Lemonade, Inc.

Previous wording

A brief chat with our bot, AI Maya, is all it takes to get covered with renters, homeowners, pet, car or life insurance, and we expect to offer a similar experience for other insurance products over time. Claims are filed by chatting with another bot, AI Jim, who pays claims in as little as two seconds. This breezy experience belies the extraordinary technology that enables it: a state-of-the-art platform that spans marketing to underwriting, customer care to claims processing, finance to regulation. Our architecture melds artificial intelligence with the human kind, and learns from the prodigious data it generates to become even better at delighting customers and evaluating risks.

Current wording

A brief chat with our bot, AI Maya, is all it takes to get covered with renters, homeowners, pet, car or life insurance, and we expect to offer a similar experience for other insurance products over time. Claims are filed by chatting with another bot, AI Jim, who pays claims in as little as two seconds. This breezy experience belies the extraordinary technology that enables it: a state-of-the-art platform that spans marketing to underwriting, customer care to claims processing, and finance to regulation. Our architecture melds artificial intelligence with the human kind, and learns from the prodigious data it generates to become even better at delighting customers and evaluating risks.

Previous wording

As of June 30, 2025, we had $123.5 million of outstanding borrowings under the Amended and Restated Agreement. We incurred interest expense of $7.3 million for the six months ended June 30, 2025 and such interest is included in “General and Administrative expense” in the condensed consolidated statements of operations and comprehensive income.

Current wording

As of September 30, 2025, we had $139.0 million of outstanding borrowings under the Amended and Restated Agreement. We incurred interest expense of $11.9 million for the nine months ended September 30, 2025 and such interest is included in “General and Administrative expense” in the condensed consolidated statements of operations and comprehensive loss.

Previous wording

We maintain proportional reinsurance contracts which cover all of the Company's products and geographies, and transfers, or “cedes,” a specified percentage of the premium to reinsurers. We also manages the remaining percentage of the business with alternative forms of reinsurance through non-proportional reinsurance contracts.

Current wording

We maintain proportional reinsurance contracts which cover all of the Company's products and geographies, and transfers, or “cedes,” a specified percentage of the premium to reinsurers. We also manage the remaining percentage of the business with alternative forms of reinsurance through non-proportional reinsurance contracts.

Previous wording

LIC and MIC entered into a Property Per Risk Excess of Loss Reinsurance Contract with a panel of reinsurance companies (the "PPR Contract") effective July 1, 2024 and expired on June 30, 2025. Under the PPR Contract, claims in excess of $750,000 were 100% ceded up to a maximum recovery of $2,250,000, subject to certain limitations. The PPR Contract was renewed at similar terms effective July 1, 2025 and will expire on June 30, 2026.

Current wording

LIC and MIC entered into a Property Per Risk Excess of Loss Reinsurance Contract with a panel of reinsurance companies (the "PPR Contract") which was effective July 1, 2024 and expired on June 30, 2025. Under the PPR Contract, claims in excess of $750,000 were 100% ceded up to a maximum recovery of $2,250,000, subject to certain limitations. The PPR Contract was renewed at similar terms effective July 1, 2025 and will expire on June 30, 2026.

Previous wording

LIC entered into an Automatic Facultative PPR Contract with Arch Re, in which claims in excess of $3,000,000 are 100% ceded with a potential recovery of at least $10,000,000, subject to certain limitations, expired on June 30, 2024, and was not renewed.

Current wording

LIC entered into an Automatic Facultative PPR Contract with Arch Re, in which claims in excess of $3,000,000 were 100% ceded with a potential recovery of at least $10,000,000, subject to certain limitations, which expired on June 30, 2024, and was not renewed.

