Lemonade, Inc.

Good day and welcome to the Lemonade Inc. Third Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Yael Wisner-Levy. Please go ahead.

Good morning, and welcome to Lemonade's third quarter 2021 earnings call. My name is Yael Wisner-Levy, and I am the VP Communications at Lemonade. Joining me today to discuss our results are Daniel Shriver, co-CEO and co-founder, Shai Winninger, co-CEO and co-founder, and Tim Bixby, Chief Financial Officer. A letter to shareholders covering the company's third quarter 2021 financial results is available on our investor relations website, investor.leveney.com. Before we begin, I would like to remind you that management remarks on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the risk factors section of Reform 10-K filed with the SEC on March 8, 2021, and our other filings with the SEC. Any forward-looking statements made on this call represent our views only as of today, and we undertake no obligation to update them. We will be referring to certain non-GAAP financial measures on today's call, such as adjusted EBITDA and adjusted gross profit, which we believe may be important to investors to assess their operating performance. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our letter to shareholders. Our letter to shareholders also includes information about our key operating metrics. including a definition of each metric, why each is useful to investors, and how we use each to monitor and manage our business. With that, I'll turn the call over to Daniel, who will begin with a few opening remarks. Daniel?

Good morning. I'd like to begin with very exciting news about our car and product strategy. Lemonade Car was launched last week, and today, as part of our continued investment in this line, we announced our acquisition of the tech-enabled car insurance company, Metromile. We believe the deal will be a significant value unlock to our shareholders and our customers, and we expect this transaction to pay dividends in three important currencies. Firstly, by collapsing time. We're acquiring billions of miles of highly textured driving data, advanced telematics technologies, and deep pricing and underwriting knowledge. Metro Mile has implemented seasoned proprietary machine learning models that are informed by real-world feedback and iteration at scale. It would, candidly, take us years to gather this level of insight. The deal also delivers over $100 million of seasoned in-force premium, 49 state licenses, and a team steeped in every aspect of digital car insurance, all things that can accelerate the growth trajectory of our own car insurance business. Secondly, the deal allows us to flatten risk curves. Not only does the transaction accelerate our growth trajectory and knowledge base, but importantly, it allows us to vault over the riskiest parts of our car ambitions, namely growing Lemonade Car before our data models season. Lastly, this transaction delivers increased efficiencies. Post-transaction close, our strategy is to build a business that preserves a single culture, single tech stack, single brand, unified team, and a single product experience. We believe this strategy yields considerable revenue and cost synergies that will enhance Lemonade's financial profile. Just days ago, we launched Lemonade Car. This was a Herculean effort by our team. The result is a car insurance product built from scratch by the largest team we've assigned to a single project ever. We're incredibly proud of how it worked out and believe it's only going to get better from here. injecting all the metromile mojo into lemonade car will lead to a product offering that stands alone in the market together we'll have all the people and tools in place to deliver the market's most seamless and customer-centric car insurance product that is also its most affordable precise and fair that at any rate is the plan concurrent with these significant developments in our car product and strategy the rest of our book has happily sustained its growth trajectory With healthy unit economics and robust customer demand, the overarching theme of 2021 sustained through Q3. We leaned in and sequentially ramped up our investment in growth. We saw robust premium growth in Q3 with IFP increasing by 84% year on year. In fact, in Q3, we drove a record $50 million net change in IFP. This marks the third consecutive record quarter and was a direct result of leaning in, a sequential increase in advertising investment for the period. Across our book of business, we are seeing trends that enhance our customer lifetime value, most notably the increasing prevalence of bundling and the formation of healthy loss ratio trends in our newer business lines, and this gives us confidence to accelerate our investment pace. Additionally, Q3 is typically the quarter where we see tailwinds driven largely by seasonality and renters' moving behavior. We capitalize on this effectively, delivering a record volume of gross new renters' business for the period. While renters' growth remains healthy, consistent with our sustained strategy of diversifying our book, we actually drove faster year-on-year growth rates in each of our non-renters' lines of business. As a result, the business mix evolution we highlighted in detail last quarter has sustained, with non-renters' share of our overall book of business ticking up to 47% from 44% last quarter. And with that, let me hand over to Shai for more updates.