Abstract

Lemonade, Inc. will report quarterly results on February 19, 2026, Pre-Market, with consensus pointing to accelerating revenue growth and improved loss metrics as investors gauge whether new products can sustain margin trends and narrow the earnings gap.

Market Forecast

Consensus forecasts indicate Lemonade, Inc. is set to post revenue of 215.84 million for the current quarter, up 48.93% year over year, alongside an adjusted EPS estimate of -0.40, implying a 33.76% year-over-year improvement; margin guidance is not provided in the current projections. The main business is expected to benefit from continued policy growth and pricing refinement, with net premiums remaining the dominant revenue driver. The most promising segment for incremental growth is auto insurance—supported by last quarter’s net premiums revenue of 140.00 million and total-company revenue growth of 42.39% year over year—where new autonomous offerings could augment premium quality and unit economics.

Last Quarter Review

Lemonade, Inc. delivered revenue of 194.50 million last quarter with a gross profit margin of 53.89%, GAAP net loss attributable to shareholders of -37.50 million, a net profit margin of -19.30%, and adjusted EPS of -0.51, improving 46.32% year over year. A notable highlight was operating loss discipline, with EBIT improving year over year by 44.83% and the net loss narrowing quarter on quarter by 14.58%. Main business momentum was anchored by net premiums of 140.00 million (71.98% of revenue), ceding commissions of 32.20 million (16.56%), commissions and other of 12.60 million (6.48%), and net investment income of 9.70 million (4.99%), against total-company revenue growth of 42.39% year over year.

Current Quarter Outlook (with major analytical insights)

Core Insurance Operations

Lemonade, Inc.’s core operations are poised to extend last quarter’s positive mix and margin trends into the current print. Revenue is forecast at 215.84 million, up 48.93% year over year, suggesting policy count expansion and price recalibration are working through the book alongside improved underwriting signals. The prior quarter’s 53.89% gross margin offers a constructive baseline; maintaining gross margin near that level would reflect ongoing gains in pricing precision and claims handling, as well as the balance of reinsurance structure against earned premium. On the earnings side, the adjusted EPS estimate of -0.40 implies a 33.76% year-over-year improvement, consistent with a trajectory of narrowing losses driven by scale, unit cost moderation, and diminishing operating leverage drag. The EBIT forecast of -32.10 million supports that narrative by indicating a 23.51% year-over-year improvement, which would mark another step toward breakeven if acquisition and servicing costs continue to normalize and if loss ratios stabilize alongside observed margin performance.

From a revenue composition standpoint, net premiums remain the core throughput of the model, having delivered 140.00 million last quarter and accounting for 71.98% of revenue. The ratio is instructive, as it ties unit growth to gross margin expression via earned premium and reinsurance mix. Over the near term, a meaningful gap relative to guidance would likely reflect either faster-than-expected policy onboarding and renewal momentum or, conversely, slower premium recognition due to mix shifts. A secondary consideration is net investment income, which contributed 9.70 million last quarter; while not a primary driver of consolidated performance, it can cushion earnings in periods of underwriting volatility and add to EPS improvement when operating losses are narrowing.

Autonomous Car Insurance Initiative

On January 21, 2026, Lemonade, Inc. announced autonomous car insurance for Tesla vehicles using Full Self-Driving (FSD), with per-mile insurance rates for FSD-engaged driving quoted as approximately 50% lower. The product begins rolling out in Arizona on January 26 and Oregon about a month later, reflecting a deliberate geographic expansion pace designed to align underwriting models with real-world telemetry. This offering introduces differentiated risk segmentation where FSD-engaged miles can be priced dynamically against human-driven miles, establishing a path for potentially lower loss frequency on specific segments if empirical data validates the pricing assumptions. Importantly, near-term revenue impact is likely incremental, as product adoption requires time for onboarding and policy conversion; however, the strategic value lies in underwriting innovation and access to technical vehicle data, which can translate into improved pricing accuracy and claims handling efficiency at scale.

