Root(ROOT) - 2024 Q4 - Annual Results

Financial Performance - In 2024, the company achieved a gross combined ratio of 94.7% on $1.3 billion of gross premiums written, generating GAAP net income of$31 million and adjusted EBITDA of $112 million[2][18]. - The company reported a net income of$22 million in Q4 2024, a $46 million improvement year-over-year, and an operating income of$35 million[12][30]. - Net premiums earned for Q4 2024 were $299.7 million, a 70.4$176.0 million in Q4 2023[61]. - Total revenues for FY 2024 reached $1,176.5 million, up 158.5$455.0 million in FY 2023[61]. - Net income for FY 2024 was $30.9 million, compared to a net loss of$147.4 million in FY 2023[64]. - The company reported a gross profit of $337.1 million for FY 2024, compared to a gross profit of$76.1 million in FY 2023[69]. - Adjusted EBITDA for FY 2024 was $111.9 million, a significant improvement from a loss of$42.9 million in FY 2023[69]. - The company achieved a gross profit of $337.1 million for the year ended December 31, 2024, compared to$76.1 million in 2023, marking a substantial improvement[76]. - Adjusted EBITDA for Q4 2024 was $43.1 million, up from$15.1 million in Q4 2023, demonstrating strong operational performance[80]. Growth Metrics - Policies in force increased by 21% to 414,862, while gross premiums written rose by 66% to $1.3 billion[15][31]. - The gross accident period loss ratio improved by 4 points to 59.9$1,495.7 million in 2024 from $1,347.7 million in 2023, representing an increase of 11$1,301.1 million, a 66.3% increase from $783.1 million in FY 2023[69]. - Direct contribution for the year ended December 31, 2024, was$394.0 million, up from $150.7 million in 2023, reflecting a growth of 161.5$333 million in unencumbered capital and expects to lower interest expense by approximately 50% going into 2025[34]. - The company plans to continue eliminating friction in the purchase experience by moving partners to fully embedded experiences, enhancing customer access[22]. - The company plans to continue expanding its market presence and investing in new technologies to enhance its service offerings and operational efficiency[74]. Market Strategy - The Partnership channel saw new writings increase by 115% year-over-year, driven by a modern technology stack that integrates seamlessly into partner platforms[21]. - The company aims to expand its distribution channels through partnerships, digital media, independent agents, and referrals[53]. - Root, Inc. plans to develop products for embedded insurance and expand into additional insurance lines[55]. - The company anticipates achieving a significant long-term competitive advantage through its partnership with Carvana[53]. - Root, Inc. is active in 35 markets for auto insurance, indicating a broad market presence[51]. Investment and Reserves - Loss and loss adjustment expense reserves rose to $413.2 million in 2024, up from$284.2 million in 2023, an increase of 45%[60]. - Unearned premiums increased to $353.9 million in 2024 from$283.7 million in 2023, a growth of 25%[60]. - Ceded premiums earned for the year ended December 31, 2024, were $160.1 million, down from$235.9 million in 2023, indicating a reduction in reinsurance costs[76]. - The company reported net investment income of $(35.9) million for the year ended December 31, 2024, compared to$(30.2) million in 2023, reflecting ongoing challenges in investment performance[76]. Customer Metrics - Root, Inc. has approximately 15 million app downloads and has collected 30 billion miles of driving data to inform their insurance offerings[49]. - The company expects to improve customer retention rates and enhance its capital and marketing efficiency[53]. - Premiums per policy increased to $1,584 in FY 2024, up from$1,423 in FY 2023, reflecting a 11.3% rise[69].