Lemonade Targets First EBITDA-Positive Quarter as CFO Tim Bixby Transitions to Board

Lemonade Targets First EBITDA-Positive Quarter as CFO Tim Bixby Transitions to Board

Lemonade expects its first EBITDA-positive quarter in Q4 , with GAAP breakeven projected roughly one year later. The company is targeting long-term growth of more than 30% while balancing expansion with insurance capital requirements. CFO Tim Bixby will join Lemonade’s board on Jan. 1 after about nine and a half years in the role, with SVP of Finance Nick Stead succeeding him. Bixby said the transition is not expected to materially change the company’s strategy. Lemonade is pursuing growth through its technology platform, geographic and product expansion, and increased cross-selling. Auto insurance and Tesla’s autonomous-driving product are expanding, while retention and multi-policy adoption remain important opportunities for improving profitability.

Chief Financial Officer Tim Bixby said the digital insurer expects to reach a significant profitability milestone in the fourth quarter, while continuing to prioritize growth, product expansion and technology-driven underwriting. Speaking at a company event, Bixby said he will transition from the CFO role to Lemonade’s board of directors effective Jan. 1. Nick Stead, currently the company’s senior vice president of finance, is set to succeed him as CFO. Bixby, Lemonade’s first CFO, has held the role for about nine and a half years.

Bixby said the leadership transition is not expected to bring a major change in the company’s strategic direction. He described Lemonade’s approach to technology, distribution and customer experience as largely consistent with the strategy established at its founding in 2015.

Lemonade expects the fourth quarter to be its first EBITDA-positive quarter, according to Bixby. He noted that the company first outlined that target about four years ago and said it remains on track, while cautioning that the quarter had not yet concluded.

The company has publicly framed growth of more than 30% as a long-term objective. Bixby said Lemonade could potentially grow faster, but that its chosen growth rate reflects a balance between expansion and the capital requirements of operating an insurance business. Insurance companies must hold surplus capital to meet regulatory requirements and support claims obligations. Bixby said growth in the high-40% range would likely require Lemonade to raise additional capital to maintain sufficient surplus. At around 30% growth, he said the company expects to support its strategy while improving profitability.

Bixby said Lemonade expects customers acquired in a given quarter to be profitable over time, though the company remains unprofitable on a consolidated basis because it expenses growth spending upfront. He reiterated that GAAP breakeven is expected to follow roughly one year after EBITDA breakeven. The company currently has between $1 billion and $2 billion of premium on a run-rate basis, Bixby said. At its last investor day, Lemonade provided a path it believed could lead to $10 billion in premium, a level he characterized as large for the company but still relatively modest within the broader insurance industry.

Bixby described Lemonade as an insurer built to use data, machine learning and artificial intelligence across customer acquisition, underwriting, claims and customer service. The company now offers renters, homeowners, pet, car and term life insurance. He said Lemonade can issue a policy in several minutes and ...