Q2 2021 Lemonade Inc Earnings Call
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Hello, everyone and thank you for joining eliminate <unk> Q2, 2021 earnings Conference call. My name is <unk> and I'll be moderating the call today. If you would like to ask a question. Please press star followed by 1 on your telephone keypad, if you change your mind.
Please press star followed by 2 on now have the pleasure of handing the call over to Al Whitney Levy from Lemonade. Please go ahead.
Good morning, and welcome to eliminate second quarter 2021 earnings call mining is <unk> and I'm the VP communications at Lemonade.
Joining me today to discuss our results are Daniel Schreiber co CEO and co founder shy Weninger co CEO and cofounder and Tim Bixby, Our Chief Financial Officer.
My letter to shareholders covering the company's second quarter 2021 financial results is available on our Investor Relations website, investor Dot Lemonade Dot com before.
Before we begin I would like to remind you that management's remarks on this call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095 actual results may differ materially from those indicated by these forward looking statements as a result of various important factors, including those discussed on the risk factors section of our form 10-K.
<unk> filed with the SEC on March 8.2021, and our other filings with the SEC.
Any forward looking statements made on this call represent our views only as of today and we undertake no obligation to update them.
We will be referring to certain non-GAAP financial measures on today's call such as adjusted EBITDA and adjusted gross profit, which we believe may be important to investors to assess our operating performance reconciliations.
Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our letter to shareholders.
Letter to shareholders also includes information about our key operating metrics, including a definition of each metric why each of useful to investors and how we use each to monitor and manage our business.
With that I'll turn the call over to Daniel who will begin with a few opening remarks Daniel.
Good morning.
I'm happy to be able to report on another quarter of strong advances along on our key performance indicators.
<unk> Q2, 2020 on top line in force premium on ISP grew.
91% to $297 million.
For the second consecutive quarter. This represents an accelerating rate of year over year growth.
Premium per customer also increased at an accelerated rate to 29% year on year as recent product launches continue to bolt on economics.
RFP growth rates reflect our decision to lean in earlier in the year, we spoke about compelling unit economics, giving us confidence to ramp up growth investment levels and that's exactly what we've done.
For the fourth consecutive quarter, we have sequentially increased our investments in marketing.
This theme of leaning in to continue through the second half of 2021 as long as we're able to acquire business at an attractive LTV to CAC ratio will continue to put a force to the gas Tim will elaborate on our expected numbers shortly.
I wanted to provide an update on our reinsurance program in Q1.2021 on business encountered a cat on catastrophe event, which is much more pressure on our gross loss ratio than any other before at the Texas freeze.
We were able to effectively enjoy this pressure due to the outstanding reinsurance program, we implemented in Q3 of 2020.
75% proportional or quota share reinsurance program.
As a result, our bottom line was shielded from 75 percentage of the impact on the Texas <unk>.
And this hyper growth stage of our business on a proportional reinsurance program is especially helpful. Not only does it reduce our volatility exposure, but it enables us to be capital light as it relates to regulatory surplus requirements.
However over time as the business matures and our expected volatility declines we anticipate a gradual reduction of the proportion of our business that we cede.
When we entered into our current reinsurance program a year ago, we locked in 55 of the 75 points for 3 year term with the remaining 20 points up for renewal each year.
Having just completed the first annual renewal process. We are pleased to share that we were able to secure similar financial terms on the portion of the quota share that we renewed.
Consistent with my earlier comment we made a modest reduction in the scope of our quota share program is stepping down from 75% to 70%.
Put differently, we renewed 15 of the 20 points to walk up for renewal.
I've spent time in prior quarters speaking about the product diversification that eliminate a critically important aspect of our strategy that sorry will elaborate on in a moment.
But I wanted to share an update on another important aspect from a business mix geographic diversification.
Today at least 1 lemonade product is available for purchase in each over the 50 U S States and we continue to push towards being able to service 100 percentage of our customers insurance needs, regardless of where they live.
We recently made a meaningful progress in the pursuit of this goal with the launch of our renters insurance product in Florida.
The renters insurance market in Florida is large in fact, it's the fourth largest market in the nation as measured by total gross written premium by.
By first focusing on renters insurance from Florida, we will be able to fine tune on approach and a risky cash state before we develop a homeowners product in that market. We look forward to bringing the lemonade relative experience of Floridians and anticipate our product suite and the state will expand over time.
