2025-02-26 Root, Inc. (ROOT) Q4 2024 Earnings Call Transcript

Root, Inc. (NASDAQ:ROOT) Q4 2024 Results Conference Call February 26, 2025 5:00 PM ET

Company Participants

Matt LaMalva - Head, Investor Relations

Alex Timm - Co-Founder & Chief Executive Officer

Megan Binkley - Chief Financial Officer

Conference Call Participants

Tommy McJoynt - KBW

Elyse Greenspan - Wells Fargo

Operator

Greetings and welcome to Root Inc. Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. \[Operator Instructions] As a reminder, this conference is being recorded.

欢迎参加Root公司2024年第四季度财报电话会议。目前，所有参会人员处于只听模式。在正式陈述结束后将进行问答环节。\[操作指引] 请注意，本次会议正在录音。

It is now my pleasure to introduce Matt LaMalva, Head of Investor Relations and Corporate Development. Please go ahead.

现在由我荣幸地介绍Root公司投资者关系与企业发展负责人Matt LaMalva先生。请开始发言。

Matt LaMalva

Thank you for joining us. Root is hosting this call to discuss its fourth quarter and full year 2024 earnings results. Participating on today's call are Alex Timm, Co-Founder and Chief Executive Officer; and Megan Binkley, Chief Financial Officer. Earlier today, Root issued a shareholder letter announcing its financial results.

感谢大家的参与。Root召开本次电话会议，是为了讨论公司2024年第四季度及全年财务业绩。今天参会的还有我们的联合创始人兼首席执行官Alex Timm，以及首席财务官Megan Binkley。早些时候，Root发布了一封致股东的信，公布了财务结果。

While this call will reflect items discussed within that document, for more complete information about our financial performance, we also encourage you to read our 2024 form 10-K, which was filed with the Securities and Exchange Commission earlier today.

虽然本次电话会议将涵盖股东信中的内容，但如需了解我们财务表现的更完整信息，建议您查阅我们今天稍早向美国证券交易委员会提交的2024年10-K表格。

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 undertake no obligation 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 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.

在我们开始之前，我想提醒大家，今天电话会议中涉及的内容包括与我们经营表现、财务目标及业务展望相关的前瞻性声明。这些声明基于管理层当前的信念和假设。请注意，这些前瞻性声明仅反映本次电话会议当日的观点，公司不承担因未来情况变化而更新信息的义务。前瞻性声明涉及多种风险、不确定性和其他因素，可能导致我们的实际结果与今日所述存在重大差异。有关风险因素的详细说明，请查阅我们最近提交的10-K文件及股东信。本次电话会议的重播将发布在公司官网的投资者关系栏目中。

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 those historical measures to the nearest comparable GAAP measures in our financial disclosures, all of which are posted on our website at ir.joinroot.com.

我还想提醒大家，在本次电话会议中我们将会讨论一些非美国通用会计准则（non-GAAP）财务指标，以反映Root的经营表现。关于这些非GAAP指标与相应GAAP指标的历史对账表，您可以在我们官网 ir.joinroot.com 的财务披露部分查看。

I will now turn the call over to Alex Timm, Root's Co-Founder and CEO.

接下来，请Root的联合创始人兼首席执行官Alex Timm发言。

Alex Timm

Thanks Matt. Simply put, 2024 was a landmark year for Root. We delivered in every facet of our operations, culminating in our first full year of net income profitability. We achieved a gross combined ratio of 95 on \$1.3 billion of gross premiums written, generating GAAP net income of \$31 million and adjusted EBITDA of \$112 million all incredible improvements from 2023.