Previous wording

We are also exposed to some risks on property, auto and pet insurance underwritten by LIC and MIC ceded through Quota Share Reinsurance Contracts (the "QS reinsurance contracts") which is retained in an offshore captive subsidiary, Lemonade Re SPC in the Cayman Islands. The MIC QS reinsurance contract which became effective July 1, 2023 was amended to increase the cession rate to 35% and ceding commission rate effective July 1, 2025, and shall remain effective for an indefinite period until terminated by either party. The LIC QS reinsurance contract became effective on July 1, 2025 and will expire on June 30, 2026.

Current wording

We are also exposed to some risks on property, auto and pet insurance underwritten by LIC and MIC ceded through Quota Share Reinsurance Contracts (the "QS reinsurance contracts") which is retained in an offshore captive subsidiary, Lemonade Re SPC in the Cayman Islands. The MIC QS reinsurance contract which became effective July 1, 2023 was terminated and the parties agreed to a new QS reinsurance contract effective July 1, 2025 on the same terms except for the increase in cession rate to 35% and ceding commission rate effective July 1, 2025. The new MIC QS reinsurance contract will remain effective for an indefinite period until terminated by either party. The LIC QS reinsurance contract became effective on July 1, 2025 and will expire on June 30, 2026.

Previous wording

Ceding commission income is commission we receive based on the premium ceded to third-party reinsurers to reimburse us for acquisition and underwriting expenses. We earn commissions on reinsurance premium ceded in a manner consistent with the recognition of the earned premium on the underlying insurance policies, on a pro-rata basis over the terms of the policies reinsured. The portion of ceding commission income which represents reimbursement of successful acquisition costs related to the underlying policies is recorded as an offset to other insurance expense.

Current wording

Ceding commission income is commission we receive based on premium ceded to third-party reinsurers to reimburse us for acquisition and underwriting expenses. We earn commissions on reinsurance premium ceded in a manner consistent with the recognition of the earned premium on the underlying insurance policies, on a pro-rata basis over the terms of the policies reinsured. The portion of ceding commission income which represents reimbursement of successful acquisition costs related to the underlying policies is recorded as an offset to other insurance expense.

Previous wording

Other insurance expense consists primarily of amortization of commissions and premium taxes incurred on the successful acquisition of business written on a direct basis, and credit card processing fees not charged to our customers. Other insurance expense also includes employee compensation, including stock-based compensation and benefits, of our underwriting teams as well as allocated occupancy costs and related overhead based on headcount. Other insurance expense is offset by the portion of ceding commission income which represents reimbursement of successful acquisition costs related to the underlying policies.

Current wording

Other insurance expense consists primarily of amortization of commissions and premium taxes incurred on the successful acquisition of business written on a direct basis, and credit card processing fees not charged to our customers. Other insurance expense also includes employee compensation, including stock-based compensation and benefits, of our underwriting teams as well as allocated occupancy costs and related overhead based on headcount. Other insurance expense is partially offset by the portion of ceding commission income which represents reimbursement of successful acquisition costs related to the underlying policies.

Previous wording

We have a valuation allowance for our U.S. deferred tax assets, including federal and state net operating losses. We expect to maintain this valuation allowance until it becomes more likely than not, that the benefit of our federal and state deferred tax assets will be realized through expected future taxable income in the U.S..

Current wording

We have a valuation allowance for our U.S. and U.K. deferred tax assets, including federal and state net operating losses and U.K. net operating losses. We expect to maintain this valuation allowance until it becomes more likely than not, that the benefit of our federal and state deferred tax assets will be realized through expected future taxable income in the U.S. and U.K., respectively.

Previous wording

ii)In force placed premium — the annualized premium of in force policies placed with third party insurance companies for which we earn a recurring commission payment. In force placed premium currently reflects approximately 3% of IFP.

Current wording

ii)In force placed premium — the annualized premium of in force policies placed with third party insurance companies for which we earn a recurring commission payment. In force placed premium currently reflects approximately 4% of IFP.

Previous wording

Net earned premium increased $23.2 million, or 26%, to $112.5 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to the earning of increased gross written premium.

