Root Inc (ROOT) 2025 Q2 法說會逐字稿

Ladies and gentlemen, greetings, and welcome to the Root Incorp., 2025 second-quarter earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded.

女士們、先生們，大家好，歡迎參加 Root Incorp. 2025 年第二季財報電話會議。（操作員指示）提醒一下，本次會議正在錄音。

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

現在我很高興介紹今天的主持人，投資者關係和企業發展主管 Matt LaMalva。請繼續。

Thank you for joining us. Root is hosting this call to discuss its second-quarter 2025 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. 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 second quarter 2025 Form 10-Q, which was filed with the Securities and Exchange Commission earlier today.

感謝您加入我們。Root 主持這場電話會議是為了討論其 2025 年第二季的獲利結果。參加今天電話會議的有聯合創始人兼執行長 Alex Timm 和財務長 Megan Binkley。今天早些時候，Root 發布了一封股東信，宣布了其財務表現。雖然本次電話會議將反映該文件中討論的內容，但為了更完整地了解我們的財務業績，我們也鼓勵您閱讀我們今天早些時候向美國證券交易委員會提交的 2025 年第二季度 10-Q 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 are not obligated to revise this information as a result of new developments that may occur.

在我們開始之前，我想提醒您，今天電話會議上討論的事項將包括與我們的經營業績、財務目標和業務前景相關的前瞻性陳述，這些陳述基於管理層當前的信念和假設。請注意，這些前瞻性陳述反映了我們在本次電話會議之日的觀點，我們沒有義務根據可能發生的新發展來修改這些資訊。

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, 10-Q and shareholder letter.

前瞻性陳述受各種風險、不確定性和其他因素的影響，這些因素可能導致我們的實際結果與今天預期和描述的結果有重大差異。有關我們的風險因素的更詳細描述，請查看我們最新的 10-K、10-Q 和股東信函。

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.

本次電話會議的重播將在我們網站的「投資者關係」部分提供。我還想提醒您，在通話過程中，我們將在談論 Root 的表現時討論一些非 GAAP 指標。您可以在我們的財務揭露中找到這些歷史指標與最接近的可比較 GAAP 指標的對賬，所有這些對帳都發佈在我們的網站 ir.joinroot.com 上。

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

現在我將把電話轉給 Root 的共同創辦人兼執行長 Alex Timm。

Thanks, Matt. The second quarter was another impressive quarter for Root. We delivered strong financial results, setting a record on revenue with $371 million in gross earned premiums and generated net income of $22 million. These results are the culmination of consistent execution of our strategy, allowing us to create great experiences and great prices for our customers.

謝謝，馬特。對於 Root 來說，第二季又是一個令人印象深刻的季度。我們取得了強勁的財務業績，創下了 3.71 億美元的總保費收入記錄，並產生了 2,200 萬美元的淨收入。這些成果是我們持續執行策略的成果，使我們能夠為客戶創造出色的體驗和優惠的價格。

Beyond financial results, we continue to advance our strategy, releasing our next-gen pricing model, continuing to rapidly grow our partnerships channel and making meaningful progress on our path to becoming national.

除了財務表現之外，我們還將繼續推進我們的策略，發布我們的下一代定價模式，繼續快速發展我們的合作夥伴管道，並在走向全國的道路上取得有意義的進展。

Building AI and Machine Learning to better price insurance is the bedrock of our strategy. Our new pricing model substantially improves our risk selection, increasing customer lifetime values by 20% on average. This impact could be even larger in some states and allows us to grow faster, collect more data and continue to build even more predictive models.

建立人工智慧和機器學習以更好地定價保險是我們策略的基石。我們的新定價模式大大改善了我們的風險選擇，平均提高了客戶生命週期價值 20%。在某些州，這種影響可能更大，並使我們能夠更快地發展，收集更多數據並繼續建立更多預測模型。

For context, our last model update was released at the end of 2024. Our foundation in Artificial Intelligence, namely Machine Learning, has allowed us to iterate on our models not only rapidly but also with big improvements to segmentation. These results show the power of this technology and our strategy.

就背景而言，我們上一次模型更新是在 2024 年底發布的。我們在人工智慧（即機器學習）方面的基礎使我們不僅能夠快速迭代我們的模型，而且還能對分割進行重大改進。這些結果顯示了這項技術和我們策略的威力。

Our partnerships channel has seen quarterly new writing nearly triple year-over-year, and we are seeing strong early wins with independent agents, driven by our technology platform that makes it incredibly easy for agents to deliver great prices quickly to their clients. We are now available through the industry's two largest comparative raters, EZLynx and PL Rating.

