| A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | AA | AB | AC | AD | AE | AF | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
1 | ||||||||||||||||||||||||||||||||
2 | Ironic Ape (@Ironic_Ape) / Xhttps://x.com/Ironic_Ape | Average Fair Share Price Today – $131.55 Expected Average CAGR of Share Price – 43.59% Expected CAGR of Shareholder Equity – 34.78% Current Share Price at time of writing – $42.41 Short Interest – 27.96% | ||||||||||||||||||||||||||||||
3 | ||||||||||||||||||||||||||||||||
4 | Financial Forecasting ($LMND) | |||||||||||||||||||||||||||||||
5 | Description | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | Notes | |||||||||||||||||
6 | Inforce Premium | $213.0 | $380.0 | $625.0 | $747.0 | $944.0 | $1,205.0 | $1,566.5 | $2,036.5 | $2,647.4 | $3,441.6 | $4,474.1 | $5,816.3 | $7,561.2 | Assumes 30% CAGR | |||||||||||||||||
7 | Net Earned Premium | $77.3 | $77.0 | $172.4 | $315.2 | $370.6 | $513.0 | $1,003.5 | $1,629.2 | $2,117.9 | $2,753.3 | $3,579.3 | $4,653.0 | $6,049.0 | Assumes continued acceleration inline with guidance and increased S&M spend | |||||||||||||||||
8 | Ceeded Premium | $692.0 | $563.0 | $407.3 | $529.5 | $688.3 | $894.8 | $1,163.3 | $1,512.2 | New line for Calcs - updated to reflect 20% ceded, with 6% NEP earned in QOQ (we are aware this will be slightly off as it does not account for XOL coverage) | ||||||||||||||||||||||
9 | Net Earned Premium - YoY Change | 0% | 124% | 83% | 18% | 38% | 96% | 62% | 30% | 30% | 30% | 30% | 30% | |||||||||||||||||||
10 | Ceding Commission Income | $15.3 | $44.9 | $64.1 | $69.8 | $91.1 | $113.0 | $140.8 | $101.8 | $132.4 | $172.1 | $223.7 | $290.8 | $378.1 | Assumes 25% Ceding commisions | |||||||||||||||||
11 | As a Percentage of NEP | 20% | 58% | 37% | 22% | 25% | 22% | 14% | 6% | 6% | 6% | 6% | 6% | 6% | Assumes drop to account for less quota share moving to 80% retained H2 2025 onwards | |||||||||||||||||
12 | Ceding Commission Income YOY Change | 193% | 43% | 9% | 31% | 24% | 25% | -28% | 30% | 30% | 30% | 30% | 30% | |||||||||||||||||||
13 | Net Investment and other Income | $1.5 | $1.9 | $8.4 | $24.7 | $34.0 | $38.5 | $75.3 | $122.2 | $158.8 | $206.5 | $268.4 | $349.0 | $453.7 | ||||||||||||||||||
14 | Net Investment Income - Annual Return | 2% | 2% | 5% | 8% | 9% | 7.5% | 7.5% | 7.5% | 7.5% | 7.5% | 7.5% | 7.5% | 7.5% | Corrolated to historical NEP to Investment returns - Note, 97% of investments are in bonds - reducing down as expecting FED rate cuts | |||||||||||||||||
15 | Net Investment Income YoY Change | 27% | 342% | 194% | 38% | 13% | 96% | 62% | 30% | 30% | 30% | 30% | 30% | |||||||||||||||||||
16 | Commission and Other Income | $0.1 | $0.8 | $6.4 | $20.0 | $30.8 | $51.3 | $105.4 | $179.2 | $233.0 | $302.9 | $393.7 | $511.8 | $665.4 | Assumes modest continuation due to increased indirect Partner lead commissions as they ramp Indirect sales across Europe with Aviva, Cardiff, Veterinary practices and wider partners etc. | |||||||||||||||||
17 | Commission and Other Income - YOY Change | 700% | 700% | 213% | 54% | 67% | 105% | 70% | 30% | 30% | 30% | 30% | 30% | |||||||||||||||||||