谢谢你，Matt。简单来说，2024年对Root来说是具有里程碑意义的一年。我们在运营的各个方面都取得了成果，最终实现了公司首个全年净利润为正的财年。我们在13亿美元的保费规模下，实现了95的综合赔付率（gross combined ratio），达成了3100万美元的GAAP净利润和1.12亿美元的调整后EBITDA，较2023年实现了巨大进步。

Additional accomplishments for the year include growing policies in force, delivering what we believe is one of the best loss ratios in the industry, continued investments in our pricing and underwriting technology, reducing run rate interest expense and making significant strides to diversify our distribution. Best of all, 2024 was just the beginning for Root. We are excited for the year ahead, as we accelerate our growth trajectory, further expand our partnerships channel and reinvest in our business to drive long-term returns. The progress achieved in 2024 was possible due to the foundation we built in previous years.

今年的其他成果还包括：保单数量增长、达成业内领先的赔付率水平、持续投入定价和承保技术、降低年化利息费用，并在渠道多元化方面取得重大进展。最重要的是，2024年只是Root成长的开始。我们对新的一年充满期待，将加快增长步伐，进一步拓展合作伙伴渠道，并将资金再投资于业务，以推动长期回报。2024年取得的进展，离不开我们前几年打下的基础。

We believe this foundation will continue to drive momentum in our business for years to come. Specifically, our policies in force grew by 21% year-over-year to more than 414,000 while achieving what we believe is a best-in-class underwriting performance, a gross loss ratio of 59% and a gross combined ratio of 95%. We deployed our latest pricing and underwriting models, further enhancing our predictive power and allowing us to continually offer the best prices to the best drivers. Given our performance, we were able to reduce our run rate interest expense by more than 50% and dramatically reduce our reinsurance costs, further validating our progress to date and providing a tailwind going into the New Year.

我们相信这一基础将在未来多年持续推动我们的业务发展。具体而言，我们的在保保单数量同比增长21%，达到超过41.4万张，同时实现了业内一流的承保表现，毛赔付率为59%，综合赔付率为95%。我们上线了最新的定价与承保模型，进一步提升了预测能力，使我们能持续为优秀驾驶者提供最优价格。得益于我们的良好业绩表现，我们将年化利息费用削减超过50%，再保险成本也大幅下降，进一步印证了我们迄今为止的进步，并为新一年的发展提供了助力。

We continue to expand into new channels within Direct and drive profitable acquisition investment. We have found success in data-rich lower funnel channels and will continue to scale these wins, while leveraging our success expand into mid to upper funnel strategies. While this will take additional time to produce results, it is the right investment to consistently grow this channel over the long-term. Building differentiated access to customers remains a core pillar in our long-term growth strategy through our partnership channel. We more than doubled our new writings in 2024 and as the fourth quarter new writings through the partnership channel represent roughly a third of our overall new business.

我们在直销渠道中持续拓展新通路，并推进高回报的获客投资。我们已在数据密集的“转化底层”渠道取得成功，未来将继续扩大这些成果，并以此为基础向“转化中上层”策略拓展。虽然这类策略需要更长时间才能体现成果，但它是我们实现渠道长期稳定增长的正确投资方向。通过合作伙伴渠道建立差异化客户获取通道，是我们长期增长战略的核心支柱之一。2024年，我们的新保费写单数量同比翻倍，第四季度通过合作伙伴渠道完成的新写单占我们整体新业务的大约三分之一。

Our progress is driven by a proprietary technology stack that can seamlessly integrate into existing partner platforms, all with meeting customers at contextually relevant times. Our partnerships pipeline remains strong across our three channels of automotive, financial services and independent agents. Along with further growing the partnership channel in 2025, we expect to continue to graduate current partners to fully-embedded experiences and eliminate friction from the purchase experience. A great example of that is Carvana Insurance built with Root, which offers a three-click, bondable purchase experience on a partner platform that our customers have come to know and trust.