我們的合作管道每季度的新作品數量同比增長近兩倍，我們看到獨立代理商在早期取得了強勁的勝利，這得益於我們的技術平台，使代理商能夠非常輕鬆地快速向客戶提供優惠的價格。我們目前可透過業界兩大比較評級機構 EZLynx 和 PL Rating 提供服務。

Now live in more than 20 states, early traction on these platforms has been strong, and we are working to expand within our geographic footprint by year-end. Through these platforms, Root significantly expands its reach, meeting agents where they are with an embedded technology that provides increased efficiency to their quote and buying process. As anticipated, we saw competition increase in our direct channel and our data science machine reacted exactly as designed, reducing marketing spend when appropriate.

目前，這些平台已覆蓋 20 多個州，早期發展勢頭強勁，我們正努力在年底前擴大我們的地理覆蓋範圍。透過這些平台，Root 大幅擴大了其覆蓋範圍，利用嵌入式技術來滿足代理商的需求，從而提高其報價和購買流程的效率。正如預期的那樣，我們看到直接管道的競爭加劇，我們的數據科學機器做出了與設計完全一致的反應，在適當的時候減少了行銷支出。

To date, we have largely focused on performance marketing channels. Combining the data-rich nature of these channels with our machine learning process allows for a competitive advantage among high-intent customers. We have proven that we can win in this segment and believe the next leg of our growth will come from ongoing R&D investments as we leverage this competitive advantage across additional data-rich marketing channels.

到目前為止，我們主要關注績效行銷管道。將這些管道的資料豐富特性與我們的機器學習過程結合，可以在高意向客戶中獲得競爭優勢。我們已經證明我們能夠在這一領域取得成功，並相信我們下一階段的成長將來自持續的研發投資，因為我們將利用這一競爭優勢在其他數據豐富的行銷管道中取得成功。

Given the size of these untapped marketing channels and the opportunity to build a competitive advantage based on data in these channels, we believe this opportunity is substantial and well worth the wait.

考慮到這些尚未開發的行銷管道的規模以及基於這些管道中的數據建立競爭優勢的機會，我們相信這個機會是巨大的，值得等待。

As mentioned last quarter, we believe we will react swiftly and appropriately to potential tariffs. To date, we have not seen a meaningful impact from tariffs. Given that our current loss ratios remain below our long-term target of 60% to 65%, we are in position to absorb some impact without raising rates or sacrificing our long-term unit economic targets. We are pleased with our progress in the quarter but are far from satisfied as our goal remains to be the largest, most profitable personal lines insurance carrier in the United States.

正如上個季度所提到的，我們相信我們將對潛在的關稅做出迅速而適當的反應。到目前為止，我們還沒有看到關稅帶來的重大影響。鑑於我們目前的損失率仍低於 60% 至 65% 的長期目標，我們有能力吸收一些影響，而無需提高費率或犧牲我們的長期單位經濟目標。我們對本季的進展感到滿意，但遠未滿足，因為我們的目標仍然是成為美國最大、最賺錢的個人保險公司。

We will continue to invest in our business, technology and growth, which we expect will impact near-term profitability in the back half of 2025. As we have made clear, at Root, it's all about the long term. That means we invest our capital to drive intrinsic value creation, not near-term calendar period results.

我們將繼續投資於我們的業務、技術和成長，預計這將影響 2025 年下半年的短期獲利能力。正如我們已經明確表示的，在 Root，一切都是為了長遠利益。這意味著我們投資資本是為了推動內在價值創造，而不是短期日曆期間的結果。

We believe a disciplined adherence to this framework creates a tremendous opportunity for long-term investors, and we are excited to continue to invest in the opportunity ahead.

我們相信，嚴格遵守這個框架將為長期投資者創造巨大的機會，我們很高興繼續投資未來的機會。

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

現在我將把電話交給梅根，更詳細地討論我們第二季的經營業績。

Thanks, Alex. Overall, we experienced another quarter of strong performance. In the second quarter, we delivered net income of $22 million, a $30 million improvement year-over-year. We also generated operating income of $27 million and adjusted EBITDA of $38 million, improvements of $24 million and $26 million year-over-year, respectively. In the second quarter, we saw increases in policies in force, gross written premium and gross earned premium when compared to the second quarter of 2024.

謝謝，亞歷克斯。整體而言，我們又經歷了一個表現強勁的季度。第二季度，我們的淨收入為 2,200 萬美元，年增 3,000 萬美元。我們也實現了 2,700 萬美元的營業收入和 3,800 萬美元的調整後 EBITDA，年比分別成長 2,400 萬美元和 2,600 萬美元。與 2024 年第二季相比，第二季有效保單數量、毛承保保費和毛已賺保費均增加。

Our growth in the quarter was driven primarily by our partnership channel as we continue to expand our pipeline with a differentiated insurance offering. We not only grew but did so profitably as evidenced by our gross accident period loss ratio of 60%.