Other tech enabled business, we've been uniquely perhaps able to address markets across continents.
Our investments have been heavily lopsided and the fate of the United States and Thats been where we've seen the most compelling unit economics.
In response to favorable recent trends around improving conversion rates and steadily declining loss ratios that we're observing in Europe.
We started investing more meaningfully in R&D in the continent.
Anticipate this will lead to a step change in growth investment levels in the continent in 2022 and beyond and we'll certainly keep you posted.
And with that let me hand over to site for some more updates on our product over to shine.
Thank you Danielle.
Last quarter, we announced the upcoming launch with Lemonade car.
And it's been gratifying to see how much our community share.
Holders and customers alike share our excitement.
In the intervening months, we've made real strides on all aspects of our current roadmap, including product and technology recruiting and regulatory approvals.
On the product and technology front, we've completed the development from scratch on an end to end digital first car quality management system.
In all aspects of our product strategy, we stay true to our values and prioritize delivery of a delightful customer experience that is simple fast and automated where possible.
We used cinematics data to develop the nuance and segmented pricing structure that will provide a great price per safe drivers and ensure we build a strong low risk book of business.
Eliminated car team continues to grow considerably.
We recruited some of the best talent in the industry to lead our car insurance operations and are staffing up our customer facing teams in preparation for launch.
And now I'd like to update you on the mix of products that are currently line.
As we look ahead to the long term, we expect our product mix to continue to gradually shift and increasingly diversified.
While we love renters is a great point of entry to eliminate we.
We continue to invest in other product verticals that provide large and growing addressable market.
Cross sell opportunities to existing customers and incremental on ramps to the eliminated experience.
This mix shift is in full effect with our non renters product accounting for roughly half of our new business for the second consecutive quarter.
Today for the first time, we are pleased to provide the product breakdown of our total book of business.
A year ago at Q2, 2020 renters represented about 75% of our ISP with homeowners accounting for the balance.
By the end of Q1, 'twenty, 1 the renters share was 56% with homeowners representing 30% past.
13% and life accounting for the remainder.
As we look ahead I would expect this mix shift dynamic to continue through the rest of 'twenty, 1 and beyond.
We expect to periodically update the mix breakdown when we believe it is helpful to understand our product growth and strategy results.
I'd like to make a short comment on the performance of 1 of our lines of business that recently celebrated a major milestone.
At the end of Q2.2020 lemonade.
Pattern 1 year old.
At 13% of the book that has well exceeded our internal expectations and notably we've seen great success selling to both new and existing <unk> customers.
As it relates to new customers compelling LTV to CAC ratios have enabled us to quickly ramp up and volume the targets neutral emanate per customers.
Patterns been a great case study that demonstrates the willingness of our existing customers to purchase additional lemonade policies.
With made tens of thousands of pet cross sales.
Those cross sales currently make up about 30% of our total ISP.
All in all a terrific first year for our <unk> coverage.
And with that let me hand over to Tim for a bit more detail around our financial results and outlook Tim.
Great. Thanks Shai.
I will give a bit more color on our Q2 results as well as expectations for the third quarter and the full year of 2021, and then we'll take your questions.
We had another strong quarter of growth driven by additions of new customers as well as the continued increase in premium per customer.
In force premium grew 91% in Q2 as compared to Q2 in the prior year to $296.8 million. We believe that this metric captures the full scope of our top line growth before the impact of reinsurance and regardless of the timing of customer acquisition during the quarter.
Premium per customer increased 29% versus the prior year to $246. This increase was driven by a combination of increased value of policies over time as well as mixed shift toward higher value homeowner and pet policies.
Roughly 3 quarters of the growth in premium per customer in Q2 was driven by product mix shift, including cross sales and the remaining 1 quarter from increased coverage levels on pricing.
Gross earned premium in Q2 increased 90% as compared to the prior year to $66.9 million in line with the increase in in force premium.
With the impact of the Texas freeze behind US our gross loss ratio was 74% for Q2.2021 in line with our target range.
This resulted 7 percentage points higher than Q2.2020 and.
And this increase is primarily driven by the impact of our rapidly growing new business lines.
Early in the eliminated life cycles, new products tend to demonstrate higher loss ratios than the relatively more mature rest of the book.
Operating expenses, excluding loss and loss adjustment expense increased 126% in Q2 as compared to the prior year.