我们的进展得益于专有技术平台的支持，该平台能够无缝集成至合作伙伴现有系统，并能在关键情境下触达客户。我们的合作伙伴储备在汽车、金融服务和独立代理三个渠道均保持强劲。我们计划在2025年进一步扩大合作伙伴渠道，并推动现有合作方升级为完全嵌入式体验，从而消除客户购买过程中的阻力。一个典型的案例是Root与Carvana合作打造的保险服务，客户在其熟悉和信赖的平台上仅需三步点击即可完成绑定购买。

We remain confident in our long-term growth avenues across both channels, while maintaining a focus on national expansion. We are proud to highlight the recent launch of Minnesota, enabling us to now reach 76% of The U.S. population. We have filings pending in additional states and expect continued progress in the year ahead. Above all, providing customers a delightful experience and a great price, no matter what channel they come through remains our top priority. As we invest in and accelerate our growth, we will maintain our laser-focused mindset on disciplined underwriting, driven by our proprietary tech platform and data science algorithms. Because our gross loss ratio continues to trend below our long-term target of 60% to 65%, we are able to reduce rates in select states, affording our best savings to our best drivers, while achieving our returns.

我们对两个渠道的长期增长路径依然充满信心，并持续推进全美市场扩展。我们很自豪地宣布近期在明尼苏达州的上线，使我们目前覆盖了美国76%的人口。我们还在多个州提交了申请，预计未来一年将持续取得进展。最重要的是，无论客户来自哪个渠道，为他们提供愉悦的体验和优质价格始终是我们的首要任务。随着我们加大投资、加速增长，我们将继续以专有技术平台和数据科学算法为驱动，保持对严格承保的高度专注。由于我们的毛赔付率持续低于60%-65%的长期目标，我们得以在部分州调降费率，将最大优惠让给最优秀的驾驶者，同时仍能实现我们的收益目标。

As we've stated, although lower rates can lead to improved renewals in new writings, it is important to note we do not set prices with the primary goal to gain market share. Rather, our goal is to set prices accurately and our data science acumen and high telematics adoption rate enables us to effectively segment and price accordingly. Our pricing platform also allows us to remain nimble and fast, particularly in times of high macroeconomic uncertainty. We are able to leverage our real time actuarial reviews to incorporate changing trends into our pricing algorithms, and continually offer the best prices to our best drivers.

正如我们所强调的，虽然更低的费率可能提升续保率和新保增长，但我们设定价格的首要目标并非争夺市场份额，而是定价准确。凭借我们在数据科学方面的优势和高比例的车联网采集覆盖率，我们能够实现有效细分并据此定价。我们的定价平台还让我们在宏观经济不确定性高企的时期保持敏捷与响应速度。我们能通过实时精算审查机制将趋势变化迅速纳入定价算法，持续为优质客户提供最合适的报价。

At Root, it's all about the long-term. That means we invest our capital to drive intrinsic value creation, based on an economic framework over the life of the customer, not calendar period results. At times, this framework can be at odds with being a public company. However, we believe this creates a tremendous opportunity for long-term investors.

对Root来说，一切围绕长期发展展开。这意味着我们的资本投资是以客户生命周期内的经济价值创造为基础，而非以季度业绩为导向。虽然这种框架有时可能与上市公司对短期业绩的要求存在冲突，但我们相信这为长期投资者创造了巨大机会。

I will now hand the call over to Megan to discuss our fourth quarter operating results in more detail.

接下来，我将把时间交给Megan，她将更详细地介绍我们第四季度的经营业绩。

Megan Binkley

Thanks, Alex. We are thrilled to share that for a second consecutive quarter, we delivered net income profitability, capping off a great 2024 for Root. This remains a testament to our data and technology advantage, our disciplined underwriting and our unwavering focus on capital and expense management. For the fourth quarter, we delivered net income of \$22 million, a \$46 million improvement year-over-year. We also generated operating income of \$35 million and adjusted EBITDA of \$43 million in the fourth quarter. These metrics improved \$47 million and \$43 million year-over-year, respectively.

