"We have consistently said that our top priority has been to reach profitability and in the third quarter, we delivered it."
— Alex Timm
03Detailed Report
ROOT
Root Inc
Period
Q3 2024
CurrencyUSD
Report TypeQuarterly Earnings
GeneratedJun 20, 2026
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Executive Summary
Root Inc (ROOT) achieved net income profitability for the first time in Q3 2024, reporting a net income of $23 million, marking a $69 million improvement year-over-year. This significant result is attributed to disciplined underwriting practices and a rigorous focus on expense management amidst ongoing revenue growth. The company reported revenues of $305.7 million, a robust 165.13% increase compared to Q3 2023, owing to substantial growth in new writings and policies in force. Management expressed confidence in reinvesting profits for future growth, particularly through enhanced partnerships and technological advancements in underwriting. Despite these positives, there are critical challenges, particularly in policyholder retention post a hyper-growth period, which may impact future profitability.
Key Performance Indicators
Revenue
Increasing
305.70M
QoQ: 5.71% | YoY: 165.13%
Gross Profit
Increasing
305.70M
1.00% margin
QoQ: 5.71% | YoY: 165.13%
Operating Income
Increasing
34.40M
QoQ: 805.26% | YoY: 175.11%
Net Income
Increasing
21.70M
QoQ: 378.21% | YoY: 147.38%
EPS
Increasing
1.52
QoQ: 392.31% | YoY: 148.10%
Revenue Trend
Margin Analysis
Financial Highlights
Revenue Performance: Root's Q3 revenue reached $305.7 million, showcasing a 165.13% YoY increase. This growth was primarily driven by a doubling of new writings and policies in force, demonstrating effective market penetration.
Profitability: Achieving a net income of $23 million translates to an impressive net income margin of approximately 7.1%, while EPS improved by 148.1% YoY to $1.52. Operating income stood at $34 million, signaling a successful management of operational costs despite aggressive growth strategies.
Expense Management: The gross combined ratio improved to 89%, underscoring enhanced efficiency in underwriting. Selling and marketing expenses, though significant at $34 million, were effectively countered by substantial operating income.
Cash Flow Analysis: Operating cash flow was nearly $50 million for the quarter, facilitating ongoing investments in business growth while maintaining a healthy balance sheet. Free cash flow reached $54 million, enabling strategic asset investments and debt repayment plans.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
305.70M
165.13%
5.71%
Gross Profit
305.70M
165.13%
5.71%
Operating Income
34.40M
175.11%
805.26%
Net Income
21.70M
147.38%
378.21%
EPS
1.52
148.10%
392.31%
Key Financial Ratios
Gross Profit Margin
Weak
1.00%
Gross profit margin is below industry norms, profitability concerns
Operating Profit Margin
Fair
11.30%
Operating margin is moderate, room for improvement in cost management
Net Profit Margin
Fair
7.10%
Net profit margin is moderate, room for improvement in cost management
Return on Assets
Weak
1.39%
Return on assets suggests inefficient capital allocation
Return on Equity
Fair
11.90%
Return on equity is acceptable but below top-tier companies
Debt to Equity
High Risk
1.65
Debt-to-equity indicates high leverage and elevated financial risk
P/E Ratio
Value
6.53x
P/E ratio suggests potential undervaluation or stable earnings
Price to Book
Premium
3.12x
Trading at premium to book value, reflects strong intangibles or growth
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