18 | Commission and Other Income - YoY Change based on Correlation to GEP overtime | $0.0 | 5.97% | 6.85% | 6.38% | 8.31% | 10.00% | 10.50% | 11.00% | 11.00% | 11.00% | 11.00% | 11.00% | 11.00% | ||||||||||||||||||
19 | Total Revenue | $94.4 | $128.4 | $256.7 | $429.8 | $526.5 | $715.7 | $1,324.9 | $2,032.4 | $2,642.1 | $3,434.7 | $4,465.1 | $5,804.7 | $7,546.1 | CAGR: 44.07% | |||||||||||||||||
20 | Total Revenue - YoY Change | 36% | 100% | 67% | 22% | 36% | 85% | 53% | 30% | 30% | 30% | 30% | 30% | |||||||||||||||||||
21 | ||||||||||||||||||||||||||||||||
22 | Net Loss Ratio | 70.8% | 93.4% | 97.0% | 89.0% | 74.7% | 72.0% | 67.8% | 63.8% | 65.0% | 66.0% | 67.0% | 68.0% | 69.0% | 2025: 72% combined (60.5 % attritional + 9 % base CAT + 2.5 % wildfire shock) 2026: 67.8% combined (56% attritional + 9 % base CAT + 0.8 % smaller CAT event +2% Tarriff Impact) 2027: 63.8% combined (54% attritional + 9 % base CAT + 0.8 % smaller CAT event) 2028 - now profitable, they relax the Risk selection and accelerate new lines of business | |||||||||||||||||
23 | Net Expense Ratio (Including S&M) | 187.8% | 318.4% | 185.7% | 98.2% | 97.8% | 73.9% | 48.1% | 42.0% | 37.9% | 34.4% | 31.5% | 29.0% | 27.0% | ||||||||||||||||||
24 | Net Combined Ratio | 258.6% | 411.8% | 282.7% | 187.1% | 172.5% | 145.9% | 115.9% | 105.8% | 102.9% | 100.4% | 98.5% | 97.0% | 96.0% | ||||||||||||||||||
25 | Loss & LAE Expense | $54.7 | $71.9 | $167.3 | $280.4 | $277.0 | $369.4 | $680.4 | $1,039.4 | $1,376.6 | $1,817.2 | $2,398.1 | $3,164.1 | $4,173.8 | ||||||||||||||||||
26 | Other Insurance Expense | $14.4 | $24.1 | $44.0 | $59.2 | $76.8 | $112.9 | $220.8 | $358.4 | $465.9 | $605.7 | $787.4 | $1,023.7 | $1,330.8 | Assumes continued growth at 20% of NEP | |||||||||||||||||
27 | Sales & Marketing | $80.4 | $141.6 | $138.3 | $101.9 | $166.3 | $170.0 | $193.0 | $219.0 | $248.6 | $282.1 | $320.2 | $363.4 | $412.5 | This model assumes Lemonade spends $170m in 2025 as per CFO guideance and growing absolute terms while reducing as a relative percentage consistent with management guidance from earnings transcripts. Spending is then expected to decline as Lemonade scales, enabling competitive pricing advantages that gradually price competitors out of the market. Additionally, customer acquisition costs (CAC) as a percentage of Net Earned Premium (NEP) are projected to decrease organically as brand awareness grows and indirect partner sales accelerate. We anticipate that in 2026, onwards a modest acceleration in S&M as organic cross sell into the 700k waiting list offsets the S&M spend while maintaining Top line growth, once the low hanging fruit customers have been onboarded, its anticipated S&M Spend will continue to accelerate. Assumes 13.5% annual increase in SG&M spend | |||||||||||||||||
28 | Sales & Marketing - YoY Change in spend | 104% | 184% | 80% | 32% | 45% | 33% | 19% | 13% | 12% | 10% | 9% | 8% | 7% | ||||||||||||||||||
29 | Technology Development | $19.4 | $51.8 | $79.6 | $88.8 | $85.8 | $86 | $87 | $88 | $92 | $97 | $102 | $107 | $112 | Assumes Flat before profitability then growing 5% YoY inline with their guidance | |||||||||||||||||
30 | Income Tax Expense | $1.5 | $7.7 | $3.0 | $7.1 | -$1.7 | $2 | $2 | $16 | $47 | $76 | $102 | $157 | $230 | Assumes flat 25% from when they become profitable | |||||||||||||||||
