Lemonade (LMND) 11 Nov 202020 Q3 Earnings call transcript

Company Profile

Participants

Yael Wissner-Levy	Vice President Communications
Daniel Schreiber	Chief Executive Officer and Co-Founder
Shai Wininger	Chief Operating Officer and Co-Founder
Tim Bixby	Chief Financial Officer
Mike Phillips	Morgan Stanley
Jason Helfstein	Oppenheimer & Company
Ron Josey	JMP Securities
Ross Sandler	Barclays
Matt Carletti	JMP
Heath Terry	Goldman Sachs
Mike Zaremski	Credit Suisse
Arvind Ramnani	Piper Sandler

Call transcript

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Operator

Good day, and welcome to the Lemonade, Inc. Q3 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, today's event is being recorded. to conference like Wissner-Levy. to now would turn over the Yael I go Please ahead.

Yael Wissner-Levy

welcome quarter the Lemonade's My morning, to Good and third Lemonade. Yael and at name Wissner-Levy XXXX I Communications am VP is call. earnings

results Joining quarter me are CEO Underwriting available John investor.lemonade.com. Co-Founder; to is and Officer. Officer; Co-Founder; covering our XXXX and Wininger, company's and our Lemonade’s shareholders Daniel A Investor Chief COO Financial Schreiber, our Shai Peters, Relations to today discuss financial results Chief third Tim the on Bixby, letter website,

Factors from that I forward-looking the undertake remarks XXXX, forward-looking statements forward-looking Before June our discussed like only Any of SEC. no other Reform may Risk XX-Q those we begin, result those would a today update our the call as this materially obligation as XXXX. ended within this to and section including months the various contain indicated remind of the may by them. of important we XX, you Securities our factors, Litigation and represent for results Act statements management's these call on of Private views of meaning on made Actual the three with to statements in Form differ filings

referring financial these Reconciliations as directly letter measures most be certain important performance. investors measures We adjusted will to GAAP profit, shareholders. operating be on we financial in such measures of may believe are to assess to our EBITDA non-GAAP comparable gross today's call, financial to which and adjusted non-GAAP to included the our

is Daniel? metrics, use metric, including to remarks. Daniel, information and includes also each our over begin monitor a useful I'll will call a each manage the each and business. to to with of definition we our With investors turn shareholders operating who key opening how why few to letter that, Our about

Daniel Schreiber

in the in all concern performance morning. Good returned indicators. strong sustained report our along quarter that and that force our pandemic growth migratory unit seasonably our doubled. with saw patterns across or happy IFP premium third and might quarter, results robust key them to fact, we I'm Year-on-year, improvements economics. disrupt Despite our strongest

backdrop, which profit adjusted happen. numbers our earned losses noteworthy didn't Perhaps United The this bark Tim to thing phrase borrow the fire Sherlock that highlight. will gross all ever. is QX A, missed alphabetically, halved. year named this had literally early by they Hurricane Holmes, premium dollar with a year had XXX%, the on Hurricane to over California's mid-September, season most starting equally season this start National letters storms Center time The out run Greek of ferocious. destructive we bark. that had alphabet. which was devastating significance never with but and per which like of gross elaborate dog That the states the Wildfire and Our Lemonade’s disasters States the see the something happened shortly. QX, non-event, union, populous so the quarter started home is in the a this majority that and while fires hit didn't made that Western customers. in the Against dog of in jumped our to most from we These though to in unprecedented are didn't I'd major early. most happened easily also has this season alone of

for ratio perfectly healthy. QX loss Our remained

year. than more In X% last than the lower corresponding quarter fact, at XX%, it was

get money our those would unchanged annual excess our XX% didn't cat most make ratio billion occasionally safe catastrophes As as loss insurance loss reinsurers fact of this finance because is bill the perspective, or our that economics companies topped of about But even ratio typically will put we gross money. loss on our the that $XX To $XX back. take below leftover without would ratio, losses XXX%. and ratio And forecasting largely will our industry the reliance catastrophic have non-event XX%, reminder, losses. for okay. that did be QX. would for reinsurers also home be losses If reinsurance share, it our could If our XX% put underwriting industry note. and loss is about million even of a of a cat is a expected gross on was of into spike average, nearly based about market A

and rata And zones I the we're testament pro in And Our is declined actual underwriting by our risks. growing loading of XX% ratio parts country. were approach wildfire than it cat on though predicted. believe loss lower year-on-year. tail to the losses some to would that not This hurricane-prone our have cautious up our shows