Current wording

Net earned premium increased $44.3 million, or 46%, to $140.0 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily due to the earning of increased gross written premium and the impact of the Company's new reinsurance program as discussed in more detail in the "Reinsurance" section above.

Previous wording

Gross written premium increased $58.3 million, or 26%, to $284.5 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase was primarily due to a 24% increase in net added customers year over year driven by the success of our digital advertising campaigns and partnerships. We also continued to expand our geographic footprint and product offerings. In addition, we also saw a 4% increase in premium per customer year over year due to an increasing prevalence of multiple policies per customer, growth in the overall average policy value, and continued shift in the mix of underlying products toward higher value policies. Assumed premium related to car insurance policies written in Texas through our fronting arrangement with a third party carrier in Texas also contributed to the increase in gross written premium during the period.

Current wording

Gross written premium increased $64.4 million, or 24%, to $333.3 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The increase was primarily due to a 24% increase in net added customers year over year driven by the success of our digital advertising campaigns and partnerships. We also continued to expand our geographic footprint and product offerings. In addition, we also saw a 5% increase in premium per customer year over year due to an increasing prevalence of multiple policies per customer, growth in the overall average policy value, and continued shift in the mix of underlying products toward higher value policies. Assumed premium related to car insurance policies written in Texas through our fronting arrangement with a third party carrier in Texas also contributed to the increase in gross written premium during the period.

Previous wording

The table below shows the amount of premium we earned on a gross and net basis. Ceded earned premium as a percentage of gross earned premium is at 55% for the three months ended June 30, 2025 and 2024 consistent with our participation rate in our reinsurance contracts as discussed in more detail in the "Reinsurance" section above.

Current wording

The table below shows the amount of premium we earned on a gross and net basis. Ceded earned premium as a percentage of gross earned premium is at 49% and 55% for the three months ended September 30, 2025 and 2024, respectively, consistent with our participation rate in our reinsurance contracts as discussed in more detail in the "Reinsurance" section above.

Previous wording

Ceding commission income increased $13.9 million, or 84%, to $30.4 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, consistent with the increase in ceded earned premium during the period and the impact of our variable ceding commission arrangement with reinsurers driven by favorable loss ratio development in comparison to prior period.

Current wording

Ceding commission income increased $8.2 million, or 34%, to $32.2 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, consistent with the increase in ceded earned premium during the period and the impact of our variable ceding commission arrangement with reinsurers driven by favorable loss ratio development in comparison to prior period.

Previous wording

Net investment income increased $1.3 million, or 16% to $9.4 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase was primarily driven by the diversification of the Company's investment portfolio with higher returns, offset by investment expenses. We mainly invest in cash, money market funds, U.S. Treasury bills, corporate debt securities, asset-backed securities, notes and other obligations issued or guaranteed by the U.S. Government and Non-US Government.

Current wording

Net investment income increased $0.8 million, or 9% to $9.7 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The increase was primarily driven by the diversification of the Company's investment portfolio with higher returns, offset by investment expenses. We mainly invest in cash, money market funds, U.S. Treasury bills, corporate debt securities, asset-backed securities, notes and other obligations issued or guaranteed by the U.S. Government and Non-US Government.

Previous wording

Commission and other income increased $3.7 million, or 46%, to $11.8 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to growth in premiums placed with third-party insurance companies during the period, installment fees and sublease income from our New York and San Francisco office space.

Current wording

Commission and other income increased $4.6 million, or 58%, to $12.6 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily due to growth in premiums placed with third-party insurance companies during the period, installment fees and sublease income from our New York and San Francisco office space.

Previous wording

Loss and LAE, net increased $7.0 million, or 10%, to $77.5 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase was in line with growth in premium and increased claim costs offset by reserve releases due to better than expected loss reserve emergence on homeowners multi-peril line of business.

