Lemonade, Inc.

Hello and welcome everyone to the Lemonade Q2 2024 Earnings School. My name is Maxine and I'll be coordinating the call today. If you would like to ask a question, you may do so by pressing star followed by 1 on your telephone keypad. I will now hand you over to Yael Wisner-Levy, VP Communications at Lemonade to begin. Yael, please go ahead when you are ready.

Good morning, and welcome to Lemonade's second quarter 2024 earnings call. My name is Yael Wissner-Levy, and I'm the VP Communications at Lemonade. Joining me today to discuss our results are Daniel Schreiber, CEO and co-founder, Shai Winninger, president and co-founder, and Tim Bixby, our chief financial officer. A letter to shareholders covering the company's second quarter 2024 financial results is available on our investor relations website, investor.lemonade.com. Before we begin, I would 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 2023 Form 10-Q, filed with the SEC on May 1, 2024, 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 direct comparable GAAP financial measures are included in our letter to shareholders. Our letter to shareholders also includes information about our key performance indicators, including customers, in-force premium, premium per customer, annual dollar retention, gross earned premium, gross loss ratio, gross loss ratio XCAT, and net loss ratio, and the definition of each metric, why each is useful to investors, and how we use each to monitor and manage our business. I'd also like to bring your attention to our upcoming Investor Day to be held on November the 19th, 2024 in New York City. We will be providing detailed updates on our strategic expansion plans, operating efficiencies, and growth trajectory. Hope to see you there. With that, I'll turn the call over to Daniel for some opening remarks. Daniel?

Good morning, and thank you for joining us to discuss Lemonade's results for Q2 2024. I'm happy to report continued consistent and strong progress across the board. Year on year, our top line grew 22 percent, our adjusted EBITDA loss improved by 18 percent, and our gross profit grew by a remarkable 155 percent. Despite a quarter that saw elevated cat losses across the industry, our loss ratio came in at 79 percent, improving 15 points year on year. This is no accident. We have been laser focused on reducing cat volatility by growing products with lower cat exposure, notably pet and renters, Geographic diversification of growth, including via Europe, where we recently launched homeowners insurance in the UK and France, continuing to eliminate homeowners insurance in the US only where our AI predicts attractive LTVs, and simultaneously placing some home premiums with third parties in select geographies. Tellingly, our trailing 12-month gross loss ratio continued its decline for the fourth consecutive quarter, also hitting 79%. We think this number, in preference to the quarterly results, neutralizes some of the volatility and provides a more bankable indication of our ongoing performance. But whatever your preferred metric is, the picture that emerges is the same. Great progress that enables us to deliver notably expanded gross margins. I'm also pleased to share that Q2 was net cash flow positive. We expect cash flow to be positive consistently here on out, excepting only Q4 this year, where various timing issues will make that quarter a one-off exception. In any event, we don't expect our cash balances to decline by more than 1% or maybe 2% before climbing consistently. With these updates, we feel exceedingly well positioned to continue investing in robust and profitable growth. I also wanted to put a spotlight on our Give Back program for a moment. A couple of weeks ago, we announced our contribution of more than $2 million to 43 nonprofits around the globe, our eighth consecutive year of giving back to dozens of local and global charities chosen by our customers. Social impact is a core pillar of who we are at Lemonade, Our contribution since inception now exceeds $10 million, and this program reflects the collective power of the lemonade community and its ability to drive meaningful change. It's something we're very proud of, and we know this is only the beginning. Next, I'd like to hand over to Shai to tell you more about our recent efficiency improvements unlocked by our technology. Shai?