Lemonade, Inc.

Good morning and thank you all for attending the LemonAid Q3 2025 earnings call. My name is Brica and I'll be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I will now hand over to the LemonAid team to begin.

Good morning, and welcome to Lemonade's third quarter 2025 earnings call. Joining us on our call today, we have Daniel Schreiber, CEO and co-founder, Shai Winninger, president and co-founder, and Tim Bixby, chief financial officer. A letter to shareholders covering the company's third quarter 2025 financial results is available on our investor relations website at lemonade.com slash investor. I would like to remind you that management's remarks made on this call may contain forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in our letter to shareholders and the risk factors section of our Form 10-K filed with the SEC on February 26, 2025. 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. including adjusted EBITDA, adjusted free cash flow, and adjusted gross profit, which we believe may be important to investors to assess our operating performance. Reconciliations of our 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 certain performance metrics, 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 for some opening remarks.

Good morning, and thank you for joining us to review Lemonade's results for Q3 25. I'm happy to report another very strong quarter. Our Inforce Premium grew to $1.16 billion, marking our eighth consecutive quarter of accelerating growth. Our revenue was up 42% year-on-year, while our Inforce Premium enjoyed 30% growth growth rates we were not expecting before 2026. Happily, our strong top-line metrics were matched by our profitability KPIs. Our gross margin climbed into the 40s, while our gross profit more than doubled to $18 million, propelling us steadily and predictably towards EBITDA profitability in Q4 of next year. All our products and regions contributed to this dynamic of accelerating top line and improving profitability, though it is worth spotlighting car, which saw 40% growth with more than half of that coming from existing lemonade customers, essentially catless acquisition. That's transformative to car's unit economics, as is the 16% year-on-year improvement in car's loss ratio, which came in at a lovely 76%. Staying with loss ratios, our company-wide gross loss ratio in Q3 was 62%, and our trading 12-month loss ratio was 67%. Both are lowest ever. If nothing unexpected happens in the coming weeks, I anticipate that we will set the new record once more this quarter, Q4. Against this backdrop, it's worth remembering that while declining loss ratios and expanding gross margins are a thrill, they are not per se what we are solving for. As I explained at some length during our investor day one year ago, the metric we are looking to maximize is gross profit dollars. Loss ratios always affect gross profit, but not always as a simple countermovement whereby lower loss ratios yield higher gross profit. In reality, the relationship is non-monotonic, meaning that often a higher loss ratio will yield higher gross profit. The underlying mechanics are obvious when you think about it. Given the incredible price sensitivity of insurance, each percentage reduction in price can often yield outsized returns in terms of conversion and retention. Lower prices worsen gross margins and loss ratio, yes, but the attendant boost in revenue often more than makes up for that. This means that for some parts of our business, certain products, certain channels, certain segments, a higher loss ratio and slimmer gross margins will actually translate into higher gross profit. Given the choice, we will always privilege dollars over percentages, which is why when we see an opportunity to trade higher loss ratios and slimmer gross margins for higher absolute gross profit dollars, we will take that trade 10 times out of 10. And indeed, as noteworthy as our loss ratio progression has been these past two years, during that time, our gross profit has surged by 261%. The full significance of this comes into sharp relief when you pair it with the fact that during the same time, our underlying expenses increased by single digits. This means that we have essentially transformed our variable expense into fixed costs. That's extraordinary. It's the hallmark of an AI-first company And it is the reason why our gross profit trendline charts are path to profit and beyond. And with that, I'll hand it over to Shai.