Current wording

Loss and LAE, net increased $11.7 million, or 15%, to $89.6 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The increase was due to growth in premium offset by reserve releases due to better than expected loss reserve emergence on homeowners multi-peril line of business and car.

Previous wording

Other insurance expense increased $2.6 million, or 14%, to $21.4 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 consistent with growth in earned premium. Credit card processing fees increased $1.3 million, or 30%, as compared to the three months ended June 30, 2024 as a result of the increase in customers and associated premium. Employee-related expense, including stock-based compensation increased $1.0 million, or 20% as compared to three months ended June 30, 2024.

Current wording

Other insurance expense increased $4.3 million, or 22%, to $24.1 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 consistent with growth in earned premium. Credit card processing fees increased $1.9 million, or 40%, as compared to the three months ended September 30, 2024 as a result of the increase in customers and associated premium. Amortization of deferred acquisition costs, net of ceding commissions increased $1.6 million, or 43% as compared to the three months ended September 30, 2024 as a result of growth in business across all products. Professional and other services increased $0.7 million or 175% as compared to the three months ended September 30, 2024.

Previous wording

Sales and marketing expense increased $22.8 million, or 62%, to $59.6 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 primarily due to brand and performance advertising, which is the largest component of our sales and marketing expenses. Expense related to advertising, other customer acquisition channels and partner payments increased $23.9 million, or 93%, as compared to the three months ended June 30, 2024 consistent with growth in our business. Compensation expense related to the warrant shares decreased $1.6 million, or 100%, as compared to the three months ended June 30, 2024 due to the termination of the Warrant Agreement with Chewy.

Current wording

Sales and marketing expense increased $6.0 million, or 12%, to $57.4 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 primarily due to brand and performance advertising, which is the largest component of our sales and marketing expenses. Expense related to advertising, other customer acquisition channels and partner payments increased $6.2 million, or 16%, as compared to the three months ended September 30, 2024 consistent with growth in our business. Compensation expense related to the warrant shares decreased $2.0 million, or 100%, as compared to the three months ended September 30, 2024 due to the termination of the Warrant Agreement with Chewy.

Previous wording

Technology development expense increased $1.2 million, or 6%, to $22.4 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. Employee-related expense, including stock-based compensation, and net of capitalized costs for the development of internal-use software, increased $1.8 million, or 11%, as compared to the three months ended June 30, 2024. Hosting and development costs decreased $0.4 million or 20%, as compared to the three months ended June 30, 2024.

Current wording

Technology development expense increased $2.8 million, or 13%, to $24.7 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Employee-related expense, including stock-based compensation, and net of capitalized costs for the development of internal-use software, increased $2.8 million, or 16%, as compared to the three months ended September 30, 2024.

Previous wording

General and administrative expense decreased $4.0 million, or 13%, to $25.8 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. Interest expense related to borrowings from financing agreement with GC increased $2.9 million, or 264%, as compared to three months ended June 30, 2024 due to increased borrowings during the period. Employee-related expense, including stock-based compensation, increased $2.5 million, or 19%, as compared to three months ended June 30, 2024. Bad debt expense increased by $2.3 million or 110%, as compared to three months ended June 30, 2024. During the period, we recorded $11.7 million of tax refund received under the ERC program.

Current wording

General and administrative expense increased $3.6 million, or 11%, to $35.0 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Interest expense related to borrowings from financing agreement with GC increased $2.9 million, or 171%, as compared to three months ended September 30, 2024 due to increased borrowings during the period. Employee-related expense, including stock-based compensation, increased $2.3 million, or 16%, as compared to three months ended September 30, 2024. Bad debt expense increased by $2.6 million or 100%, as compared to three months ended September 30, 2024. Depreciation and amortization decreased by $1.7 million, or 33% as compared to three months ended September 30, 2024. During the period, we recorded $2.3 million of gain on early lease termination related to the Company's office space in San Francisco.

Previous wording

Income tax expense decreased $1.9 million, or 45%, to $2.3 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 due to change in transfer pricing methodology and uncertain tax position.