And this was primarily driven by a 106% increase in sales and marketing spend as a result of leaning into advertising and growth investment.
We also continued to add new lemonade team members in all areas of the company in support of customer and premium growth in both current and future product launches and thus saw increases in each of the other expense lines.
Global head count grew 97%.
Versus the prior year to 749 with a greater growth rate in customer facing departments.
Product development teams.
Net loss was $55.6 million in Q2 as compared to the $21 million, we reported in the second quarter of 2020.
While adjusted EBITDA loss was $40.4 million in Q2 as compared to $18.2 million in the second quarter of 2020.
Our total cash cash equivalents and investments ended the quarter at roughly $1.2 billion, reflecting primarily the net proceeds from our January follow on offering of approximately $640 million, partially offset by the use of cash for operations of $57 million since.
Year end 2020.
And with these goals and metrics in mind, I will outline our specific financial expectations for the third quarter as well as an updated full year view of 2021.
For the third quarter, we expect in force premium at September 30 of between 336 and $339 million gross earned premium between 76, 5% and $77.5 million.
Revenue between 32, 5% and $33.5 million.
Adjusted EBITDA loss of between 55% and $52 million.
And stock based compensation expense of approximately $15 million and capital expenditures of approximately $3 million.
And for the full year 2021, we expect in force premium at December 31 of between $380 and $384 million.
Gross earned premium between 286 and $288 million.
Revenue between 123, and $125 million and adjusted EBITDA loss between 173 and $169 million.
Stock based compensation expense of approximately $50 million and capital expenditures of approximately $11 million in the year.
And as a reminder, please note that GAAP accounting rules are such that ceded premiums are excluded from GAAP revenue as a result of the change in our reinsurance structure affected last July 1.2 significant proportional reinsurance our year over year revenue and gross margin comparisons are not directly comparable.
Accordingly, new published in force premium and gross earned premium has metrics that we believe are very useful to analysts and investors because both capture the overall growth trajectory of the business before the impact of reinsurance.
And with that I would like to turn the call back over to Daniel to address some questions for our share from our shareholders Dennis.
Thanks, Tim.
And this is on a practice, we will now turn to questions. Most of them voted by shareholders through the same platform and the first comes from Dean C, who asked about innovations and developments on the pipeline.
Well a lot of engineering and product team are working on new products such as car that we have spoken about that certainly requires intense.
Levels of development on work.
But I must tell you that product innovation product iteration enhancements and innovations on day.
Today, our bread and butter force its really part of our DNA and it never stops.
In fact for existing products that are already live we push into live production dozens of iterations of day. So there is a continuous innovation cycle all of our products continuous improvement.
Data scientists.
Continuously monitoring our data streams and training and retraining on models.
On a product teams are continuing to take parts of our processes that are managed by people to automate them.
And something that we've not spoken about previously but in a few weeks, we'll be shipping at brand new App experience and this really reflects the monumental changes that our business has gone through in the past year.
They are a year ago, we were a mono line business.
Just on the homeowner's space of course, now we have done it and we have pets, and we have life and cause imminent.
So we are redesigning that have experienced pretty dramatically to allow customers to manage.
All of the different products that lemonade in a pretty seamless way on to navigate between the insurance policies.
To update coverages filed claims and get more products.
A simple tap.
Dean that gives you a sense of what we're working on.
Next question comes from Orlando G rely on to off about a breakeven and how we will fund the next leg of our growth.
Orlando, we don't put a hard date on this but we're not expecting to achieve cash flow positivity on.
In the next couple of years. These this is a time when there is tremendous opportunity for us to make investments now that we believe will reward us in the long term. So we think about breakeven is something in the medium term rather than in the next couple of years.
We spoke about this a bit in a lesser as well in the near term.
We're not going to be optimizing for EBITDA, rather we're trying to maximize profitable growth as measured by lifetime value of our customers.
We keep monitoring that every dollar that we invest is generating new customers on new products that will be long term profitable, but really the emphasis is on long term.
In terms of funding all of that growth. We believe we are likely able to fund the business to breakeven with the cash already on our balance sheet.
Very strong cash position today and as we model out.
Tremendous growth opportunities that we see in front of us.
We think that the cash on hand will suffice to get us through that on hyper growth and to ultimately to profitability and cash flow.
Positivity.
30th page on <unk>.
When do we expect the auto insurance products launch.
And what effect, we believe bundling will have on homeowners insurance.