31 | General & Administrative - Reported | $46.3 | $72.6 | $122.3 | $129.3 | $124.5 | $123 | $122 | $121 | $128 | $134 | $141 | $148 | $155 | Assumes Flat before profitability then growing 5% YoY inline with their guidance | |||||||||||||||||
32 | ||||||||||||||||||||||||||||||||
33 | Total Expense | $216.7 | $369.7 | $554.5 | $666.7 | $728.7 | $863.5 | $1,305.5 | $1,842.3 | $2,358.1 | $3,011.9 | $3,850.2 | $4,962.8 | $6,414.4 | ||||||||||||||||||
34 | Total Expense - YOY Change | 70.6% | 50.0% | 20.2% | 9.3% | 18.5% | 51.2% | 41.1% | 28.0% | 27.7% | 27.8% | 28.9% | 29.2% | |||||||||||||||||||
35 | Total Expense as a % of revenue | 229.56% | 287.93% | 216.01% | 155.12% | 138.40% | 120.64% | 98.54% | 90.65% | 89.25% | 87.69% | 86.23% | 85.50% | 85.00% | ||||||||||||||||||
36 | ||||||||||||||||||||||||||||||||
38 | Net Income (Loss) | ($122.3) | ($241.3) | ($297.8) | ($236.9) | ($202.2) | ($147.7) | $19.3 | $190.1 | $284.0 | $422.8 | $614.9 | $841.9 | $1,131.7 | ||||||||||||||||||
39 | Depreciation and Amortization | $1.7 | $3.7 | $12.2 | $20.0 | $20.0 | $19.7 | $20.0 | $20.2 | $21.3 | $22.3 | $23.4 | $24.6 | $25.8 | ||||||||||||||||||
40 | GAAP EBITDA | ($120.6) | ($237.6) | ($285.6) | ($216.9) | ($182.2) | ($128.0) | $39.3 | $210.4 | $305.3 | $445.1 | $638.4 | $866.5 | $1,157.5 | ||||||||||||||||||
41 | ||||||||||||||||||||||||||||||||
42 | GAAP Book Value | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | ||||||||||||||||||
43 | Net Income (Loss) | ($147.7) | $19.3 | $190.1 | $284.0 | $422.8 | $614.9 | $841.9 | $1,131.7 | NET Income Lines not included 2020-2024 as accounted for in reported in accumulated deficit number | ||||||||||||||||||||||
44 | Additional Paid in Capital | $859.8 | $1,553.5 | $1,754.1 | $1,814.5 | $1,898.3 | $1,958.7 | $2,019.1 | $2,079.5 | $2,079.5 | $2,079.5 | $2,079.5 | $2,079.5 | $2,079.5 | ||||||||||||||||||
45 | Accumulated Deficit | -$320.6 | -$561.9 | -$859.7 | -$1,096.6 | -$1,298.8 | -$1,446.5 | -$1,427.2 | -$1,237.1 | -$953.1 | -$530.3 | $84.7 | $926.6 | $2,058.3 | ||||||||||||||||||
46 | AOCI | $1.8 | -$3.4 | -$27.6 | -$9.0 | -$6.1 | $0.0 | $0.0 | $0.0 | $0.0 | $0.0 | $0.0 | $0.0 | $0.0 | Assumed $0 for forecasts - as it should ideally blend overtime and get closer to zero as they scale | |||||||||||||||||
47 | Shareholder Equity | $541.0 | $988.2 | $866.8 | $708.9 | $593.4 | $512.2 | $591.9 | $842.4 | $1,126.4 | $1,549.2 | $2,164.2 | $3,006.1 | $4,137.8 | ||||||||||||||||||
48 | SBC | $60.4 | $60.4 | $60.4 | $0.0 | $0.0 | $0.0 | $0.0 | $0.0 | Assumes typically annual dilution stops after 1st full year of profit. | ||||||||||||||||||||||
49 | ||||||||||||||||||||||||||||||||
50 | Capital Requirements | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | ||||||||||||||||||
51 | Percentage of NEP Restricted for Capital Adequacy Requirements | 14.1% | 23.6% | 21.4% | 12.3% | 10.4% | 14.3% | 18.2% | 20.0% | 20.0% | 20.0% | 20.0% | 20.0% | 20.0% | We assume with the shift of policy mix to Car and home as they expand those lines of business, the capital requirements increase. Requirements change propotional to the change in premium retained in 2025 | |||||||||||||||||