Current wording

Income tax expense decreased $0.7 million, or 37%, to $1.2 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 primarily due to a change in uncertain tax positions related to the change in transfer pricing methodology in prior year.

Previous wording

Net loss decreased $13.3 million, or 23%, to $43.9 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 due to the factors described above.

Current wording

Net loss decreased $30.2 million, or 45%, to $37.5 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 due to the factors described above.

Previous wording

Net earned premium increased $43.1 million, or 25%, to $216.8 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to the earning of increased gross written premium and the impact of our reinsurance program to our ceded written premium as discussed above under "Reinsurance."

Current wording

Net earned premium increased $87.4 million, or 32%, to $356.8 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily due to the earning of increased gross written premium and impact of the Company's new reinsurance program as discussed in more detail in the "Reinsurance" section above.

Previous wording

Gross written premium increased $106.9 million, or 25%, to $538.7 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase was primarily due to a 24% increase in net added customers year over year driven by the success of our digital advertising campaigns and partnerships. We also continued to expand our geographic footprint and product offerings. We also saw a 4% increase in premium per customer year over year primarily due to an increasing prevalence of multiple policies per customer, growth in the overall average policy value, and continued shift in the mix of underlying products toward higher value policies. Assumed premium related to car insurance policies written in Texas from our fronting arrangement with a third party carrier in Texas also contributed to the increase in gross written premium during the period.

Current wording

Gross written premium increased $171.3 million, or 24%, to $872.0 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase was primarily due to a 24% increase in net added customers year over year driven by the success of our digital advertising campaigns and partnerships. We also continued to expand our geographic footprint and product offerings. We also saw a 5% increase in premium per customer year over year primarily due to an increasing prevalence of multiple policies per customer, growth in the overall average policy value, and continued shift in the mix of underlying products toward higher value policies. Assumed premium related to car insurance policies written in Texas from our fronting arrangement with a third party carrier in Texas also contributed to the increase in gross written premium during the period.

Previous wording

Ceded written premium increased $32.8 million, or 26%, to $157.1 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to growth in business across all products.

Current wording

Ceded written premium decreased $36.8 million, or 9%, to $352.6 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily due to growth in business across all products offset by the impact of the Company's reinsurance program. See "Reinsurance" above for further information.

Previous wording

Net written premium increased $47.0 million, or 24%, to $242.8 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 due to factors noted above.

Current wording

Net written premium increased $208.1 million, or 67%, to $519.4 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 due to factors noted above.

Previous wording

The table below shows the amount of premium we earned on a gross and net basis. Ceded earned premium as a percentage of gross earned premium is at 55% for the six months ended June 30, 2025 and 2024, consistent with our participation rate in our reinsurance contracts as discussed in more detail in the "Reinsurance" section above.

Current wording

The table below shows the amount of premium we earned on a gross and net basis. Ceded earned premium as a percentage of gross earned premium is at 53% and 55% for the nine months ended September 30, 2025 and 2024, consistent with our participation rate in our reinsurance contracts as discussed in more detail in the "Reinsurance" section above.

Previous wording

Ceding commission income increased $19.8 million, or 53%, to $57.3 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, consistent with the increase in ceded earned premium and the impact of our variable ceding commission arrangement with reinsurers driven by favorable loss ratio development in comparison to prior period.

Current wording

Ceding commission income increased $28.0 million, or 46%, to $89.5 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, consistent with the increase in ceded earned premium and the impact of our variable ceding commission arrangement with reinsurers driven by favorable loss ratio development in comparison to prior period.

Previous wording

Net investment income increased $3.2 million, or 20%, to $18.9 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase was primarily driven by the diversification of the Company's investment portfolio with higher returns offset by investment expenses. We mainly invest in cash, money market funds, U.S. Treasury bills, corporate debt securities, asset-backed securities, notes and other obligations issued or guaranteed by the U.S. and non-U.S. Government.