Well that as we spoke about launch time on you on the call, but I am glad you raised this we are very hopeful quite.
Quite optimistic that the car home bundling will be a significant driver of value going forward.
Date, despite a meaningful success in renters and homeowners insurance, we've really been selling these products with 1 hand tied behind our back because it's very common practice for customers to bundle home and car something that our competitors are able to offer on that to date, we have not been able to so adding car product should 1.
Able us to improve homeowners and renters conversion rates on.
On retention rates.
<unk> accelerate that business growth and to dramatically improve the lifetime value of existing lemonade customers.
We have been had we will have the option of adding a car policy and as we've said in the past we think on existing customers are probably spending over $1 billion today on car insurance with other insurers, we'd like to believe that they'd rather spend that would eliminate that option has not been available in fact, we encouraged to see that on Google.
Lemonade car eliminate coinsurance is consistently ranked as 1 on the top 3 such terms associated with our company.
And that's been true for years, even before we spoke about this as a product.
We think that may be an indicator of the pent up demand debt.
We will hopefully on lease with the launch of Lemonade com.
With that let me turn the call back over to the operator, so we can take some questions from <unk> on the streets. Thank you.
Okay.
Thank you very much as a reminder to ask a question. Please press star followed by 1 on your telephone keypad. If you change your mind. Please press star followed by 2.
Our first question comes from Michael Phillips from Morgan Stanley. Your line is now open. Please go ahead.
Thank you and good morning, everybody.
First question, Tim I think you mentioned the loss ratio as compared to last year, and you said, specifically because of rapidly growing new business lines.
And so I think I, specifically say heard you say debt as compared to just new business.
So how should we think about the direction of either.
Gross loss ratio, knowing that youre going to have a lot of new business, because you're growing so much.
And then.
So with the kind of continued shift in your mix of business that.
<unk> been alluding to as well so the direction of the gross loss ratio from here I guess is the question and very modest because as you mentioned the target remind us what your target is on that.
Sure So happy to Mike.
So I would think of the loss ratio was sort of short short term volatility versus sort of long term target and long term achievement. So in the short term what we're seeing.
More on this quarter.
And a trend I would expect to perhaps continue as.
Somewhat upward pressure on loss ratio as a result of some over performance in some ways of our new product growth and so as we move through the course of this year.
<unk> seen our.
Top line expectations in terms of in force premium.
Gross earned premium increase as we move through the course of the year and much of that increase in that.
Added optimism is driven by our newer products.
Expanded homeowners coverage.
<unk> per product.
And the newer products tend to have a somewhat higher loss ratio. There earlier on there sort of development phase their maturity phase as compared to renters.
These are sort of opposing forces as our book of business balance.
Balances as the mix shift continues as the.
Mix continues to shift towards newer products in the short term you will.
It's not unexpected that you would see a higher somewhat higher loss ratio, but over the longer term as those newer products mature.
We would expect to see the same dynamic we've seen and renters.
On loss ratio that improves over time now.
Now this is not a day.
<unk> will end in.
In the short term, we've talked quite a bit about our investments.
Pending car launch.
<unk> will be new it will be.
Clearly 1 of the largest markets.
In terms of the <unk>.
Is that the addressable market and so there will likely be that same dynamic of upward pressure on the short term.
As we.
Kind of step.
First steps into auto over the longer term, though our targets remain the same with the COVID-19 in the low seventies $70 to 75% loss ratio.
Absent made.
Major cats.
It's still our target and our long term target on our long term expectation.
Pardon.
Don't underestimate the impact of car.
It's.
1 of the most dynamic markets 1 of our highest potential markets for us with Daniel and Shai outlined but with that will come from complexity and we'll learn our way through it and I think if you look back at our previous product launches.
We've demonstrated.
Australia pretty solid ability to optimizing those early months and quarters car may take a little bit longer as we step into it but I would expect the same dynamic to play out in terms of loss ratio.
Okay. Thank you that's very helpful.
Kind of a quick numbers question, probably still for you to Tim on.
On your guidance for the adjusted EBITDA, It looks a little lumpy as we get to the <unk> and <unk> see.
If I'm reading that right, but it looks like there's a big drop off more so in <unk>, and then kind of rebound in <unk> and <unk>.
Seen that rate if I look at your guidance numbers and if so kind of what's behind that more of a drop off from the third quarter relative to other quarters on a year.
