Root (NASDAQ:ROOT) executives used the company’s fourth-quarter earnings call to highlight full-year 2025 profitability, growing premiums, and a strategy aimed at accelerating policies-in-force (PIF) growth in 2026 through pricing improvements, broader distribution, and deeper partner integrations.
Management points to 2025 growth, profitability, and AI-driven pricing
Co-founder and CEO Alex Timm said 2025 was “another strong year” for Root, citing 29% revenue growth and a 30% increase in net income. He said the company ended the year with “$1.5 billion in premiums,” “exceptional financial performance,” and what he described as the strongest position in Root’s history.
Timm also argued that insurance distribution is increasingly a “technology problem,” describing a shift toward integrations with consumer-facing platforms, financial services apps, and vehicles to enable “easy, almost invisible insurance.”
Five growth levers and a push for broader distribution
Timm outlined a five-part growth strategy:
- Pricing: Rapid iteration of pricing models using data sources that include cell phone sensors, in-app behaviors, and traditional underwriting variables, with the goal of lowering prices while maintaining loss ratio performance.
- Geographic expansion: Root currently covers 36 states, representing about 80% of the U.S. population, and aims to be in all contiguous states by the end of 2027.
- Independent agents: Management called this Root’s fastest-growing segment and cited a total addressable market above $100 billion.
- Connected technology ecosystem: Root highlighted OEM and connected-vehicle opportunities, including a partnership with Toyota.
- Direct distribution: A data-driven marketing and pricing “machine” designed to target customers using hundreds of behavioral variables and allocate capital with discipline.
In response to an analyst question, Timm said the five levers were not necessarily ranked by impact, but reiterated that pricing is “the tide that lifts all ships,” affecting growth across direct, independent agent, and partner channels. He said independent agents have been the company’s fastest-growing channel, with new writings more than tripling year-over-year, and noted Root is in “about 10%” of appointed agents nationwide.
Partnerships channel grows to nearly half of Q4 new writings
Senior Vice President of Business Development Jason Shapiro said Root has built a partnerships channel that was “nearly half of overall new writings in the 4th quarter” and is meeting its profitability and loss ratio target. He described Root’s approach as “deep technical integration” rather than surface-level referral links or basic API access.
Shapiro said Root’s platform includes APIs for quoting, underwriting, binding, servicing, and telematics that can be configured into a partner’s native environment. He pointed to several examples:
- Carvana: Root is embedded in the vehicle purchase flow, enabling customers to quote and buy insurance in “three clicks” and as little as “30 seconds,” with ongoing joint experimentation to improve conversion.
- Independent agent technology: Shapiro said Root’s integration with Vertafore reduced quote-to-bind time by more than 50% by embedding Root’s APIs into the agent platform.
- OEM partnerships: He cited Hyundai and Toyota as examples where connected-vehicle data can enable telematics-based pricing at policy inception.
Shapiro also discussed financial services distribution, including relationships with partners such as Experian, which he said allows Root to embed insurance into “high-intent financial moments” with flexibility to start with lighter integrations and deepen over time.
Toyota connected-vehicle data used for instant telematics-based quotes
Shapiro said that in the fourth quarter, owners of connected Toyota vehicles can consent to share driving data with Root through its platform. Under a data partnership with Connected Analytics Services, eligible Toyota and Lexus owners can opt in to receive an “instant telematics-based quote” using connected car data.
On the Q&A portion of the call, management said the type of data available varies by OEM and vehicle model. Timm said Root generally receives basic telemetry data and is “increasingly getting access to more data,” including ADAS and autonomous-related features, depending on the automaker. He added that some OEMs provide historical data, while others only enable forward-looking streaming data, requiring Root to maintain flexibility across integrations.
Financial results: Q4 profitability with investment-driven declines; 2026 expected lower net income
Chief Financial Officer Megan Binkley said Root ended 2025 with “exceptional underwriting,” a strong capital position, and record net income. In the fourth quarter, gross written premium and gross earned premium increased 9% and 14% year-over-year, respectively. Root posted fourth-quarter net income of $5 million, down $17 million year-over-year, along with operating income of $11 million and Adjusted EBITDA of $29 million, both down year-over-year.
Binkley said the year-over-year declines reflected deliberate investments in partnership acquisition and direct R&D and marketing, plus a “modest increase in loss ratio due to elevated seasonality.” She added that Root accelerated PIF growth at more than double the pace of the fourth quarter of 2024.
For full-year 2025, Binkley reported gross written premium growth of 16% and gross earned premium growth of 19%. Net income was $40 million, up $9 million year-over-year. Operating income was $62 million and Adjusted EBITDA was $132 million, compared with 2024 operating income of $79 million and Adjusted EBITDA of $112 million.
Root finished 2025 with $312 million of unencumbered capital and excess capital across its insurance subsidiaries, according to Binkley.
Looking ahead, Binkley said the company expects elevated shopping and sequential PIF growth in the first quarter of 2026 driven by tax refund season, but warned that year-over-year growth may appear less pronounced than in the first quarter of 2025, which benefited from increased vehicle sales tied to tariff uncertainty. She also said Root expects more favorable first-quarter loss ratio performance than in the fourth quarter, noting the company’s seasonality pattern.
For 2026, Binkley said Root plans to continue investing in distribution expansion, national footprint, product enhancements, and data science and technology capabilities. She said those investments, combined with a higher loss ratio that remains within Root’s long-term target range of 60% to 65%, are expected to result in “lower full-year net income in 2026.”
About Root (NASDAQ:ROOT)
Root, trading on the Nasdaq under the ticker ROOT, is a Columbus, Ohio–based insurance company that leverages mobile technology and data analytics to offer personalized auto insurance policies. Founded in 2015 by Alex Timm and Dan Manges, Root set out to transform traditional underwriting by focusing on individual driving behavior rather than broad demographic factors.
The company’s core product is usage-based auto insurance, delivered through a smartphone app that monitors driving patterns such as speed, braking and phone usage behind the wheel.
