Executive Summary

Root delivered a record quarter: total revenues of $382.9M, net income of $22.0M, adjusted EBITDA of $37.6M, and a net combined ratio of 95.2% . The company highlighted gross earned premium of $371.3M and a gross loss ratio of 58% as underwriting outperformance .
Results beat Wall Street: revenue beat consensus by $44.6M to $382.9M*, EPS beat by $0.55 to $1.23*, and EBITDA beat by ~$3.0M to ~$29.3M*; drivers were partnership channel growth, disciplined expense, and strong loss ratios *. Values retrieved from S&P Global.
Management expects a Q3 GAAP net loss due to a $16–$18M non-cash Carvana warrant expense catch-up, but still positive adjusted EBITDA; H2 loss ratios expected to tick up seasonally by a few points .
Strategic catalysts: new pricing model increasing customer LTVs by ~20%, launch approvals toward national expansion, and scaling independent agent/comparative rater integrations (EZLynx and PL Rating) .

What Went Well and What Went Wrong

What Went Well

Record top-line with sustained profitability: revenues $382.9M; net income $22.0M; net combined ratio 95.2% underscoring underwriting discipline .
Pricing technology improved risk selection; new model increased estimated customer LTVs by ~20% on average and enhanced telematics segmentation .
Partnership channel momentum: new writings nearly tripled YoY; early wins with independent agents and broadening distribution via comparative raters across >20 states . Quote: “Our partnerships channel has seen quarterly new writings nearly triple year-over-year… now available through the industry’s two largest comparative raters” .

What Went Wrong

Competitive pressure in Direct channel led to reduced marketing spend; management won’t “chase a soft market” which tempered PIF growth near-term .
Q3 outlook includes a non-cash warrant expense catch-up of ~$15.5M within a $16–$18M total, driving expected GAAP net loss despite positive adjusted EBITDA .
Seasonal headwinds: management expects loss ratios to rise a couple of points in H2 (convective storms, hurricanes), and sales & marketing investment to be slightly elevated vs Q2 .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Total Revenues ($USD Millions)	$326.7	$349.4	$382.9
Net Income ($USD Millions)	$22.1	$18.4	$22.0
Diluted EPS ($USD)	$1.55*	$1.07*	$1.23*
Adjusted EBITDA ($USD Millions)	$43.1	$31.9	$37.6
Net Combined Ratio (%)	91.5%	95.6%	95.2%

Values retrieved from S&P Global for EPS.
Additional operating/KPI detail:

KPI / Margin	Q2 2024	Q4 2024	Q1 2025	Q2 2025
Policies in Force	406,283	414,862	453,800	455,493
Premiums per Policy ($)	$1,522	$1,584	$1,614	$1,616
Gross Premiums Written ($M)	$308.2	$330.5	$410.8	$346.2
Gross Premiums Earned ($M)	$308.0	$331.0	$344.4	$371.3
Direct Contribution ($M)	$87.0	$115.8	$127.1	$125.8
Adjusted EBITDA ($M)	$12.1	$43.1	$31.9	$37.6
Gross Loss Ratio (%)	61.6%	56.8%	56.1%	58.0%
Gross Accident Period Loss Ratio (%)	61.0%	61.2%	55.7%	59.6%

YoY disclosures (from management): GEP up 21% to $371M; gross combined ratio improved 6 points to 94%; net income improved $30M YoY to $22M .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
GAAP Net Income	Q3 2025	Not provided	Expected GAAP net loss due to $16–$18M non-cash Carvana warrant expense (incl. ~$15.5M catch-up)	Lowered
Adjusted EBITDA	Q3 2025	Not provided	Expected positive adjusted EBITDA despite warrant expense	Maintained positive
Loss Ratios	H2 2025	Not provided	Expect loss ratios to tick up a couple of points due to seasonality	Raised (seasonal)
Sales & Marketing	H2 2025	Opportunistic	Slightly elevated vs Q2; opportunistic based on competitive dynamics	Raised
Reinsurance Cession	2025	~9% of GEP in Q4	Session levels expected to remain materially consistent with Q4 (~mid-single-digit to ~9%)	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
AI/Tech Pricing	Emphasis on ML-driven pricing; low-to-mid single-digit loss trend outlook	New pricing model increases LTV ~20% via improved segmentation/telematics	Accelerating
Distribution Mix	Partnerships ~1/3 of new writings in Q4; expanding partners HCA/Experian; independent agents ramp	Partnership channel new writings nearly tripled YoY; comparative raters live in >20 states; appointed with ~4% of independent agents	Scaling
Direct Channel Competition	Q4 competitive pressure; Q1 seasonality/tax refunds boosted Direct	Increased competition; reduced direct marketing spend; won’t chase soft markets	More competitive
Tariffs/Macro	Monitoring; ability to react quickly; not projecting tariff impact	No meaningful tariff impact to date; positioned to absorb without raising rates	Stable/Watchful
Reinsurance Strategy	Lower quota share; protect tail risk; ~9% cession in Q4	Continued tail risk covers; improving retention evident in KPIs	Maintaining
State Expansion	35 states; filings pending (MI/WA/NJ/MA)	Washington product filing approved; more pending; path to national	Progressing
Seasonality & Profit Mix	Q1 benefits (tax refunds/fewer miles); higher LR in Q2/Q3	Expect H2 LR up a few points; S&M slightly elevated vs Q2	Typical seasonality

