Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 12, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-39367 | |
Entity Registrant Name | Lemonade, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 32-0469673 | |
Entity Address, Address Line One | 5 Crosby Street, 3rd Floor | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10013 | |
City Area Code | 844 | |
Local Phone Number | 733-8666 | |
Title of 12(b) Security | Common Stock, $0.00001 par value per share | |
Trading Symbol | LMND | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 56,576,808 | |
Amendment Flag | false | |
Entity Central Index Key | 0001691421 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Investments | ||
Debt Securities, Available-for-sale | $ 6.7 | $ 5.9 |
Short-term investments | 29.9 | 54.7 |
Total investments | 36.6 | 60.6 |
Cash, cash equivalents and restricted cash | 258.8 | 270.3 |
Premium receivable, net of allowance for doubtful accounts of $0.4 million and $0.2 million as of June 30, 2020 and December 31, 2019 | 64.9 | 54.1 |
Reinsurance recoverable | 26.2 | 20.3 |
Prepaid reinsurance premium | 0 | 1 |
Deferred acquisition costs | 2.5 | 1.8 |
Property and equipment, net | 4.3 | 3.1 |
Intangible assets | 0.6 | 0.6 |
Other assets | 6 | 2.5 |
Total assets | 399.9 | 414.3 |
Liabilities, Convertible Preferred Stock and Stockholders' Deficit | ||
Unpaid losses and loss adjustment expense | 35.3 | 28.2 |
Unearned premium | 86.9 | 68 |
Trade payables | 0.6 | 0.7 |
Other liabilities and accrued expense | 18.5 | 19.7 |
Total liabilities | 141.3 | 116.6 |
Commitments and contingencies (Note 15) | ||
Convertible preferred stock (Series Seed, A, B, C and D), $0.00001 par value; 31,557,107 shares authorized, issued and outstanding as of June 30, 2020 and December 31, 2019, respectively; aggregate liquidation preference of $480.8 million as of June 30, 2020 | 480.2 | 480.2 |
Stockholders' deficit: | ||
Common stock, $0.00001 par value, 52,000,000 shares authorized as of June 30, 2020 and December 31, 2019, respectively; 12,369,701 shares and 11,784,765 shares issued and 12,369,701 shares and 11,271,228 shares outstanding as of June 30, 2020 and December 31, 2019, respectively | 0 | 0 |
Additional paid-in capital | 33.9 | 15.7 |
Accumulated deficit | (255.8) | (198.3) |
Accumulated other comprehensive income | 0.3 | 0.1 |
Total stockholders' deficit | (221.6) | (182.5) |
Total liabilities, convertible preferred stock and stockholders' deficit | $ 399.9 | $ 414.3 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Amortized cost, available-for-sale securities | $ 6.5 | $ 5.8 |
Premium receivable, allowance for doubtful accounts | $ 0.4 | $ 0.2 |
Convertible preferred stock, par value (usd per share) | $ 0.00001 | $ 0.00001 |
Convertible preferred stock, authorized (shares) | 31,557,107 | 31,557,107 |
Convertible preferred stock, issued (shares) | 31,557,107 | 31,557,107 |
Convertible preferred stock, outstanding (shares) | 31,557,107 | 31,557,107 |
Convertible preferred stock, liquidation preference | $ 480.8 | $ 480.8 |
Common stock, par value (usd per share) | $ 0.00001 | $ 0.00001 |
Common stock, authorized (shares) | 52,000,000 | 52,000,000 |
Common stock, issued (shares) | 12,369,701 | 11,784,765 |
Common stock, outstanding (shares) | 12,369,701 | 11,271,228 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue | ||||||
Net earned premium | $ 29.2 | $ 13.3 | $ 54.5 | $ 23.8 | ||
Ceding commission income | 0.4 | 0 | 0.4 | 0 | ||
Net investment income | 0.2 | 0.5 | 1.1 | 1 | ||
Commission income | 0.1 | 0 | 0.1 | 0 | ||
Total revenue | 29.9 | 13.8 | 56.1 | 24.8 | ||
Expense | ||||||
Loss and loss adjustment expense, net | 20.5 | 9.9 | 38.7 | 17.8 | ||
Other insurance expense | 4 | 2.2 | 7.3 | 4.1 | ||
Sales and marketing | 16.1 | 19 | 35.3 | 37.4 | ||
Technology development | 4.2 | 2.1 | 7.7 | 3.6 | ||
General and administrative | 5.8 | 3.6 | 24 | 6.4 | ||
Total expense | 50.6 | 36.8 | 113 | 69.3 | ||
Loss before income taxes | (20.7) | (23) | (56.9) | (44.5) | ||
Income tax expense | 0.3 | 0.1 | 0.6 | 0.2 | ||
Net loss | (21) | $ (36.5) | (23.1) | $ (21.6) | (57.5) | (44.7) |
Other comprehensive income, net of tax | ||||||
Unrealized gain on investments | 0.2 | $ 0 | 0 | $ 0 | 0.2 | 0 |
Comprehensive loss | $ (20.8) | $ (23.1) | $ (57.3) | $ (44.7) | ||
Per Share Data: | ||||||
Net loss per share attributable to common stockholders—basic and diluted (usd per share) | $ (1.77) | $ (2.09) | $ (4.89) | $ (4.05) | ||
Weighted average common shares outstanding—basic and diluted (shares) | 11,891,979 | 11,072,985 | 11,750,198 | 11,028,667 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT - USD ($) $ in Millions | Total | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income |
Beginning balance (shares) at Dec. 31, 2018 | 24,445,555 | ||||
Beginning balance at Dec. 31, 2018 | $ 180.8 | ||||
Convertible Preferred Stock | |||||
Issuance of Preferred stock (shares) | 3,622 | ||||
Ending balance (shares) at Mar. 31, 2019 | 24,449,177 | ||||
Ending balance at Mar. 31, 2019 | $ 180.8 | ||||
Beginning balance (shares) at Dec. 31, 2018 | 10,983,684 | ||||
Beginning balance at Dec. 31, 2018 | (79.1) | $ 0 | $ 10.7 | $ (89.8) | $ 0 |
Increase (Decrease) in Stockholders' Deficit [Roll Forward] | |||||
Exercise of stock options (shares) | 3,125 | ||||
Stock-based compensation | 0.4 | 0.4 | |||
Net loss | (21.6) | (21.6) | |||
Other comprehensive income (loss) | 0 | ||||
Ending balance (shares) at Mar. 31, 2019 | 10,986,809 | ||||
Ending balance at Mar. 31, 2019 | $ (100.3) | $ 0 | 11.1 | (111.4) | 0 |
Beginning balance (shares) at Dec. 31, 2018 | 24,445,555 | ||||
Beginning balance at Dec. 31, 2018 | $ 180.8 | ||||
Ending balance (shares) at Jun. 30, 2019 | 28,595,471 | ||||
Ending balance at Jun. 30, 2019 | $ 355.2 | ||||
Beginning balance (shares) at Dec. 31, 2018 | 10,983,684 | ||||
Beginning balance at Dec. 31, 2018 | (79.1) | $ 0 | 10.7 | (89.8) | 0 |
Increase (Decrease) in Stockholders' Deficit [Roll Forward] | |||||
Net loss | (44.7) | ||||
Ending balance (shares) at Jun. 30, 2019 | 11,084,434 | ||||
Ending balance at Jun. 30, 2019 | $ (122.7) | $ 0 | 11.8 | (134.5) | 0 |
Beginning balance (shares) at Mar. 31, 2019 | 24,449,177 | ||||
Beginning balance at Mar. 31, 2019 | $ 180.8 | ||||
Convertible Preferred Stock | |||||
Issuance of Preferred stock (shares) | 4,146,294 | ||||
Issuance of preferred stock, net of issuance costs | $ 174.4 | ||||
Ending balance (shares) at Jun. 30, 2019 | 28,595,471 | ||||
Ending balance at Jun. 30, 2019 | $ 355.2 | ||||
Beginning balance (shares) at Mar. 31, 2019 | 10,986,809 | ||||
Beginning balance at Mar. 31, 2019 | (100.3) | $ 0 | 11.1 | (111.4) | 0 |
Increase (Decrease) in Stockholders' Deficit [Roll Forward] | |||||
Exercise of stock options (shares) | 97,625 | ||||
Exercise of stock options | 0.3 | 0.3 | |||
Stock-based compensation | 0.4 | 0.4 | |||
Net loss | (23.1) | (23.1) | |||
Other comprehensive income (loss) | 0 | ||||
Ending balance (shares) at Jun. 30, 2019 | 11,084,434 | ||||
Ending balance at Jun. 30, 2019 | $ (122.7) | $ 0 | 11.8 | (134.5) | 0 |
Beginning balance (shares) at Dec. 31, 2019 | 31,557,107 | ||||
Beginning balance at Dec. 31, 2019 | $ 480.2 | ||||
Ending balance (shares) at Mar. 31, 2020 | 31,557,107 | ||||
Ending balance at Mar. 31, 2020 | $ 480.2 | ||||
Beginning balance (shares) at Dec. 31, 2019 | 11,271,228 | 11,271,228 | |||
Beginning balance at Dec. 31, 2019 | $ (182.5) | $ 0 | 15.7 | (198.3) | 0.1 |
Increase (Decrease) in Stockholders' Deficit [Roll Forward] | |||||
Exercise of stock options (shares) | 54,374 | ||||
Stock-based compensation | 2.2 | 2.2 | |||
Contribution to the Lemonade Foundation (shares) | 500,000 | ||||
Contribution to the Lemonade Foundation | 12.2 | 12.2 | |||
Net loss | (36.5) | (36.5) | |||
Other comprehensive income (loss) | 0 | ||||
Ending balance (shares) at Mar. 31, 2020 | 11,825,602 | ||||
Ending balance at Mar. 31, 2020 | $ (204.6) | $ 0 | 30.1 | (234.8) | 0.1 |
Beginning balance (shares) at Dec. 31, 2019 | 31,557,107 | ||||
Beginning balance at Dec. 31, 2019 | $ 480.2 | ||||
Ending balance (shares) at Jun. 30, 2020 | 31,557,107 | ||||
Ending balance at Jun. 30, 2020 | $ 480.2 | ||||
Beginning balance (shares) at Dec. 31, 2019 | 11,271,228 | 11,271,228 | |||
Beginning balance at Dec. 31, 2019 | $ (182.5) | $ 0 | 15.7 | (198.3) | 0.1 |
Increase (Decrease) in Stockholders' Deficit [Roll Forward] | |||||
Exercise of stock options (shares) | 84,936 | ||||
Net loss | $ (57.5) | ||||
Ending balance (shares) at Jun. 30, 2020 | 12,369,701 | 12,369,701 | |||
Ending balance at Jun. 30, 2020 | $ (221.6) | $ 0 | 33.9 | (255.8) | 0.3 |
Beginning balance (shares) at Mar. 31, 2020 | 31,557,107 | ||||
Beginning balance at Mar. 31, 2020 | $ 480.2 | ||||
Ending balance (shares) at Jun. 30, 2020 | 31,557,107 | ||||
Ending balance at Jun. 30, 2020 | $ 480.2 | ||||
Beginning balance (shares) at Mar. 31, 2020 | 11,825,602 | ||||
Beginning balance at Mar. 31, 2020 | (204.6) | $ 0 | 30.1 | (234.8) | 0.1 |
Increase (Decrease) in Stockholders' Deficit [Roll Forward] | |||||
Exercise of stock options (shares) | 30,562 | ||||
Exercise of stock options | 0.1 | 0.1 | |||
Stock-based compensation | 2.4 | 2.4 | |||
Release of shares upon repayment (shares) | 513,537 | ||||
Release of shares upon repayment | 1.3 | 1.3 | |||
Net loss | $ (21) | (21) | |||
Other comprehensive income (loss) | 0.2 | ||||
Ending balance (shares) at Jun. 30, 2020 | 12,369,701 | 12,369,701 | |||
Ending balance at Jun. 30, 2020 | $ (221.6) | $ 0 | $ 33.9 | $ (255.8) | $ 0.3 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT (Parenthetical) $ in Millions | 3 Months Ended |
Jun. 30, 2019USD ($) | |
Statement of Stockholders' Equity [Abstract] | |
Issuance costs | $ 0.6 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (57.5) | $ (44.7) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 0.7 | 0.1 |
Stock-based compensation | 4.6 | 0.8 |
Amortization of discount on bonds | (0.3) | 0 |
Bad debt expense | 0.9 | 0 |
Noncash interest | 0 | (0.3) |
Common share contribution to the Lemonade Foundation | 12.2 | 0 |
Changes in operating assets and liabilities: | ||