谢谢你，Alex。我们很高兴地宣布，Root已连续第二个季度实现净利润为正，为2024年画上了圆满句号。这充分体现了我们在数据与技术方面的优势、承保纪律的严谨性，以及对资本和费用管理始终如一的专注。2024年第四季度，我们实现净利润2200万美元，同比提升4600万美元。同时，我们实现了3500万美元的营业利润和4300万美元的调整后EBITDA，分别同比增长4700万美元和4300万美元。

Our outstanding results continue to be driven primarily by growth in our net-earned premium, consistently strong loss ratio performance, our closely-managed fixed expense base and responsible deployment of marketing investment. As we've consistently noted, we do not defer the majority of our customer acquisition costs over the life of our customer, which leads to accelerated expense recognition relative to earned premium. We saw material increases in policies in force, gross written premium and gross earned premium compared to the fourth quarter of 2023.

我们杰出的业绩表现，主要得益于净已赚保费的增长、持续强劲的赔付率表现、严格控制的固定费用结构，以及审慎投放的营销资金。正如我们一贯所强调的，我们不会将大部分获客成本延后摊销至客户生命周期中，因此相对于已赚保费，费用确认节奏更快。与2023年第四季度相比，我们在在保保单数量、毛签单保费和毛已赚保费方面均实现了显著增长。

We achieved this growth while delivering a Q4 gross accident period loss ratio of 61%, a 2 point improvement year-over-year, which was driven by our continued investment in data science and technology. We posted a fourth quarter growth combined ratio of 91%, a 19 point improvement year-over-year.

在实现增长的同时，我们第四季度的毛事故期赔付率为61%，同比改善了2个百分点，这得益于我们在数据科学与技术方面的持续投入。第四季度的毛综合赔付率为91%，同比改善了19个百分点。

In the fourth quarter of 2024, we ceded approximately 9% of our gross earned premium, and the difference between our gross and net loss and LEE ratios was just 1 point for the quarter. Our improvements in reinsurance costs were made possible through our continued improvement in underwriting results. We continue to maintain strong reinsurance protection for tail risk events, including catastrophe and excess of loss covers. The improvement in our operating results enabled the refinancing of our debt facility with Blackrock in October, which we expect to reduce our run rate interest expense in 2025 by approximately 50%. Blackrock has been a great partner to us over the past few years, and we are pleased to continue our relationship with them.

2024年第四季度，我们分出约9%的毛已赚保费，而毛赔付率与净赔付率（包括丧失和费用率）的差距仅为1个百分点。再保险成本的改善，得益于我们承保表现的持续优化。我们仍维持强有力的再保险保护，以应对尾部风险事件，包括自然灾害与超额损失覆盖。营运成果的改善，也使我们得以在10月成功与贝莱德重组债务融资，我们预计这将使2025年的年化利息支出减少约50%。贝莱德多年来一直是我们的重要合作伙伴，我们很高兴能继续与他们保持合作关系。

不容易，2020年有10亿美元的所有者权益，一路亏损到现在，目前还剩下2亿，大部分运营资金需要贷款。

Overall, it was a fantastic 2024 for Root. But as Alex noted, it's still early in our journey. We remain focused on growing in a thoughtful and disciplined manner, through expanding our footprint and distribution channels and investing in opportunities for the business that present high return potential, including measured experiments across the marketing funnel. We believe continued investments in our people and infrastructure, as well as targeted customer acquisition investment to enable profitable growth is the right decision to drive long-term success and shareholder value. Running the business in a lifetime unit economic framework may impact the degree of GAAP profitability in any given quarter, but we believe that will eventually translate to strong calendar year results, just as we saw take place in 2024. We remain excited for our future and appreciate your continued support.

总体而言，2024年对Root来说是极为出色的一年。但正如Alex所说，我们仍处于发展旅程的早期阶段。我们将继续秉持审慎且有纪律的增长策略，扩大市场覆盖和分销渠道，并投资于具有高回报潜力的业务机会，包括对营销转化路径各阶段的谨慎测试。我们相信，持续在人力与基础设施上的投入，以及有针对性的获客投资，是推动盈利性增长、实现长期成功与股东价值的正确抉择。以客户生命周期为核心的单位经济模型可能会影响某一季度的GAAP盈利水平，但我们相信最终将带来全年层面的强劲成果，正如我们在2024年所见。我们对未来充满信心，并感谢大家一直以来的支持。

With that, we look forward to your questions.

