Revenue growth has decelerated sharply from 165.1% to 1.6% while the combined ratio has exhibited extreme volatility, spiking to 152.7% in Q2 2026, indicating severe underwriting losses and an uncontrolled expense structure.
Root, Inc. (ROOT) annual income statement — 8-year revenue, gross profit & net income history
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 |
|---|
| Revenue | 1.56B | 1.52B | 1.18B | 455M | 310.8M | 345.4M | 346.8M | 290.2M | 43.3M |
| Revenue Growth % | 7.89% | 28.95% | 158.57% | 46.4% | -10.02% | -0.4% | 19.5% | 570.21% | - |
| Medical Costs & Claims | 1.06B | 1.13B | 839.4M | 378.9M | 343M | 397.3M | 361M | 373.7M | 53.7M |
| Medical Cost Ratio % | 67.92% | 74.52% | 71.35% | 83.27% | 110.36% | 115.03% | 104.09% | 128.77% | 124.02% |
| Gross Profit | 500.7M | 386.6M | 337.1M | 76.1M | -32.2M | -51.9M | -14.2M | -83.5M | -10.4M |
| Gross Margin % | 32.08% | 25.48% | 28.65% | 16.73% | -10.36% | -15.03% | -4.09% | -28.77% | -24.02% |
| Gross Profit Growth % | - | 14.68% | 342.97% | 336.34% | 37.96% | -265.49% | 82.99% | -702.88% | - |
| Operating Expenses | 419.1M | 345.8M | 306.2M | 223.5M | 265.5M | 469.2M | 348.8M | 198.9M | 58.7M |
| OpEx / Revenue % | 26.85% | 22.79% | 26.03% | 49.12% | 85.42% | 135.84% | 100.58% | 68.54% | 135.57% |
| Depreciation & Amortization | 13.5M | 11.8M | 14.9M | 12.6M | 13.8M | 16.6M | 15.6M | 4.9M | 600K |
| Combined Ratio % | 94.77% | 97.31% | 97.37% | 132.4% | 195.79% | 250.87% | 204.67% | 197.31% | 259.58% |
| Operating Income | 85.4M | 40.8M | 30.9M | -147.4M | -297.7M | -521.1M | -363M | -282.4M | -69.1M |
| Operating Margin % | 5.47% | 2.69% | 2.63% | -32.4% | -95.79% | -150.87% | -104.67% | -97.31% | -159.58% |
| Operating Income Growth % | - | 32.04% | 120.96% | 50.49% | 42.87% | -43.55% | -28.54% | -308.68% | - |
| EBITDA | 98.9M | 52.6M | 45.8M | -134.8M | -283.9M | -504.5M | -347.4M | -277.5M | -68.5M |
| EBITDA Margin % | 6.34% | 3.47% | 3.89% | -29.63% | -91.34% | -146.06% | -100.17% | -95.62% | -158.2% |
| Interest Expense | 17.8M | 21M | 42.2M | 46.1M | 34.6M | 20M | 77.7M | 22.3M | 900K |
| Non-Operating Income | -14M | -21M | -42.2M | -46.1M | -34.6M | -20M | -77.7M | -22.3M | -900K |
| Pretax Income | 81.6M | 40.8M | 30.9M | -147.4M | -297.7M | -521.1M | -363M | -282.4M | -69.1M |
| Pretax Margin % | 5.23% | 2.69% | 2.63% | -32.4% | -95.79% | -150.87% | -104.67% | -97.31% | -159.58% |
| Income Tax | -400K | -500K | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Effective Tax Rate % | -0.49% | -1.23% | 0% | 0% | 0% | 0% | 0% | 0% | 0% |
| Net Income | 80.4M | 40.3M | 30.9M | -147.4M | -297.7M | -521.1M | -363M | -282.4M | -69.1M |
| Net Margin % | 5.15% | 2.66% | 2.63% | -32.4% | -95.79% | -150.87% | -104.67% | -97.31% | -159.58% |
| Net Income Growth % | 40.81% | 30.42% | 120.96% | 50.49% | 42.87% | -43.55% | -28.54% | -308.68% | - |
| EPS (Diluted) | 4.79 | 2.24 | 1.83 | -10.24 | -21.11 | -37.62 | -86.43 | -24.83 | -6.08 |
| EPS Growth % | 38.37% | 22.4% | 117.87% | 51.49% | 43.89% | 56.47% | -248.09% | -308.39% | - |
| EPS (Basic) | - | 2.49 | 1.96 | -10.24 | -21.11 | -37.62 | -86.43 | -24.83 | -6.08 |
| Diluted Shares Outstanding | 16.8M | 17.2M | 16.9M | 14.4M | 14.1M | 13.84M | 13.88M | 14.08M | 1.77M |
Quick answers to the most common questions about buying ROOT stock.
