Q1 2024 Shareholder Letter Dear Shareholders We're pleased to share that our strong momentum continued in the first quarter of 2024, delivering operating income for the first time in the company's history while materially growing our business. The vision we had when we started Root was to fundamentally transform insurance using technology and data science. In doing so, we believed we would create more accurate pricing while giving consumers more transparency and control over their financial lives, and ultim ...

The latest trading session saw Root, Inc. (ROOT) ending at $51.44, denoting a +0.02% adjustment from its last day's close. The stock's change was more than the S&P 500's daily loss of 0.88%. On the other hand, the Dow registered a gain of 0.56%, and the technology-centric Nasdaq decreased by 2.05%.The company's shares have seen a decrease of 0.66% over the last month, surpassing the Finance sector's loss of 6.2% and the S&P 500's loss of 2.57%.The investment community will be closely monitoring the performa ...

Super Micro Computer (NASDAQ: SMCI) has made headlines this year, as the company came from nowhere to become one of the best-performing companies in Wall Street. It has surged by more than 253% this year, giving it a market cap of over $60 billion. It even entered the S&P 500 index on Monday.Root stock price is surgingCopy link to sectionBut SMCI is trailing another technology company. Root (NASDAQ: ROOT) stock price is up by more than 1,524% in the past 12 months and 467% this year alone. This remarkable s ...

Root, Inc. (NASDAQ:ROOT) Q4 2023 Earnings Conference Call February 21, 2024 5:00 PM ET Company Participants Matt LaMalva - Investor Relations Alex Timm - Co-Founder & Chief Executive Officer Megan Binkley - Chief Financial Officer Conference Call Participants Josh Siegler - Cantor Fitzgerald Yaron Kinar - Jefferies Tommy McJoynt - KBW Elyse Greenspan - Wells Fargo Mike Ward - Citi Operator Good afternoon and welcome to the Root, Inc. Fourth Quarter 2023 Earnings Conference Call. Please note that this call i ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | --- | --- | --- | | Class A common stock, | ROOT | The Nasdaq Stock Market LLC | | $0.0001 par value per share | | | OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ...

Root, Inc. (NASDAQ:ROOT) Q3 2023 Earnings Conference Call November 2, 2023 8:00 AM ET Company Participants Alex Timm - Co-Founder & CEO Megan Binkley - CFO Matt LaMalva - IR Conference Call Participants Josh Siegler - Cantor Fitzgerald Tommy McJoynt - KBW Elyse Greenspan - Wells Fargo Alison Jacobowitz - UBS Operator Good morning. My name is Chris, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Root Inc. Q3 2023 Earnings Conference Call. [Operator Instruction ...