and and tails Speaking dogs barking. of

generated in newcomers, These their second for added of three times roaring start. newcomer comprise we About on-ramp about at The their without Lemonade will provided XX% insurance delivered was pet soon to Pets maybe into to for of incremental homeowners in the almost about additional of the existing newcomers premiums. with these but months insurance our better than who IFP that a Each added you beyond health as newcomers our us. premiums product. pet majority as look won't compelling renters of years our did quarter acquire it launch insurance. foray our yet these metrics pet And following policy all, within a any our beyond sold from an only rate but quarter homeowners efficiency be with average were first or buyers. step years they as their Lemonade first this a are marketing insurance took renters customers achieve and costs an nine the of X% that to it $XXX has the median it's incurring our four Lemonade, Not first-time launch hear, last. of initial first us And sector jump alone to premium three four-fold And of at more insurance our we to thing ago. It's us note pet off customers. homeowners. an to to policies of

are homeowners Our Lemonade experience acquiring a progress with three policyholders Lemonade and months the significant as their events, grow do so magnitude they growing cross-sell cycle strategy predictable that when up-sell with About that insurance Lemonade. us. of phenomena started modest graduated and XX% needs gain QX homeowners and and orders too. ensuring young to often our experience This get post-launch our condo business they through needs continues they renters within affirms of fabulous as of to by our life steam then customers become with at in

from and tremendous trends me incremental what's believe within third to average owning Shai? grew lines to cost that to products. while over And from note, of to $XXX IFP over quarter, overall three In renting Shai graduates homeowners to doubled We premium. XXX% between graduation acquire more product customers further before IFP our graduating significant. have these in both hand fact, give adding year-on-year $XXX the their after, let next. grew that's on coming We same on with from by hope to them premiums during again, on no a these six-folds The the runway. the update our incremental months, boost by you

Shai Wininger

the tend the the product and domain to their than on the Which months, bring prioritize established the insurance. in to Insurance between and insurance quite In other. in term settle P&C frameworks. coming there to the frameworks or months. We for regulatory regulatory we customer life considerations, invisible The is plan strive to based insurance recent industry, insurance are into experience Lemonade Thank Life distinct but market you, is one two understand the launches needs companies Daniel. we Agency an we why boundary Lemonade rather and why life

forthcoming even will life I'd guarantees better. certain, tech-enabled be products a to term acquisition with announcement we you a and noteworthy economics Teams to it we're highlight this we giving no of term winner. think is life associated at we and use Beyond policies. initiatives, insurance returns. digital struggled product heads how offer about that a make up placing work about that their respect bet and other on though do we can have It not like risks launch, the And to companies we're the

them, differences and this we despite uncertainty. are are bet, Because why make the us a So smart life? important launching there term that differences between

systems downside we'll because leveraging modest is the be place. and in one, already technologies For

will X million We of for free. underwriting excited not to about. customers audience be those and we'll we policies captive a have whom market something is can we're ourselves This

be well as Our technology for that platform, we others right. from for user customer and as products scratch, ones on service incredible built the experience can leveraged

when buying trigger same first another, life are age first about a about of XX, to The buying the For home their Lemonade also average it’s we from triggers in age policy to. insurance college child. to graduation me events for have age one's also average is And for first which about the grads ownership is the that often average customers. U.S. home the renting

Finally, the the the end compounded of this trillion billion than cost is and the insurance expected to not annually term the spread to over to grow high, researchandmarkets.com, potential about the global $XXX is According stands price more market year decade. big. at by of while life $X is XX%

over comfortable outlook, greater letter, as in with detail the wrote volatility, Bixby conditions we reveal more so. Tim and results trade and that, but abandon them into Tim? bets, to for bit make financial around to making. data to are of SX translates decisions me also to better a aggregate be uncertainty, let we founders’ prefer as hand returns. our It’s As we And to soon under bad a That our

Tim Bixby

by compared prior quarter. a mix mix one-third remaining increased to this value driven well Premium of was year time, XX% in in to versus combination customer increased of the acquisition premium written over policies. premium. growth product year our per QX growth policies questions. million. Shai. year increase metric full QX the additions continued and we'll customer well fourth grew in per Thanks before take of as the growth line $XXX.X our reinsurance XX% as the Then premium of Great. had regardless line new to a as increase driven homeowner of captures of higher in driven XXX% shift strong the another toward premium increase Gross premium in QX In-force We results, now the expectations from to give increased prior color as year well the $XXX. two-thirds and shift coverage I'll top timing scope the $XX.X increased the the pet of by was your more by and on as to QX in impact and quarter XXXX. the of as bit Roughly of per customer. million a in a compared during This QX This levels. the customer prior in-force value for as with in full customers, quarter as

for quarter, Our XX% gross representing activity improvement CAT quarter of from an XX% loss ratio in is third the despite QX, XXXX. the significant in