52 | Minimum Capital Requirement as a Ratio of NEP | 7.09 | 4.23 | 4.67 | 8.12 | 9.60 | 7.00 | 5.50 | 5.00 | 5.00 | 5.00 | 5.00 | 5.00 | 5.00 | • Capital multiple now established – 45 % retention ⇒ 10.4 % of NEP held as restricted capital – Capital per unit of retained premium = 10.4 ÷ 45 ≈ 0.2311 • If retention rises to 80 % – Required restricted capital = 0.2311 × 80 ≈ 18.5 % of NEP • This financial year (H1 at 45 %, H2 at 80 %, assume NEP split 50/50) – Blended capital ratio = (10.4 + 18.5) ÷ 2 ≈ 14.5 % of NEP • Next full year (80 % retention all year) – Capital ratio stays at ≈ 18.5 % of NEP Moving to 20% for subsiquent years as Car scales, but 20% still ceded | |||||||||||||||||
53 | Minimum Capital Requirement (Extrapolated from Historical known numbers) | $10.9 | $18.2 | $36.9 | $38.8 | $38.6 | $73.3 | $182.5 | $325.8 | $423.6 | $550.7 | $715.9 | $930.6 | $1,209.8 | ||||||||||||||||||
54 | Risk-Based Capital Ratio Estimate (Including Parent Funds) | 4963% | 5430% | 2349% | 1827% | 1537% | 699% | 324% | 259% | 266% | 281% | 302% | 323% | 342% | Note - 2022, 2023 and 2024 actual RBC values confirmed from filings - LMND use Parent funds to increase TAC, with $195m TAC in 2024. - They need to stay above 200%. | |||||||||||||||||
55 | Confirmed Actuals from Regulatory Documents – LIC-Only RBC | 376% | 416% | 577% | ||||||||||||||||||||||||||||
56 | ||||||||||||||||||||||||||||||||
57 | ||||||||||||||||||||||||||||||||
58 | Share Price Forecasts and Key Assumptions | |||||||||||||||||||||||||||||||
59 | Basic Info & Assumptions | |||||||||||||||||||||||||||||||
60 | Share Price Today | $42.41 | ||||||||||||||||||||||||||||||
63 | ||||||||||||||||||||||||||||||||
64 | Estimated Fair Value Share Price Today | Bull Case 12% Discount Rate | Base Case 15% Discount Rate | Notes | ||||||||||||||||||||||||||||
65 | BV/PS | $62.91 | $62.91 | Book Value per Share (BVPS) isn't an ideal metric for valuing Lemonade (LMND), as it only reflects historical asset values. This approach overlooks LMND's high-growth potential, proprietary AI technology, strong brand equity, and anticipated future profitability—all key drivers of its true valuation. Our valuation assumes a 9x BVPS multiple, positioned just above Progressive's 6x. Progressive's shareholder equity is growing at an 11.2% CAGR, compared to LMND's forecasted 34.8%. Additionally, once Lemonade achieves profitability, we anticipate they will reduce their ceded share, significantly boosting revenue acceleration and positively impacting shareholder equity. Given today's BVPS of around 4, we believe Lemonade is substantially undervalued. Consequently, a more realistic fair valuation today is better represented through a Discounted Cash Flow (DCF) model. a BV multiple in the range of 8-10x would more realistically bridge the market-cap valuations derived from these different methodologies. | ||||||||||||||||||||||||||||
66 | P&E 40x Multiple | $237.51 | $192.24 | |||||||||||||||||||||||||||||
67 | DCF | $94.23 | $68.37 | |||||||||||||||||||||||||||||
68 | Average Fair Value Share Price Today | $131.55 | $107.84 | |||||||||||||||||||||||||||||
69 | ||||||||||||||||||||||||||||||||
70 | Share Price CAGR | Notes | ||||||||||||||||||||||||||||||
71 | P&E CAGR 40x | 45.59% | Assumes a 40x Multiple due to its fast growth and large TAM | |||||||||||||||||||||||||||||