接下来，我们期待大家的提问。

Question-and-Answer Session

问答环节

Operator

[Operator Instructions] And our first question comes from the line of Tommy McJoynt with KBW. Please proceed.

[操作指引] 我们的第一个问题来自KBW的Tommy McJoynt。请开始提问。

Tommy McJoynt

Hi, good afternoon. With what you see as some geographies and customer segments allowing for selective rate decreases and mapping that against others still needing rate increases, what do you expect to be the direction of the premium per policy in the year ahead?

你好，下午好。考虑到你们观察到部分地区和客户群体可以适当降价，而其他地区仍需提价，你们预计明年每张保单的平均保费走势将会如何？

Alex Timm

Yes. I think you are going to see us file and continue to see some modest rate decreases. And so, that you will see apply some pressure to average premiums. Now at the same time, and we've talked about this before, we are still growing our independent agency channel as well as our partnership channel. And those policies, they retain longer. They usually have more vehicles associated with them. And so, they're fatter policies. And so on a per policy basis, you may see it to be relatively flat to modestly increasing.

是的，我认为你们会看到我们继续申请并实施适度的降价，这将对平均保费形成一定的下行压力。但与此同时，正如我们之前所提到的，我们的独立代理渠道和合作伙伴渠道仍在增长。这些渠道的保单通常续保率更高，涉及的车辆也更多，因此它们是“更厚重”的保单。从每张保单的角度来看，平均保费可能会维持平稳，或出现温和增长。

Tommy McJoynt

Got it. And when we think about modeling the session rate on your premium going forward, is the fourth quarter a good run rate of that mid single-digits number? It doesn't look like you can get much lower than that.

明白了。那如果我们要预测未来的保费分出率，是否可以将第四季度的中个位数分出水平作为一个参考的常态？看起来你们的分出比例已经降无可降了。

Megan Binkley

Yes. Thanks, Tommy. Yes, the reinsurance structure has certainly evolved, as you've seen our underwriting results improve over the last 24 months. We've been able to reduce the quota share sessions quite a bit. So yes, going forward, our focus is going to continue to be purchasing the per risk and catastrophe reinsurance covers to continue to protect the business from tail risk events and volatility. So, yes, you saw in Q4 our session levels of earned premium were around 9%. We do expect that, the session levels going forward will be materially consistent with where they were in Q4.

是的，谢谢你，Tommy。我们的再保险结构确实发生了显著变化，过去24个月随着承保表现的持续改善，我们大幅减少了配额再保险的分出比例。展望未来，我们的重点将继续放在购买单一风险和灾难性再保险覆盖，以保护公司免受尾部风险事件和波动的影响。第四季度我们的已赚保费分出率大约为9%，我们预计未来的分出水平将大体保持与第四季度一致。

Tommy McJoynt

Thanks. And then just last one, you gave some commentary about the retention levels on recent cohorts improving. Are there any data points that you guys would be willing to share or disclose around what those retention versus churn metrics actually look like?

谢谢。最后一个问题，你们提到了近期投保人群的留存水平在改善。能否分享或披露一些具体数据点，比如留存率和流失率的表现？

Alex Timm

No. We're not going to share necessarily any data additional data points right now. But what I will say is there's been a couple of things. One on PIF churn, we have seen a lot of the sort of hyper growth penalty that we saw really coming out of 2023 into 2024 abate and normalize. And so that, as we've said before, will be a tailwind to PIF growth. And so, that's certainly beneficial. In terms of those new cohorts, I think our retention is fairly consistent.

目前我们不会披露额外的具体数据点。但我可以说几点：第一，关于在保保单（PIF）的流失情况，我们观察到那种“高速增长后的反噬效应”——主要发生在2023到2024年初的阶段——已经缓解并趋于正常化。正如我们之前所说的，这将为保单数量增长带来顺风。至于新客户群体的留存情况，我认为总体上维持在一个比较一致的水平。

看着有向下兼容的性格。

Operator

[Operator Instructions] And the next question will come from the line of Elyse Greenspan with Wells Fargo. Please proceed.