Current wording

Net investment income increased $4.0 million, or 16%, to $28.6 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase was primarily driven by the diversification of the Company's investment portfolio with higher returns offset by investment expenses. We mainly invest in cash, money market funds, U.S. Treasury bills, corporate debt securities, asset-backed securities, notes and other obligations issued or guaranteed by the U.S. and non-U.S. Government.

Previous wording

Commission and other income increased $8.1 million, or 57%, to $22.3 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, due to growth on premium placed with third-party insurance companies during the period, installment fees and sublease income from our New York and San Francisco office space.

Current wording

Commission and other income increased $12.7 million, or 57%, to $34.9 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, due to growth on premium placed with third-party insurance companies during the period, installment fees and sublease income from our New York and San Francisco office space.

Previous wording

Loss and LAE, net increased $26.5 million, or 19%, to $162.9 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase was in line with growth in premium and increased claim costs offset by reserve releases due to better than expected loss reserve emergence on homeowners multi-peril line of business. Net incurred losses included the impact of the California Wildfires in January 2025 in the amount of $16.9 million.

Current wording

Loss and LAE, net increased $38.2 million, or 18%, to $252.5 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase was due to growth in premium offset by reserve releases due to better than expected loss reserve emergence on homeowners multi-peril line of business and car. Net incurred losses included the impact of the California Wildfires in January 2025 in the amount of $19.9 million.

Previous wording

Other insurance expense increased $11.4 million, or 32%, to $47.5 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 consistent with growth in earned premiums and the California FAIR Plan assessment charge of $6.9 million related to the January 2025 California Wildfires. Credit card fees also increased $2.6 million, or 32%, as compared to the six months ended June 30, 2024, as a result of the increase in customers and associated premium. Underwriting data costs increased $1.8 million, or 34%, as compared to the six months ended June 30, 2024. Employee-related expense, including stock-based compensation, increased $1.5 million, or 14%, as compared to the six months ended June 30, 2024. Amortization of deferred acquisition costs, net of ceding commissions increased $1.2 million, or 20%, as compared to the six months ended June 30, 2024. Insurance regulatory fees decreased $1.5 million, or 50% as compared to the six months ended June 30, 2024.

Current wording

Other insurance expense increased $15.7 million, or 28%, to $71.6 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 consistent with growth in earned premiums and the California FAIR Plan assessment charge of $6.9 million related to the January 2025 California Wildfires. Credit card fees also increased $4.5 million, or 35%, as compared to the nine months ended September 30, 2024, as a result of the increase in customers and associated premium. Amortization of deferred acquisition costs, net of ceding commissions increased $2.7 million, or 27%, as compared to the nine months ended September 30, 2024. Underwriting data costs increased $2.3 million, or 28%, as compared to the nine months ended September 30, 2024. Employee-related expense, including stock-based compensation, increased $1.5 million, or 9%, as compared to the nine months ended September 30, 2024. Insurance regulatory fees decreased $1.5 million, or 35% as compared to the nine months ended September 30, 2024.

Previous wording

Sales and marketing expense increased $35.6 million, or 53%, to $102.8 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to brand and performance advertising, which is the largest component of our sales and marketing expenses. Expense related to advertising, other customer acquisition channels and partner payments increased $42.2 million, or 93%, as compared to the six months ended June 30, 2024 consistent with growth in our business. Compensation expense related to the warrant shares decreased $7.7 million, or 308%, due to the termination of the Warrant Agreement with Chewy.

Current wording

Sales and marketing expense increased $41.6 million, or 35%, to $160.2 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily due to brand and performance advertising, which is the largest component of our sales and marketing expenses. Expense related to advertising, other customer acquisition channels and partner payments increased $48.4 million, or 57%, as compared to the nine months ended September 30, 2024 consistent with growth in our business. Compensation expense related to the warrant shares decreased $9.7 million, or 216%, due to the termination of the Warrant Agreement with Chewy.

