Root shrinks net loss to $6 million

Root Insurance released its Q1 2024 results, ending the quarter with ~401k policies in force, an increase of 59k policies compared to Q4 2023.

The company continued to increase sales and marketing spend, which stood at $30.4 million during the quarter. In Q4 2023 and Q1 2023, Root spent $26.5 million and $3.6 million on sales and marketing, respectively. Root claims that its data-science marketing platform continues to systematically deploy spend and optimize unit economics. However, in Q4 2023, Root added 82k net new policies after spending $26.5 million on sales and marketing while adding 59k net new policies after spending $30.4 million on sales and marketing in the first quarter this year. Assuming the retention was steady between quarters, Root’s marketing in the quarter was less efficient than the previous one.

During the quarter, Root reported a $6 million net loss, an 85% year-over-year improvement. The company also delivered positive adjusted EBITDA of $15 million, a $26 million improvement year-over-year.

Root’s net combined ratio for the quarter was 102%, an improvement of 59.2 points compared to Q1 2023.

Renewal premium percentage of gross premiums earned decreased to 39% as a result of new business growth.

The direct channel was Root’s primary growth driver in the quarter, fueled by performance marketing.