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Root said Wednesday it will cut its workforce by 20%. This is the Columbus-based auto-insurance startup’s second job cut this year to boost profitability.
“We are prioritizing resources to support Root’s forward-looking strategy to further improve cash flow,” said Root CEO and Co-Founder Alex Timm, announcing the company’s third-quarter financial results. “As a result, we have made the difficult decision to reduce our headcount by approximately 20%,” he said in a letter to shareholders.
The latest round of cuts has cut 137 jobs this week, the company said.
“The hardest part of this reorganization is saying goodbye to employees across the business,” the insurer said in a statement. We are deeply grateful to all of our employees, past and present, for their support.”
In January, Root cut 330 people, or about 20% of its workforce at the time, blaming the surge in costs that the pandemic has cost the company so much.
more:A Mixed Message: Layoffs Are Rising in Ohio While Other Jobs Still Unfilled
Root said it’s also cutting costs other than personnel.
In its report for the three months ended Sept. 30, Root said it expects to save $48 million in annual expenses, with an additional $50 million in cost savings. He also said he cut his spending on marketing by $60 million compared to the same period in 2021.
“As we continue to transform our business with the goal of reducing the time to profitability, we are focused on initiatives that we believe will yield clear and immediate benefits,” Tim said in the letter. ‘ said. “We use our deep understanding of customer segments and geographies to create profitable new stories by offering them directly with very limited marketing.”
Root started in 2015 on the premise that machine learning and modern technology could revolutionize the old and boring auto insurance industry.
The driver downloads the Root app to their phone and drives normally. The app tracks speed, hard acceleration, hard stops, turns and whether the driver is using their phone while driving.
At one point, various reports put the company’s value at up to $6 billion, but the insurer’s share price has fallen since going public two years ago. Today the company is worth about $100 million.
The company posted a quarterly loss of $64 million on revenue of $73.7 million. That’s down from his $133 million loss from the third quarter of 2021, on earnings he’s $93.8 million.
Roots’ cuts are the latest in a series of cuts by relatively new Columbus-area tech companies, including Olive, Lower.com and Upstart.
mawilliams@dispatch.com
@BizMarkWilliams
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