increased within XX%, will continue We recent to XX this marketing note, expenses, as loss time compared loss actually to in gross for excluding sales gross ratio nearly public expense ratio a but adjustment XX% and as overall expenses ratios, the our with corporate due remained by to XX%, lower years expenses occasional that primarily the and year continued and about quarter, ratio in certain with again, CAT the sector insurance loss in marketing prior is prior vary Also loss to gross expect professional in G&A expected, outside short-term to to even range average notable in our the players year annual slightly any Operating compared for P&C top company a increased target below results approximately it's loss competitive. the tougher the our loss XX% efficiency. XX% like services. range, just as over improvement QX and highly expense related

better $XX.X million a people rate in with areas to versus XXX new of development in in Net to premium supportive headcount quarter other QX, product slightly and the of members loss continued notably team teams. each hire XXXX base. in than we the year roughly departments loss company, thus in reported growth larger also customer product the was facing and in growth in-force Lemonade $XX.X saw billion expense customer a doubled prior of increases the customer and new third and greater premium with all launches in We Global the lines.

balance While $XX.X end net since adjusted primarily public in to quarter year approximately proceeds for our July offset of from use million partially $XX QX million quarter XXXX, total million, at compared million $XX.X EBITDA investments equivalents third reflecting of cash, the of offering the in operations as our was $XXX of the cash of XXXX. million, the loss and ended cash by $XXX.X

now the expectations With of year specific our quarter I'll financial metrics XXXX. the for these and full fourth and goals mind, outline in

the of XX and million million, we December and to XXXX, adjusted revenue Gross million For million. premium $XX loss million. million between at fourth expect EBITDA $XX $XXX million $XX million $XX of $XXX between of quarter of $XX in-force GAAP and and earned premium of between $XX

We expect $X compensation expense and of million million. stock-based capital $X approximately expenditures approximately

full the $XXX expect again revenue to and adjusted For million. between in-force $XXX and at loss gross XX year million and earned between million, EBITDA million December XXXX, million premium premium between $XX $XXX of million we $XXX million GAAP and $XXX of of $XX million, $XXX

that note please and such GAAP expense expenditures GAAP compensation full premiums of stock-based capital million. from excluded approximately rules expect also We accounting revenue. the as $XX approximately are ceded of reminder, million $X And are for the a year

As that was Thanks and trajectory appreciate believe public structure, reinsurance our and interest not be that each the in the a on to support. and quarterly to comparisons captures joining useful perhaps X Q&A are gross result, earned second of premium proportional and we've we back the published over instructions, we call margin as with company, your a this as the of July Accordingly, who before gross significant we'll business structure happy premium overall analysts noted we that, do take growth to turn like reinsurance. because our investors, metrics in-force year-over-year of as are effective to a rejoin change the questions. reinsurance to impact operator, your much I revenue so call for review, now would can the With our and comparable.

Operator

Thank you.

[Operator the first begin Morgan session. And question now Instructions] Stanley. from today's ahead. with will go We Please Ismael comes question-and-answer Dabo

Mike Phillips

Phillips I have start and actually. they everybody, tough Mike quarter. customers. on the because a seasonality, quarter you with as would. guess time quarter, congrats and going people it not Last to Thanks. a I'm Hey. be typically could Good the line it’s morning nice to off Appreciate as top this quarter moving guided much of

new I into show? that premium, customers did the actual growth guess, in-force headwind not – you see headwind or expected did And new came so it by or there, the drilling that down did customers. drill offset we kind can you something but you from, of Where customers, the the new was So not see where the come else just into

Tim Bixby

QX, extent. the Mike. We're a patterns a in of them. quite is Sure, about more are quarter normal early the year. in really this is And the part concerned seeing came seasonal to reason, might the not in customer we seen expected, think the about as this Hey, the the changes have I happening be so had growth a of remarkably because strong repeat significant cautious what numbers great year things we of haven't came that little year, as but into QX more we in expected reality just some in been heading cyclical a

to so healthy Important at that than we even we're note very pace. growth customers is continuing customers so add premium paramount. on more a focus to do dollars, So

we And So we've the we're see prior count cycle sometimes growth. very a comments both sort really from in in seeing then the the year the and count slightly really come much what the together of ebb think growth from make customer be that, years. the but with standpoint, and seen you'll guidance with in happy today flow line that customer premium can off with seasonality I the of and we're

Mike Phillips

Tim. Thanks, Okay.

the about talked CAT numbers. You

basis, what a result if strong we really you obviously. were the know actually in How I I on side? number CAT – that growth on something of on back loss you loss the How could then was the X% talk that really the really but was about about much the that the underlying basis? much And that net growth much what CAT, underwriting from ratio? was what now X% was talked behind – CAT guess Your was of don't strong, how was strong, ratio net your out

