Root, Inc. reported third‑quarter 2025 results that exceeded analyst expectations, with revenue reaching $387.8 million—up 26.9% year‑over‑year—while earnings per share came in at –$0.35, beating the consensus estimate of –$0.43 by $0.08. The revenue beat was driven by a 17% increase in gross premiums written, largely fueled by a surge in new business through the partnership channel, which more than doubled its new writings year‑over‑year and now accounts for roughly half of the company’s partnership distribution.
The company’s profitability profile reflects a mix of one‑time and operating dynamics. Net loss for the quarter was $5 million, largely attributable to a $17 million non‑cash expense related to a warrant structure with Carvana. Excluding that charge, Root generated an operating income of $300,000 and an adjusted EBITDA of $34 million, indicating that core operations are moving toward profitability. The net combined ratio fell to 102.1% from 113.2% a year earlier, a 11‑point improvement that signals tighter underwriting and pricing control, while the gross accident period loss ratio of 59% remains comfortably below the company’s target range of 60‑65%.
Policy growth continued to accelerate, with policies in force rising 14% year‑over‑year to approximately 466,000. This growth, coupled with the higher premium mix, supports the company’s long‑term revenue trajectory and underpins the improved combined ratio. The partnership channel’s expansion—particularly through independent agents—has been a key driver of both premium and policy growth, reinforcing Root’s strategy to scale through technology‑enabled distribution.
Management highlighted the role of technology in sustaining growth. CEO Alex Timm emphasized that the new pricing algorithm has improved customer lifetime value by 20% on average and that the updated underwriting model has increased predictive power by 10%. He also noted that the partnership channel now represents 50% of partnership distribution, reflecting the success of the company’s channel strategy. Head of Investor Relations Matthew LaMalva explained that the net loss was primarily driven by the warrant‑related expense, clarifying that the underlying operating performance remains strong.
The company plans to increase its R&D marketing investment by $5 million in Q4 to support the continued rollout of its technology platform and to capture additional market share. While the company does not provide new forward guidance in this release, the combination of revenue growth, improved underwriting metrics, and strategic investments signals confidence in sustaining its growth momentum in the coming quarters.
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