Insurtech Startup Lemonade Drops S-1, Revealing Sharply Rising Revenue And Net Losses

Another unprofitable company has filed to go public.

Lemonade, which operates an AI-driven insurance platform, today filed an S-1 with the U.S. Securities and Exchange Commission.

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The New York-based company revealed a proposed maximum offering price of $100 million. It also noted that it will list its common stock on the New York Stock Exchange under the ticker symbol “LMND.”

In April 2019, we reported that Lemonade had raised $300 million in a Series D round led by SoftBank Group. That financing reportedly valued the company at more than $2 billion. In total, Lemonade has raised $480 million since its 2015 inception. It also secured a $120 million Series C in late 2017 that valued the company at $620 million. SoftBank led that round as well.

Other backers include Germany’s Allianz, Israel-based OurCrowd, and U.S.-based General Catalyst, GV (formerly known as Google Ventures), and Thrive Capital.

Lemonade is licensed as a property and casualty insurance carrier, and began offering homeowners and renters’ insurance in New York in late 2016. That offering is now available for most of the U.S. population. The company says it powers its offerings with artificial intelligence and “behavioral economics.” Lemonade claims it’s built a system that “collects 100x more data than traditional carriers,” giving it the ability to generate predictive data that can help improve underwriting and pricing. It operates contrary to traditional insurance models, charging a fixed percentage as a flat fee.

Lemonade also has a social good component. As a certified B-Corp, the company annually donates a portion of unclaimed premium dollars to nonprofits.

The numbers

In its S-1, Lemonade shed some light on its financials. It revealed both increased revenue and net loss in 2019. Specifically, the company’s revenue skyrocketed by nearly 200 percent in 2019 to $67.3 million compared with $22.5 million in 2018. At the same time, its net loss was up by 105 percent to $108.5 million in 2019 compared to $52.9 million in 2018.

And it doesn’t expect that to change anytime soon. In its risk factors, Lemonade said it expects that its net loss “will increase in the near term” as it continues to invest in growing its business.

The company also said that it has not been profitable since its inception in 2015 and had an accumulated deficit of $198.3 million and $234.8 million as of Dec. 31, 2019 and March 31, 2020, respectively.

Lemonade said its headcount also grew, with 329 employed at the end of the first quarter compared to 279 at the end of last year and 117 at the end of 2018.

The number of homes it insures, meanwhile, grew to 425,000 in 2018 (covering just shy of $50 billion in total insured value) compared to just over 100,000 at the end of 2017.

Other unprofitable companies that have filed to go public this year include online used car retailer Vroom and construction tech unicorn Procore, which ended up pulling its IPO last month. ZoomInfo also made its public debut last week.

Illustration: Li-Anne Dias