Root, Inc. Earnings Per Share Disclosure
| For the Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in millions, except per share amounts) | |||||||||||||||||
| Numerator: | |||||||||||||||||
| Net income (loss) | $ | 40.3 | $ | 30.9 | $ | (147.4) | |||||||||||
| Less: Undistributed income allocated to participating securities | 2.0 | 1.7 | — | ||||||||||||||
| Net income (loss) attributable to common shareholders | 38.3 | 29.2 | (147.4) | ||||||||||||||
| Denominator: | |||||||||||||||||
| Weighted-average common shares outstanding: basic (both Class A and B) | 15.4 | 14.9 | 14.4 | ||||||||||||||
| Effect of dilutive securities: | |||||||||||||||||
| Redeemable convertible preferred stock | 0.8 | 0.8 | — | ||||||||||||||
| Service-based restricted stock units | 0.5 | 0.8 | — | ||||||||||||||
| Market-based restricted stock units | 0.3 | 0.3 | — | ||||||||||||||
| Stock options | 0.1 | 0.1 | — | ||||||||||||||
| Weighted-average common shares outstanding: diluted (both Class A and B) | 17.1 | 16.9 | 14.4 | ||||||||||||||
| Earnings (loss) per common share (both Class A and B): | |||||||||||||||||
| Basic | $ | 2.49 | $ | 1.96 | $ | (10.24) | |||||||||||
| Diluted | $ | 2.36 | $ | 1.83 | $ | (10.24) | |||||||||||
| For the Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Options to purchase common stock | — | — | 0.1 | ||||||||||||||
Nonvested shares subject to repurchase | — | — | 0.1 | ||||||||||||||
| Service-based restricted stock units | 0.1 | — | 1.5 | ||||||||||||||
| Market-based restricted stock units | — | — | 0.4 | ||||||||||||||
Redeemable convertible preferred stock (as converted to common stock) | — | — | 0.8 | ||||||||||||||
| Warrants to purchase common stock | 7.5 | 7.5 | 7.7 | ||||||||||||||
Total | 7.6 | 7.5 | 10.6 | ||||||||||||||
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About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.