Yes, I think youre seeing that right. There's a couple of dynamics happening there. So Q3 as you know.
No.
Historically been our strongest seasonal quarter. The most added customers added growth added premium tends to come on in the third quarter.
Net.
Is moderating somewhat because the newer products from pet insurance for example is a little less seasonal but we still see that dynamic.
So we've got a pretty clear line of sight visibility into the coming quarter.
We're on Montana, and so I think the Q3 guidance represents.
Debt at high level of visibility now because we are guiding for the full year, where theres, obviously implied guidance for Q4, Q4, Theres a little more uncertainty.
So we're investing significantly to gear up for the pending Kerr launched you don't have a hard date, you disclosed that yet.
So theres a little more uncertainty about Q4.
In terms of debt.
Spending pace will play out to be so I would think of the Q3 guidance is in line with our confidence in approach we've seen in prior quarters.
And then Q4 will come back in 90 days and update and have on.
A much clearer somewhat clearer view of how we think growth investment will play out how do we think.
Our investment work is going in.
Okay.
The fourth quarter at that time.
Okay. Thanks, 1 more from.
Now if I could.
Speaking of car.
How much of your.
Youre doing a pretty respectful dilip.
A deliberate attempt to get into that and taking your time, there and on the right. Thanks, It seems like so.
Respectful, but how much of your entry into that market is a function on the timing of interest is.
As a function of kind of what we see in the overall industry right now, which looks like pretty tough because of where loss trends are headed is that effect on your planned entry right now.
Thanks, so much.
This is a long term play.
How do we think about lemonade in general.
As a long term player we're building for 5 and 10 years from now our view towards cars the same.
We have.
A significant proportion of our customers who have cars and will ensure their cars and we'll continue to do so.
I think we can bring them a product that is.
Notably distinct in the market and in line with the Lemonade promise that we've delivered with the other products that are already on the market.
The short term trends, we're certainly aware of and not ignoring.
But we believe that.
The more tumultuous the market the more unpredictable market it really benefits.
On the providers, we're more agile who have the ability to pivot quickly and investing.
And clever thoughtful and quick ways and while it's a challenging market. We think we are in.
And will be once we launch in a pole position to be able to perform.
Performed well.
And what is a trickier market on a large incumbents.
Have done amazing things over many years.
Thank you bring.
And ability to be agile that we'll put them on a great position.
Okay. Thank you very much.
Our next question comes from Josh Shanker from Bank of America. Your line is now open. Please go ahead.
Yes. Thank you for taking my question.
I was surprised on the statistic that 30% of your pet premiums are coming from Bundlers I would've thought that it's a natural.
Cameron piece to be a renter bundled with lemonade and that would be the greatest source of your.
Premium can you talk about the marketing.
Agenda, how lemonade sold and do you think this percentage.
Bundle renters rises over time.
Yes, we can.
We kind of see that as a very positive.
On metric so it's always a big question on you're launching the product and what proportion will come from existing folks versus new customers. As you know is in the U S is a relatively small market. So 2 thirds or more of folks on the cat or a dog or or more.
Relatively low percentage have excellent insurance and so we've been able to show with <unk>.
30% of those new sales.
Other performing our expectation in terms of the total in force premium going to Pat.
I think that the.
Very very strong number will.
We'll continue to go after those existing customers, but I think it is.
Healthy.
To keep our reinsurance.
Relationships healthy and vibrant and so all of that kind of balance together and I think the trend lines are quite good.
Thank you for the answers.
Our next question comes from Andrew Killick them on from a credit Suisse. Your line is now open. Please go ahead.
Thank you good morning.
I can follow up on the the auto insurance.
In and you will be you highlighted slot would lop E, including any auto insurance and your I I S. P guidance for 2021.
So I I guess the first part of the question would be is that because you actually would expect that this product will get launched in 22 and secondly, what are some of the steps need to accomplish.
Before launching the product.
Andrew Good morning, Daniel here Uhm, there is some uncertainty around the lunch I saw some questions coming on where you come from from the retail investors as well on when you say line so happy to.
To address the questions amongst ideals in this regard.
We have pretty good control hold on.
On development processes and.
The development.
Well I think actually perhaps ahead of time and what we're seeing in terms of the the product development is incredibly hot day, it's really quite exciting to see this product in development.