本季我們的成長主要得益於我們的合作管道，因為我們繼續透過差異化的保險產品擴大我們的管道。我們不僅實現了成長，而且獲利能力也得到了提升，這從我們 60% 的總事故期損失率就可以看出。

We also achieved a net combined ratio of 95% in the quarter, an 8-point improvement on a year-over-year basis, reinforcing the ongoing discipline in how we manage the business and deploy capital. None of this is possible without continued investment into our business and disciplined execution against our strategy.

本季度，我們的淨綜合成本率還達到 95%，比去年同期提高了 8 個百分點，這進一步強化了我們在業務管理和資本配置方面的持續紀律。如果沒有對業務的持續投資和嚴格執行策略，這一切都不可能實現。

We remain well capitalized and positioned to pursue the most attractive opportunities ahead of us. At the end of the quarter, we had $314 million in unencumbered capital, and we continue to maintain excess capital across our insurance subsidiaries. This financial flexibility enables us to optimize our operating structure and deploy growth capital dynamically where we see the greatest long-term return potential.

我們仍然擁有充足的資本，並有能力抓住未來最具吸引力的機會。截至本季末，我們擁有 3.14 億美元的未支配資本，並且我們繼續在保險子公司中保持過剩資本。這種財務靈活性使我們能夠優化營運結構，並在我們認為具有最大長期回報潛力的地方動態部署成長資本。

Looking ahead to the second half of the year, we plan to continue investing in key strategic areas, expanding our national footprint, enhancing our product suite and deepening our data science and technology capabilities. These investments are foundational to driving long-term growth, scale and sustained value creation.

展望下半年，我們計劃繼續投資關鍵策略領域，擴大我們的全國影響力，增強我們的產品套件，並深化我們的數據科學和技術能力。這些投資是推動長期成長、規模和持續價值創造的基礎。

We do expect these investments, combined with typical seasonal loss ratio pressure in H2, to result in increased pressure on net income profitability in the near term. Separately, as we've disclosed, assuming the Carvana short-term warrants expire unexercised on September 1, we would recognize a cumulative warrant expense catch-up.

我們確實預計，這些投資加上下半年典型的季節性損失率壓力，將在短期內增加淨收入獲利能力的壓力。另外，如我們所揭露的，假設 Carvana 短期認股權證於 9 月 1 日到期未行使，我們將確認累計認股權證費用補繳。

We expect to incur approximately $16 million to $18 million in noncash expense in Q3 related to the outstanding warrant structure, of which approximately $15.5 million reflects a cumulative catch-up tied to the transition to long-term warrants, which best based on policy sales. This is expected to result in a net loss for the quarter, but we expect to maintain positive adjusted EBITDA. In short, this reflects the success of our partnership with Carvana and the value we're creating together.

我們預計第三季與未償還認股權證結構相關的非現金支出約為 1,600 萬至 1,800 萬美元，其中約 1,550 萬美元反映了與向長期認股權證過渡相關的累計追趕，這最好以保單銷售為基礎。預計這將導致本季淨虧損，但我們預計調整後的 EBITDA 將保持正值。簡而言之，這反映了我們與 Carvana 合作的成功以及我們共同創造的價值。

Finally, as always, we'll continue to take a disciplined and opportunistic approach to direct marketing investment, adjusting quarter-by-quarter based on performance and competitive dynamics. On the partnership side, while we're still early in scaling this channel, we expect it to continue increasing as a percentage of our overall book in the back half of the year.

最後，與往常一樣，我們將繼續採取嚴謹和機會主義的方式進行直接行銷投資，並根據業績和競爭動態逐季度進行調整。在合作方面，雖然我們仍處於擴展該管道的早期階段，但我們預計其在下半年整體帳簿中所佔的百分比將繼續增加。

As we've consistently stated, we've remained 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 over the long term. We are excited for our future and appreciate your continued support.

正如我們一貫所說，我們始終專注於以深思熟慮和自律的方式發展，透過擴大我們的業務範圍和分銷管道，並投資於具有長期高回報潛力的業務機會。我們對我們的未來充滿期待，並感謝您的持續支持。

With that, Alex and I look forward to your questions.

因此，亞歷克斯和我期待您的提問。

Ladies and gentlemen, we will now begin the question-and-answer session.

女士們、先生們，我們現在開始問答環節。

(Operator Instructions)

（操作員指示）

Tommy McJoynt, KBW.

湯米·麥克喬伊特，KBW。

Hey, good afternoon guys. Thanks for taking our questions here. The first one I want to talk about is just the direction of your expectations for policies in force growth. It seems that we saw a little bit of a deceleration this quarter, and you guys noted some in the commentary around the competitive state of the direct channel of marketing. So can you talk about your appetite to lean into growth on the direct side and what that could mean for your potential PIF growth and your appetite for that going forward?