[操作指引] 接下来是来自富国银行的Elyse Greenspan，请提问。

Elyse Greenspan

Hi, thanks. Good evening. My first question, you guys were talking about in the prepared remarks, right, you guys are going to reduce rates as the loss ratio has kind of been trending below, right, the 60% to 65% target. As we see some rate reductions, which makes sense given the profitability, where would you expect the loss ratio to settle out based on expectations right for some rate declines and what do you see from a loss trend perspective when you think about 2025?

你好，谢谢，晚上好。我的第一个问题是，在你们的开场发言中提到，由于赔付率持续低于60%到65%的目标区间，你们将适度下调费率。考虑到这种盈利能力带来的降价空间，你们预期在降价后赔付率会稳定在什么水平？以及展望2025年，你们对赔付趋势有怎样的判断？

Alex Timm

Thanks, Elyse. We're really projecting a low-to-mid single-digits loss trend. It's really what we're seeing right now in 2025. There's some uncertainty around that. We're always monitoring that. And if we ever see that change, we would certainly change our rate position. And we think, particularly with our technology stack and our ability to detect those rates very quickly, as you saw in the last inflationary environment, where we reacted very quickly and got the company into a position to grow faster than almost all of our competitors, we think, we could do that again if we see any changes in the macro economic landscape. So I think you're going to see, but right now, we're expecting, like I said, low single digit trends, low- to mid single digit trends and some slight rate decreases. So that's going to net out to maybe some slight increases in the loss ratio, but nothing material.

谢谢你，Elyse。我们目前预计2025年的赔付趋势将处于低至中个位数（low-to-mid single-digits）水平。这是我们当前观察到的情况，虽然其中存在一定的不确定性，我们会持续密切关注。如果发现变化，我们一定会及时调整费率策略。借助我们的技术平台和快速识别能力，就像上一轮通胀周期一样，我们当时迅速反应，使公司比几乎所有竞争对手都更快进入增长轨道。如果宏观环境再次出现变化，我们相信我们可以再次做到这一点。目前的预期是，赔付趋势处于低至中个位数，费率则会有些许下降，综合来看可能使赔付率略有上升，但幅度不会太大。

别人已经走过的路。

Elyse Greenspan

Okay. That's helpful. And then we've seen a couple quarters in a row, right, of positive earnings. Obviously, right, you guys are growing and there are some trade-offs there. How do you think about, I guess, have we seen it in inflection and could you give us any sense of where you would expect earnings to trend in 2025?

明白了，这很有帮助。我们已经看到你们连续几个季度实现盈利。显然你们也在扩大业务规模，其中也存在一些权衡。你们如何看待这个拐点的出现？是否可以给出2025年盈利趋势的展望？

Alex Timm

We don't manage the company to a quarterly P&L or quarterly earnings basis. We are always looking to manage the company to a life time value basis. And we have seen a favorable growth environment year-to-date. We're continuing to see our loss ratio perform year-to-date as well. And so, we think there's lots of opportunities to actually scale the company and grow. And we're doing that through our partnerships channel and adding additional partnerships. We're doing that through our adding states and getting national. And so, you're going to continue to see state expansion from us. And then lastly, we're going to continue to push new marketing channels that we're seeing and scaling those new marketing channels. And all of that's going to result in additional growth.

我们不会以季度损益表或季度盈利为主要管理目标，我们始终以客户生命周期价值为核心进行管理。年初至今我们看到了良好的增长环境，赔付率表现也很稳健。因此，我们认为公司存在很多扩大规模和增长的机会。我们正在通过合作伙伴渠道拓展新合作，也在进入更多州、走向全国布局，你们会继续看到我们的地域扩展。同时，我们还在推进并放大新型营销渠道的成果，所有这些都将带来额外增长。

Now that may mean in a certain quarter, you will see P&L pressure, because we are investing into the business. And we know that's the right investment to make over the long-term. But in the short-term, you may see that actually reduce earnings in a given quarter.