Premium receivable | (11.6) | (13) |
Reinsurance recoverable | (5.9) | (5.4) |
Prepaid reinsurance premium | 1 | 1.5 |
Deferred acquisition costs | (0.7) | (0.2) |
Other assets | (3.5) | (2.9) |
Unpaid loss and loss adjustment expense | 7.1 | 7.6 |
Unearned premium | 18.9 | 16.2 |
Trade payables | 0.1 | (0.2) |
Other liabilities and accrued expense | (1.3) | 2.8 |
Net cash used in operating activities | (35.3) | (37.7) |
Cash flows from investing activities: | ||
Proceeds from short-term investments sold or matured | 40 | 6 |
Proceeds from bonds sold or matured | 2.2 | 0 |
Cost of short-term investments acquired | (14.9) | (14.8) |
Cost of bonds acquired | (2.9) | (2.3) |
Purchases of property plant and equipment | (1.9) | (1.4) |
Net cash provided by (used in) investing activities | 22.5 | (12.5) |
Cash flows from financing activities: | ||
Proceeds from release of shares upon repayment | 1.3 | 0 |
Issuance of Preferred stock, net | 0 | 174.4 |
Proceeds from stock exercises | 0.1 | 0.3 |
Net cash provided by financing activities | 1.4 | 174.7 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (0.1) | 0 |
Net (decrease) increase in cash, cash equivalents and restricted cash | (11.5) | 124.5 |
Cash, cash equivalents and restricted cash at beginning of period | 270.3 | 102.4 |
Cash, cash equivalents and restricted cash at end of period | 258.8 | 226.9 |
Supplemental disclosure of cash flow information: | ||
Cash paid for income taxes | $ 0.8 | $ 0 |
Nature of the Business
Nature of the Business | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of the Business | Nature of the BusinessLemonade, Inc. is a public benefit corporation organized under Delaware law on June 17, 2015. It provides certain personnel, facilities and services to each of its subsidiaries (together with Lemonade, Inc., the “Company”), all of which are 100% owned, directly or indirectly, by Lemonade, Inc. The Company consists of the following entities, which support Lemonade, Inc.’s U.S. and E.U. operations: (1) Lemonade Insurance Company, an insurance corporation organized under New York law; this company issues insurance policies and pays claims; it is licensed and regulated as a stock property and casualty insurance company in New York and in all other states where the Company’s insurance products are available; (2) Lemonade Insurance Agency, LLC, a limited liability company organized under New York law; this company is licensed as an insurance agent in New York and in all other states where the Company’s insurance products are available and it acts as the distribution and marketing agent for Lemonade Insurance Company and provides certain underwriting and claims services, and receives a fixed percentage of premium for doing so; it also acts as agent for other insurance companies in distributing their insurance, for which it receives various percentages of premium; (3) Lemonade Ltd., a company organized under the laws of Israel; this company provides technology, research and development, management, marketing and other services to the companies in the group, charged on a ‘‘cost plus’’ basis; (4) Lemonade Insurance N.V., a public limited company organized under the laws of the Netherlands; (5) Lemonade Agency B.V., a Netherlands private limited liability company; (6) Lemonade B.V., a Netherlands private limited liability company; and (7) Lemonade Life Insurance Agency, LLC, a limited liability company formed in Delaware to act as the distribution and marketing agent for the sale and servicing of life insurance products. |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of the Company and its wholly owned subsidiaries. All material inter-company transactions and balances have been eliminated upon consolidation. All foreign currency amounts in the statement of operations and comprehensive loss have been translated using an average rate for the reporting period. The Company translates all monetary assets and liabilities denominated in foreign currencies into U.S. dollars using the exchange rates in effect at the balance sheet dates and other assets and liabilities using historical exchange rates. All figures expressed, except share amounts, are represented in U.S. dollars in millions. Risk and Uncertainties The global pandemic resulting from the disease known as COVID-19, caused by a novel strain of coronavirus, SARS-CoV-2, has caused national and global economic and financial market disruptions and may adversely impact our business. Although the Company did not see a material impact on its net earned premium in the three and six month periods ended June 30, 2020 due to the COVID-19 pandemic, the Company cannot predict the duration or magnitude of the pandemic or the full impact that it may have on the Company’s financial condition and results of operations, business operations, and workforce. Unaudited interim financial information In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of its financial position and its results of operations, changes in stockholders’ equity (deficit) and cash flows. The condensed consolidated balance sheet at December 31, 2019, was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. The accompanying unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the fiscal year ended December 31, 2019 contained in the Company’s final prospectus for its initial public offering of its common stock ("IPO") dated as of July 1, 2020 and filed with the SEC pursuant to Rule 424(b)(4) on July 2, 2020. |
Use of Estimates
Use of Estimates | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Use of Estimates | Use of EstimatesThe preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. On an ongoing basis, the Company’s management evaluates estimates, including those related to contingent assets and liabilities as of the date of the financial statements as well as the reported amounts of revenue and expense during the reporting period. Such estimates are based on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities at the dates of the condensed consolidated financial statements, and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Significant estimates reflected in the Company’s condensed consolidated financial statements include, but are not limited to, reserves for loss and loss adjustment expense, reinsurance recoverables on unpaid losses, and the fair values of investments. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Cash, cash equivalents and restricted cash The following represents the Company’s cash, cash equivalents and restricted cash as of June 30, 2020 and December 31, 2019 ($ in millions): As of June 30, December 31, 2020 2019 Cash and cash equivalents $ 258.5 $ 270.0 Restricted cash 0.3 0.3 Total cash, cash equivalents and restricted cash $ 258.8 $ 270.3 Cash consists primarily of cash on hand and bank deposits. Cash equivalents consist primarily of money market accounts with maturities of three months or less at the date of acquisition and are stated at cost, which approximates fair value. The Company’s restricted cash relates to security deposits for office leases in Israel. The carrying value of restricted cash approximates fair value. Deferred offering costs The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs are recorded as a reduction to the carrying value of stockholders' equity (deficit) as a reduction of additional paid-in capital generated as a result of such offering. Should an in-process equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the condensed consolidated statements of operations and comprehensive loss. As of June 30, 2020, the Company recorded deferred offering costs of $2.8 million within other assets in the accompanying condensed consolidated balance sheets. Recent accounting pronouncements The Company currently qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Accordingly, the Company is provided the option to adopt new or revised accounting guidance either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods as private companies. The Company has elected to adopt new or revised accounting guidance within the same time period as private companies, unless, as indicated below, management determines it is preferable to take advantage of early adoption provisions offered within the applicable guidance. Recently issued accounting pronouncements In February 2016, the FASB issued Leases (Topic 842) (“ASU 2016-02”), whereby lessee will be required to recognize for all leases at the commencement date a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. A modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements must be applied. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. ASU 2016-02 is effective for the Company’s annual periods beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. The adoption of the new standard is expected to result in the recognition of additional lease liabilities and right-of-use assets as of January 1, 2022. The Company is evaluating the potential impact of this pronouncement. In June 2016, the FASB issued Financial Instruments — Credit Losses, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 will change the way entities recognize impairment of financial assets by requiring immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, including, among others, held-to-maturity debt securities, premium receivables, and reinsurance recoverable. The valuation allowance is a measurement of expected losses that is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. This methodology is referred to as the current expected credit loss model. ASU 2016-13 requires a valuation allowance to be calculated on these financial assets, as well as available for sale securities, and that they be presented on the financial statements net of the valuation allowance. ASU 2016-13 is effective for the Company’s annual periods beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the impact of ASU 2016-13 on its financial condition and results of operations, with a primary focus on its reinsurance recoverable. |
Investments
Investments | 6 Months Ended |