From an economics perspective, telematics-rich policies can refine underwriting cohorts, compress adverse selection, and sharpen claims attribution. If the differentiated per-mile pricing successfully maps to lower loss experience on FSD-engaged miles, it could support the gross margin profile by lowering expected claims costs for the affected mileage. The initiative may also bolster customer acquisition efficiency by targeting high-engagement segments and offering tangible savings that are measured in real-time utilization, which can be appealing to tech-forward consumers. Should unit economics meet modeled expectations, this segment can evolve from a high-potential funnel to a meaningful premium contributor over subsequent quarters, reinforcing the broader theme of margin improvement through data-driven underwriting.

Stock Price Drivers This Quarter

Investors are likely to focus on revenue delivery against the 215.84 million consensus and the EPS trajectory relative to the -0.40 estimate. A revenue beat paired with stable or improving gross margin relative to last quarter’s 53.89% would strengthen the case for sustained loss ratio management and scale-driven operating leverage. Conversely, any pressure on margin—whether from claims mix, seasonality, or reinsurance dynamics—would test the pacing of EPS improvement and could recalibrate expectations for the runway to breakeven. The EBIT line, modeled at -32.10 million, is a second anchor for sentiment; the magnitude of year-over-year improvement is meaningful, and the market will parse whether the reduction is driven primarily by cost discipline, improved policy profitability, or both.

Another key driver is the performance of net premiums as the central revenue engine. Given net premiums accounted for 140.00 million last quarter, investors will look for signals that policy growth and price optimization are transitioning into consistent earnings quality rather than one-off improvements. The autonomous insurance announcement adds a forward narrative; execution milestones—policy uptake, early claims metrics, and geographic rollout velocity—will inform views on its ability to contribute to premium quality and margin persistence. Finally, unit cost dynamics in customer acquisition and servicing, coupled with any updates on reinsurance allocation, remain relevant to the income statement’s path; if the company evidences stable acquisition economics and disciplined servicing against higher volumes, EPS improvement should remain aligned with the current consensus arc.

Analyst Opinions

Bullish opinions dominate the current period’s collected views. On January 6, 2026, Truist initiated coverage of Lemonade, Inc. with a Buy rating and a price target of $98, framing an outlook that emphasizes accelerating revenue growth, narrowing losses, and an expanding product set as catalysts for stronger operating metrics. The bullish stance reflects confidence in the guidance-derived trajectory—revenue up 48.93% year over year and adjusted EPS improving 33.76% year over year—as well as the potential for underwriting innovation to anchor margin stability. Truist’s view syncs with the narrative that last quarter’s gross margin of 53.89% and improved EBIT performance (-36.30 million, a 44.83% year-over-year improvement) are not isolated datapoints but part of a broader trend of operational refinement and scale.

The bull case builds on how core insurance operations are translating into better income statement posture: net premiums are providing consistent throughput, ceding commissions and net investment income add resilience, and cost normalization is visible through sequential loss narrowing (14.58% quarter-on-quarter improvement in net loss). Investors who share this view tend to focus on the interplay of pricing precision and claims handling improvements, both of which underpin gross margin sustainability. Furthermore, the autonomous insurance initiative for Tesla FSD drivers, announced on January 21, 2026, is seen by bullish analysts as a strategic wedge into a new risk paradigm, where telematics and vehicle data can materially influence underwriting quality. If the differentiated per-mile pricing achieves modeled outcomes, this segment can both deepen customer engagement and improve loss ratio trends, adding support to the EPS arc toward breakeven.

Within the bull framework, the thresholds that matter most in the upcoming report are clear. Revenue delivery at or above 215.84 million reinforces the growth slope; maintaining gross margin close to last quarter’s level strengthens conviction in underwriting. Hitting or outperforming the -0.40 adjusted EPS estimate validates the path of expense and loss ratio management. Updates on autonomous insurance adoption and the broader auto insurance strategy will serve as qualitative checks on future premium quality. A demonstration of disciplined acquisition costs, servicing efficiency, and reinsurance alignment would further substantiate the long-term narrative of improving unit economics. Against this backdrop, the majority opinion leans toward a constructive outlook on both the near-term print and the medium-term trajectory, with the bull case anchored in a combination of forecasted revenue acceleration, margin steadiness, and new-product optionality that could compound over coming quarters.