Root, Inc.

Greetings and welcome to the Root, Inc. Fourth Quarter Earnings Conference Call. At this time, all participants are in the listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Matt Zimalda, Head of Investor Relations and Corporate Development. Please go ahead, sir.

Good afternoon, and thank you for joining us. Rood is hosting this call to discuss its fourth quarter and full year 2025 earnings results. Participating on today's call is Alex Tim, co-founder and chief executive officer, Jason Shapiro, senior vice president of business development, and Megan Binkley, chief financial officer. Earlier today, Rood issued a shareholder letter announcing its financial results. While this call will reflect items within that document, for more complete information about our financial performance, we also encourage you to read our full-year 2025 Form 10-K. Before we begin, I want to remind you that matters discussed on today's call will include forward-looking statements related to our operating performance, financial goals, and business outlook, which are based on management's current beliefs and assumptions. Please note that these forward-looking statements reflect our opinions as of the date of this call and we are not obligated to revise this information as a result of new developments that may occur. Forward-looking statements are subject to various risks, uncertainties, and other factors that could cause our actual results to differ materially from those expected and described today. For a more detailed description of our key performance indicators and risk factors, please review our most recent 10-K and shareholder letter. A replay of this conference call will be available on our website under the Investor Relations section. I would also like to remind you that during the call, we will discuss some non-GAAP measures while talking about Root's performance. You can find reconciliations of these historical measures to the nearest comparable GAAP measures in our financial disclosures, all of which are posted on our website at ir.joinroot.com. I will now turn the call over to Alex.

Thanks, Matt. 2025 was another strong year for Root. We grew revenue by 29% and our net income by 30%. exiting the year in the strongest position in the company's history. These are standout results in any year, but particularly in 2025. This is a testament to the strong foundation that Root has built to deliver throughout cycles. With $1.5 billion in premiums, exceptional financial performance, and a strong balance sheet, we have put in the hard work, time, and investment to be in the enviable position to drive profitable and material growth in our business. And we are doing this in a $350 billion auto market. Furthermore, our technology has given us a structural advantage and positioned us since our founding to lead in the adoption of AI-driven pricing and automation. As a company whose founding principles lie at the heart of AI, namely the advancements of modern quantitative methods, we are able to take advantage of an increasingly connected world. And we are seeing this come through the numbers. In the last 12 months, we increased our LTVs by more than 20% on average by just doing better math. While we believe that automation via robotic process automation and chatbots will be important to our operating leverage, our data suggests that this opportunity pales in comparison to the relative enormity of leveraging next-generation quantitative machines to the fundamental problem of insurance, that is, prediction. And our technology advantage doesn't end there. As technology and consumer behavior rapidly shifts and expectations rise, insurance distribution is now increasingly a technology problem. In the past, distribution first relied on appointing the right exclusive agents in local areas. Then, as the direct channel grew, it moved to inundating customers with ads. Today, whether it's integrating with new consumer-facing GPTs, financial services apps, or vehicles, we believe the future of distribution will be the ability to seamlessly integrate with these services to provide easy, almost invisible insurance. Doing this with flexible and transparent underwriting so that there is no dilemma between ease and profit is fundamentally a technology and data science capability. an opportunity that Root was built for. I'd like to share our growth strategy that consists of five key growth levers. The first is pricing, the continued rapid iteration of our pricing models as we incorporate new data from a variety of sources, ranging from cell phone sensors to in-app behaviors to traditional underwriting variables, enables lower prices while maintaining our strong loss ratio performance. This drives material and compounding growth across all of our channels. Price is the most important factor in insurance, and ultimately, as we lower prices, consumers in all our channels benefit. We are constantly working to make our product more affordable for our customers. The second is geographic expansion. We are already covering 80% of the US population, and our goal is to be in all contiguous states by the end of 2027. There's no reason our model doesn't scale to these folks in these new states, as consumers everywhere want affordable, easy, transparent, and fair insurance. The third is independent agents. This is our fastest growing segment with a total addressable market of over $100 billion and growing. Our seamless agent purchasing experience and competitive pricing makes for a formidable product that is not easily replicated. The fourth is our connected technology ecosystem, a prime example of this opportunity. is the recently announced partnership with Toyota that enables consenting drivers to receive an instant telematics-based car insurance quote from Root. Jason will go into more details on this exciting partnership on today's call. And our fifth lever is our direct distribution machine. Built on a modern data science architecture, our integrated pricing and marketing machines use hundreds of behavioral variables to target the right customers with the right price, adapt quickly to change, and deploy capital with agility and discipline. We're continuing to expand the scope of this machine as we enter into more data-rich channels, providing new veins of growth for the business. This growth strategy, we believe, is self-reinforcing, creating compounded effects when successful. For example, as pricing gets better, our performance improves, and as a regulated insurance carrier, this performance is critical to our state expansion. As we become national, this in turn makes us more attractive to large partners, and we begin to see economies of scale in our direct distribution. This is a virtuous growth cycle that has been unlocked by our scale and net income profitability. In 2026, we expect accelerating annual PIF growth fueled by continued expansion of our distribution channels. We also expect to continue investing in the talent and technology to support our growth. Given our clear market opportunity, proven business model, and track record of execution, these investments represent a significant long-term opportunity. We operate with a long-term mindset, prioritizing durable value over short-term reporting results. That means thoughtfully balancing growth and profitability as market conditions shift and we invest in R&D, all while staying focused on the compounding strength of our model rather than quarterly fluctuations. Taken together, we believe this approach positions Root to become one of the defining insurance companies of the next decade. I'll now turn the call over to Jason to talk about our exciting partnership results.