嘿，大家下午好。感謝您在這裡回答我們的問題。我想談的第一個問題是您對政策執行成長方向的預期。看來我們本季看到了一些減速，你們在有關直接行銷管道競爭狀況的評論中註意到了一些。那麼，您能談談您對直接增長的興趣嗎？這對您的潛在 PIF 成長意味著什麼？以及您對未來的興趣是什麼？

Yeah. Thanks, Tommy. First, I'd note we have seen modest growth in our PIF quarter-to-date in Q3. And so we do believe that there's certainly opportunity to grow the business. We did see in Q2, the direct channel become more competitive, and we're not going to chase a soft market.

是的。謝謝，湯米。首先，我要指出的是，我們的 PIF 在第三季迄今出現了溫和的成長。因此我們確實相信，肯定存在業務成長的機會。我們確實看到在第二季度，直接通路的競爭變得更加激烈，我們不會追逐疲軟的市場。

And so if we're not necessarily expecting that to change in the near term. But we also have been growing our partnership channel very rapidly. That grew 3x year-over-year in new writings. And we're doing that, and we're still only appointed in fewer than 4% of all independent agents nationwide. So we think that the long-term growth opportunity there is really significant.

因此，如果我們不期望這種情況在短期內會改變。但我們的合作管道也在快速發展。新作品數量年增了 3 倍。我們正在這樣做，但我們在全國範圍內的獨立代理商中僅佔不到 4%。因此我們認為那裡的長期成長機會確實很大。

We also, as you saw in the quarter, just received approval for our product filing in the state of Washington. So that's a meaningful step towards continuing our march to be national, and we believe that, that's also going to add material opportunity for growth in the long term.

正如您在本季度看到的，我們也剛剛獲得了華盛頓州產品備案的批准。這是我們繼續走向全國的有意義的一步，我們相信，這也將為長期成長增添物質機會。

And then the third thing I'd highlight is we're continuing to test mid- to upper level funnel marketing channels. That is in R&D. It's going to be lumpy. You're going to see some of that expense hit in Q3 as we test more of those channels, and that will be a longer-term growth lever for us.

我要強調的第三件事是我們正在繼續測試中上層漏斗行銷管道。那是在研發方面。它會變得凹凸不平。隨著我們對更多管道進行測試，您將看到第三季的部分費用受到影響，這將成為我們長期的成長槓桿。

So again, we've seen modest PIF growth quarter-to-date, and we think that there's a lot of room ahead of us to continue to grow in what is a really massive industry.

因此，我們再次看到本季迄今的 PIF 成長溫和，我們認為，在這個真正龐大的行業中，我們還有很大的持續成長空間。

Got it. And we have seen that partnership channel scale up. Do you have a sense now that it's large enough to enable you to continue growing PIF throughout a soft market even at the time where you might be pulling back on the direct side? Basically, I'm asking, is the partnership channel big enough to offset an intentional pullback in the direct side to still grow through a soft market cycle?

知道了。我們已經看到合作管道規模不斷擴大。您現在是否感覺到，它已經足夠大，足以讓您在疲軟的市場中繼續發展 PIF，即使在您可能撤回直接投資的時候？基本上，我想問的是，合作通路是否足夠大，可以抵消直接方面的故意回調，從而在疲軟的市場週期中仍然保持成長？

Yeah, I think you're going to see modest growth, particularly in the near term as that channel continues to scale. But longer term, particularly after a couple of quarters, I do think that you're going to start to see that channel continue to gain steam and momentum and will be a sizable portion of our business. And that channel, again, because we have really built a lot of -- really a moat around our customers in that business and differentiated access to customers. Even through soft markets, we believe that we can continue to grow.

是的，我認為你會看到適度的成長，特別是在短期內，隨著該管道的不斷擴大。但從長遠來看，特別是幾個季度之後，我確實認為你會開始看到該管道繼續獲得動力和發展，並將成為我們業務的相當大一部分。再次強調，因為我們確實在該業務中圍繞客戶構建了許多護城河，並為客戶提供了差異化的訪問方式。即使市場疲軟，我們也相信我們能夠繼續成長。

So yeah, absolutely, that channel is going to continue to be meaningful.

是的，這個管道絕對會繼續發揮其意義。

Great. And then just last one around a similar topic. Do you guys have a budget for what you guys plan to spend on growth spend or sales and marketing for at least the rest of this year and however long you're able to think about providing that forecast for?

偉大的。最後一個話題與此類似。你們是否有預算，計劃至少在今年剩餘時間內用於增長支出或銷售和行銷，以及你們能夠考慮提供多長時間的預測？

Yeah. Tommy, it's Megan. That's a good question. As we look at spend throughout the rest of the year, on the direct side, we're going to continue to be opportunistic there. We're going to continue monitoring the competitive environment, and we're really only going to invest there as long as we're meeting our return thresholds.