Jun. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments Unrealized gains and losses The following tables present cost or amortized cost and fair values of investments as of June 30, 2020 and December 31, 2019 ($ in millions): Cost or Amortized Cost Gross Fair Gains Losses June 30, 2020 U.S. Government obligations $ 6.5 $ 0.2 $ — $ 6.7 Total $ 6.5 $ 0.2 $ — $ 6.7 December 31, 2019 U.S. Government obligations $ 5.8 $ 0.1 $ — $ 5.9 Total $ 5.8 $ 0.1 $ — $ 5.9 Gross unrealized gains for U.S. Government obligations were $0.2 million and $0.1 million, as of June 30, 2020 and December 31, 2019, respectively. There were no gross unrealized losses as of June 30, 2020. Gross unrealized losses were less than $0.1 milion as of December 31, 2019. Gross unrealized gains and losses were recorded as a component of accumulated other comprehensive income. Contractual maturities of bonds The following table presents the cost or amortized cost and estimated fair value of bonds as of June 30, 2020 by contractual maturity ($ in millions). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. As of June 30, 2020 Cost or Fair Value Due in one year or less $ 0.1 $ 0.1 Due after one year through five years 6.4 6.6 Due after five years through ten years — — Due after ten years — — Total $ 6.5 $ 6.7 Net investment income An analysis of net investment income follows ($ in millions): Three Months Ended Six Months Ended 2020 2019 2020 2019 Interest on cash and cash equivalents $ 0.1 $ 0.4 $ 0.8 $ 0.8 Short-term investments 0.1 0.1 0.3 0.2 Total net investment income $ 0.2 $ 0.5 $ 1.1 $ 1.0 Investment gains and losses The Company did not have any pre-tax net realized capital gains or losses for the three and six months ended June 30, 2020 and 2019. Aging of gross unrealized losses There were no gross unrealized losses and related fair values for the Company's available-for-sale bond securities as of June 30, 2020. The following table presents the gross unrealized losses and related fair values for the Company’s available-for-sale bond securities, grouped by duration of time in a continuous unrealized loss position, as of December 31, 2019 ($ in millions): Less than 12 Months 12 Months or More Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses December 31, 2019 U.S. Government obligations $ 0.2 $ — $ 2.2 $ — $ 2.4 $ — Total $ 0.2 $ — $ 2.2 $ — $ 2.4 $ — There were no gross unrealized losses incurred for U.S. Government Bonds for twelve months or more as of June 30, 2020. Gross unrealized losses for U.S. Government Bonds was less than $0.1 million for twelve months or more as of December 31, 2019. The gross unrealized investment losses as of June 30, 2020 and December 31, 2019, were deemed to be temporary, based on, among other things: • the duration of time and the relative magnitude to which fair values of these investments have been below their amortized cost was not indicative of an other than temporary impairment loss; • the absence of compelling evidence that would cause the Company to call into question the financial condition or near-term prospects of the issuer of the investment; and • the Company’s ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery. The Company may ultimately record a realized loss after having originally concluded that the decline in value was temporary. Risks and uncertainties are inherent in the methodology the Company uses to assess other-than-temporary declines in value. Risks and uncertainties could include, but are not limited to, incorrect assumptions about financial condition, liquidity or future prospects, inadequacy of any underlying collateral, and unfavorable changes in economic conditions or social trends, interest rates or credit ratings. As of June 30, 2020, the Company held a total of 7 debt securities, none of which were in an unrealized loss position continuously for 12 months or more. As of December 31, 2019, the Company held a total of 9 debt securities, 4 of which were in an unrealized loss position, continuously for 12 months or more. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The following tables present the Company’s fair value hierarchy for financial assets and liabilities measured as of June 30, 2020 and December 31, 2019 ($ in millions): Fair Value Measurements as of June 30, 2020 Level 1 Level 2 Level 3 Total Assets: U.S. Government obligations $ — $ 6.7 $ — $ 6.7 Total $ — $ 6.7 $ — $ 6.7 Fair Value Measurements as of December 31, 2019 Level 1 Level 2 Level 3 Total Assets: U.S. Government obligations $ — $ 5.9 $ — $ 5.9 Total $ — $ 5.9 $ — $ 5.9 There were no transfers between Level 1, Level 2, or Level 3 during the three and six months ended June 30, 2020 and 2019. |
Unpaid Loss and Loss Adjustment
Unpaid Loss and Loss Adjustment Expense ("LAE") | 6 Months Ended |
Jun. 30, 2020 | |
Insurance [Abstract] | |
Unpaid Loss and Loss Adjustment Expense ("LAE") | Unpaid Loss and Loss Adjustment Expense (“LAE”) The following table presents the activity in the liability for unpaid loss and LAE in the six months ended June 30, 2020 and 2019 ($ in millions): Six Months Ended 2020 2019 Unpaid loss and LAE at beginning of period $ 28.2 $ 13.1 Less: Reinsurance recoverable at beginning of period (1). 18.5 11.3 Net unpaid loss and LAE at beginning of period 9.7 1.8 Add: Incurred loss and LAE, net of reinsurance, related to: Current year 33.5 15.4 Prior years 5.2 2.4 Total incurred 38.7 17.8 Deduct: Paid loss and LAE, net of reinsurance, related to: Current year 24.4 11.6 Prior years 13.2 4.2 Total paid 37.6 15.8 Unpaid loss and LAE, net of reinsurance recoverable, at end of period 10.8 3.8 Reinsurance recoverable at end of period (1) 24.5 16.9 Unpaid loss and LAE, gross of reinsurance recoverable, at end of period $ 35.3 $ 20.7 (1) Reinsurance recoverable in this table includes only ceded unpaid loss and LAE Unpaid loss and LAE includes anticipated salvage and subrogation recoverable. |
Other Liabilities and Accrued E
Other Liabilities and Accrued Expenses | 6 Months Ended |
Jun. 30, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Other Liabilities and Accrued Expenses | Other Liabilities and Accrued Expense Other liabilities and accrued expense consist of the following ($ in millions): As of June 30, December 31, 2020 2019 Ceded premium payable $ 5.5 $ 3.9 Accrued advertising costs 4.3 7.9 Accrued professional fees 3.3 2.8 Employee compensation payable 1.8 1.0 Premium taxes payable 1.3 2.6 Indirect taxes payable 0.8 0.4 Income tax payable 0.7 0.5 Other payables 0.8 0.6 Total other liabilities and accrued expense $ 18.5 $ 19.7 |
Convertible Preferred Stock
Convertible Preferred Stock | 6 Months Ended |
Jun. 30, 2020 | |
Temporary Equity Disclosure [Abstract] | |
Convertible Preferred Stock | Convertible Preferred Stock As of June 30, 2020 and December 31, 2019, the Company’s certificate of incorporation, as amended and restated, authorized the Company to issue 31,557,107 shares of par value $0.00001 per share convertible preferred stock, respectively. The holders of convertible preferred stock have liquidation rights in the event of a deemed liquidation that, in certain situations, are not solely within the control of the Company. Therefore, the convertible preferred stock is classified outside of stockholders’ equity (deficit) on the condensed consolidated balance sheet. As of each balance sheet date, preferred stock consisted of the following ($ in millions, except for share amounts): As of June 30, 2020 Preferred Preferred Carrying Liquidation Common Stock Series Seed Preferred stock 7,905,140 7,905,140 $ 12.9 $ 13.0 7,905,140 Series A Preferred stock 3,328,774 3,328,774 14.0 13.6 3,328,774 Series B Preferred stock 4,511,417 4,511,417 34.1 34.1 4,511,417 Series C Preferred Stock 8,703,846 8,703,846 119.8 120.1 8,703,846 Series D Preferred Stock 7,107,930 7,107,930 299.4 300.0 7,107,930 31,557,107 31,557,107 $ 480.2 $ 480.8 31,557,107 As of December 31, 2019 Preferred Preferred Carrying Liquidation Common Stock Series Seed Preferred stock 7,905,140 7,905,140 $ 12.9 $ 13.0 7,905,140 Series A Preferred stock 3,328,774 3,328,774 14.0 13.6 3,328,774 Series B Preferred stock 4,511,417 4,511,417 34.1 34.1 4,511,417 Series C Preferred Stock 8,703,846 8,703,846 119.8 120.1 8,703,846 Series D Preferred Stock 7,107,930 7,107,930 299.4 300.0 7,107,930 31,557,107 31,557,107 $ 480.2 $ 480.8 31,557,107 |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Common stock As of June 30, 2020 and December 31, 2019, the Company was authorized to issue 52,000,000 shares of par value $0.00001 per share common stock, respectively. The voting, dividend and liquidation rights of the holders of the Company’s common stock is subject to and qualified by the rights, powers and preferences of the holders of the preferred stock. On February 18, 2020, the Company made a contribution of 500,000 newly issued shares of common stock to a related party, the Lemonade Foundation (see Note 14). |
Stock-based Compensation
