Lemonade CFO Timothy Bixby said the New York-based insurer is spending money to expand beyond its core renter and pet policies as it also balances profitability goals.
In a presentation at an investor conference last week, Bixby noted that there is at times a cost to cross-selling in order to win more business from existing customers — and to get them to add other offerings such as its insurance for homes or self-driving cars.
“There's not many folks who are driving many miles under fully autonomous [vehicles], but it's growing pretty rapidly,” Bixby said Thursday at the KBW Insurance Conference, referring to the self-driving car insurance it launched in January for Tesla vehicles with full self-driving systems. “It's not a premium driver for us yet, but I would think of it as an indicator of where Lemonade is headed.”
Founded in 2015, Lemonade is under financial pressure to meet profitability goals while also seeking to expand. It is aiming to realize its first-ever quarter of positive adjusted EBITDA in its fourth quater of 2026, according to the company’s Q2 shareholder letter. During the latest quarter, it reported an adjusted EBITDA loss of $19 million, a 54% improvement over the year-earlier period.
During the talk, Bixby said the company is currently a “very, very small player” in the huge insurance markets where it’s expanding. The company started out as primarily an insurance company for what he called the “often unloved” rental insurance market, but that has changed over time with pet insurance now being its largest business.
In order to continue to grow this year in what he called a “softening market,” he said that the company carefully gauges the cost of acquiring new customers. “Our marketing efficiency is a critical measure,” he said, according to a transcript of the call. “We typically acquire something like 3x lifetime value as a ratio compared to our customer acquisition cost. That's another dynamic or another sort of a guidepost that we track.”
Still, the marketing is not cheap. In June, Lemonade and Hannover Re DAC entered into a new agreement under which Hannover would provide up to $250 million of outstanding capital related to financing the company’s sales and marketing growth spend for a period of two years beginning Jan. 1, 2027.
Bixby said the company was starting to invest in brand marketing and actively seeking to increase the percentage of its customers that have more than one policy with Lemonade above the 5% to 6% level that it’s now at.
“Our brand awareness has gone from zero to low single digits and is heading towards a rate that we like, which is heading towards a double-digit awareness,” he said. “All that takes time. We're pretty good at unique approaches that don't require Super Bowl ads or dramatic spending, but that process is underway.”
Bixby detailed the company’s strategy as he prepares to step down next year from the top finance post he has held for nearly a decade. He will take a seat on the company’s board in January and be succeeded by Nick Stead, currently SVP of finance, the company announced in July. During the fireside chat Bixby also signaled the new CFO will likely have a similar approach because the two have worked together for years.
“I wouldn't expect dramatic changes,” Bixby said. “But I would hope for some — perhaps a slight quality upgrade. He's a young, smart, ambitious guy. I'm sure he'll have some thoughtful ways of improving the communication and continuing to do what we do.”