Tim Bixby

know have saw CAT for generally, in have normal would incremental there from transition from filings of I A numbers. gross on I you're out the ratio activity, a probably versus because norm. some the of – reinsurance the We'll that CAT specific today. more X. say number think to would But that I July impacts, roughly XX points so quarter – One that of ratio, significant at something think thing statutory half Yes, impact shortly out we loss are impact our CAT of net the be the disclosable like roughly of looking can’t some have don't half quarter. all when does was happened not I nuances that the loss

kind we'll to of loss share ratio continue XX% really gross that so that the And overall comparison. is number apples-to-apples

out you if with also last the much QX. quarter line with in we where at CAT you And pretty back where were right activity even in think so line. CAT And about XX%, were the and we in

So we're and and performance. really how pretty underwriting on weather, our the quarter basis think I to was bringing loss what significant net really that enabled both really with test ratio shows strong this think I us growth the pleased a

Mike Phillips

net there. XX%, just you the a Tim did mean have When without Quickly, quick XX been follow-up XX the Okay. say would you CAT?

Tim Bixby

of but growth, the sort basis. it of a on on focused think gross yes, I'm

Mike Phillips

happen and that how the not I'll proactively So on might marketing some the thought in and the of you into quarter? pull Okay. guess lower and on circle in any were dollar people lower. concerns there sales Was of sales marketing is I did the you with And any there for On because amounts moving? proactive efficiencies then, back. spend to getting mentioned Tim, your reasons you're there last now, back because comments one you what quarter

Tim Bixby

really and to managing We're we whether some in don't going back anticipate this real sure happen. So pull we're they're not things, time.

And But with years. so, the see prior spend, quarter, we to quarter an again, spending the growth sorry, the it's on that seasonally really of seen that when manage the quarters, of it's we was is we've consistent see see that's generally, And flows a sort kind of hard reflected a doubling of in pretty tighter But But year-on-year what aggregate, say what a really efficiency of day-to-day of when few over what I comparison inappropriate quarters. arc we're that's I QX we've past course just ebbs we patterns prior for – or for than a a you the and the the we seen ability spend basis. that. think, and so to year-on-year more a I’m the how but what going saw efficiency significant is QX. guidance. four think years we're extraordinary, a it’s doubling over doing marketing still been now, to CFO, I say bringing I to our think it's in on just in, spending improvement really in

Mike Phillips

quick, guess XX%, the IFP talked last Thanks. from – have and XX% lifetime one from the I'll to Last it grew the on I graduation and renters. then Okay. that the of comments the real in about to comments to condos In you homeowners. quarter quarter over jump In went condo, graduated your compared XXX% how on the value, XXX% off. your

is piece. that’s asking. one in classified versus the guess and specify in or XX% The lifetime which XXX%, make XXX%, graduating homeowners, you that that You homeowners distinction is that? a two on the the condo just their condos, wording condos I’m I from here versus So condo, why is between true or the can want to

Tim Bixby

but on same the Two metrics, different Yes. topic. very

we condos the that's our year, you nice back talked of XX%. percentage, So for all at steady – about about homeowner think was is at XXX% upward And we've the condo graduation. alone something that if a a March, looked

so home we a combined, graduation saw and are than rate three So but good uptick, two whether different an ago, those a year or times condo metrics. progress, higher

Mike Phillips

sure. Yes,

Congrats Okay, thanks it. Tim. guys. Appreciate

Tim Bixby

Thank you. Yes.

Operator

ahead. from today question Oppenheimer next with Please And our & Helfstein Jason go comes Company.

Jason Helfstein

– can and expansion. Thanks. separate how extent of efficiency why able question I life you kind people launch about to be you just into over out then Kind kind think broadly, legacy the At that'll the And et with questions. insurance Thanks. of the maybe we next because impact second first you that do just the understand lean you versus the way is car new insurance, life, business vertical two that's business reported of to And investments, a a that, think of the think have, a there versus months, marketing XX of to do would the the the cetera? kind impact so efficiency?

Daniel Schreiber

here. good morning, Daniel Jason,

it's three different me Let – in the your pet, of are launch to an of then all as what for not life, the expensive spoken customers’ within grow take want – life that months insurance our today as we pretty to grow months of with and part cater launched the build didn't needs we XXst them we're the first times life. announced needs be behind looking century, to We're those in It's we've really company question. instead we centric will announced build about sorry, we here. that aspirations and iconic ago, hubris one Three we've CAR, to today of time. we've it's at customer fullness we of launched and going doing, time

And you And assume that can so steady you launching see that fairly products. that clip customer we before will products needs. all new at the a done, launch our we're we're

So a why question the sequencing just other. the rather of than rather really one question it's than of

about. talk goodness to As things that is Shai mentioned, fit around life, specifically there a other of we

do Mike And this being things from having those some once do gave a that see we happen a me buying home see And to graduation. we that overlap kind of Tim buying habits with individuals with when and deal. home events coincides establishing other. a people having proximity being you are often great that with to that to family, life the meets families of So events, responsibilities in go numbers the largely about close just to a lifecycle kid

stage So product we fit goodness Tim? instead of just this comments, in do say, to my back of other, the but it's I right the life, as feel like isn't the I one there go other. one is before a earlier

