it is building premium, that for the third consecutive quarter it saw accelerated growth in premium per customer. That number is now at $229 per customer, up 25 percent year-over-year.

The company also cites an expanded product offering, which now includes renters, homeowners, term life and pet insurance in the U.S. alone. Lemonade said that non-renters products accounted for about half of its new business in the 2021 first quarter, up from one-third in the 2020 first quarter. Before the company’s initial public offering in July 2020, Lemonade sold renters or homeowners insurance, it notes.

Lemonade explains that its newer products are generating faster growth than previous ones.

“It took several years to achieve profitable unit economics for our home insurance products, but for Lemonade Pet it took just a few months,” the shareholder letter notes. “This acceleration is largely enabled by channel diversification, improving brand awareness and a machine-learning-driven growth engine that constantly iterates to improve each step of our onboarding funnel,” Lemonade noted.

Car insurance is planned soon, the company has said.

Gains and Struggles

Lemonade’s in-force premium was nearly $252 million at the end of Q1 2021, versus $183 million a year ago. Its gross earned premium reached $56.2 million during the quarter, compared to $30.5 million in Q1 2020.

And yet net earned premium came in at $13.8 million, down from $25.3 million last year.

The company tallied Q1 gross profit of $1.9 million, down almost 60 percent versus the year before. Lemonade blamed Winter Storm Uri, which cased $6.5 million of net incurred losses during the quarter.

Lemonade’s stock traded above $79.33 early afternoon on May 21, up more than 2.3 percent. That’s well above the close of the company’s fist day of trading, when Lemonade’s stock price jumped $40, closing at $69.41. At the same time, however, it is well below Lemonade’s initial high of $183.26 reached on Jan. 11.

Source: Lemonade