For fiscal year 2025, Root, Inc. (ROOT) reported total revenue of $1.52B. This represents a 3403.7% increase compared to $43.3M in 2018.
Root, Inc. (ROOT) is profitable, generating $40.3M in net income for the fiscal year ending 2025 with a net profit margin of 2.7%.
Root, Inc. (ROOT) reported an operating income of $40.8M, resulting in an operating profit margin of 2.7%. This margin reflects the operational efficiency of the business before interest and taxes.
Root, Inc. (ROOT) generated $386.6M in gross profit for the year, representing a gross profit margin of 25.5%. This demonstrates the company's core pricing power and production efficiency.
Key Metrics
Top Statement Risk
Volatile Combined Ratio
Metrics are mathematically derived from official filings.
Premium Growth Decelerates Sharply
Root's total revenue growth has plummeted from a peak of 165.1% year-over-year in Q3 2024 to just 1.6% in Q2 2026, suggesting the hyper-growth phase following its market re-entry has concluded and the company is now facing a significantly more challenging top-line environment.
The dramatic sequential deceleration, particularly the collapse from 32.4% growth in Q2 2025 to single-digit levels by mid-2026, indicates the company may have exhausted its initial wave of easy customer acquisitions and now faces a mature, potentially saturated market. This sharp slowdown raises questions about the sustainability of its direct-to-consumer model without a substantial increase in marketing spend or a shift in product strategy.
Comb Ratio Volatility Undermines Profitability
The combined ratio spiked to 152.7% in Q2 2026, indicating severe underwriting losses, after a brief period of profitability in Q1 2026 (90.8%), highlighting extreme volatility in Root's core insurance economics that makes consistent earnings generation precarious.
This pattern of alternating profitable and unprofitable quarters suggests that pricing models or loss reserving may be inconsistently calibrated to actual claim experience. The 61.6% loss ratio in the latest quarter appears deceptively low, but the explosive combined ratio indicates a massive, non-claims-related operating loss, potentially from policy acquisition costs or technology investments, which overwhelms the underwriting result.
Q3 2025 Loss Marks a Critical Stumble
The Q3 2025 quarter, where Root posted a net loss of $5.4 million and a combined ratio of 101.3%, appears to be the inflection point where the company's rapid growth trajectory first hit a wall of unprofitable underwriting, challenging its narrative of sustained operational improvement.
This loss quarter, sandwiched between periods of profitability, suggests a specific event or seasonal loss spike overwhelmed the company's model. It warrants investigation into whether this represented a one-time catastrophe loss, a deterioration in rate adequacy, or a strategic decision to sacrifice profitability for market share, as it interrupted the steady improvement trend seen through early 2025.
Questionable Earnings Quality and Sustainability
The extreme swings in net income, from a $35.9 million profit in Q1 2026 to just $24.1 million in Q2 despite similar revenue, combined with the 152.7% combined ratio, suggest that recent profitability may be driven by volatile factors rather than sustainable underwriting discipline.
An analyst must scrutinize whether prior reserve releases or favorable development are flattering current earnings, masking underlying loss trends. The lack of investment income disclosure further complicates the picture, as it's unclear how much of the profit is derived from core underwriting versus external financial factors, challenging the thesis that Root has achieved a durable, profitable operating model.
Expense Structure Appears Uncontrolled
The Q2 2026 combined ratio of 152.7% versus a loss ratio of only 61.6% implies an extraordinarily high expense ratio over 91%, suggesting that Root's customer acquisition and operational costs are consuming revenue at an alarming rate, potentially undermining any underwriting efficiency.
This cost structure is fundamentally unsustainable, as it indicates the company spends nearly a dollar for every dollar of premium just on expenses, before any claims are paid. Without a drastic reduction in policy acquisition or general administrative costs, the path to consistent GAAP profitability appears blocked, regardless of loss ratio improvements.