Stock-based Compensation | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based Compensation | Stock-based Compensation Share option plan In July 2015, the Company adopted the 2015 incentive share option plan and amended and restated the plan on September 4, 2019 (the “2015 Plan”). The 2015 Plan has been amended and restated from time to time to increase the number of shares reserved for grant and to enable the grant of options to employees of the Company’s subsidiaries. Under the 2015 plan, options to purchase Common stock of the Company may be granted to employees, officers, directors and consultants of the Company. Each option granted can be exercised for one share of Common stock of the Company. Options granted to employees generally vest over a period of no more than four years. The options expire 10 years from the date of grant. Pursuant to the 2015 Plan, the Company had reserved 7,312,590 shares of Common stock for issuance. As of June 30, 2020, there were 1,750,178 shares of Common stock available for future grant. Options granted to employees and non-employees The fair value of each option granted during the six months ended June 30, 2020 and 2019 is estimated on the date of grant using the Black-Scholes model with the following assumptions: Six Months Ended 2020 2019 Weighted average expected term (years) 6.1 6.1 Risk-free interest rate 1.0% 2.5% Volatility 40% 50% Expected dividend yield 0% 0% Expected volatility is based on companies at a comparable stage, as well as companies in the same or a similar industry. The expected term of options granted is based on the “Simplified” method, in accordance with ASC 718, “Compensation — Stock Compensation”. The risk-free interest rate is based on observed interest rates appropriate for the term of the Company’s employee stock options. The dividend yield assumption is based on the Company’s historical and expected future dividend payouts and may be subject to substantial change in the future. The following table summarizes activity of stock options ($ in millions, except for option and average amounts): Number of Weighted- Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding as of December 31, 2019 4,048,802 $ 13.27 8.8 $ 42.2 Granted 707,030 24.41 Exercised (84,936) 2.08 Cancelled (92,376) 20.28 Outstanding as of June 30, 2020 4,578,520 $ 15.06 8.6 $ 43.1 Options exercisable as of June 30, 2020 1,222,898 $ 4.79 7.3 $ 24.1 Options vested and expected to vest as of June 30, 2020 4,578,520 $ 15.06 8.6 $ 43.1 Total stock-based compensation expense resulting from stock options granted to employees and non-employees for the three and six months ended June 30, 2020 were $2.4 million and $4.5 million, respectively and for the three and six months ended June 30, 2019 were $0.4 million and $0.7 million, respectively. In December 2019, the board of directors approved the repricing of the stock options to purchase 1,708,300 shares of common stock held by 198 employees with exercise prices of $26.04 and $28.53 per share to the then current fair value of $23.69 per share. In connection with the repricing of these options, the Company recorded incremental expense of $0.1 million and $0.2 million for the three and six months ended June 30, 2020. The incremental unrecognized expense on these repriced option grants at June 30, 2020 was $1.4 million, with a remaining weighted-average period vesting period of 1.4 years. The total unrecognized expense on options granted to employees and non-employees outstanding at June 30, 2020 was $30.3 million, with a remaining weighted-average vesting period of 1.4 years. Stock-based compensation expense Stock-based compensation expense was classified in the condensed consolidated statements of operations as follows ($ in millions): Three Months Ended Six Months Ended 2020 2019 2020 2019 Loss and loss adjustment expense, net $ 0.1 $ — $ 0.1 $ — Other insurance expense 0.2 0.1 0.4 0.2 Sales and marketing 0.6 0.1 1.3 0.2 Technology development 0.7 0.1 1.3 0.1 General and administrative 0.8 0.1 1.5 0.3 Total stock-based compensation expense $ 2.4 $ 0.4 $ 4.6 $ 0.8 In 2016 and 2017, the Company entered into stock purchase agreements with two executive employees where in lieu of cash payment for the stock, promissory notes were issued totaling $1.5 million and bearing a weighted average interest of 1.9% per annum, payable to the Company. These notes are secured by the underlying stock purchased and such unvested stock can be repurchased by the Company upon termination of each executive’s employment at the original issuance price. Because the Company only has partial recourse under the promissory notes, the Company deemed the purchase of the stock to be non-substantive. As such, the note receivable is not reflected in the condensed consolidated financial statements and the related stock transaction will be recorded at the time the note receivable is settled in cash. In accordance with ASC 718, the purchases were treated as exercises of stock options with the fair value recognized over the requisite service period through a charge to compensation cost. The maturity date of the promissory notes reflects the legal term of the stock option for purposes of valuing the award. Total stock-based compensation expense resulting from stock options granted to the executives for the three and six months ended June 30, 2020 and 2019 was less than $0.1 million and $0.1 million, respectively. The unrecognized expense on options granted to these executives outstanding at June 30, 2020 was $0.1 million, with a remaining weighted average vesting period of 1.0 year. On June 8, 2020, the Company received $1.3 million in cash from the two executives in full settlement of the outstanding promissory notes, including principal and accrued and unpaid interest. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Effective tax rates The consolidated effective tax rate for the six months ended June 30, 2020 and 2019, was (1.0%) and (0.2%), respectively. The change in effective tax rate over the two periods was predominantly reflective of the change in profit before tax of the Israel entity. The Company believes that as of June 30, 2020, it had no material uncertain tax positions. Interest and penalties related to unrecognized tax expenses (benefits) are recognized in income tax expense, when applicable. There were no material liabilities for interest and penalties accrued as of June 30, 2020. |
Net Loss Per Share
Net Loss Per Share | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Net Loss per Share Net loss per share Basic and diluted net loss per share attributable to common stockholders was calculated as follows: Three Months Ended June 30, Six Months Ended 2020 2019 2020 2019 Numerator: Net loss attributable to common stockholders ($ in millions) $ (21.0) $ (23.1) $ (57.5) $ (44.7) Denominator: Weighted average common shares outstanding — basic and diluted 11,891,979 11,072,985 11,750,198 11,028,667 Net loss per share attributable to common stockholders — basic and diluted $ (1.77) $ (2.09) $ (4.89) $ (4.05) The Company’s potentially dilutive securities, which include stock options and preferred stock, have been excluded from the computation of diluted net loss per share as the effect would be anti-dilutive. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect: As of 2020 2019 Options to purchase common stock 4,578,520 2,102,124 Convertible preferred stock (as converted to common stock) 31,557,107 28,595,471 36,135,627 30,697,595 In addition to the potentially dilutive securities noted above, in 2016 and 2017 the Company entered into stock purchase agreements with executive employees where in lieu of cash payment for the stock, promissory notes were issued (see Note 11). The Company determined the purchase of the stock to be non-substantive, and as such, the shares subject to the promissory notes would not be deemed outstanding until such time as the promissory notes have been repaid. Accordingly, the Company excluded these shares in the calculation of basic and diluted net loss per share for the three and six months ended June 30, 2019. On June 8, 2020, all outstanding balances under the promissory notes were paid back to the Company and therefore, these shares were included in the calculation of basic and diluted net loss per share for the three and six months ended June 30, 2020. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Company uses the services of a travel agency owned by a relative of one of the Company’s key stockholders. The Company incurred travel related expenses in the amount of approximately less than $0.1 million during the three and six months ended June 30, 2020 and less than $0.1 million and $0.1 million during the three and six months ended June 30, 2019, respectively, in connection with these services. The Company has leased office space in the United States and The Netherlands from an affiliate. The rental expense recorded was less than $0.1 million and $0.1 million for the three and six months ended June 30, 2020, respectively. Rental expense for each of the three and six months ended June 30, 2019 was less than $0.1 million. There were no outstanding amounts due to or from related parties as of June 30, 2020 and December 31, 2019. The Company’s Chief Executive Officer and the Company’s President and Chief Operating Officer, both of whom are also members of the Company’s board of directors, are the two sole members of board of directors of the Lemonade Foundation. During the six months ended June 30, 2020, the Company contributed of 500,000 shares of common stock with a fair market value of $24.36 per share (see Note 10). The Company recorded $12.2 million of non-cash expense within general and administrative expense in connection with this contribution. As of June 30, 2020, the Company had a receivable of $0.1 million from the Lemonade Foundation in connection with certain expenses paid for by the Company on behalf of the Lemonade Foundation. |
Commitment and Contingent Liabi
Commitment and Contingent Liabilities | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitment and Contingent Liabilities | Commitments and Contingent Liabilities Litigation The Company is occasionally a party to routine claims or litigation incidental to its business. The Company does not believe that it is a party to any pending legal proceeding that is likely to have a material adverse effect on its business, financial condition or results of operations. Lease commitments The Company and its subsidiaries lease their facilities under various operating lease agreements. The Company’s headquarters in New York is under a lease that expires in November 2022. The Company’s Israel based operations occupy offices with lease expiration dates that extend through January 2023. On March 18, 2019, the Company entered into a lease agreement to lease office space in Scottsdale, Arizona that expires in December 2024. Aggregate minimum rental commitments under non-cancelable leases at June 30, 2020 are as follows ($ in millions): 2020 (remaining six months) $ 1.8 2021 3.4 2022 3.1 2023 0.3 2024 0.3 $ 8.9 Expenses for lease of facilities for the three and six months ended June 30, 2020 were approximately $1.0 million and $1.9 million, respectively and for the three and six months ended June 30, 2019 were approximately $0.7 million and $1.2 million, respectively. Charges and guarantees The Company provided guarantees in an aggregate amount of $0.6 million with respect to office leases as of June 30, 2020 and December 31, 2019, respectively. |
