The stock price of Root, Inc. (NASDAQ: ROOT) has experienced a notable increase, rising 27.79% to $126.50 following the release of the company’s annual financial results. The company’s first-ever profitable year in fiscal year 2024 was a significant accomplishment. This accomplishment follows significant expansion in important operational domains.
Outstanding Business Development and Profitability
Root increased the number of insurance in effect by 21% in 2024, reaching 414,862. In the Partnerships channel, the business has quadrupled the number of new writings. On a run-rate basis, Root also claimed an almost 50% decrease in interest expenditures, a considerable reduction in reinsurance costs, and a best-in-class gross loss ratio of 58.9%.
With net income reaching $22 million, operating income at $35 million, and adjusted EBITDA skyrocketing to $43 million—significant gains over the previous year—these milestones were crucial in propelling the company’s profitability.
Strategic Development Using Data Science and Technology
Root’s success is attributed not only to robust business growth but also to its advanced technological capabilities. The company’s gross premiums written surged 66%, while gross earned premiums nearly doubled.
Importantly, Root’s gross loss ratio and Loss Adjustment Expense (LAE) ratio saw a significant seven-point improvement, reaching 67.5%. These improvements were fueled by the company’s superior technology stack and data science-driven marketing efforts, rather than relying on large teams or extensive marketing budgets.
Expanding Channels and Future Prospects
The company’s Direct channel continues to show promising results, driven by carefully targeted investments in customer acquisition. Root’s mobile-first telematics product enhances the customer experience while offering competitive pricing.
Meanwhile, the Partnerships channel has experienced a remarkable 115% year-over-year growth in new writings, with expanding pipelines in automotive, financial services, and agent sub-channels. Root’s modern technology stack enables seamless integration into partner platforms, allowing for fully embedded insurance purchases at the point of sale, and ensuring smooth customer interactions.