Lemonade's Third-Quarter In-Force Premium Jumps 34% to $1.55 Billion and Revenue Rises 73% to $336 Million, With the Net Loss at $43.7 Million and a Positive-EBITDA Quarter Promised for Q4

Lemonade, Inc., the technology-led insurer, has published its third-quarter 2026 shareholder letter, covering the quarter ended September 30. The letter, filed with the U.S. Securities and Exchange Commission, does not state its own publication date but says Lemonade's earnings call will be held on November 5, 2026, and that an investor day will take place on November 17, 2026, in New York. Percentages and differences that are not in the letter are calculated here and labelled. The letter is a company document, and Lemonade defines adjusted EBITDA and several other measures itself, so readers should consult the definitions in the full letter.

Growth

In-force premium, the annualised premium on active policies at the end of the period, was $1,550.8 million, up 34% from $1,157.9 million a year earlier. Customers numbered 3,520,555, up 23% from 2,869,900. Premium per customer was $440, up 9% from $403, which is a sign that growth came from both more customers and more premium from each. Annual dollar retention, which in general terms measures how much premium stays on the books over a year, was 86%, up one percentage point.

Gross written premium was $450.7 million against $333.3 million, and gross earned premium was $364.1 million, up 33% from $274.7 million. Total revenue was $336.1 million, up 73% from $194.5 million. Revenue grew faster than earned premium, 73% against 33% as stated, and the letter extract used here does not explain the difference, so this article does not speculate on the cause.

Profitability

Gross profit was $118.1 million, up 48% from $79.9 million, but the gross profit margin fell to 35% from 41%. The gross loss ratio, which compares claims to gross earned premium, was 65% against 62%. Excluding catastrophes it was 63% against 56%, which means the ex-catastrophe loss ratio worsened by seven points. The net loss ratio was 64%, unchanged.

The net loss was $43.7 million, or $0.56 per share, against $37.5 million, or $0.51. Adjusted EBITDA was a loss of $20.4 million against a loss of $25.6 million, so the adjusted measure improved while the net loss widened. Adjusted free cash flow was $27.0 million against $18.1 million, and cash flow from operations was $7.3 million against $4.5 million. Cash and investments were about $1.2 billion, and about $350 million of regulatory surplus is required at the insurance subsidiaries. Employees numbered 1,321, down 1% from the second quarter.

Car insurance and Tesla

The car line is the main growth story. Car in-force premium was $265 million against $163 million, an increase of about 63% calculated here. The letter says car insurance is available in 14 states covering more than 50% of the U.S. population. Lemonade's Autonomous Car product has expanded to six states. Eligibility now includes Tesla vehicles with HW3 hardware, with a 30% lower rate on miles driven with Full Self-Driving (supervised) engaged, while HW4 vehicles get 50% off. Early conversion rates are more than twice those of the broader Car product, according to the letter.

These are company statements about pricing and conversion. The letter as used here does not give claims data for autonomous driving, and it is too early for this article to say whether the discount reflects lower losses.

Guidance

Lemonade's guidance for the fourth quarter of 2026 is in-force premium of $1,632 million to $1,639 million, gross earned premium of $379 million to $383 million, revenue of $342 million to $346 million, and adjusted EBITDA of $5 million to $9 million. For the full year, in-force premium guidance of $1,632 million to $1,639 million was reiterated, gross earned premium of $1,382 million to $1,386 million and revenue of $1,231 million to $1,235 million were both raised, and adjusted EBITDA is expected to be between negative $51 million and negative $47 million.

The company says it expects its first positive adjusted EBITDA quarter in Q4 2026 and its first full year of positive adjusted EBITDA in 2027. The chief executive's letter reiterates the expectation of positive adjusted EBITDA for the first time in Q4. Guidance is a forecast, not a result, and it can change.

A caution on the numbers

The quarter has a tension. Growth and revenue were strong, and the adjusted EBITDA loss narrowed, but the gross loss ratio worsened and the net loss widened. The Q4 target requires a swing from negative $20.4 million to between positive $5 million and $9 million in a single quarter, a change of roughly $25 million to $30 million calculated here. The letter does not break down how that improvement will happen in the portions used for this article. Insurance results can also swing with catastrophe losses, which the company excluded when giving its 63% loss ratio.

What it means

For customers, the points that matter are that Lemonade is growing quickly, that its insurance subsidiaries hold regulatory capital, and that car insurance now covers more than half the U.S. population. For investors, the guidance for Q4 is the key test. This article does not predict whether it will be met. Readers should read the full letter and the company's filings, and consult a licensed adviser before making financial decisions. This article is general information and not investment advice.