Root (ROOT) investor relations material

Executive summary

• Net income rose 15.5% year-over-year to $25.4 million for Q2 2026, with a 31% annualized return on equity.

• Revenue increased 2% year-over-year to $389 million; policies in force grew 6% to 484,000.

• Gross premiums written declined 1.9% to $339.7 million for Q2, mainly due to lower direct channel growth, offset by partnership channel expansion.

• AI and proprietary data drive automation and pricing accuracy, with continued investment in technology and partnerships.

• Geographic expansion and partnerships, including entry into New Jersey and a new partnership with Jerry, are key growth drivers.

Financial highlights

• Net premiums earned rose 3.0% year-over-year to $363.5 million for Q2; gross written premium declined 2% to $340 million.

• Net combined ratio improved to 92.1% for Q2, driven by expense discipline.

• Net expense ratio improved to 26%; net loss and LAE ratio stable at 66%.

• Share repurchases exceeded $20 million in the quarter under a $75 million authorization.

• $4.4 million impairment loss recognized on private equity investments, reducing carrying value to zero.

Outlook and guidance

• Continued investment in R&D, with $10 million allocated for new acquisition channels in H2.

• Management expects continued growth in partnership channel and disciplined marketing spend.

• Sufficient liquidity and capital resources projected for at least the next 12 months.

• PIF expected to remain relatively flat year-over-year if current competitive conditions persist.

• Next-generation predictive pricing model to launch in Q4, with impact expected in 2027.