是的。湯米，我是梅根。這是個好問題。當我們審視今年剩餘時間的直接支出時，我們將繼續抓住機會。我們將繼續關注競爭環境，並且只有在達到回報門檻的情況下我們才會進行投資。

As Alex mentioned, we're also investing in the R&D channels in the back half of the year. And so as I think about just the level of spend overall, I think you can expect it to be slightly elevated compared to where we were in Q2. But that also just depends on the competitive environment and the timing in terms of where we see some of those R&D investments hit. And keep in mind, those R&D investments are going to be upfront investment, and it's going to take a while for those to really scale through the top line.

正如 Alex 所提到的，我們也將在下半年投資研發管道。因此，當我考慮整體支出水準時，我認為與第二季度相比，支出水準會略有上升。但這也取決於競爭環境和我們看到這些研發投資受到衝擊的時機。請記住，這些研發投資將是前期投資，需要一段時間才能真正擴大規模。

Great, thanks Megan, thanks Alex.

太好了，謝謝梅根，謝謝亞歷克斯。

Andrew Kligerman, TD Securities.

道明證券的安德魯‧克里格曼 (Andrew Kligerman)。

Hey, good afternoon. My first question is around pricing. Just eyeballing the figures, gross written premium up 12% year-over-year, policies in force up 12% year-over-year. Should I interpret that to mean that pricing was kind of flattish? And maybe from that answer, you could extrapolate a little bit into what types of autos that you're writing the most of? Is it mostly standard?

嘿，下午好。我的第一個問題是關於定價的。從數據上看，總承保保費年增 12%，有效保單年增 12%。我是否應該將其解讀為定價有點平緩？也許從這個答案中，您可以稍微推斷一下您最常寫的汽車類型是什麼？它基本上是標準的嗎？

Are you getting any preferred non-standard? And how is the pricing breaking out there? Maybe even regionally if you could talk about that. But the first part is just what's your general pricing? Is it flat?

您是否有任何偏好的非標準？那裡的價格走勢如何？如果您可以談論這一點的話，甚至可以從地區角度來談論。但第一部分是您的一般定價是多少？它是平的嗎？

Yeah. Yeah. Thanks, Andrew. We are price adequate. I think right now, we are trending a little below our long-term loss ratio targets.

是的。是的。謝謝，安德魯。我們的價格合適。我認為目前我們的損失率趨勢略低於我們的長期損失率目標。

And so we are letting trend catch up with us a little bit so that our loss ratio will be more in our target -- our long-term target range of 60% to 65%. But we're very pricing adequate. And so we're not taking a lot of rate. There's -- we still are seeing some trend. But again, with where our loss ratio is right now, it's in a very strong position. And so we're not looking to take a lot of rate.

因此，我們讓趨勢稍微趕上我們，以便我們的損失率更接近我們的目標——我們的長期目標範圍是 60% 到 65%。但我們的定價非常合理。因此我們的利率並不高。我們仍然看到一些趨勢。但從我們目前的損失率來看，它處於非常有利的地位。因此我們不想收取太多的利率。

And maybe just more where are you writing and any segmentation around pricing there?

也許您還寫在哪裡以及那裡的定價有任何細分嗎？

Yeah. I'd say the first big proof point on segmentation, and I think this is hard to overstate, is just the massive advancement that we've taken through our new algorithm that we just shipped that actually has increased. Our expectation is actually over 20% of our -- where we're going to increase LTVs, our customer LTVs by over 20%. And that's material to the business, obviously. And that segmentation really is improving across pretty much virtually every customer segment you can imagine.

是的。我想說，關於細分的第一個重要證明點，我認為這很難誇大，就是我們透過剛發布的新演算法所取得的巨大進步，實際上已經有所增加。我們的預期實際上是將 LTV 提高 20% 以上，即將客戶 LTV 提高 20% 以上。顯然，這對業務至關重要。而且，幾乎你能想到的每個客戶群的細分情況都在不斷改善。

And so we get a broad swath of the US population. And so we write standard, we write non-standard, rewrite preferred. In part of the specialness of Root and what we've built is that our algorithms are able to adequately price across all of those customer segments. There are some areas, of course, that we do better in and some areas that we want to fine-tune and continue to fine-tune, and we think that, that represents upside for us going forward.

這樣我們就得到了美國廣大民眾的回饋。因此，我們寫標準，寫非標準，重寫首選。Root 以及我們所建構產品的特殊性部分在於，我們的演算法能夠針對所有客戶群進行充分定價。當然，有些領域我們做得更好，有些領域我們希望微調並持續微調，我們認為這對我們未來發展有好處。

But we are broadly competitive across the spectrum of different customer segments and across all geographies right now.

