Lemonade, Inc.

Good morning and welcome to the Lemonade, Inc. first quarter 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw from the question queue, 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, VP Communications. Please go ahead.

Good morning and welcome to Lemonade's first quarter 2022 earnings call. My name is Yael Wisner-Levy and I'm the VP Communications at Lemonade. Joining me today to discuss our results are Daniel Schreiber, 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 first quarter 2022 financial results is available on our investor relations website, investor.lemonade.com. Before we begin, I'd like to remind you that management's 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 our Form 10-K filed with the SEC on March 1, 2022, 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 our 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?

Thank you, Ellen, and thank you to everybody for joining us this morning to review our Q1 results. and to allow us to update you on our expectations from the remainder of Q2 and indeed the remaining of 2022. I'm very happy to say that the year kicked off with a very strong first quarter. Both our top line and our bottom line came in ahead of expectations, as Inforce Premium, or IFP, stood at $419 million, while our adjusted EBITDA loss for the quarter came in at $57 million. This quarter, we also hit a big milestone for the company, as it was the first full quarter in which Lemonade offered the full suite of insurance products, that is, renters, home, life, pet, and car, in one market. For the first time, a customer could mega-bundle or get all four Lemonade policies that meet their insurance needs in one app with bundle discounts and with the ease Lemonade is known for. So far, this mega-bundle is available in Illinois and Tennessee alone, And I think these markets offer an early peek into how meaningful growing with our customers can become as we roll out these products nationwide. Growing with our customers has long been a central plank of our strategy, and the early dynamics we see in both Illinois and Tennessee reinforce that. For example, in one quarter alone, we saw bundle rates in Illinois climb 40% versus the rest of the country. To the extent that this is indicative of things to come, it is very significant. Customers with two lemonade products outspent the average single product. When we get to customers with all four products in these two markets, that ratio jumped to 9 to 1. Indeed, it jumped during Q1 to 90%. So while it's early days and small numbers, Illinois serves as an encouraging case study. As has been our strategy since day one, we want to be there for our customers as they go through predictable lifecycle events, moving, buying a home, getting a car, starting a family.