Pretty engaged with a prospective customers have had from 10000 customers help us in designing the product on prioritizing features on it coming together on the way that will hide them easily on your board on all of our customers patient from so the development I do on a signal she is going well perhaps on <unk>.
Schedule and is really quite exhilaration to fate.
But there are elements of the products that we don't control on those the regulatory approvals Uhm, we don't anticipate any problems with that it's just hard to time them.
So we do you know we own insurance carrier and you have a license day, but we do need to go to several states not all states require this and get them to approve us to rights car insurance, specifically working through that process.
And then in all states, we have to get 2.8 some forms approved that can be somewhat laborious process at the price of times and oftentimes when it's your first time I'm finding these and slightly more discussion is to establish a baseline with regulators. So those are the price has been tiny uhm pedestrian in the process of that we need to go through.
There is nothing particularly exciting unusual about them, but they just introducing the degree of.
Of unpredictable nutso unpredictability whenever the deposit lettuce.
Into a launch dates so there's definitely a swing of several months around that question.
So for that reason, we're not getting a specific date you did say a few months ago Maria announced the product, they're hoping that it will be within the week.
We certainly stand by that from all of our point of view, the United rather than later, but hopefully the regulatory Okay gives me a sense of why we're being a little bit ginger.
Ginger.
Addressing it somewhat gingerly because of the uncertainty hoisted upon us by the regulators.
I see.
It sounds like you're happy with what killed.
But it's more the regulatory process and and when <unk> is that right.
It is.
Okay, and when you said within the year.
Within 2022 or within 2021, whether you were previously saying just so I'm clear on that.
Yeah, Yeah. The lack of clarity is understandable. It was an ambiguous statement and I'm gonna leave it hanging out a little bit on that I'm PSE unresolved I'm afraid yeah.
Really hold on to our regulations on we want to give them the.
We don't have tightened down they don't appreciate us being too from on the date for the ultimate in their hands on he wanted to respect that process. So apologies from what being more precise on that.
Okay.
We've got very fair and I'll I'll leave it at that and then just 1 other question on your life insurance launch.
Obese you mentioned that.
You came out with it in January I, you have a meaningful ads and in the second quarter and currently it's 1% on you or your business mix at this stage in the game. You also mentioned that you think that the current it could become a meaningful peace going forward.
But there is the 1% imply that there were a lot of challenges that it may be difficult to get that number.
What are you thinking that that that that might allow for this to become meaningful.
Well the market is very sizable so consumers, including our own consumer spending.
A lot of money on the fact that tens of billions of dollars just on Tom lives just on the U S. Every year. This is clearly a major potential market for us.
And we ask the growing the 1% income.
Intimated there's not.
What we're seeing in terms of our sales on a daily basis on percentage is higher.
Product is launching 5 years on the other ones that have to.
<unk> his way into a meaningful.
Per cent of the book just because the other products have years of Headstarts on it. So we are seeing the product so well we are seeing its growth.
On along along the lines that we would have hoped to see.
We are learning how to sell the product both to existing on to prospective customers.
So actually I think I would categorize this is something that we're pretty optimistic about when we announced the product you may recall, a couple of course on the W. A very cautious.
Cognizant of the fact that from other players in this space acquiring customers at a profitable level has proven very tricky.
We didn't want to presume that we'll be able to succeed where others have struggle.
I think we are more bullish on it now we're seeing a few months in finding a pushing.
On this product and it's progressing nicely. So I don't want us suggest that there's any problems in this product on at all is progressing nicely on hopefully we'll continue to progress in that way.
And on just 1 let me sneak 1 last point to that then I'm done.
<unk> is clearly bigger and perhaps making that market a lot more competitive but you feel like you are finding pathways to that growth on.
That's why you're saying you're optimistic despite greater competition on the life products and maybe some of your other ones right now.
What we're seeing a bit like the discussion on we just had around patch, we're seeing a significant portion of our lifestyles are going to existing customers.
And 1 other big unlocks really full houses so.
The time life insurance can just on it has to be the level already customers of your debt already.
Dusting of the brand and engaged with you. So suddenly we're seeing that existing customers are happy to buy term life from us, but we are also seeing that we are getting better.
I would say finding are forcing on how to promote this to new customers as well I don't want to overstate. It. It is early days, we've only been doing this for a couple of non too.
Pretty studio set trying different things were still in that trial and error faith I don't know.
No comments or other cell, but I am signaling that we're seeing an increase degree of confidence relative to how we spoke about this just a couple of months ago.