[Part I. Financial Information](index=6&type=section&id=Part%20I.%20Financial%20Information) This section provides Root, Inc.'s unaudited condensed consolidated financial statements and related disclosures [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents Root, Inc.'s unaudited condensed consolidated financial statements, highlighting key financial position and performance Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Summary (Unaudited) | Account | Sep 30, 2023 (in millions) | Dec 31, 2022 (in millions) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $635.3 | $762.1 | | Total investments | $171.5 | $133.2 | | Total assets | $1,240.2 | $1,312.9 | | **Liabilities & Equity** | | | | Loss and loss adjustment expense reserves | $256.5 | $287.4 | | Unearned premiums | $218.9 | $136.5 | | Long-term debt and warrants | $298.3 | $295.4 | | Total liabilities | $951.1 | $923.8 | | Total stockholders' equity | $177.1 | $277.1 | Condensed Consolidated Statements of Operations and Comprehensive Loss Condensed Consolidated Statement of Operations Summary (Unaudited) | Account | Three Months Ended Sep 30, 2023 (in millions) | Three Months Ended Sep 30, 2022 (in millions) | Nine Months Ended Sep 30, 2023 (in millions) | Nine Months Ended Sep 30, 2022 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $115.3 | $73.7 | $260.2 | $239.5 | | Loss and loss adjustment expenses | $85.8 | $80.9 | $208.6 | $273.3 | | Total operating expenses | $149.3 | $130.8 | $349.2 | $454.9 | | Operating loss | $(34.0) | $(57.1) | $(89.0) | $(215.4) | | Net loss | $(45.8) | $(66.4) | $(123.4) | $(239.4) | | Loss per common share | $(3.16) | $(4.71) | $(8.57) | $(17.10) | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statement of Cash Flows Summary (Unaudited) | Cash Flow Activity | Nine Months Ended Sep 30, 2023 (in millions) | Nine Months Ended Sep 30, 2022 (in millions) | | :--- | :--- | :--- | | Net cash used in operating activities | $(79.7) | $(163.9) | | Net cash used in investing activities | $(46.2) | $(5.7) | | Net cash (used in) provided by financing activities | $(0.9) | $283.3 | | **Net (decrease) increase in cash** | **$(126.8)** | **$113.7** | | Cash at beginning of period | $763.1 | $707.0 | | Cash at end of period | $636.3 | $820.7 | Notes to Condensed Consolidated Financial Statements - In Q3 2023, the company commuted certain reinsurance agreements, resulting in the recognition of **$4.4 million** in net premiums earned, **$4.2 million** in loss and LAE, and **$5.8 million** in other insurance expenses[47](index=47&type=chunk) - Restructuring costs related to workforce reductions and other initiatives totaled **$9.4 million** for the nine months ended September 30, 2023, compared to **$8.4 million** in the prior year period[53](index=53&type=chunk) - An additional **$1.7 million** in employee compensation expense is expected through Q4 2023[55](index=55&type=chunk)[56](index=56&type=chunk) - Total share-based compensation expense for the nine months ended September 30, 2023 was **$12.4 million**, a decrease from **$21.8 million** in the same period of 2022[61](index=61&type=chunk) - As of September 30, 2023, there was **$28.7 million** of total unrecognized compensation cost related to unvested equity awards[61](index=61&type=chunk) - The company is party to several legal proceedings, including a class action complaint and a shareholder derivative complaint[67](index=67&type=chunk)[69](index=69&type=chunk) - Management believes the claims are without merit and intends to defend against them vigorously, but cannot predict the outcome or estimate potential loss at this time[70](index=70&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes improved financial performance to strategic actions, rate increases, reduced reinsurance, and expense control Key Performance Indicators Key Performance Indicators Summary | Metric | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Policies in force | 259,522 | 255,279 | 259,522 | 255,279 | | Gross premiums written | $224.2M | $150.7M | $503.9M | $478.0M | | Gross profit/(loss) | $11.2M | $(8.3)M | $29.4M | $(28.1)M | | Net loss | $(45.8)M | $(66.4)M | $(123.4)M | $(239.4)M | | Direct contribution | $37.0M | $11.5M | $84.9M | $17.7M | | Adjusted EBITDA | $(19.4)M | $(46.4)M | $(42.6)M | $(161.4)M | | Net combined ratio | 143.1% | 185.1% | 150.1% | 199.3% | | Gross combined ratio | 118.7% | 130.4% | 119.9% | 139.5% | Results of Operations - **Q3 2023 vs Q3 2022:** - **Net Premiums Earned:** Increased **45.8%** to **$100.0 million**, primarily due to reduced reinsurance cessions (**37.4%** in Q3'23 vs **55.8%** in Q3'22) and higher premium per policy from rate actions[127](index=127&type=chunk)[128](index=128&type=chunk) - **Loss and LAE:** Increased **6.1%** to **$85.8 million**, driven by reduced reinsurance cessions, partially offset by better loss experience[132](index=132&type=chunk) - **Gross Accident Period Loss Ratio:** Improved to **68.0%** from **79.3%**, mainly due to rate actions outpacing increased claim severity[133](index=133&type=chunk) - **Operating Expenses:** Total operating expenses increased **14.1%** to **$149.3 million**, driven by higher sales & marketing and other insurance expenses, but offset by decreases in technology and G&A costs[133](index=133&type=chunk) - **Nine Months 2023 vs Nine Months 2022:** - **Net Premiums Earned:** Increased **1.0%** to **$223.9 million**, as reduced reinsurance cessions and rate actions offset a **15.9%** decline in Gross Premiums Earned[139](index=139&type=chunk)[140](index=140&type=chunk) - **Loss and LAE:** Decreased **23.7%** to **$208.6 million** due to better loss experience[143](index=143&type=chunk) - **Gross Accident Period Loss Ratio:** Improved significantly to **67.9%** from **81.3%** due to rate actions[144](index=144&type=chunk) - **Operating Expenses:** Total operating expenses decreased **23.2%** to **$349.2 million**, reflecting broad cost reductions, particularly in Sales & Marketing, Technology, and G&A, following 2022 workforce reductions[144](index=144&type=chunk) Liquidity and Capital Resources - As of September 30, 2023, the company had **$635.3 million** in cash and cash equivalents, with **$502.2 million** held outside of regulated insurance entities, and **$167.1 million** in marketable securities[165](index=165&type=chunk) - The company believes existing cash, marketable securities, and operating cash flow will be sufficient to support working capital and capital expenditure needs for at least the next 12 months[167](index=167&type=chunk) - Net cash used in operating activities improved to **$79.7 million** for the first nine months of 2023, compared to **$163.9 million** for the same period in 2022, primarily due to a lower net loss and reduced operating costs[172](index=172&type=chunk) - The company is subject to debt covenants requiring a minimum of **$200.0 million** in cash and cash equivalents to be held in entities other than its insurance subsidiaries[170](index=170&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk disclosures from the 2022 Annual Report on Form 10-K are reported - There have been no material changes in the quantitative and qualitative market risk disclosures from the 2022 10-K[180](index=180&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were ineffective due to a material weakness in monitoring and control circumvention - As of September 30, 2023, management concluded that disclosure controls and procedures were not effective due to a previously identified material weakness[182](index=182&type=chunk) - The material weakness relates to inadequate senior leadership hiring practices and ineffective controls over vendor management, contracts, and payments, which were circumvented by a former employee[183](index=183&type=chunk) - Remediation efforts are in progress, including enhanced hiring policies and improved vendor management processes, but the new controls have not operated for a sufficient period to demonstrate effectiveness[184](index=184&type=chunk)[185](index=185&type=chunk)[187](index=187&type=chunk) [Part II. Other Information](index=49&type=section&id=Part%20II.%20Other%20Information) This section provides additional information including legal proceedings, risk factors, and equity security disclosures [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, but management does not expect a material adverse financial effect - The company is party to litigation and legal proceedings from time to time[190](index=190&type=chunk) - Except as disclosed in Note 11, management does not believe any pending action will have a material adverse effect on its financials[190](index=190&type=chunk) [Item 1A. Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the 2022 Annual Report on Form 10-K are reported - There have been no material changes in risk factors from those disclosed in the 2022 10-K[192](index=192&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=51&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company made no equity security purchases and does not anticipate paying cash dividends due to business needs and restrictions - The company made no purchases of its equity securities during the quarter[194](index=194&type=chunk) - The company has never paid cash dividends and does not anticipate paying any in the foreseeable future, intending to retain earnings for business expansion[195](index=195&type=chunk) - Dividend payments are restricted by state insurance regulations for its subsidiaries and by covenants in its Term Loan agreement[196](index=196&type=chunk)[199](index=199&type=chunk) [Item 3. Defaults Upon Senior Securities](index=52&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable as the company has not defaulted upon any senior securities - Not applicable[200](index=200&type=chunk) [Item 4. Mine Safety Disclosures](index=53&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's business - Not applicable[202](index=202&type=chunk) [Item 5. Other Information](index=54&type=section&id=Item%205.%20Other%20Information) There is no other information to report for this item - None[204](index=204&type=chunk) [Item 6. Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications - Lists exhibits filed with the report, including CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906[207](index=207&type=chunk)

