Root Insurance Posts Q2 Profit, Partnership Channel Drives Growth

Root Inc., an insurtech company, reported a Q2 net income of $22 million, a significant improvement from a loss of $7.8 million in the same period last year. The combined ratio for Q2 was 95.2, up 7.5 points YoY. Gross premiums written increased 12.3% to $346.2 million, with the partnership channel contributing 44% of new writings. Root's CEO, Alex Timm, highlighted the importance of the partnership channel for long-term growth and the launch of a new pricing model in several states.

Root Inc. (NASDAQ:ROOT), a digital-first auto insurer, reported its financial results for the second quarter of fiscal 2025, showcasing a significant improvement in profitability. The company posted a net income of $22.0 million, reversing a loss of $7.8 million from the same period last year. The earnings per share (EPS) were $1.29 (diluted, GAAP), surpassing the $0.56 consensus estimate [1].

The company's revenue (GAAP) reached $382.9 million, a 32.4% increase compared to Q2 2024, but fell $1.17 million short of analyst expectations. The gross loss ratio improved to 58.0% in Q2 2025, down from 61.6% in Q2 2024, reflecting gains from updated pricing models and improved risk selection. The combined ratio, which includes all operating expenses as a proportion of premium, was 94.3%, signaling that Root collected more in premiums than it spent on claims and other costs [1].

Root's CEO, Alex Timm, highlighted the importance of the partnership channel for long-term growth. New policies sold through this channel nearly tripled year-over-year. The company extended its reach to independent insurance agents in over 20 states. Gross premiums written increased by 12.3% compared to Q2 2024, reaching $346.2 million. The partnership channel contributed 44% of new writings [1].

The company's adjusted EBITDA, a non-GAAP financial measure, rose to $37.6 million, more than triple the prior year’s level. The balance sheet showed $314 million in unencumbered capital at the end of Q2 2025, and cash and investments increased to $641.4 million as of Q2 2025. Root expects a $16–18 million non-cash expense in Q3 2025 related to a partnership warrant arrangement [1].

Looking ahead, technology and distribution investments are expected to rise in the second half of 2025. Management signaled that net income may moderate in coming quarters as it aims to expand distribution and enhance its technology platform. No formal full-year financial guidance was offered. Investors should watch for the impact of new state entries, the pace of partnership channel growth, and ongoing product improvements from Root’s data science teams [1].

References:
[1] https://www.nasdaq.com/articles/root-root-q2-net-income-hits-22m