Very helpful. Thanks, so much.
Let's welcome.
Our next question comes from around the chosen from a J M paint on it that will please go ahead.
Hi, guys. It's kindergarten on from there on thanks for taking my questions on the breakdown you talked about Newark distribution channels like I guess on the letters are.
Can you talk about newer distribution channels like Asian partners in graduate doubling share upon a homeowner sales year over year.
Can you talk about how these other channels are playing out longer term and the lessons.
You're learning here and then secondly on the Florida launch can you talk about your approach here and just remind us how many states lemonade offers renters on home and and how did you guys are progressing towards kind of national coverage. Thank you.
So from take the second 1 first from a coverage standpoint, where licensed in upwards of 90 per cent of the U S in homeowners and and mentors or some variation we're not in actively selling bolt in every single 1 of those states, but well above 90 per cent in terms of licensing well about 80 per cent and.
Terms of actively lives selling with my 4 in 100 per cent, you know 51 states, including D C.
So while we don't speak much about coverage, it's primarily because we're so itching. So close to 100 per cent. So we have a couple expansion states left to go with the launch of Florida, which was relatively recent every large state is now in play for lemonade, but there's a a handful of a handful of.
Smaller states.
Get get to go.
And if you could if you could clarify your first question a little bit I think I got most of it but maybe just seizure.
Yeah.
And the and the letter you guys mentioned agent partners, and then graduate W share of homeowners year over year.
As you guys think about kind of other channels playing out longer term you know what are the lessons you guys are learning that that seems kind of as a test or is there something to read in there just on the language.
What what's yeah can can you break that down a little bit more [noise] yeah.
Yeah, I think I.
I think it's.
The complex and I think it was his patients it cause some of the things that we have seen in the numbers take some time to develop so clearly graduate you're a renter, becoming a homeowners thought about and encouraged <unk> tried to benefit from since the early days the business, there's not actually much we can do in terms of.
Facilitating someone to go out and buy a home, but it's something we can make the pathway easier on either overtime until what we've seen is a consistent monthly quarterly increase in the proportion not proportionate, but the number of folks were graduating buying homes and then staying with lemonade, there's still an awareness challenge it we're getting much better at they're still.
Folks, who who buy a home and don't actually know that lemonade has coverage.
Cause a significant problem in the past were getting better at that that's improving over time.
But what we're seeing is over the course of quarters in years. This graduate number if you just look at the pie of new dollars coming in today or this month or this quarter at graduate number in terms of premium dollars does not significant to a significant contributor.
So we're on.
A few years ago. It was really every dollar we had to pay for word of mouth was limited.
That has now shifted.
The amount of strong graduates are contributing a significant amount.
And then the the third piece that you mentioned is an area, where we're also seeing some interesting developments net.
Within an area, where the business development group.
It's on partnerships and developing different channels, whether it's referral agreements and something we've been talking about on the last couple of calls as an agent program now lemonade as you know is known for not having agents not paint commissions and those kinds of things, but leveraging networks.
<unk> networks that are out there in enabling us to reach customers that are a little tricky to reach through our tradition channels. That's what this debt.
And so there's an an agent infrastructure that's now.
Bringing business to us that's gone from from relatively small to a much stronger contributor.
So I think it's.
Some of these new channels take quarters or even years to build and now we're seeing the benefit from that and the mix of new business coming in is is.
Is becoming much more balanced.
The measurements the same so when you look.
As much as we can at what we expect a lifetime value to calculate you have to be in each of these channels on it varies based on these channels. So we're kind of using that same lens to to figure out where the best opportunities are but all that said you know the vast majority of the business is still.
Overwhelmingly direct which were very very good at and and continue to to optimize continue to see improvements even in net.
Method of acquiring customers.
Is that more of a test channel or or is it is it more mature could that roll out more broadly just across the platforms.
We think about other lines maturing.
I would think of it as a complementary so it's not it's not a core focus on our customer acquisition, but it's complimentary looked at different channels in different ways and so it might be somewhat more mature than a test, but I would put it in for the complementary bucket and and that's something where.
Will deploy dollars get results and and Ah adjust accordingly.
Thank you so much.
[noise].
Alright, I think if there are no more questions, we will wrap up the call so great to catch up with everyone on <unk>. Thank you for your thoughtful questions and.
We look forward to seeing you again next quarter. Thanks, so much.