Management Commentary

“We delivered strong financial results, setting a record on revenue… and generated net income of $22,000,000. Beyond financial results, we continued to advance our strategy, releasing our next gen pricing model… and making meaningful progress on our path to becoming national.”
“Our new pricing model substantially improves our risk selection, increasing customer lifetime values by 20% on average.”
“We are now available through the industry's two largest comparative raters, EZ Lynx and PL Rating… early traction on these platforms has been strong.”
“We will continue to invest in our business, technology and growth, which we expect will impact near term profitability in the 2025. As we have made clear, at Root, it's all about the long term.”

Q&A Highlights

PIF growth outlook and channel mix: Modest PIF growth quarter-to-date; partnerships expected to offset direct pullback over time; independent agent appointments still <4%, implying runway .
Pricing adequacy and segmentation: Adequate pricing with LR below long-term 60–65% target; new model improves segmentation across standard/non-standard/preferred .
Loss ratio seasonality/tariffs: Expect LR up a couple of points in H2 due to storms/hurricanes; no material tariff impact to date; capability to react quickly via tech and rate actions .
Direct vs partnerships economics: Slightly higher new business penalty in Direct; partnerships more preferred mix (higher severity, lower frequency) but priced to similar returns across channels .
Spend cadence: Direct spend opportunistic; R&D investments to be slightly elevated vs Q2 and ramp over time; adjusted EBITDA expected positive in Q3 despite non-cash warrant expense .

Estimates Context

Comparison to S&P Global consensus:

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue Consensus Mean ($USD Millions)	287.8	306.8	338.3
Revenue Actual ($USD Millions)	326.7	349.4	382.9
Primary EPS Consensus Mean ($USD)	-0.48	0.47	0.68
Primary EPS Actual ($USD)	1.55	1.07	1.23
EBITDA Consensus Mean ($USD Millions)	12.6	19.9	26.0
EBITDA Actual ($USD Millions)	36.5	25.7	29.3

All values marked above are from S&P Global; company-reported adjusted EBITDA differs from standardized EBITDA in SPGI. Values retrieved from S&P Global.

Highlights:

Q2 2025 beats: Revenue +$44.6M to $382.9M*, EPS +$0.55 to $1.23*, EBITDA +$3.3M to ~$29.3M*. Values retrieved from S&P Global.
Q1 and Q4 also exceeded consensus across revenue and EPS, reflecting consistent execution and underwriting performance *. Values retrieved from S&P Global.

Key Takeaways for Investors

Underwriting continues to outperform: gross loss ratio 58% and net combined ratio 95.2% sustain profitability and provide pricing flexibility .
Structural growth levers are intact: partnerships nearly tripled YoY in new writings; independent agent distribution and comparative raters broaden reach .
Near-term earnings risk is technical: Q3 GAAP net loss expected from $16–$18M non-cash warrant expense catch-up; adjusted EBITDA still positive .
Direct channel competitive intensity is elevated; expect opportunistic marketing deployment and increased H2 spend supporting long-term LTV-driven growth .
National expansion progressing (Washington approval; additional filings pending) and pricing model upgrades drive 20%+ LTV uplift, supporting durable unit economics .
Reinsurance cession levels likely remain consistent with Q4 (~9% earned premium), keeping more economics while retaining catastrophe protection .
Trading lens: Strong beats vs consensus and LTV uplift are positives; but management’s explicit Q3 net loss guide (non-cash) and H2 seasonal LR pressure may cap near-term momentum, with narrative focused on AI-driven pricing and channel diversification .

Appendix: Source Documents Read

Q2 2025 8-K (Item 2.02) with shareholder letter and full financials
Q2 2025 earnings call transcript
Q2 2025 press release (results announcement and call details)
Q1 2025 press release and call transcript
Q4 2024 press release and call transcript

Root, Inc. (ROOT)·Q2 2025 Earnings Summary