Root announced on Wednesday that it was reducing its workforce by 20%, the second round of job cuts the Columbus-based auto insurance startup has achieved this year as it strives to become profitable.
“To further improve cash flow, we are prioritizing resources that support Root’s future strategy,” Root CEO and co-founder Alex Timm said in a letter to shareholders as part of the publication by the company of its financial results for the third quarter. “As a result, we have made the difficult decision to reduce our workforce by approximately 20 percent.”
The company said 137 jobs were cut this week in this latest round of cuts.
“The hardest part of this realignment is that we said goodbye to employees across the company,” the insurer said in a statement. “We are deeply grateful to all Root employees, past and present, for their continued commitment to our vision to disrupt the auto insurance industry.”
In January, Root cut 330 jobs, or about 20% of its workforce at the time, blaming the pandemic for skyrocketing costs that resulted in heavy losses for the company.
Beyond the number of employees, Root said he was also cutting other expenses.
In its report for the three months ending Sept. 30, Root said it had cut spending by $48 million a year and planned to further cut costs by another $50 million. It also said it cut marketing spend by $60 million compared to the same period in 2021.
“As we continue to transform the business with the goal of shortening the time horizon to achieve profitability, we are focusing on initiatives that we believe will have a clear and immediate return,” Timm said in the letter. “We use our deep understanding by customer segment and by geography to drive profitable new writing through our direct offering with very limited marketing.”
Root began operations in 2015 on the premise that machine learning and modern technology could revolutionize the old, cumbersome auto insurance industry.
Drivers download the Root app to their phone and drive as they normally would. The app tracks speed, rapid acceleration, hard stops, swerves, and whether drivers are busy with their phones while driving.
At one point, various reports valued the company at $6 billion, but the insurer’s shares have fallen since going public two years ago. Today, the company is worth around $100 million.
The company recorded a loss of $64 million for the quarter on revenue of $73.7 million. That’s down from a loss of $133 million from the third quarter of 2021 on revenue of $93.8 million.
The Roots cuts are the latest in a series of cuts from relatively new technology companies in the Columbus area, including oliveLower.com and Upstart.