Tim Bixby

efficiency like unit maybe what anticipate the insurance pet And Lemonade hopefully economic point, I think think million life And pretty to or too who other only how some their you versus customers expect have shifts that we of and customers We'll this will standpoint, vice life marketing the And at product, into a nearing looks invest much we see any we shouldn't holistically. versa. buy dramatic something needs. in dollars acquire. of about from customers have Yes. in extent, marketing and customers think we'll long. where percentage existing those we'll as first also we branch then that before We're some products X probably

a performance metrics at common the in expect to at. pretty quite optimized got a life years several than so pet launched have unit good place this more wouldn't renters internal over quickly key I a our the actually it's our tend bit of products the launch indicators we're reasonably they of new. something time, due improve and place is that us, for and and new kind start that's same anything I nature so that And expect be would certain to to dramatically economics it's ago the when different then we but past launch. to quickly,

Jason Helfstein

Thank you.

Operator

go today our Josey Please Securities. comes And ahead. at Ron JMP from question next

Ron Josey

about little question. in taking for insurance framework. regulatory I to down the customer based life Thanks needs talked and more Daniel, on the wanted you versus launching bit a the letter drill Great. on

to sequencing. in a of maybe follow-up terms So questions Jason's

with mentioned why then life telling you mentioned comes research about and for? of life, abandoning about your terms And us users your bets data. asking based you research telling Just what a on talk you to in your are few launch bad is first? is And what times what then the you of Shai

as see us and verticals launch, cadence Thank make newer a you seems you. decisions quarter to these Just KPIs of set talk to what timelines every do be to we now? about

Daniel Schreiber

– the us purchase for could hundreds insurance. data But of is best market of there dollars did stage approaching research. there going mean for also indication more our insurance out well, life bit good the is to triggers about thanks we're life product honestly, about insurance agent to subhead launching that those term about pay little overwhelming of clearly home the we of The gave And that the mixed, little paragraph a are a that term result insurance elaborate we vast on somebody cautiously. life insurance, but life them by I talks is customers sizable and the think is trillions bit in just of have dollars. shareholders we pay homeowners we do hi, about Ron, what it a that. And this majority letter data we think very why as Yes, of and sometimes assume I premiums. that the is in out market there the some be billions life

we'll That Jason's some and going we about definitely can you of by or on being customers arena for. glean ceilings acquisition is worth we've also to from price which mentioned, the other dynamics placing this stories million and much So that launched internally, the speaks of bit trust bets, question to can the we time have, a life Tim coming it's And fast others there these like caps, market of we cautious because are glass struggling and we real seen together but kinds X how and I whole think little this research. market nicely. simply on those cost said are is symbiotic as new

we're would play about what one piece. cautious one and declaring do read to we get know inquiries this to customers, from if So we And right fest is to to my victory adoption it speed kind Ron available. at of inbound don't honest that's out, just is kind what answer customers, do speak more really and The the we before out, to that we play thing of kind the all going so. research you yet other

take other bets, these One the really user of certainties, the we this are support and the that than as moves. we've we that the that that done, some we're experience, are already base. that company they're the risks actually but technologies, all the the them launch of well of rather because all staff, very things is the licenses modest, doing The to nice do regard and are leveraging of of all we about not the all things bets of as branding, install everything

leverage an getting and of paid question for to of more us it's been just is for able products. to top in start Life all and more on for we've way, a already use we really and homeowners it's So products. very renters and built using for, and to that that that everything much new it of more things thing be launched exciting the lay

it like those So pretty it is modest with but a the kinds from value is expected back We expected things, of bet, bet a upside. the return, anti the tremendous is compelling.

Ron Josey

That's you, great. Thank Daniel.

Daniel Schreiber

Ron. Thanks,

Operator

comes Sandler And question our Please next Barclays. Ross of go ahead. from today

Ross Sandler

guys. Hey

two questions. Just

works. how fire are California, and your works? retention on underwriting CAC should improve, just if bit pretty highest customer how Can here. in expect like congrats generating homeowners the your we're the season looks they about renters and a the in the And California then to us with us out a question the gross remind yet or second the in partnership was XQ California guys you remind back so crank Thank it you talk in Are profit behalf? Can Just CAC trended rough as lean LTV you. to is, future? up you you that. on arrangement and continues per And doing resident Palomar to versus it history, more we plan? how So company marketing just

Tim Bixby

Sure.