Geographical Breakdown of Gross
Geographical Breakdown of Gross Written Premium | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Geographical Breakdown of Gross Written Premium | Geographical Breakdown of Gross Written Premium The Company has a single reportable segment and offers insurance coverage under a single line of business, homeowners multi-peril. Gross written premium by jurisdiction are as follows ($ in millions): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Jurisdiction Amount % of GWP Amount % of GWP Amount % of GWP Amount % of GWP Texas $ 11.8 25.3 % $ 6.7 26.4 % $ 20.6 24.3 % $ 12.0 26.8 % California 9.9 21.2 % 6.4 25.2 % 19.3 22.8 % 11.3 25.3 % New York 5.3 11.3 % 3.6 14.2 % 10.2 12.0 % 6.5 14.5 % Georgia 2.8 6.0 % 1.4 5.5 % 4.9 5.8 % 2.4 5.4 % Illinois 2.6 5.6 % 1.3 5.1 % 4.2 5.0 % 2.1 4.7 % New Jersey 1.6 3.4 % 1.0 3.9 % 3.1 3.7 % 1.9 4.3 % Michigan 1.4 3.0 % 0.5 1.9 % 2.4 2.8 % 1.0 2.2 % Ohio 1.2 2.6 % 0.6 2.4 % 2.2 2.6 % 1.2 2.7 % Arizona 1.1 2.4 % 0.5 2.0 % 1.9 2.2 % 0.9 2.0 % Pennsylvania 1.1 2.4 % 0.6 2.4 % 1.8 2.1 % 1.0 2.2 % All other 7.9 16.8 % 2.8 11.0 % 14.2 16.7 % 4.4 9.9 % $ 46.7 100.0 % $ 25.4 100.0 % $ 84.8 100.0 % $ 44.7 100.0 % |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Initial Public Offering On July 2, 2020, the Company completed its initial public offering (“IPO”), in which the Company issued and sold 12,650,000 shares of its common stock at a public offering price of $29.00 per share, including 1,650,000 shares sold upon the exercise of the underwriter’s option to purchase additional shares. After underwriter discounts and commissions and other offering costs, net proceeds from the IPO were approximately $335.6 million. Offering costs of approximately $3.5 million were recognized as a component of general and administrative expense in 2019. In connection with the IPO, the Company’s outstanding convertible preferred stock converted into shares of common stock (see Note 9) on July 2, 2020. Upon conversion of the convertible preferred stock, the Company reclassified the carrying value of the convertible preferred stock to common stock and additional paid-in capital. Upon closing of the IPO, the Company filed an amended and restated certificate of incorporation on July 7, 2020 with the Secretary of State of the State of Delaware to authorize the issuance of up to 200,000,000 shares of common stock, par value $0.00001 per share, and 10,000,000 shares of undesignated preferred stock, par value $0.00001 per share. 2020 Incentive Compensation Plan On July 2, 2020, the Company’s board of directors adopted and the Company’s stockholders approved the 2020 Incentive Compensation Plan (the “2020 Plan”), which became effective immediately prior to the effectiveness of the registration statement for the Company’s IPO. The 2020 Plan provides for the issuance of incentive stock options, non-qualified stock options, stock awards, stock units, stock appreciation rights and other stock-based awards. The number of shares initially reserved for issuance under the 2020 Plan is 5,503,678 shares, inclusive of available shares previously reserved for issuance under the 2015 Plan. In addition, the number of shares reserved for issuance under the 2020 Plan is subject to an annual increase on the first day of each calendar year beginning on January 1, 2021 and ending on and including January 1, 2030, equal to the lesser of (A) 5% of the shares outstanding (on an as-converted basis) on the last day of the immediately preceding fiscal year and (B) such smaller number of shares as determined by the Company’s board of directors, provided that no more than 3,650,000 shares may be issued upon the exercise of incentive stock options. 2020 Employee Stock Purchase Plan On July 2, 2020, the Company’s board of directors adopted and the Company’s stockholders approved the 2020 Employee Stock Purchase Plan (the “ESPP”), which became effective immediately prior to the effectiveness of the registration statement for the Company’s IPO. The total shares initially reserved for issuance under the ESPP is limited to 1,000,000 shares. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of presentation | The accompanying interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of the Company and its wholly owned subsidiaries. All material inter-company transactions and balances have been eliminated upon consolidation. All foreign currency amounts in the statement of operations and comprehensive loss have been translated using an average rate for the reporting period. The Company translates all monetary assets and liabilities denominated in foreign currencies into U.S. dollars using the exchange rates in effect at the balance sheet dates and other assets and liabilities using historical exchange rates. All figures expressed, except share amounts, are represented in U.S. dollars in millions. |
Use of estimates | The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. On an ongoing basis, the Company’s management evaluates estimates, including those related to contingent assets and liabilities as of the date of the financial statements as well as the reported amounts of revenue and expense during the reporting period. Such estimates are based on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities at the dates of the condensed consolidated financial statements, and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Significant estimates reflected in the Company’s condensed consolidated financial statements include, but are not limited to, reserves for loss and loss adjustment expense, reinsurance recoverables on unpaid losses, and the fair values of investments. |
Cash, cash equivalents and restricted cash | Cash consists primarily of cash on hand and bank deposits. Cash equivalents consist primarily of money market accounts with maturities of three months or less at the date of acquisition and are stated at cost, which approximates fair value. The Company’s restricted cash relates to security deposits for office leases in Israel. The carrying value of restricted cash approximates fair value. |
Deferred offering costs | The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs are recorded as a reduction to the carrying value of stockholders' equity (deficit) as a reduction of additional paid-in capital generated as a result of such offering. Should an in-process equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the condensed consolidated statements of operations and comprehensive loss. As of June 30, 2020, the Company recorded deferred offering costs of $2.8 million within other assets in the accompanying condensed consolidated balance sheets. |
Recent accounting pronouncements | The Company currently qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Accordingly, the Company is provided the option to adopt new or revised accounting guidance either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods as private companies. The Company has elected to adopt new or revised accounting guidance within the same time period as private companies, unless, as indicated below, management determines it is preferable to take advantage of early adoption provisions offered within the applicable guidance. Recently issued accounting pronouncements In February 2016, the FASB issued Leases (Topic 842) (“ASU 2016-02”), whereby lessee will be required to recognize for all leases at the commencement date a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. A modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements must be applied. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. ASU 2016-02 is effective for the Company’s annual periods beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. The adoption of the new standard is expected to result in the recognition of additional lease liabilities and right-of-use assets as of January 1, 2022. The Company is evaluating the potential impact of this pronouncement. In June 2016, the FASB issued Financial Instruments — Credit Losses, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 will change the way entities recognize impairment of financial assets by requiring immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, including, among others, held-to-maturity debt securities, premium receivables, and reinsurance recoverable. The valuation allowance is a measurement of expected losses that is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. This methodology is referred to as the current expected credit loss model. ASU 2016-13 requires a valuation allowance to be calculated on these financial assets, as well as available for sale securities, and that they be presented on the financial statements net of the valuation allowance. ASU 2016-13 is effective for the Company’s annual periods beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the impact of ASU 2016-13 on its financial condition and results of operations, with a primary focus on its reinsurance recoverable. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Cash and cash equivalents | The following represents the Company’s cash, cash equivalents and restricted cash as of June 30, 2020 and December 31, 2019 ($ in millions): As of June 30, December 31, 2020 2019 Cash and cash equivalents $ 258.5 $ 270.0 Restricted cash 0.3 0.3 Total cash, cash equivalents and restricted cash $ 258.8 $ 270.3 |
Restricted cash | The following represents the Company’s cash, cash equivalents and restricted cash as of June 30, 2020 and December 31, 2019 ($ in millions): As of June 30, December 31, 2020 2019 Cash and cash equivalents $ 258.5 $ 270.0 Restricted cash 0.3 0.3 Total cash, cash equivalents and restricted cash $ 258.8 $ 270.3 |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Amortized cost and fair values | The following tables present cost or amortized cost and fair values of investments as of June 30, 2020 and December 31, 2019 ($ in millions): Cost or Amortized Cost Gross Fair Gains Losses June 30, 2020 U.S. Government obligations $ 6.5 $ 0.2 $ — $ 6.7 Total $ 6.5 $ 0.2 $ — $ 6.7 December 31, 2019 U.S. Government obligations $ 5.8 $ 0.1 $ — $ 5.9 Total $ 5.8 $ 0.1 $ — $ 5.9 |