Financial Data and Key Metrics Changes - The company reported a net loss of $37 million, which is a 62% improvement year-over-year [84] - Adjusted EBITDA improved by 81% over the prior year, resulting in a loss of $12 million [84] - The gross accident period loss ratio decreased to 68%, showing a slight improvement over Q1 [82] Business Line Data and Key Metrics Changes - Gross written premium for Q2 was $145 million, an 8% increase quarter-over-quarter [83] - Gross earned premium for Q2 was $132 million, a slight increase over the first quarter [83] - The company experienced a 65% quarter-over-quarter growth in new writings [76] Market Data and Key Metrics Changes - The company noted that 80% of its footprint is now rate adequate or at single-digit indications [54] - The competitive environment has led to favorable marketing costs, which the company is monitoring closely [78] Company Strategy and Development Direction - The long-term strategy focuses on retaining more business and reducing reinsurance costs [2] - The company aims to leverage technology and machine learning to improve pricing and underwriting [79] - The company is committed to disciplined growth while maintaining profitability [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to achieve profitability with existing capital [80] - The company anticipates elevated cash burn in the second half of the year due to increased acquisition spending [87] - Management is optimistic about the growth potential from partnerships, particularly with Carvana [20] Other Important Information - The company ended Q2 with $520 million of unencumbered cash, a minimal change from $524 million at the end of Q1 [85] - The company has been decreasing its external session percentage as business improves [66] Q&A Session Summary Question: What is driving the elevated cash burn in the second half of the year? - Management clarified that the cash burn is a result of increased marketing and acquisition spending, but emphasized that growth is not at the expense of profit [24][26] Question: Can you discuss the new pricing model and its impact on loss ratios? - Management highlighted that the new pricing model is 17% more accurate and is expected to improve loss ratios moving forward [12][15] Question: What is the status of the Carvana partnership? - Management reported strong growth in the Carvana partnership, with customer adoption tripling [19][20] Question: How much of the states are now rate adequate? - Management indicated that 80% of their footprint is now rate adequate or at single-digit indications [54] Question: What are the future pricing assumptions around frequency? - Management noted that they are targeting high single digits for overall trends, considering both frequency and severity [56]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from____________to____________ Commission File Number: 001-39658 ROOT, INC. (Exact name of Registrant as specified in its charter) Delaware 84-2717903 (State or oth ...

Root, Inc. (NASDAQ:ROOT) Q1 2023 Results Conference Call May 4, 2023 8:00 AM ET Company Participants Jodi Baker - Investor Relations Alex Timm - Co-Founder and Chief Executive Officer Megan Binkley - Interim Chief Financial Officer Frank Palmer - Chief Insurance Officer Conference Call Participants Josh Siegler - Cantor Fitzgerald Tommy McJoynt - KBW Peter Phipson - Evercore Charlie Lederer - Citi Operator Thank you for standing by, my name is Kayla Baker, and I will be your conference operator today. At th ...