Root (ROOT) Q3 2025 earnings summary

Executive summary

• Achieved record quarter for policies in force and revenue, with net premiums earned up 28.9% year-over-year for Q3 2025, driven by growth in both direct and partnership channels and higher premiums per policy.

• Growth supported by new pricing algorithms, expansion into Washington state, and new marketing channels.

• Maintained strong loss ratio performance while accelerating growth, despite a net loss due to increased Carvana warrant expense.

• Independent agent channel tripled new writings year-over-year, now representing 50% of partnership distribution.

• Strategic reduction in quota share reinsurance improved capital efficiency but increased capital requirements.

Financial highlights

• Net loss of $5.4 million for Q3 2025, primarily due to a $17.2 million non-cash Carvana warrant expense.

• Net premiums earned: $360.1M in Q3 2025, up 28.9% year-over-year; total revenues: $387.8M, up 26.9%.

• Adjusted EBITDA: $33.7M for Q3 2025; operating income of $300,000.

• Double-digit year-over-year increases in policies in force, written premium, and earned premium.

• Gross accident period loss ratio: 59.5% for Q3 2025.

Outlook and guidance

• Expect continued acceleration in policies in force growth and premiums per policy.

• Planning to increase direct R&D marketing investment by $5 million in Q4.

• Anticipate a seasonal headwind to loss ratio in Q4, similar to last year's 5 percentage point impact.

• Existing cash, equivalents, and marketable securities are sufficient to support operations for at least the next 12 months.