Contractual maturities of bonds | The following table presents the cost or amortized cost and estimated fair value of bonds as of June 30, 2020 by contractual maturity ($ in millions). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. As of June 30, 2020 Cost or Fair Value Due in one year or less $ 0.1 $ 0.1 Due after one year through five years 6.4 6.6 Due after five years through ten years — — Due after ten years — — Total $ 6.5 $ 6.7 |
Net investment income | An analysis of net investment income follows ($ in millions): Three Months Ended Six Months Ended 2020 2019 2020 2019 Interest on cash and cash equivalents $ 0.1 $ 0.4 $ 0.8 $ 0.8 Short-term investments 0.1 0.1 0.3 0.2 Total net investment income $ 0.2 $ 0.5 $ 1.1 $ 1.0 |
Aging of gross unrealized losses | The following table presents the gross unrealized losses and related fair values for the Company’s available-for-sale bond securities, grouped by duration of time in a continuous unrealized loss position, as of December 31, 2019 ($ in millions): Less than 12 Months 12 Months or More Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses December 31, 2019 U.S. Government obligations $ 0.2 $ — $ 2.2 $ — $ 2.4 $ — Total $ 0.2 $ — $ 2.2 $ — $ 2.4 $ — |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair value hierarchy for financial assets and liabilities | The following tables present the Company’s fair value hierarchy for financial assets and liabilities measured as of June 30, 2020 and December 31, 2019 ($ in millions): Fair Value Measurements as of June 30, 2020 Level 1 Level 2 Level 3 Total Assets: U.S. Government obligations $ — $ 6.7 $ — $ 6.7 Total $ — $ 6.7 $ — $ 6.7 Fair Value Measurements as of December 31, 2019 Level 1 Level 2 Level 3 Total Assets: U.S. Government obligations $ — $ 5.9 $ — $ 5.9 Total $ — $ 5.9 $ — $ 5.9 |
Unpaid Loss and Loss Adjustme_2
Unpaid Loss and Loss Adjustment Expense ("LAE") (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Insurance [Abstract] | |
Activity in the liability for unpaid loss and LAE | The following table presents the activity in the liability for unpaid loss and LAE in the six months ended June 30, 2020 and 2019 ($ in millions): Six Months Ended 2020 2019 Unpaid loss and LAE at beginning of period $ 28.2 $ 13.1 Less: Reinsurance recoverable at beginning of period (1). 18.5 11.3 Net unpaid loss and LAE at beginning of period 9.7 1.8 Add: Incurred loss and LAE, net of reinsurance, related to: Current year 33.5 15.4 Prior years 5.2 2.4 Total incurred 38.7 17.8 Deduct: Paid loss and LAE, net of reinsurance, related to: Current year 24.4 11.6 Prior years 13.2 4.2 Total paid 37.6 15.8 Unpaid loss and LAE, net of reinsurance recoverable, at end of period 10.8 3.8 Reinsurance recoverable at end of period (1) 24.5 16.9 Unpaid loss and LAE, gross of reinsurance recoverable, at end of period $ 35.3 $ 20.7 (1) Reinsurance recoverable in this table includes only ceded unpaid loss and LAE |
Other Liabilities and Accrued_2
Other Liabilities and Accrued Expenses (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Other liabilities and accrued expenses | Other liabilities and accrued expense consist of the following ($ in millions): As of June 30, December 31, 2020 2019 Ceded premium payable $ 5.5 $ 3.9 Accrued advertising costs 4.3 7.9 Accrued professional fees 3.3 2.8 Employee compensation payable 1.8 1.0 Premium taxes payable 1.3 2.6 Indirect taxes payable 0.8 0.4 Income tax payable 0.7 0.5 Other payables 0.8 0.6 Total other liabilities and accrued expense $ 18.5 $ 19.7 |
Convertible Preferred Stock (Ta
Convertible Preferred Stock (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Temporary Equity Disclosure [Abstract] | |
Convertible preferred stock | As of each balance sheet date, preferred stock consisted of the following ($ in millions, except for share amounts): As of June 30, 2020 Preferred Preferred Carrying Liquidation Common Stock Series Seed Preferred stock 7,905,140 7,905,140 $ 12.9 $ 13.0 7,905,140 Series A Preferred stock 3,328,774 3,328,774 14.0 13.6 3,328,774 Series B Preferred stock 4,511,417 4,511,417 34.1 34.1 4,511,417 Series C Preferred Stock 8,703,846 8,703,846 119.8 120.1 8,703,846 Series D Preferred Stock 7,107,930 7,107,930 299.4 300.0 7,107,930 31,557,107 31,557,107 $ 480.2 $ 480.8 31,557,107 As of December 31, 2019 Preferred Preferred Carrying Liquidation Common Stock Series Seed Preferred stock 7,905,140 7,905,140 $ 12.9 $ 13.0 7,905,140 Series A Preferred stock 3,328,774 3,328,774 14.0 13.6 3,328,774 Series B Preferred stock 4,511,417 4,511,417 34.1 34.1 4,511,417 Series C Preferred Stock 8,703,846 8,703,846 119.8 120.1 8,703,846 Series D Preferred Stock 7,107,930 7,107,930 299.4 300.0 7,107,930 31,557,107 31,557,107 $ 480.2 $ 480.8 31,557,107 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Fair value assumptions | The fair value of each option granted during the six months ended June 30, 2020 and 2019 is estimated on the date of grant using the Black-Scholes model with the following assumptions: Six Months Ended 2020 2019 Weighted average expected term (years) 6.1 6.1 Risk-free interest rate 1.0% 2.5% Volatility 40% 50% Expected dividend yield 0% 0% |
Stock options activity | The following table summarizes activity of stock options ($ in millions, except for option and average amounts): Number of Weighted- Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding as of December 31, 2019 4,048,802 $ 13.27 8.8 $ 42.2 Granted 707,030 24.41 Exercised (84,936) 2.08 Cancelled (92,376) 20.28 Outstanding as of June 30, 2020 4,578,520 $ 15.06 8.6 $ 43.1 Options exercisable as of June 30, 2020 1,222,898 $ 4.79 7.3 $ 24.1 Options vested and expected to vest as of June 30, 2020 4,578,520 $ 15.06 8.6 $ 43.1 |
Stock-based compensation expense | Stock-based compensation expense was classified in the condensed consolidated statements of operations as follows ($ in millions): Three Months Ended Six Months Ended 2020 2019 2020 2019 Loss and loss adjustment expense, net $ 0.1 $ — $ 0.1 $ — Other insurance expense 0.2 0.1 0.4 0.2 Sales and marketing 0.6 0.1 1.3 0.2 Technology development 0.7 0.1 1.3 0.1 General and administrative 0.8 0.1 1.5 0.3 Total stock-based compensation expense $ 2.4 $ 0.4 $ 4.6 $ 0.8 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Basic and diluted net loss per share | Basic and diluted net loss per share attributable to common stockholders was calculated as follows: Three Months Ended June 30, Six Months Ended 2020 2019 2020 2019 Numerator: Net loss attributable to common stockholders ($ in millions) $ (21.0) $ (23.1) $ (57.5) $ (44.7) Denominator: Weighted average common shares outstanding — basic and diluted 11,891,979 11,072,985 11,750,198 11,028,667 Net loss per share attributable to common stockholders — basic and diluted $ (1.77) $ (2.09) $ (4.89) $ (4.05) |
Antidilutive potential common shares | The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect: As of 2020 2019 Options to purchase common stock 4,578,520 2,102,124 Convertible preferred stock (as converted to common stock) 31,557,107 28,595,471 36,135,627 30,697,595 |
Commitment and Contingent Lia_2
Commitment and Contingent Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Aggregate minimum rental commitments under non-cancelable leases | Aggregate minimum rental commitments under non-cancelable leases at June 30, 2020 are as follows ($ in millions): 2020 (remaining six months) $ 1.8 2021 3.4 2022 3.1 2023 0.3 2024 0.3 $ 8.9 |
Geographical Breakdown of Gro_2
Geographical Breakdown of Gross Written Premium (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Gross written premium by state | The Company has a single reportable segment and offers insurance coverage under a single line of business, homeowners multi-peril. Gross written premium by jurisdiction are as follows ($ in millions): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Jurisdiction Amount % of GWP Amount % of GWP Amount % of GWP Amount % of GWP Texas $ 11.8 25.3 % $ 6.7 26.4 % $ 20.6 24.3 % $ 12.0 26.8 % California 9.9 21.2 % 6.4 25.2 % 19.3 22.8 % 11.3 25.3 % New York 5.3 11.3 % 3.6 14.2 % 10.2 12.0 % 6.5 14.5 % Georgia 2.8 6.0 % 1.4 5.5 % 4.9 5.8 % 2.4 5.4 % Illinois 2.6 5.6 % 1.3 5.1 % 4.2 5.0 % 2.1 4.7 % New Jersey 1.6 3.4 % 1.0 3.9 % 3.1 3.7 % 1.9 4.3 % Michigan 1.4 3.0 % 0.5 1.9 % 2.4 2.8 % 1.0 2.2 % Ohio 1.2 2.6 % 0.6 2.4 % 2.2 2.6 % 1.2 2.7 % Arizona 1.1 2.4 % 0.5 2.0 % 1.9 2.2 % 0.9 2.0 % Pennsylvania 1.1 2.4 % 0.6 2.4 % 1.8 2.1 % 1.0 2.2 % All other 7.9 16.8 % 2.8 11.0 % 14.2 16.7 % 4.4 9.9 % $ 46.7 100.0 % $ 25.4 100.0 % $ 84.8 100.0 % $ 44.7 100.0 % |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 258.5 | $ 270 | ||
Restricted cash | 0.3 | 0.3 | ||
Total cash, cash equivalents and restricted cash | 258.8 | $ 270.3 | $ 226.9 | $ 102.4 |
Deferred offering costs | $ 2.8 |
Investments - Amortized Cost an
Investments - Amortized Cost and Fair Values (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | $ 6.5 | $ 5.8 |
Gross Unrealized Gains | 0.2 | 0.1 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 6.7 | 5.9 |
U.S. Government obligations | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 6.5 | 5.8 |
Gross Unrealized Gains | 0.2 | 0.1 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | $ 6.7 | $ 5.9 |
Investments - Contractual Matur
Investments - Contractual Maturities of Bonds (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Cost or Amortized Cost | ||
Due in one year or less | $ 0.1 | |
Due after one year through five years | 6.4 | |
Due after five years through ten years | 0 | |
Due after ten years | 0 | |
Cost or Amortized Cost | 6.5 | $ 5.8 |
Fair Value | ||
Due in one year or less | 0.1 | |
Due after one year through five years | 6.6 | |
Due after five years through ten years | 0 | |
Due after ten years | 0 | |
Fair Value | $ 6.7 | $ 5.9 |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Net Investment Income [Line Items] | ||||