Previous wording

Technology development expense increased $2.3 million, or 5%, to $44.4 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Employee-related expense, including stock-based compensation, net of capitalized costs for the development of internal-use software, increased $3.4 million, or 11%, as compared to the six months ended June 30, 2024. Hosting and development costs decreased by $0.9 million, or 21%, as compared to the six months ended June 30, 2024.

Current wording

Technology development expense increased $5.1 million, or 8%, to $69.1 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. Employee-related expense, including stock-based compensation, net of capitalized costs for the development of internal-use software, increased $6.2 million, or 13%, as compared to the nine months ended September 30, 2024. Hosting and development costs decreased by $1.3 million, or 21%, as compared to the nine months ended September 30, 2024.

Previous wording

General and administrative expense increased $2.1 million, or 4%, to $61.7 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Interest expense related to borrowings from financing agreement with GC increased $5.6 million, or 329%, as compared to six months ended June 30, 2024 due to increased borrowings during the period. Employee-related expense, including stock-based compensation, increased by $4.5 million, or 17%, as compared to the six months ended June 30, 2024. Bad debt expense increased $3.6 million, or 68% compared to the six months ended June 30, 2024. During the period, we recorded $11.7 million of tax refund received under the ERC program. Depreciation and amortization expense decreased $1.0 million, or 10% compared to six months ended June 30, 2024.

Current wording

General and administrative expense increased $5.7 million, or 6%, to $96.7 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. Interest expense related to borrowings from financing agreement with GC increased $8.5 million, or 250%, as compared to nine months ended September 30, 2024 due to increased borrowings during the period. Employee-related expense, including stock-based compensation, increased by $6.8 million, or 17%, as compared to the nine months ended September 30, 2024. Bad debt expense increased $6.2 million, or 78% compared to the nine months ended September 30, 2024. Depreciation and amortization expense decreased $2.7 million, or 18% compared to nine months ended September 30, 2024. During the period, we recorded $11.7 million of tax refund received under the ERC program and $2.3 million of gain on early lease termination related to the Company's office space in San Francisco.

Previous wording

Net loss increased $1.8 million, or 2%, to $106.3 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 due to the factors described above.

Current wording

Net loss decreased $28.4 million, or 16%, to $143.8 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 due to the factors described above.

Previous wording

(1) Includes the impact of canceled unvested warrant shares for contract year 2 related to the termination of the Warrant Agreement with Chewy of $5.2 million for the six months ended June 30, 2025 and compensation expense related to the warrant shares $1.6 million and $2.5 million for the three and six months ended June 30, 2024, respectively (See Note 11 of the unaudited condensed consolidated financial statements).

Current wording

(1) Includes the impact of canceled unvested warrant shares for contract year 2 related to the termination of the Warrant Agreement with Chewy of $5.2 million for the nine months ended September 30, 2025 and compensation expense related to the warrant shares of $2.0 million and $4.5 million for the three and nine months ended September 30, 2024, respectively (See Note 11 of the unaudited condensed consolidated financial statements).

Previous wording

(2) Includes the California FAIR Plan assessment related to the January 2025 California Wildfires for the six months ended June 30, 2025 (See Note 15 of the unaudited condensed consolidated financial statements).

Current wording

(2) Includes the California FAIR Plan assessment of $6.9 million related to the January 2025 California Wildfires for the nine months ended September 30, 2025 (See Note 15 of the unaudited condensed consolidated financial statements).

Previous wording

(4) Includes $11.7 million of tax refund received under the ERC Program for the three and six months ended June 30, 2025 (See Note 12 of the unaudited condensed consolidated financial statements).

Current wording

(3) Includes $11.7 million of tax refund received under the Employee Retention Credit Program for the nine months ended September 30, 2025 (See Note 12 of the unaudited condensed consolidated financial statements).