但目前我們在各個不同的客戶群和各個地區都具有廣泛的競爭力。

And Alex, maybe the follow-up is, could you share with us anything about these algorithms that's unique to Root and gives you that competitive advantage to find it a 20% LTV improvement?

亞歷克斯，接下來的問題是，您能否與我們分享有關這些演算法的任何信息，這些演算法是 Root 獨有的，並為您提供競爭優勢，使其 LTV 提高 20%？

I think the most important thing is that we've really -- this company was born in a time of modern quantitative methods that has allowed us to use AI and machine learning in a real native sense since the inception of the company. And that's allowed us to really create a machine that can suck in data from a variety of different sources and rapidly be retrained and continually get better and better at predicting who's going to get into a car accident, what are those car accidents going to cost and how is that going to change over time.

我認為最重要的是我們真的——這家公司誕生於現代定量方法的時代，這使得我們自公司成立之初就能夠真正原生地使用人工智慧和機器學習。這使我們能夠真正創造出一台機器，它可以從各種不同的來源吸收數據，并快速進行再訓練，並不斷越來越準確地預測誰將遭遇車禍、這些車禍將造成多少損失以及這種情況將如何隨著時間的推移而變化。

And data is only proliferating. And so the ability to continue to ingest this data and quickly respond and understand what it means in terms of matching price to risk, it's fundamental to the industry. And that's exactly why we built the company, and we're seeing a drive, again, the most fundamental of economics in the business in terms of our customer lifetime values increasing by double digits, sheerly through creating better algorithms.

數據還在不斷激增。因此，能夠持續吸收這些數據並快速做出反應並理解其在價格與風險匹配方面的含義，這對該行業至關重要。這正是我們創建這家公司的原因，而且我們再次看到了業務中最基本的經濟效益，即透過創建更好的演算法，我們的客戶終身價值實現了兩位數的成長。

That's really interesting. If I could sneak one last one in. Net expense ratio, 29.1% versus 30% year-over-year, 31.6% Q-over-Q. So it's down quite a bit. And in following up on your commentary about investing in R&D and other areas to improve performance and grow.

這真的很有趣。如果我能偷偷溜進去最後一個。淨費用率為29.1%，較去年同期為30%，較上季為31.6%。所以下降了不少。並跟進您關於投資研發和其他領域以提高績效和成長的評論。

How should we think -- and I know it was asked a different way in the prior question, but how should we think about that 29.1%? Is it more likely to be closer to 31%, 32% like last quarter?

我們該如何思考——我知道上一個問題問得不同，但我們該如何看待那 29.1%？是否更有可能接近上一季的 31%、32%？

Yeah. Thanks, Andrew. As you look at the gross expense ratio, one thing to keep in mind is that's got your acquisition expense and fixed expense in the quarter. As we think about acquisition expense, we continue to be opportunistic and direct. So that ratio may fluctuate a bit on a quarter-over-quarter basis, just given that when we deploy capital in the direct marketing space, we are expensing all of that upfront.

是的。謝謝，安德魯。當您查看總費用率時，要記住的一件事是，這是本季的收購費用和固定費用。當我們考慮收購費用時，我們繼續採取機會主義和直接的態度。因此，該比率可能在季度環比基礎上略有波動，因為當我們在直銷領域部署資本時，我們會預先將所有資本支出。

And then when I think about the fixed expense investment, and we've been talking about this for a couple of quarters now, we are making targeted investments in our product and our technology, and we're making those investments to really scale our proprietary pricing models, as Alex talked about, and also our distribution channels.

然後，當我考慮固定費用投資時，我們已經討論了幾個季度了，我們正在對我們的產品和技術進行有針對性的投資，我們進行這些投資是為了真正擴大我們的專有定價模型，正如亞歷克斯談到的，還有我們的分銷渠道。

That does not mean that we are not maintaining discipline on fixed expense, but we're also not overly focused on preserving every single point of operating leverage in the near term, especially if it means unlocking meaningful long-term value. And a good example of that is the latest pricing model that Alex just walked through that's already driving more than a 20% lift in customer lifetime value.

這並不意味著我們沒有對固定費用保持紀律，而是我們也不會過度注重在短期內保持每一個經營槓桿點，特別是如果這意味著釋放有意義的長期價值。一個很好的例子就是 Alex 剛剛介紹的最新定價模型，該模型已經將客戶生命週期價值提高了 20% 以上。

So we feel really good about the return on those investments. And in the near term, as a percentage of GEP, you can think about some of these investments that we're making really be just a couple of points of gross earned premium.

因此，我們對這些投資的回報感到非常滿意。而在短期內，作為 GEP 的百分比，你可以認為我們所做的某些投資實際上只是總保費收入的幾個點。

Okay, thank you.

