Root shares surge as Q1 earnings and revenue top estimates

May 08, 2025 11:39 PM AEST | By Investing

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Root shares surge as Q1 earnings and revenue top estimates

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Investing.com - Root Inc (NASDAQ:ROOT) reported first-quarter 2025 results that exceeded analyst expectations, driving shares up 7% in pre-open trading Thursday. The auto insurance technology company posted strong growth in premiums and improved profitability metrics.

Root reported adjusted earnings per share of $1.07, significantly beating the analyst consensus of $0.17. Revenue for the quarter came in at $349.4 million, surpassing estimates of $303.9 million and representing a 25% increase YoY.

The company’s gross premiums written grew 24% compared to the first quarter of 2024. Root also improved its net loss and LAE ratio by 8 percentage points YoY to 64%, while its net combined ratio improved by 6 points to 96%.

"The first quarter of 2025 was another great quarter for Root as we accelerated our policies-in-force growth while once again achieving profitability," Root CEO Alex Timm told Investing.com following the results. "This is a direct result of our strong product offering, underwriting technology, fixed expense discipline, and capitalization. With a strong capital position and ability to drive profit, we are excited to continue focusing on our long-term growth."

Root generated net income of $18 million, operating income of $24 million, and adjusted EBITDA of $32 million for the quarter. The company also announced new partnerships with Hyundai (OTC:HYMTF) Capital America and Experian (OTC:EXPGF) to expand its distribution channels.

The strong results were partly attributed to seasonal favorability, driven by tax refunds and elevated shopping behavior. Root emphasized its ability to maintain underwriting discipline while pursuing growth opportunities.

Looking ahead, Root cautioned that the first quarter is typically the strongest for growth and underwriting, and this seasonal favorability is not expected to persist for the remainder of 2025. However, the company remains optimistic about its long-term growth prospects and ability to offer competitive pricing through its technology-driven approach.

This article first appeared in Investing.com

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