earthquake for to So but today, we've majority all have do California the purpose. vast coverage, Lemonade. things about the this us all essentially is that's We of talking and available it's Palomar, the been coverage

but ratio, really performance very level. So exposed, we're limited a the we clearly exposed in loss strong by

hit think Your other maybe first. retention questions, I

how So retention is I stable it. would and modestly term is up,

somewhat internal and the can that steady while that really sort disclosed So levels numbers see we've system. is Dollar very in of kind stable. that we a year nothing one the and internally But takes is of two the starting deteriorating I we've those are of if to through filter year a retention there gone at more specifically a to headline positive uncertainty. and think longer-term you look look retention public, since year

how So the how next of and On part it. confidence how is exactly spending year. put we're I exactly and we're think right. think that's about quarter our in it and marketing way question, into you Leaning how I is in definitely heading into fourth think we're the we your guiding

but our when have row been the showing point, past really really quarters, explored investment a you over improvement, or are seen or the little were it's So investment, light. if seasonally quarters this we've a do future next for now uncertain, savings of to we'll reinvest three continue ratios that's in is of pre-public, in for done more where as I exception steady confidence, think think quarters mode more operation we'll April I that. many to continue the past. more the if approach what year of But QX, at in. We're the long improvement, EBITDA some little regardless for we meaning two best we look guidance or a that more tended where kind I CAC more in we've things we'll LTV guide as of expect include And cost continue to giving that, with you and to spend we've lean we've not

Operator

Thank you.

comes today from go JMP. Matt Please with question next ahead. Our Carletti

Matt Carletti

Hey, Good thanks. morning.

Just those just comment hoping like I mean, And learned. a else things What how kind going it are clearly ahead of and on surprised might you to whether start, lessons little kind lessons of, well. you can pet going take hoping you? to be quickly, then has on could bit a good whatever or into us? life seems insurance insurance it off it touch of apply to be

Daniel Schreiber

very a test Hi, you Matt, months. the context just were life. have talking of And one first products. it’s surprise. Daniel the know, three really can't positive this you And here. It's insurance, of beta We three in with been about that, been things the months

than you do on you and research the rather the market post-launch live pre-launch. lessons learn Sometimes

And what is were beforehand, rent it’s is space the penetration growing. of vacant, so fast where cover, And it's and enter the knows woefully home we but small what up, do it of to is should Pet never about real don't – from with And you the of underpenetrated blue pet the do for something fast cetera. a until the bring customer. the try should our rewrite like, of did matter of experience market, go what other is would that you should diligence but kind life going technology, pet and to time insurance. Lemonade for it in-house look growing it and very rethink in insurance kind the really we U.S. ocean encounter be. all the very response high. policy what is from of everything and product. some unlike So et customers the categories scratch like to work XX% opportunity And scratch, parents pet have, that really a have that ahead thinking coverage, some a It one ground some be, insurance the of and excited to our regulators, pet in from build us

a was it great source pride. So of

we nice experience finer the design think when the see of we’re in five who came we as insurance to this like life is product, really And part new we everything user story now underwriting, and people the pet I used a proceeding entirely cycle years able everything beautifully. is into nice of come The an buying treated our support we've it's poured the have thing be see together the the and – that weren't customers. it a internally, graduation, this and sales, thing lot one renters a that, and together that learned moments Lemonade to weeks that wouldn't expectations. task once least customer launching only or is just just lot is that got new expect, Not not of added acquire tremendous all got It of but policy. interest, fast we unavailable expected. quarter them to have an a this knew to otherwise ago, set people be And to. that XX% better, beyond within the marketing consensus customers was efficiencies, we exactly at just a what seeing to really to but We're not through what new on-ramp. those our of a the that to we These we rewarded. are of a seems that who set avenue customers have of homeowners a tools matter X%

to comprised of other. So of being the different we’re dynamics that serve then And the both increase the – even of dramatic that customers more premium owners their and for as new force really points seeing products, the to premium existing just or so XXX% the the cross-sell policy of our the actually company, but entry, seeing pets able of was median increase the majority one XXX%. to we’re shy them in

it continues can to it's we feel growth good with played the the that that products all-in-all, and hope that So way replicate out about just on trajectory we pets both it very come. very, and we

Matt Carletti

you in acting retaining you're risk agency of underwriting insurance will the want I confirm, experience If an purely any life customer those won't just it, when controlling be just launch, sorts marketing things? obviously, clarification with to a that you all could and be Great. just say, just but capability, quick and

Daniel Schreiber

the will the very But The be much exactly you a experience underlying yes, right. it's largely user consumer, just policy on exactly this described. issue. somebody To a transparent be what be else's experience. That’s will will Lemonade paper. But

Matt Carletti

Thanks best the for luck. and answers Great. of

Daniel Schreiber

Thank you.