好的，謝謝。

[Hristian Getsov, Wells Fargo].

[克里斯蒂安‧格索夫，富國銀行]。

Hi, good afternoon. You mentioned you're able to absorb some tariff impact if those materialize in the second half. But as we kind of think about premium growth potentially slowing in the back half and earned premium catching up with the written premium slowdown, like technically, that should push loss ratios up.

嗨，下午好。您提到，如果這些在下半年實現，您能夠吸收一些關稅影響。但我們認為下半年保費成長可能會放緩，而賺取的保費會趕上已賺保費的放緩，從技術上講，這應該會推高損失率。

And we have seen a lot of favorable frequency year-to-date, and that could potentially turn, maybe not. But -- so how do you guys balance all of those moving parts when you're pricing products currently and thinking about growth in the second half and onward?

今年迄今為止，我們已經看到了很多有利的頻率，這種情況可能會轉變，也可能不會。但是——當你們目前為產品定價並考慮下半年及以後的成長時，你們如何平衡所有這些變化因素？

Thanks. We -- I mean, we are constantly monitoring the environment, and we haven't seen any impact yet from the implementation of tariffs. We've got a lot of technology in our claims systems and our reserving functions that really alert us that are very leading indicators as to what's happening with claim costs.

謝謝。我們——我的意思是，我們一直在監測環境，但我們還沒有看到關稅實施帶來的任何影響。我們的索賠系統和準備金功能中有很多技術，這些技術可以真正提醒我們索賠成本發生的情況，這些都是非常領先的指標。

And as you saw in 2021, we react very quickly, probably, we believe, the quickest in the industry to those sorts of trends, and it's been a competitive advantage of ours for some time. So when we're looking at that, though, we are not seeing any material signs of increased trend. So we think that it's -- given where our loss ratios are, we definitely are well positioned to absorb that.

正如您在 2021 年看到的那樣，我們對此類趨勢的反應非常迅速，我們相信，我們可能是業內最快的，這已經成為我們的競爭優勢。因此，當我們觀察這一點時，我們並沒有看到任何實質的成長趨勢跡象。因此我們認為，考慮到我們的損失率，我們絕對有能力承擔這一損失。

I'll let Megan talk a little bit about our loss ratio expectations for the back half of the year.

我讓梅根稍微談談我們對今年下半年的損失率預期。

Yeah. Hristian, it's a good question. And on the loss ratio, as Alex mentioned, we have been operating below our long-term target of 60% to 65% for several quarters at this point. And as we look towards the second half of the year, we do expect loss ratios to tick up a couple of points just due to typical seasonality in those periods.

是的。克里斯蒂安，這是個好問題。至於損失率，正如亞歷克斯所提到的，目前我們的損失率已經連續幾季低於 60% 至 65% 的長期目標。展望下半年，我們確實預期損失率會上升幾個點，這僅僅是因為這些時期的典型季節性。

Thank you. And then do your writings through your partnership channel, do they have different loss ratios versus on the direct side? Because what I'm trying to understand is if there is a bigger mix towards partnerships versus direct in the short to intermediate term, would that technically drive your loss ratio lower? And then sticking on that, have you ever quantified how much the Carvana partnership accounts for your partnership revenue?

謝謝。然後透過您的合作管道寫作，他們的損失率與直接損失率是否不同？因為我想了解的是，如果在短期到中期內，合作夥伴關係與直接投資的比例更大，那麼從技術上講，這是否會降低您的損失率？然後繼續說，您是否量化過 Carvana 合作夥伴關係佔您的合作收入的多少？

Well, first on the loss ratio, we have channel factors in pricing, and so we actually can make sure that all of our channels are running appropriate loss ratios. And we really price all of our business to the same return. And so we try to make sure that each channel is appropriately priced. And so you shouldn't expect material differences in unit economics really across channels.

嗯，首先關於損失率，我們的定價中有通路因素，因此我們實際上可以確保我們所有通路的損失率都合適。我們確實為所有業務設定了相同的回報價格。因此，我們盡力確保每個通路的定價合理。因此，你不應該期望跨通路的單位經濟效益有實質差異。

Second, on Carvana and our partnerships generally, we're very happy with the Carvana partnership. It's been a huge success for us. And we think that, that product is really special in market. That said, there is no single partner that is the majority of our partnership's volume, and that's as much as we disclosed.

其次，關於 Carvana 和我們的合作夥伴關係，我們對 Carvana 合作關係非常滿意。這對我們來說是一個巨大的成功。我們認為該產品在市場上確實很特別。也就是說，沒有哪個合作夥伴能夠佔據我們合作夥伴交易量的大部分，這也是我們所揭露的數量。

Got you. And then just if I could sneak one more in. In terms of the competitive pressures in the direct channel, did that get worse as we kind of went through the Q2? Or it's kind of been spread across since the start of like the year?

