Israeli InsureTech startup, Lemonade served the New York Stock Exchange (NYSE) with its prospectus summary for an upcoming IPO. The summary revealed some interesting figures about its financial situation and future plans post IPO.
Lemonade has raised $480 million up to date from investors like SoftBank Group, Aleph, Sequoia, and OurCrowd. The InsureTech company started its way to the stock market by offering digital insurance for renters and homeowners.
What’s been happening? And how much is the company raising?
According to the company’s NYSE served summary, it looks like the company is planning on raising another $100 million before its IPO. The prospect IPO will have a few famous investment banks at the helm, including Goldman Sachs, Barclays, Morgan Stanley, as well as others.
It was just last year in 2019, that Lemonade scored a whopping $300 million in total investments, based on the market value evaluation of $1.8 billion, bringing the company’s total raised capital to $480 million. With those numbers in mind, let’s dive into some interesting figures coming out of the company’s recent prospectus summary regarding its profits and losses report between the years of 2017-2019.
Revenue from insurance comes further down the road
The prospectus summary clearly shows an exponential rise in gross written premium (GWP), from insurance premium sales, since its launch in late 2016, landing them $9 million in 2017, $47 million in 2018, and then making the biggest leap in GWP in 2019 with $116 million. Lemonade also noted in the summary that by the end of 2020’s first quarter, the company had already made $38 million in GWP from insurance sales, leaving the future looking mighty green for the Israeli company.
Total revenue is up
According to the summary, the company’s revenue has subsequently seen a similar rise since its launch, including $2 million in 2017, $23 million in 2018, and in 2019 Lemonade nearly tripled its revenue bringing in $67.3 million. While once again the first quarter of 2020 looked mighty bright with total revenue of $23 million.
But can’t stop the losses
Alongside the company’s positive numbers showing revenue, it’s hard to ignore Lemonade’s greater net losses over the years. As they say ‘Mo Money Mo Problems’, and as revenue went up since launch, so follows the loss column, with the company reporting a net loss of $28 million in 2017, $53 million in 2018, and $109 million in 2019.
The company’s returns show improvement
Lemonade also posted their return rate, meaning paid out insurance claims against premiums collected. The graph paints a positive picture over the years, despite a negative start. For example, in 2017, the company paid out more in claims than collected from premiums sold, paying out $1.62 for $1 earned. Continuing in 2018, the company was paying out more than putting in, however the line started to level out. Then in 2019, the company succeeded in turning the situation around, reporting more revenue collected from premiums against paid-out in claims.
$275 million in the bank
We’ve gone over Lemonade’s revenue, losses, and returns - but how much money is in the company’s bank? According to the document served to the NYSE, at the end of March the company reported $275 million in cash holdings - despite the company’s losses.
A newcomer, entering a market of veterans
The summary shared that the worldwide insurance market is valued at $5 trillion annually, with 12 of the biggest insurance companies part of the Fortune 100. The most interesting fact is that the average age of these 12 companies is 125 years old, 25 times older than the Israeli company, which was founded in 2015 by CEO, Daniel Schreiber, and COO, Shai Wininger.
Lemonade also reported that it spends $1 in marketing that generates $2 made from premium sales, noting that the figures should improve considering that its business model is planned to branch out and offer life insurance policies among other products. “We believe that having valued customers for a lifetime overshadows our costs of getting them.”
This statement becomes pretty noteworthy, considering the company continues to show staggering losses, with the company losing $109 million last year and over $36 million in 2020’s first quarter, which was before the consequences of the COVID-19 crisis show true effect.