当然，这可能意味着在某个季度，你会看到利润表承压，因为我们在进行长期必要的投资。虽然短期可能对盈利有影响，但我们认为这是值得的长期投入。

Elyse Greenspan

And then, you were saying, right, low-to-mid single-digits loss trend in 2025. How are you thinking about the impact of tariffs? And I guess if there is some kind of impact, would that be something we would expect right in the back half, I guess, as opposed to perhaps the front part of 2025? Any color you could give there? Thank you.

你刚刚提到2025年的赔付趋势预计为低至中个位数。那你们如何看待关税带来的影响？如果真的产生影响，是否可能更偏向2025年下半年体现出来？能否就此方面提供一些判断？谢谢。

Alex Timm

Thanks, Elyse. We're not right now predicting any impacts from the tariffs. If those happen, we will be watching that real time. And again, because of our technology platform, when those changes happen through our reserving system that is automated, we can detect those changes real time very quickly. We can respond with rate trend. And that's again what put us in such a good position to grow our PIF materially in 2024 and 2023. And so, we do believe if a disruption like that happens in the macro economic landscape or through tariffs or otherwise, that being on a tech chassis actually positions you better than a lot of our incumbent competitors. And so, we're constantly monitoring that, and we are prepared to act very quickly and swiftly, if anything changes in the environment.

谢谢你，Elyse。我们目前并未预测关税会带来实质性影响。但如果真的发生，我们将实时监控。正如我们之前所说，依托自动化储备系统的技术平台，我们能够非常迅速地察觉此类变化，并据此调整费率趋势。正是这种能力，使我们在2023年和2024年能够迅速扩大在保保单数量。如果宏观经济出现像关税这样的扰动事件，我们相信自身的技术平台能让我们比传统竞争者更具优势。因此，我们会持续密切监测环境变化，并准备在必要时迅速采取行动。

Operator

And the next question comes from the line of Andrew Anderson with Jefferies. Please proceed.

接下来的问题来自杰富瑞的Andrew Anderson，请提问。

Unidentified Analyst

Hi, guys. This is Charlie on for Andrew. Congrats on the quarter. My first question is just around ad spend going into 2025. Can you guys talk about whether or not you're shifting the type of ad spend between like brand awareness spend versus performance marketing, or I guess any color around directionally how the bits and pieces in there should be moving this year would be helpful.

大家好，我是Charlie，代Andrew提问。恭喜你们本季度表现亮眼。我的第一个问题是关于你们2025年的广告支出方向。你们是否会在品牌曝光和效果营销之间调整广告投入的结构？如果可以的话，请大致分享一下这一年相关预算的方向性调整。

Alex Timm

Yes. On our increased investment in our acquisition spend, we are going more up funnel. It's not brand awareness spend, but it is more up funnel into channels like YouTube and video as well as more into direct mail. And so, we are seeing several channels that you would classify as more up funnel or mid funnel channels are working. That's important though. What we are not doing is just investing our marketing dollars to try to drive brand awareness. What we are doing is, we are taking the same competency and the same technology that we built in lower funnel channels that allows us to take all of the rich data and really assign exactly what an appropriate bid is for a customer and to understand what a customer is worth.

我们确实在加大客户获取方面的投资，但重点是在营销转化路径的上游。虽然不是传统意义上的品牌曝光投放，但我们在YouTube、视频和直邮等“中上游”渠道的投入在增加，而且目前这些渠道的表现是有效的。不过要特别说明的是，我们不会把预算单纯用于提升品牌认知。我们做的是，把我们在转化路径底层所建立起来的数据技术能力应用到这些数据密集的中上游渠道中，通过精确计算出每位潜在客户的合适出价及价值，来实现精准投放。

We're using that same technology in these data-rich channels that are more mid-to-upper funnel channels so that we can still drive returns. So we are taking it with the same level of discipline and real rigor around making sure that we are hitting our IRR on all of those dollars that we dollars that we invest. And if we ever see that not the case, we will pull back. But we are seeing meaningful opportunities to continue to invest in the business in our direct channel and in new channels as well. So it will be more mid-to-upper funnel, but that does not mean that it's just going to be brand awareness. We are still rigorously measuring every dollar we spend.