72 | Book Value per Share (BV/PS) CAGR | 41.59% | Assumes a 9x Multiple | |||||||||||||||||||||||||||||
73 | Average CAGR | 43.59% | ||||||||||||||||||||||||||||||
74 | ||||||||||||||||||||||||||||||||
75 | P/E Ratio | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | CAGR | Market Cap (B) (2032) | Discounted Fair Share Price today (12% Discounted rate) | Discounted Fair Share Price today (15% Discount Rate) | |||||||||||||||||||
76 | Dilution | 2.50% | 2.50% | 2.50% | NA | NA | NA | NA | NA | |||||||||||||||||||||||
77 | Outstanding Shares M | 73.27 | 75.10 | 76.98 | 76.98 | 76.98 | 76.98 | 76.98 | 76.98 | |||||||||||||||||||||||
78 | Earnings per share | $0.00 | 0.26 | 2.47 | 3.69 | 5.49 | 7.99 | 10.94 | 14.70 | |||||||||||||||||||||||
79 | 15x | $0.00 | $3.86 | $37.05 | $55.35 | $82.39 | $119.82 | $164.05 | $220.52 | 26.56% | $16.98 | $89.07 | $72.09 | |||||||||||||||||||
80 | 20x | $0.00 | $5.15 | $49.39 | $73.79 | $109.85 | $159.76 | $218.74 | $294.03 | 31.87% | $22.63 | $118.75 | $96.12 | |||||||||||||||||||
81 | 30x | $0.00 | $7.72 | $74.09 | $110.69 | $164.77 | $239.65 | $328.11 | $441.05 | 39.73% | $33.95 | $178.13 | $144.18 | |||||||||||||||||||
82 | 40x | $0.0 | $10.3 | $98.8 | $147.6 | $219.7 | $319.5 | $437.5 | $588.1 | 45.59% | $45.27 | $237.51 | $192.24 | |||||||||||||||||||
83 | 45x | $0.00 | $11.58 | $111.14 | $166.04 | $247.16 | $359.47 | $492.16 | $661.57 | 48.06% | $50.93 | $267.20 | $216.27 | |||||||||||||||||||
84 | Discount Rate Scenario A | 12% | ||||||||||||||||||||||||||||||
85 | Discount Rate Scenario B | 15% | ||||||||||||||||||||||||||||||
86 | ||||||||||||||||||||||||||||||||
87 | Discounted Cash Flow (DCF) Analysis | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | |||||||||||||||||||||||
88 | Cash | $1,020.0 | ||||||||||||||||||||||||||||||
89 | Net Income | ($147.7) | $19.3 | $190.1 | $284.0 | $422.8 | $614.9 | $841.9 | $1,131.7 | |||||||||||||||||||||||
90 | Depreciation and Amortization | $19.7 | $20.0 | $20.2 | $21.3 | $22.3 | $23.4 | $24.6 | $25.8 | |||||||||||||||||||||||
91 | Restricted Capital | ($73.3) | ($109.2) | ($143.4) | ($97.7) | ($127.1) | ($165.2) | ($214.8) | ($279.2) | |||||||||||||||||||||||
92 | FCF | $818.7 | -69.82 | 66.98 | 207.53 | 318.04 | 473.16 | 651.76 | 878.37 | |||||||||||||||||||||||
94 | Discounted FCF (excluding Synthetic Agent cash retained) (Scenario A) | ($62.3) | $53.4 | $147.7 | $202.1 | $268.5 | $330.2 | $397.3 | ||||||||||||||||||||||||
95 | Discounted FCF (excluding Synthetic Agent cash retained) (Scenario B) | ($60.7) | $50.6 | $136.5 | $181.8 | $235.2 | $281.8 | $330.2 | ||||||||||||||||||||||||
96 | ||||||||||||||||||||||||||||||||
97 | Scenario A | Scenario B | ||||||||||||||||||||||||||||||
98 | Discount Rate | 12% | 15% | |||||||||||||||||||||||||||||
99 | Terminal Rate | 3% | 3% | |||||||||||||||||||||||||||||
100 | Terminal Value | $10,052 | $7,539 | |||||||||||||||||||||||||||||
101 | Discounted Terminal Value | $4,547 | $2,834 | |||||||||||||||||||||||||||||
102 | Enterprise Value | $5,884 | $3,990 | |||||||||||||||||||||||||||||
103 | Starting Cash | $1,020 | $1,020 | |||||||||||||||||||||||||||||
104 | Equity Value | $6,904 | $5,010 | |||||||||||||||||||||||||||||