Operator

Please today Heath Goldman of comes Terry our go And ahead. question next Sachs. from

Heath Terry

the exodus could a negative a homeowners positive renters Lemonade cities Thank the homeowners a for become To further you. of for Did Lemonade Daniel, business, see customers? it I'd your like into been any you signs urban extent customers Great. wasn’t moving graduation. to to have dig business? bit renters, in little that the out

Daniel Schreiber

Hey, that support any Heath. don’t or have morning. data debunk thesis. to I Good

I something I this, don’t – in just step can’t Tim, know. really confirm I if I I don’t. But couldn’t So that that. or don’t he deny know, knew

Heath Terry

other to gone of pace Lemonade model much add maybe insurance that you’re – And direction this yourself commissioned see you’ve then type of P&C life just and this in maintaining your in that agency of is categories you. very experience, other Lemonade a areas of than a up those much to the quickly insurers, faster side Got – the base that at to but something just things, a might on doing you could on this extent of a the the basis faster you kind in categories, using otherwise? of opening to have auto quickly you’re – all customer

Daniel Schreiber

share is our let with And Heath. we me This about think first these Thanks, time things. how actually doing not you, this.

Palomar. about the Somebody mentioned on call earlier

our So experience. we our for in technology, a and that. California very doing not consumer, paper, integrated insurance elsewhere we and platform, already albeit example, But have on our been through our earthquake through for seamless is written and give

risk involve. some that kinds experience that user we we fit categories, not of of great feel in the or kind those between So is want there a to the retain

thankfully, and product happened policyholder. after happen, And it’s example, a rare with claims is passing when of very for The the insurance them. So sell claims the very life experience. term they

is claims the low doubt very this or frequency the little control certificates. resolved litigation renters, pet frequency, high the to interact need and and home life are unlike and also claims very with low because claims to the experience. and about with experience policies So death one There’s

room So there arguments for very is there. little

perhaps Palomar. oftentimes, that we the that’s across infrastructure Lemonade that all really dependencies give offer prism incumbents experience with. how litmus a the feel can we we comfortable insurance to control the kind which best We asking all sure them, of beyond that question that do don’t that brand. by insurance, of about the a is insurance your which not ourselves extent question, apply we of we decide them already with test really partner And we the answered or the the and made and it’s board. when have on it to other level they can somebody experience experience with – the ourselves. want we associate what will born a sizable, I’m user And has the that experience. The an risk that pet sense through by do So existing or through to lot incumbents the to underlying of was where the to case but answer And to want. consumer with been come and to car

Heath Terry

Thanks Great. Daniel.

Operator

next our with today comes Mike ahead. go Please And Credit Zaremski from question Suisse.

Mike Zaremski

than growth there curious your ways new were changes better I’m any if incorrect, were can have there showed nice policy down that Lemonade a of I in and might think maybe got little if been ways changes third-parties I customers the downloads Hi, bit acquired? customers has Any expected if good migration you in and the me morning. your that that’s some tell app maybe a saw the the is to desktop? think? you

Daniel Schreiber

Yes.

a kind So question. two-part of

of look answer short geography. channels the immense pretty hour is, by agnostic no. there it is or the of But or best amount over finding the theme terms an of quarter, a you the the at month return in by consistent were So change. Obviously, and course of of real change, if No day. key optimizing sort

regions less where that So the even about matter. We kind what was what unchanged. states or countries return of go substantially and that or is, for what it’s

not actually the that’s something question, question, because On app indicate happening. download it’s great a it can

And to works, that of proportion download over changes. need or And from time-to-time the what few shifted download to customers in system we the of actually as significantly so around app way made the changes terms the past different that quarters it our some app. choose has reasonably

growth. in it So the not a does really linear way indicate

customer less, think somewhat we of how actually works. were move that downloads experience this quarter, it that I made the kind this an that optimize is intentional to you appeared saw but but

I intentional moves. growth not of coming be is expect shift But what think a see but are bit. that we a that guidance it’s And so seeing. the an our to view trajectory may interesting number those measure And over we’re of download overall great indicator, you it’s quarter. the the really around best the And the

Mike Zaremski

policies? interesting. you lastly. will who insurance tell just life be us – Okay, Can the just underwriting I is guess,

Daniel Schreiber

disclosed That’s not this that's something at point.

Mike Zaremski

Okay. Thank you.