我们在这些渠道中同样坚持数据驱动、回报测算清晰的原则，以确保所投资的每一笔资金都达到我们的内部回报率要求（IRR）。一旦发现不达标，我们会立即撤回。但目前我们看到了在直销渠道和新渠道中继续投入的有效机会。因此，我们会更加关注中上游渠道，但这绝不意味着只是做品牌宣传，我们仍在对每一美元支出进行严格监测。

Unidentified Analyst

Okay. Thanks. And then just a follow-up. Between the direct and the embedded partnership channel, where are you guys seeing better returns going into 2025?

明白了，谢谢。接着问一下，在直销渠道和合作伙伴嵌入式渠道之间，你们在2025年预计哪一边的回报更好？

Alex Timm

I'd say both of those channels really are operating at our target returns. There's some puts and takes for each channel. Certainly, in the direct channel, you have low customer acquisition costs, but you expense a lot of those dollars upfront. In the embedded channel and the partnerships channel, we're continuing to see real momentum. We see longer retention in those channels. We see higher average premiums in those channels. And it's a commission rate, which all in might mean higher customer acquisition costs, but you incur those over a longer period of time. And so, we're actively investing in both channels. On the embedded side, we're investing in technology and development and continuing to scale our embedded platform. And then on direct, we're really investing again more inside of that data platform, so that we can continue to expand in the mid-to-upper funnel channels.

这两个渠道目前的回报基本都符合我们的目标水平。各有利弊：直销渠道的获客成本较低，但费用多集中在投保初期确认；而嵌入式合作伙伴渠道目前增长势头很强，客户留存更久，保费水平也更高。虽然它以佣金形式支付，总体获客成本可能更高，但是分期分步发生的。因此我们两个渠道都在积极投入。嵌入式这边我们持续投入于平台技术开发与扩展，直销这边则继续加码我们在数据平台上的投入，以便拓展中上游渠道。

Unidentified Analyst

Okay. And then just kind of following up on that specifically. I think over the past couple of quarters, we've talked about competition and how that's ramping as different competitors might be in better positions with their books. Do you expect the dynamics as you see them right now, between the two channels to be consistent going through 2025 or would you expect those dynamics to shift in the back half?

好的，最后再追问一下。在过去几个季度中我们也讨论过竞争环境的变化，一些竞争对手的业务状况有所改善，导致市场竞争在升温。你们认为目前这两个渠道之间的竞争格局会在2025年保持稳定，还是会在下半年出现变化？

Alex Timm

I'd say we're really expecting it to stay pretty consistent. We're always monitoring the competitive environment. We did see competition increase a bit in Q4, but I think really we're anticipating it to be fairly stable from here.

我们目前预期整体将保持相对稳定。我们会持续监测竞争态势。确实，第四季度的竞争略有加剧，但总体而言，我们认为市场格局将趋于平稳。

Operator

There are no further questions at this time. I'd like to turn the call back to Alex Timm for closing remarks.

目前没有更多提问。我们将电话交还给Alex Timm作会议总结。

Alex Timm

Thanks everybody for joining and I want to especially thank the team at Root for delivering what was yet again another tremendous quarter. Thanks everybody.

感谢大家的参与，我特别要感谢Root团队又一次带来了如此出色的季度业绩。谢谢大家！

Operator

This concludes today's conference. You may disconnect your lines at this time. Enjoy the rest of your day.

本次电话会议到此结束。您现在可以挂断电话，祝您余下的时光愉快。

2025-02-26 Root, Inc. (ROOT) Q4 2024 Earnings Call Transcript

2025-02-26 Root, Inc. (ROOT) Q4 2024 Earnings Call Transcript

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