明白了。然後如果我能再偷偷溜進去一個就好了。就直接通路的競爭壓力而言，隨著我們進入第二季度，情況是否變得更糟了？還是從今年年初就已經傳播開來？

I'd say we saw a favorable Q1, and we definitely saw some pull forward, particularly from the tariff announcements. And so we did see some strong demand that was sort of pulled forward from Q2 into Q1. But other than that, we really probably, post April, saw just a pretty competitive environment more broadly. And since then, it's been pretty flat.

我想說，我們看到了有利的第一季度，而且我們確實看到了一些推動力，特別是來自關稅公告。因此，我們確實看到了一些強勁的需求，從第二季提前到了第一季。但除此之外，四月之後，我們很可能會看到更廣泛的競爭環境。從那以後，情況就一直很平穩。

Got it, thank you.

知道了，謝謝。

Andrew Andersen, Jefferies LLC.

安德魯·安德森（Andrew Andersen），傑富瑞有限責任公司（Jefferies LLC）。

Hi guys, good afternoon, this is Charlie on for Andrew. So I have kind of a follow-up question on the loss ratios between the two channels. I think in the past, you guys have talked about the partnership channel being a bit more preferred, maybe having a bit more of an impact from severity, but less frequency. What I'm trying to understand is, I guess, number one, what is the difference, if any, between new business penalty in the two channels? Just trying to think through as you toggle growth in one versus the other, what we should think about in terms of the loss ratio there?

大家好，下午好，我是查理，為安德魯報道。因此，我對這兩個管道之間的損失率有一個後續問題。我認為過去你們曾討論過合作管道更受歡迎，可能從嚴重性上產生的影響更大一些，但頻率較低。我想了解的是，首先，兩個管道的新業務處罰之間有什麼區別（如果有的話）？只是想想想，當你在一個成長與另一個成長之間切換時，我們應該考慮那裡的損失率嗎？

And then number two, just the impact on -- from frequency or severity on the two.

第二，僅從頻率或嚴重程度來看兩者的影響。

Yeah. Thanks, Charlie. Yes, I'd say in terms of the new business penalty, you see a little bit more new business penalty in direct than you do in the partnerships channel. It's not massive, and it is different by partner. It's different for independent agents, for example, than it is for automotive partners.

是的。謝謝，查理。是的，我想說，就新業務處罰而言，直接業務處罰比合作管道中的新業務處罰要多一些。它不是大規模的，並且因合作夥伴而異。例如，獨立代理商和汽車合作夥伴的情況就有所不同。

And so there's some variance there, but I wouldn't expect it to be huge. And it's a similar story on severity and frequency. Yeah, we are -- the mix coming through the partnership channel is more preferred. And so you will see slightly elevated severity trends. But again, not something that we would expect to really drive material differences in our blended loss ratio.

因此存在一些差異，但我預計差異不會很大。其嚴重程度和頻率也有類似的情況。是的，我們更喜歡透過合作管道實現的組合。因此，您會看到嚴重程度趨勢略有上升。但同樣，我們預期這不會真正導致混合損失率出現實質差異。

Okay. And I think you guys just touched on it, but the pull forward in demand that you were seeing in the first quarter related to tariffs, did you see like a material reversal of that in second quarter? Or was it just more steady state?

好的。我想你們剛才提到了這一點，但是你們在第一季看到的需求上升與關稅有關，那麼在第二季是否出現了實質的逆轉？還是只是更穩定的狀態？

I'd say we saw some headwinds in the second quarter from that for sure. And so that was partially -- that partially drove Q2.

我想說，我們在第二季肯定會遇到一些阻力。這在一定程度上推動了第二季度的進展。

Okay. And then last one, if I could. So you guys are now live in Washington. Could you remind us of what other states are pending and what we should look for in terms of announcements there next?

好的。如果可以的話，這是最後一個。你們現在住在華盛頓。您能否提醒我們其他州還有哪些待辦事項以及我們接下來應該關注哪些公告？

Yeah. Just to clarify, we did not launch Washington, we just received our product filing approval. And then there's a host of other states that we currently have filings pending, and they are out there in the public domain.

是的。需要澄清的是，我們並沒有推出華盛頓，我們只是獲得了產品備案批准。目前，還有許多其他州的申請正在等待審理，這些申請都已公開。

Okay, got it. Thanks for the questions guys.

好的，明白了。謝謝大家的提問。

Ladies and gentlemen, this concludes the question-and-answer session and the conference of Root Incorp. Thank you for your participation. You may now disconnect your lines.

女士們、先生們，Root Incorp 的問答環節和會議到此結束。感謝您的參與。現在您可以斷開線路了。