Operator

Sandler. from And our comes Piper Arvind today Ramnani with next ahead. Please go question

Arvind Ramnani

Thanks. Congrats this adding life on insurance.

range going near-term clear much How longer a timeline the a of you’re term insurance priority? it or auto it to made chase should You’ve a of policy? Is certainly we broader think about for products. more that

Tim Bixby

– timing. our So is disclose disclose timing we to don’t practice not we until

long-term And the know everybody important of that a our saw other that to plans, types clearly unlike the And and who coverage, is so and to need. provide vision, upcoming that’s market plans think you our today practice that for for you launch I want let critical of with folks customers we know everything pet. drives to auto has our and We’ll life, customers auto insurance. Europe

a quantity the so known And of for in it’s kind terms of potential market us.

as fair it that I while we not as specific is it’s to today, communicating customers. to to say us So important timeline our believe it’s think we’re

Arvind Ramnani

great. Great,

of policy of additional in the kind look insurance rationale out versus just kind add figuring of life that? the that the about something agency talk itself? – goes policy owning maybe I And agent you that. to of And Can as as products, some the sort more think you kind into an for of, what you’re

Tim Bixby

it’s too, Daniel things. one, on – maybe will a so it’s this in and of Yes, jump but combination

one So speed, to is time build. take products

that delight take others, customer time is all Some build, to at products engagement standard. they of take than customer level particularly but longer the and our

factor we that so And in.

overall build an with principal ratio. loss book a that business smart and we’re in solid have and way build a We trying to of

a opposed way at underwritten look by working that regulatory if with there is structure. consider launch we customers as before something So then partners. products get also There at we And factor want to A+ as partner we believe enter. be our to then a we is level we we’ll partners. to a standpoint that And that’s think something the from is a quality potential is the to time to comfortable us

quicker obviously, in instance. it’s a much partner to So that leverage

the calculus. the time, really can platform at we But factors about really is that for we’ve us. this a adjust. built life thought Over mix in So our those so is are good that the moment,

and will as in at will significant. case we’ll be So pretty a launch then products. Life Palomar we very level. our more think we hope similar be, a test really was plan very way modest And additional

Daniel Schreiber

The only thing I would add…

Arvind Ramnani

Go ahead.

Daniel Schreiber

there consideration is of aware other add you with that insurance company. which to Just that life, one is be particularly should that

insurance stand another in we insurance up two write in your United have Europe capitalize policies independently. own in are carriers. it to would And States on and insurance and We paper, P&C carrier and the companies actually they are to life

in addition other ones. were there the those So considerations to

underwriting life that some as But claims of is claims. think are lead differentiation. do the real as products, in that said, In for in differentiation items we to these well. these some we them, it’s experiences long underwriting. In I can the going of very So massive not be, bring

So we going without user of is to differentiation why, up of this think big sense will mean, I I you a think get experience. here standing when product, be carrier. insurance an achieve you’ll the and we the launch all that can understand we

in one other to that’s So thing bear mind.

you It Sorry, to with wanted I else. like come in felt something interrupted you.

Arvind Ramnani

that’s No, super helpful.

Just the last question me. from

we’ve what level acquisition in terms bit efficiency customer you a nice of about Can seen little drove in talk Just of that improvement. customer maybe acquisition? a

Tim Bixby

year bigger true ago prior year. really We’ve silver factors year Seasonality team had got bullet a we significantly. smarter versus a pretty that not and answer. in a It’s ago, also a the than was

in a generated in identical of actually we If we you ago. year year-to-date, QX it’s IFP almost look at to that the versus growth what amount saw

very different can the But quarter, over with line in are came prior quarters. in Now it the it’s quite of ins be the day-to-day. again, course – and outs

each We’re pieces. getting of a little little bit better the at

today look you at our if So it’s ago, creative year versus better. a

you always at the bit of time from improvement. show over has enable been strong, if super show and but us every up steady reaction getting a – data you just to they’ve in day. what to look better There’s And add customers, we’re behind just a little shown that we’re If the customer those lot doing. fit combination

like. of better so folks, to about top who and the through just right that are funnel of bring and the funnel not getting of a to helps step before Lemonade but we sees the a ago. There lot folks to we’re and the now is only of ago mouth. it who’ve looks funnel, with folks a year itself. How conversion, recognize too heard the every better And years to to better more There’s policies of Helps on word the what top or people heading tends two feed ratios customer long. compared compared to customers reads, feels better are million of probably There’s what better the at getting with it. to and of

number, relatively customers. but driver would ability recognized stronger quite And absolute that’s last add to by also I in it’s is, terms, acquire maybe then tiny our the Now of becoming we’ve thing becoming a a probably others.

the would whether customers, But of just So not – metrics, you good Good you J.D. of the whether think of whether at it’s and ourselves great a things. or we store, Clearsurance those market, just improvement all app measures, top had Power I expect. at combination it’s reviews, a opinion of really consistent as whether if not it’s customer look other or time. it's over really, really

Arvind Ramnani

Thanks for terrific questions. color. that's again answering Great, the

Daniel Schreiber

Great, thank you.

all answered the like looks questions. So we’ve

Excellent it participating. up the So we’ll very here I think have in see everyone it thank up Great And to here. much and we’ll wrap you wrap questions. quarter. you and say, we’ll

Operator

We today's concludes thank Thank for presentation. all you today’s This call. conference you, attending sir.

your wonderful day. may disconnect have You lines now a and

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