Net investment income | $ 0.2 | $ 0.5 | $ 1.1 | $ 1 |
Interest on cash and cash equivalents | ||||
Net Investment Income [Line Items] | ||||
Net investment income | 0.1 | 0.4 | 0.8 | 0.8 |
Short-term investments | ||||
Net Investment Income [Line Items] | ||||
Net investment income | $ 0.1 | $ 0.1 | $ 0.3 | $ 0.2 |
Investments - Aging Of Gross Un
Investments - Aging Of Gross Unrealized Losses (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Fair Value | ||
Less than 12 Months | $ 200,000 | |
12 Months or More | 2,200,000 | |
Fair Value | 2,400,000 | |
Gross Unrealized Losses | ||
Less than 12 Months | 0 | |
12 Months or More | 0 | |
Gross Unrealized Losses | 0 | |
U.S. Government obligations | ||
Fair Value | ||
Less than 12 Months | 200,000 | |
12 Months or More | 2,200,000 | |
Fair Value | 2,400,000 | |
Gross Unrealized Losses | ||
Less than 12 Months | 0 | |
12 Months or More | $ 0 | 0 |
Gross Unrealized Losses | $ 0 |
Investments - Additional Inform
Investments - Additional Information (Details) - security | Jun. 30, 2020 | Dec. 31, 2019 |
Investments, Debt and Equity Securities [Abstract] | ||
Number of debt securities held | 7 | 9 |
Number of debt securities held, unrealized loss position for 12 months or more | 0 | 4 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Government obligations | $ 6.7 | $ 5.9 |
Total | 6.7 | 5.9 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Government obligations | 0 | 0 |
Total | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Government obligations | 6.7 | 5.9 |
Total | 6.7 | 5.9 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Government obligations | 0 | 0 |
Total | $ 0 | $ 0 |
Unpaid Loss and Loss Adjustme_3
Unpaid Loss and Loss Adjustment Expense ("LAE") (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||||
Unpaid loss and LAE at beginning of period | $ 28.2 | $ 13.1 | ||
Less: Reinsurance recoverable at beginning of period | 18.5 | 11.3 | ||
Net unpaid loss and LAE at beginning of period | 9.7 | 1.8 | ||
Add: Incurred loss and LAE, net of reinsurance, related to: | ||||
Current year | 33.5 | 15.4 | ||
Prior years | 5.2 | 2.4 | ||
Total incurred | $ 20.5 | $ 9.9 | 38.7 | 17.8 |
Deduct: Paid loss and LAE, net of reinsurance, related to: | ||||
Current year | 24.4 | 11.6 | ||
Prior years | 13.2 | 4.2 | ||
Total paid | 37.6 | 15.8 | ||
Unpaid loss and LAE, gross of reinsurance recoverable, at end of period | 10.8 | 3.8 | 10.8 | 3.8 |
Reinsurance recoverable at end of period | 24.5 | 16.9 | 24.5 | 16.9 |
Unpaid loss and LAE, gross of reinsurance recoverable, at end of period | $ 35.3 | $ 20.7 | 35.3 | 20.7 |
Reserve deficiencies | $ 2.6 | $ 1.2 |
Other Liabilities and Accrued_3
Other Liabilities and Accrued Expenses (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Other Liabilities Disclosure [Abstract] | ||
Ceded premium payable | $ 5.5 | $ 3.9 |
Accrued advertising costs | 4.3 | 7.9 |
Accrued professional fees | 3.3 | 2.8 |
Employee compensation payable | 1.8 | 1 |
Premium taxes payable | 1.3 | 2.6 |
Indirect taxes payable | 0.8 | 0.4 |
Income tax payable | 0.7 | 0.5 |
Other payables | 0.8 | 0.6 |
Total other liabilities and accrued expense | $ 18.5 | $ 19.7 |
Convertible Preferred Stock (De
Convertible Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Millions | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Temporary Equity [Line Items] | ||||||
Convertible preferred stock, authorized (shares) | 31,557,107 | 31,557,107 | ||||
Convertible preferred stock, par value (usd per share) | $ 0.00001 | $ 0.00001 | ||||
Convertible preferred stock, issued (shares) | 31,557,107 | 31,557,107 | ||||
Convertible preferred stock, outstanding (shares) | 31,557,107 | 31,557,107 | 31,557,107 | 28,595,471 | 24,449,177 | 24,445,555 |
Convertible preferred stock, carrying value | $ 480.2 | $ 480.2 | $ 480.2 | $ 355.2 | $ 180.8 | $ 180.8 |
Convertible preferred stock, liquidation preference | $ 480.8 | $ 480.8 | ||||
Convertible preferred stock, common stock issuable upon conversion (shares) | 31,557,107 | 31,557,107 | ||||
Series Seed Preferred stock | ||||||
Temporary Equity [Line Items] | ||||||
Convertible preferred stock, authorized (shares) | 7,905,140 | 7,905,140 | ||||
Convertible preferred stock, issued (shares) | 7,905,140 | 7,905,140 | ||||
Convertible preferred stock, outstanding (shares) | 7,905,140 | 7,905,140 | ||||
Convertible preferred stock, carrying value | $ 12.9 | $ 12.9 | ||||
Convertible preferred stock, liquidation preference | $ 13 | $ 13 | ||||
Convertible preferred stock, common stock issuable upon conversion (shares) | 7,905,140 | 7,905,140 | ||||
Series A Preferred stock | ||||||
Temporary Equity [Line Items] | ||||||
Convertible preferred stock, authorized (shares) | 3,328,774 | 3,328,774 | ||||
Convertible preferred stock, issued (shares) | 3,328,774 | 3,328,774 | ||||
Convertible preferred stock, outstanding (shares) | 3,328,774 | 3,328,774 | ||||
Convertible preferred stock, carrying value | $ 14 | $ 14 | ||||
Convertible preferred stock, liquidation preference | $ 13.6 | $ 13.6 | ||||
Convertible preferred stock, common stock issuable upon conversion (shares) | 3,328,774 | 3,328,774 | ||||
Series B Preferred stock | ||||||
Temporary Equity [Line Items] | ||||||
Convertible preferred stock, authorized (shares) | 4,511,417 | 4,511,417 | ||||
Convertible preferred stock, issued (shares) | 4,511,417 | 4,511,417 | ||||
Convertible preferred stock, outstanding (shares) | 4,511,417 | 4,511,417 | ||||
Convertible preferred stock, carrying value | $ 34.1 | $ 34.1 | ||||
Convertible preferred stock, liquidation preference | $ 34.1 | $ 34.1 | ||||
Convertible preferred stock, common stock issuable upon conversion (shares) | 4,511,417 | 4,511,417 | ||||
Series C Preferred Stock | ||||||
Temporary Equity [Line Items] | ||||||
Convertible preferred stock, authorized (shares) | 8,703,846 | 8,703,846 | ||||
Convertible preferred stock, issued (shares) | 8,703,846 | 8,703,846 | ||||
Convertible preferred stock, outstanding (shares) | 8,703,846 | 8,703,846 | ||||
Convertible preferred stock, carrying value | $ 119.8 | $ 119.8 | ||||
Convertible preferred stock, liquidation preference | $ 120.1 | $ 120.1 | ||||
Convertible preferred stock, common stock issuable upon conversion (shares) | 8,703,846 | 8,703,846 | ||||
Series D Preferred Stock | ||||||
Temporary Equity [Line Items] | ||||||
Convertible preferred stock, authorized (shares) | 7,107,930 | 7,107,930 | ||||
Convertible preferred stock, issued (shares) | 7,107,930 | 7,107,930 | ||||
Convertible preferred stock, outstanding (shares) | 7,107,930 | 7,107,930 | ||||
Convertible preferred stock, carrying value | $ 299.4 | $ 299.4 | ||||
Convertible preferred stock, liquidation preference | $ 300 | $ 300 | ||||
Convertible preferred stock, common stock issuable upon conversion (shares) | 7,107,930 | 7,107,930 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - $ / shares | Feb. 18, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Equity [Abstract] | |||
Common stock, authorized (shares) | 52,000,000 | 52,000,000 | |
Common stock, par value (usd per share) | $ 0.00001 | $ 0.00001 | |
Affiliated entity | The Lemonade Foundation | |||
Related Party Transaction [Line Items] | |||
Contribution to the Lemonade Foundation (shares) | 500,000 |
Stock-based Compensation - Addi
Stock-based Compensation - Additional Information (Details) $ / shares in Units, $ in Millions | Jun. 08, 2020USD ($)employee | Dec. 31, 2019USD ($)employee$ / sharesshares | Jun. 30, 2020USD ($)shares | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)shares | Jun. 30, 2019USD ($) | Dec. 31, 2017USD ($)employee |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Common stock reserved for issuance (shares) | shares | 7,312,590 | 7,312,590 | |||||
Common stock available for grant (shares) | shares | 1,750,178 | 1,750,178 | |||||
Stock-based compensation expense | $ 2.4 | $ 0.4 | $ 4.6 | $ 0.8 | |||
Proceeds from release of shares upon repayment | $ 1.3 | 0 | |||||
Stock options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 4 years | ||||||
Expiration period | 10 years | ||||||
Stock-based compensation expense | 2.4 | 0.4 | $ 4.5 | 0.7 | |||
Repricing of stock options (shares) | shares | 1,708,300 | ||||||
Repricing of stock options, number of employees impacted | employee | 198 | ||||||
Repricing of stock options, exercise price, lower limit (usd per share) | $ / shares | $ 26.04 | ||||||
Repricing of stock options, exercise price, upper limit (usd per share) | $ / shares | 28.53 | ||||||
Repricing of stock options, fair value (usd per share) | $ / shares | $ 23.69 | ||||||
Repricing of stock options, incremental expense | 0.1 | 0.2 | |||||
Repricing of stock options, unrecognized incremental expense | $ 1.4 | ||||||
Repricing of stock options, unrecognized incremental expense, period for recognition | 1 year 4 months 24 days | ||||||
Unrecognized expense | 30.3 | $ 30.3 | |||||
Unrecognized expense, period for recognition | 1 year 4 months 24 days | ||||||
Executive | Stock options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock-based compensation expense | 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | |||
Unrecognized expense | $ 0.1 | $ 0.1 | |||||
Unrecognized expense, period for recognition | 1 year | ||||||
Subscriptions receivable, number of employees | employee | 2 | 2 | |||||
Subscriptions receivable | $ 1.5 | ||||||
Subscriptions receivable, weighted average interest rate | 1.90% | ||||||
Proceeds from release of shares upon repayment | $ 1.3 |
Stock-based Compensation - Fair
Stock-based Compensation - Fair Value Assumptions (Details) - Stock options | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted average expected term | 6 years 1 month 6 days | 6 years 1 month 6 days |
Risk-free interest rate | 1.00% | 2.50% |
Volatility | 40.00% | 50.00% |
Expected dividend yield | 0.00% | 0.00% |
Stock-based Compensation - Stoc
Stock-based Compensation - Stock Options Activity (Details) $ / shares in Units, $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020USD ($)$ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | |
Number of Options | ||
Outstanding (shares) | shares | 4,048,802 | |
Granted (shares) | shares | 707,030 | |
Exercised (shares) | shares | (84,936) | |
Cancelled (shares) | shares | (92,376) | |
Outstanding (shares) | shares | 4,578,520 | 4,048,802 |
Exercisable (shares) | shares | 1,222,898 | |
Vested and expected to vest, (shares) | shares | 4,578,520 | |
Weighted- Average Exercise Price | ||
Outstanding (usd per share) | $ / shares | $ 13.27 | |
Granted (usd per share) | $ / shares | 24.41 | |
Exercised (usd per share) | $ / shares | 2.08 | |
Cancelled (usd per share) | $ / shares | 20.28 | |
Outstanding (usd per share) | $ / shares | 15.06 | $ 13.27 |
Exercisable, weighted-average exercise price (usd per share) | $ / shares | 4.79 | |
Vested and expected to vest, weighted-average exercise price (usd per share) | $ / shares | $ 15.06 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||
Outstanding, weighted-average remaining contractual, term | 8 years 7 months 6 days | 8 years 9 months 18 days |
Exercisable, weighted-average remaining contractual, term | 7 years 3 months 18 days | |
Vested and expected to vest, weighted-average remaining contractual, term | 8 years 7 months 6 days | |
Outstanding, aggregate intrinsic value, outstanding | $ | $ 43.1 | $ 42.2 |
Exercisable, aggregate intrinsic value | $ | 24.1 | |
Vested and expected to vest, aggregate intrinsic value | $ | $ 43.1 |
Stock-based Compensation - Expe
Stock-based Compensation - Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 2.4 | $ 0.4 | $ 4.6 | $ 0.8 |
Loss and loss adjustment expense, net | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 0.1 | 0 | 0.1 | 0 |
Other insurance expense | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 0.2 | 0.1 | 0.4 | 0.2 |
Sales and marketing | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 0.6 | 0.1 | 1.3 | 0.2 |
Technology development | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 0.7 | 0.1 | 1.3 | 0.1 |
General and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 0.8 | $ 0.1 | $ 1.5 | $ 0.3 |
Income Taxes (Details)
Income Taxes (Details) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate | (1.00%) | (0.20%) |
Net Loss Per Share - Reconcilia
Net Loss Per Share - Reconciliation (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Numerator: | ||||
Net loss attributable to common stockholders | $ (21) | $ (23.1) | $ (57.5) | $ (44.7) |
Denominator: | ||||
Weighted average common shares outstanding—basic and diluted (shares) | 11,891,979 | 11,072,985 | 11,750,198 | 11,028,667 |
Net loss per share attributable to common stockholders—basic and diluted (usd per share) | $ (1.77) | $ (2.09) | $ (4.89) | $ (4.05) |
Net Loss Per Share - Antidiluti
Net Loss Per Share - Antidilutive Potential Common Shares (Details) - shares | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive potential common shares | 36,135,627 | 30,697,595 |
Options to purchase common stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive potential common shares | 4,578,520 | 2,102,124 |
Convertible preferred stock (as converted to common stock) | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive potential common shares | 31,557,107 | 28,595,471 |
Related Party Transactions (Det
Related Party Transactions (Details) | Feb. 18, 2020shares | Jun. 30, 2020USD ($)director | Mar. 31, 2020shares | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)director$ / shares | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) |
Related Party Transaction [Line Items] | |||||||
Due to (from) related parties | $ 0 | $ 0 | $ 0 | ||||
Common share contribution to the Lemonade Foundation | 12,200,000 | $ 0 | |||||
Common Stock | |||||||
Related Party Transaction [Line Items] | |||||||
Contribution to the Lemonade Foundation (shares) | shares | 500,000 | ||||||
Key stockholder | Travel related expenses | |||||||
Related Party Transaction [Line Items] | |||||||
Expenses with related parties | $ 100,000 | $ 100,000 | $ 100,000 | 100,000 | |||
Affiliated entity | The Lemonade Foundation | |||||||
Related Party Transaction [Line Items] | |||||||
Number of shared directors | director | 2 | 2 | |||||
Contribution to the Lemonade Foundation (shares) | shares | 500,000 | ||||||
Contribution of common stock to related party, fair value (usd per share) | $ / shares | $ 24.36 | ||||||
Common share contribution to the Lemonade Foundation | $ 12,200,000 | ||||||
Due from related party | $ 100,000 | 100,000 | |||||
Affiliated entity | Rental expense | |||||||
Related Party Transaction [Line Items] | |||||||
Expenses with related parties | $ 100,000 | $ 100,000 | $ 100,000 | $ 100,000 |
Commitment and Contingent Lia_3
Commitment and Contingent Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |||||
2020 (remaining six months) | $ 1.8 | $ 1.8 | |||
2021 | 3.4 | 3.4 | |||
2022 | 3.1 | 3.1 | |||
2023 | 0.3 | 0.3 | |||
2024 | 0.3 | 0.3 | |||
Aggregate minimum rental commitments | 8.9 | 8.9 | |||
Rental expense | 1 | $ 0.7 | 1.9 | $ 1.2 | |
Office leases, payment guarantees | |||||
Loss Contingencies [Line Items] | |||||
Guarantees | $ 0.6 | $ 0.6 | $ 0.6 |
Geographical Breakdown of Gro_3
Geographical Breakdown of Gross Written Premium (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)segment | Jun. 30, 2019USD ($) | |
Segment Reporting [Abstract] | ||||
Number of reportable segments | segment | 1 | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Amount | $ 46.7 | $ 25.4 | $ 84.8 | $ 44.7 |
Gross written premium | Geographic Concentration Risk | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
% of GWP | 100.00% | 100.00% | 100.00% | 100.00% |
Texas | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Amount | $ 11.8 | $ 6.7 | $ 20.6 | $ 12 |
Texas | Gross written premium | Geographic Concentration Risk | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
% of GWP | 25.30% | 26.40% | 24.30% | 26.80% |
California | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Amount | $ 9.9 | $ 6.4 | $ 19.3 | $ 11.3 |
California | Gross written premium | Geographic Concentration Risk | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
% of GWP | 21.20% | 25.20% | 22.80% | 25.30% |
New York | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Amount | $ 5.3 | $ 3.6 | $ 10.2 | $ 6.5 |
New York | Gross written premium | Geographic Concentration Risk | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
% of GWP | 11.30% | 14.20% | 12.00% | 14.50% |
Georgia | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Amount | $ 2.8 | $ 1.4 | $ 4.9 | $ 2.4 |
Georgia | Gross written premium | Geographic Concentration Risk | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
% of GWP | 6.00% | 5.50% | 5.80% | 5.40% |
Illinois | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Amount | $ 2.6 | $ 1.3 | $ 4.2 | $ 2.1 |
Illinois | Gross written premium | Geographic Concentration Risk | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
% of GWP | 5.60% | 5.10% | 5.00% | 4.70% |
New Jersey | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Amount | $ 1.6 | $ 1 | $ 3.1 | $ 1.9 |
New Jersey | Gross written premium | Geographic Concentration Risk | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
% of GWP | 3.40% | 3.90% | 3.70% | 4.30% |
Michigan | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Amount | $ 1.4 | $ 0.5 | $ 2.4 | $ 1 |
Michigan | Gross written premium | Geographic Concentration Risk | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
% of GWP | 3.00% | 1.90% | 2.80% | 2.20% |
Ohio | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Amount | $ 1.2 | $ 0.6 | $ 2.2 | $ 1.2 |
Ohio | Gross written premium | Geographic Concentration Risk | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
% of GWP | 2.60% | 2.40% | 2.60% | 2.70% |
Arizona | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Amount | $ 1.1 | $ 0.5 | $ 1.9 | $ 0.9 |
Arizona | Gross written premium | Geographic Concentration Risk | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
% of GWP | 2.40% | 2.00% | 2.20% | 2.00% |
Pennsylvania | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Amount | $ 1.1 | $ 0.6 | $ 1.8 | $ 1 |
Pennsylvania | Gross written premium | Geographic Concentration Risk | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
% of GWP | 2.40% | 2.40% | 2.10% | 2.20% |
All other | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Amount | $ 7.9 | $ 2.8 | $ 14.2 | $ 4.4 |
All other | Gross written premium | Geographic Concentration Risk | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
% of GWP | 16.80% | 11.00% | 16.70% | 9.90% |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions | Jul. 02, 2020 | Jul. 07, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Subsequent Event [Line Items] | ||||
Common stock, authorized (shares) | 52,000,000 | 52,000,000 | ||
Common stock, par value (usd per share) | $ 0.00001 | $ 0.00001 | ||
Common stock reserved for issuance (shares) | 7,312,590 | |||
Subsequent event | ||||
Subsequent Event [Line Items] | ||||
Common stock, authorized (shares) | 200,000,000 | |||
Common stock, par value (usd per share) | $ 0.00001 | |||
Preferred stock, authorized (shares) | 10,000,000 | |||
Preferred stock, par value (usd per share) | $ 0.00001 | |||
Subsequent event | 2020 Incentive Compensation Plan | ||||
Subsequent Event [Line Items] | ||||
Common stock reserved for issuance (shares) | 5,503,678 | |||
Common stock reserved for issuance, annual increase, percentage of outstanding shares | 5.00% | |||
Maximum shares that may be issued upon exercise of incentive stock options (shares) | 3,650,000 | |||
Subsequent event | 2020 Employee Stock Purchase Plan | ||||
Subsequent Event [Line Items] | ||||
Common stock reserved for issuance (shares) | 1,000,000 | |||
IPO | Subsequent event | ||||
Subsequent Event [Line Items] | ||||
Common stock sold (shares) | 12,650,000 | |||
Common stock sold, offering price (usd per share) | $ 29 | |||
Net proceeds from common stock sold | $ 335.6 | |||
Offering costs | $ 3.5 | |||
Underwriter's option | Subsequent event | ||||
Subsequent Event [Line Items] | ||||
Common stock sold (shares) | 1,650,000 |