Root, Inc. Q2 FY26 Results

We’re happy to report that in the second quarter we continued to generate impressive performance, delivering another strong quarter of profitability while continuing to invest in long-term growth. These results demonstrate the strength of the technology and data science capabilities we have built over the past decade. When we founded Root, our core belief was simple: insurance would ultimately be won through superior pricing and automation. Long before AI became a mainstream conversation, we built our company around machine learning, quantitative science, and a modern technology platform designed to automate insurance from end to end. What’s changing is the pace at which AI is expanding what’s possible. The earliest generations of Root’s models relied on structured data and machine learning to improve pricing accuracy beyond traditional actuarial methods. Today, advances in AI and foundation models allow us to extract predictive insights directly from complex, unstructured information while meaningfully accelerating feature generation and model development. Work that once required significant manual effort from data scientists can increasingly be automated, allowing our teams to spend more time making the system itself smarter. At the same time, AI-assisted software development is enabling our engineering teams to build, test, and deploy new capabilities faster than ever. AI has the potential to reshape nearly every part of the insurance lifecycle, from customer acquisition and underwriting to regulatory filings, claims handling, and customer service. The rapid advancement of AI has reinforced our conviction in technology and automation. Moreover, we believe it strengthens Root’s competitive position when paired with our proprietary data, modern infrastructure, and real operating experience as a regulated insurance carrier. Root’s data assets, including 37 billion miles of driving data and more than 900,000 claims filed, are not generic data sets. They are generated from real customer behavior, real underwriting decisions, and real claims outcomes across our insurance platform. We believe that combination becomes increasingly valuable as AI makes it possible to learn faster, automate more processes, and improve decision-making across the business. Root has spent the last decade building proprietary data sets on a modern technology platform and developing the operating experience of a regulated insurance carrier. That combination is difficult to replicate. Many large incumbents have scale and data, but continue to modernize decades-old technology stacks. Many newer technology companies have modern software capabilities, but lack the regulatory infrastructure, claims experience, underwriting history, and capital foundation required to operate as an insurance carrier at scale. Massive amounts of data are a prerequisite to training insurance AI models. We are building an insurance company for the AI era, one where pricing, underwriting, claims, customer interactions, software development, and capital allocation become increasingly intelligent and automated. We believe the insurance industry is entering a generational technology paradigm shift, and we are uniquely positioned to lead. The competitive environment in Direct remained challenging in the second quarter, as carriers increased marketing spend while lowering prices. When these cycles occur, we remain disciplined: we plan to pursue growth only when it meets our target returns. While that decision can constrain near-term growth, we believe it is the right one for building long-term shareholder value. Over the medium term, we expect geographic expansion, including our launch in New Jersey, continued growth through independent agents, and expanding partnerships to provide durable growth drivers. Customers are buying insurance in more ways than ever before, and Root has positioned itself across virtually all of these channels—direct, comparison marketplaces, embedded partnerships at the point of vehicle purchase, independent agents, and increasingly AI-enabled customer experiences. Over the long term, we believe the best growth strategy is to build the best insurance product in the world, and that begins with pricing. Better risk selection enables better prices, stronger unit economics, and a product more customers choose and love. Technology is at the heart of who we are and has always been fundamental to how we create value. We built the company on the belief that a modern, fully integrated technology stack—combined with proprietary data and continuously improving predictive models—would allow us to price risk more accurately and operate more efficiently than traditional carriers. Our second-quarter results demonstrate the strength of that foundation. We delivered a 92.1% net combined ratio reflecting the continued profitability and underwriting discipline of the business. These results provide tangible evidence that our investments in technology, enhanced by AI, and pricing are producing meaningful outcomes today. At the same time, we continue to invest in what comes next. We expect to launch our newest predictive pricing model in the fourth quarter, and early results from research and development are highly encouraging. We continue to see meaningful gains as more underwriting, pricing, and behavioral data enter our system and strengthen our models. The opportunity ahead is not simply to develop a better model. It is to create an increasingly intelligent, automated insurance company—one that learns faster, prices more precisely, and delivers a better customer experience at a lower cost. That is the company we have always been building, and we believe AI compounds the potential of this foundation. In the second quarter, we generated $389 million of revenue, a 2% increase year-over-year. Net income was $25 million, an increase of $3 million or 15% year-over-year, and adjusted EBITDA was $44 million, an increase of $6 million or 16% year-over-year. Gross written premium was $340 million and gross earned premium was $368 million, down 2% and 1% year-over-year, respectively. Policies in force ended the quarter at 484 thousand, up 6% year-over-year. The quarter reflected more selective growth in a competitive Direct market, while our profitability remained strong. Partnership and independent agent channels represented approximately 51% of new writings in the quarter, up from approximately 44% in the prior-year period, reflecting continued progress diversifying growth beyond Direct. Net underwriting margin improved 3.1 points year-over-year to 7.9%, equivalent to a 92.1% net combined ratio, driven primarily by continued expense discipline. Net expense ratio improved 3.0 points year-over-year to 26.1%, while net loss and LAE ratio was 66.0%, broadly in line with the prior-year period. Our results reflect a business that can generate meaningful earnings while continuing to invest behind growth, technology, pricing, and distribution. During the quarter, we successfully refinanced our existing $200 million debt into a new term loan facility led by The Huntington National Bank, reducing our cost of debt and increasing financial flexibility. We also repurchased more than $20 million of our shares under our $75 million share repurchase authorization during the second quarter. We view share repurchases as one of several capital allocation tools available to us. They are part of the same framework we use to evaluate all uses of capital: organic growth, technology investment, partnerships, strategic opportunities, and returning capital to shareholders. We continue to maintain meaningful financial flexibility and remain disciplined in how we allocate capital. We are expanding our national footprint, deepening our distribution capabilities, advancing our pricing models, and building the technology platform we believe will define the next decade of insurance. Thank you to our team members for their hard work, to our customers for their trust, and to our shareholders for their support.