Root (ROOT) Q1 2025 earnings summary

Executive summary

• Delivered a profitable first quarter of 2025, with net income of $18.4 million, continuing momentum from 2024 and driven by higher premiums, reduced reinsurance cessions, and improved operating leverage.

• Achieved 24.2% year-over-year growth in gross premiums written to $410.8 million, with policies in force up 13% to 453,800 and premiums per policy up 8.9%.

• Expanded distribution through new strategic partnerships with Hyundai Capital America and Experian, and broadened geographic footprint to 35 states, with additional filings pending.

• Strategic reduction in quota share reinsurance led to higher retention of premiums and improved direct contribution and adjusted EBITDA.

Financial highlights

• Total revenues grew 37.1% year-over-year to $349.4 million, with net premiums earned up 39.5% to $321.3 million.

• Net income reached $18.4 million, a $25 million improvement year-over-year.

• Operating income was $24 million, up $18 million year-over-year; adjusted EBITDA was $32 million, more than doubling year-over-year.

• Gross loss ratio improved to 56.1% from 60.6%, and net combined ratio improved to 95.6% from 102.0%.

• Cash and cash equivalents stood at $609.4 million, with $320.8 million in marketable securities as of March 31, 2025.

Outlook and guidance

• Management expects continued growth in policies in force and premiums per policy, supported by ongoing investment in direct and partnership channels.

• Partnership channel expected to contribute a higher percentage of new writings through the rest of 2025 as direct channel seasonality abates.

• Policy growth expected to be roughly flat in Q2, with loss ratio anticipated to rise in Q2 and Q3 due to storm and hurricane seasons, aligning with long-term target of 60–65%.

• Strategic reduction in reinsurance utilization is expected to further improve capital efficiency and profitability.

• Sufficient liquidity and capital resources are projected to support operations and growth for at least the next 12 months.