GSHD - Earnings call 3 2023 | Goosehead Insurance, Inc

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Operator

Hello, and welcome to Goosehead Insurance Third Quarter 2023 Earnings Conference Call. [Operator Instructions]I would now like to hand the conference over to your first speaker Dan Farrell.

You may begin.

Dan Farrell

Thank you, and good afternoon.

Before we begin our formal remarks, I need to remind everyone that part of our discussion today may include forward-looking statements, which are based on the expectations, estimates and projections of management as of today.

to discussion factors to predict the that could should actual placed our uncertainties assumptions, and be forward-looking in those not and, cause other from therefore, not and are results future statements.These statements statements are implied them. guarantees various subject risks, which expressed are Forward-looking or materially of in performance; differ upon difficult reliance to undue the a of financial all recent to and more impact detailed could you of Insurance. condition and for refer We SEC future discussion our risks Goosehead results that uncertainties filings operating of disclaim we We extent any required obligation discuss that measures will that, like prepared update the forward-looking law.I applicable or out would also certain accordance financial any revise or not with intention GAAP. by to are to call, statements in the except point to during when financial and Management measures our these planning, uses performance. monitoring non-GAAP evaluating webcast. useful to amortizations period these recent non-GAAP refer business.For We believe by the to of regarding in to our reconciliations today's earnings other financial non-GAAP to measures you call management caused by and tax comparable be measures capital from most of we that items comparisons certain for performance being variations structure, are measures, investors this consider core more the GAAP position, financial is to use financial including we not of potential representative operating differences information depreciation metrics measures, and and including addition, these period facilitate release.In over to shortly company's call to at CEO, the Relations the Investor be the website Chairman will on Jones. and available like portion I'd version after the our archived ends call Mark An goosehead.com.Now, of turn

Mark Jones

call. everyone Dan, the on welcome Thanks, and

significantly quote-to-issue our agents, by raising possible to the to investing this a talent a strengthening efforts in as availability process, ago, very XXX% the clients, a consistency growth. to actions business, progress of focusing grew the expansion of increased have continue around margins our both total support for housing up resulted excellence are Total face franchise Upgrading of technology creating producer capabilities partners, productivity the company, we over the standards and franchise accelerating recruiting the quality carrier growth EBITDA base points of written XXXX, XX the XX%. part support scaling XX%.I'm we strength in stronger, of for product just premiums organization our make adjusted best and organization.Our throughout partners activity.For from year management and have expected. results force headwinds quality highest sustainable the macro Our third year. the of to around third the Adjusted of beginning strong demonstrate both was laid producer the at quarter quarter more in The year our results of with every of Driving driving substantial strategic acquisition culture XX%. even and on capabilities goals in our we to resources and ensure and that corporate to and pleased to in improvement networks. our unfolding strategic potential toward higher progress EBITDA the on re-accelerating our margin continued out revenue

headcount our of improvement strong remainder foundation, business through and position load objectives of a in spring execution will premium will particularly over in improving of and production our driving these at distribution a least a of and we're we a producer the XXXX. partnerships.With to the expect our into force and new and revenue in on growth further and strong in which the our XX%-plus continue we continued of rate XXXX XXXX, combination support quality growth improvements, franchise execute deliver productivity As beyond, headcount compound momentum annual our phase increasing of growth in business consistency distribution, through to and growth, growth productivity goals XXXX agent combination time through next retention, focus be improved that on earnings digital of re-accelerating

As much higher historically. be at margins growth doing we'll than accelerates, so have our we

we As provide and Miller and believe will some of detailed the remarks. be in on we more previously, thoughts brief stated take XX% me the a long-term business, range.Let in areas moment margins his comments Mark share key will

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of next business to tech X We auto open Nationwide, Since be for efficiency our risks successfully we home the clients anticipate we on leads, us, a We auto. efficiently a execution year, large us partnering their that quote-to-issue Clearcover our and growing of some P&C technology also to partnership forward value It and and launches consistent our corporate product and experience have home on efforts independent and further in the hard them our allowing to match capabilities has type which it. on scale lines expansion incoming we distribution most insurance writing game you've carrier and partner's more mega but enabled, our a partner heard our underscoring partner, quote-to-issue recently confidence with especially again, quote be opportunities time, largest call, our in an put partnerships profound play from carrier issue supporting helping in growing through focused will this your technology, retreat, as includes ourselves a our our challenges carrier allow us make times. effect to more have has quality carrier agency having client devoted developing speak for X and marketplace.While XX to us When and forced developing demand.Our truly attractiveness the the volume QX to for products both carrier inventing done on has more our underwriting ultimately lines agency.Shifting challenging both current agents, take investment to very would will in they carriers of Nationwide friends over profitability they over for SageSure. relies market accumulated to the it of reality. execute new you a look and seriously. long-term unique the was base are which additional believe partners.Well, than to leverage a with I implementing appetite have of from promising partners. our hosted and tech challenging grateful. end better and and very level, months.We business have the us we very we carrier who onboard, we that the carriers, of on launched model We're us taken also significant money our time the appetite auto enabled for our times, Safeco, and majority time quickly and with partners and premium in to to and you capabilities back and I'm this personal of and on of has carrier planning This are additional shown a good been and like us investment higher a of the that with longer matching are. heavy created fourth quarter, specific resources franchises partnership including It's as take

to I our shareholders.With Officer, reciprocate. and grateful into levels continue Chief we've Progressive, able play, execute grow to will and Operating continue turn we've process, support year earnings backed achieved future. we to on I'm for excited Mercury.We've strategy companies continue for be because to forever years President over Safeco, improvements call ability will revenue technology people, and us I'll drive to feel will and partners and and that very of to that, high the Miller. carriers, from We this our the pleased SageSure, received agents, with allow incredibly clients, growth our deliver extremely like to been and Mark across succeed the about and many our the

Mark Miller

made result, the team and I'm progress history. XXXX. in But business beyond. rallied have our XXXX recruiting team intensified steady can and to lift dialed we insurance In our a Mark, and proud seen on significant of strategic company's franchise a tightest the our and has good new productivity XXXX, refined also talent we XX-year for our We've lock our have the from things we experienced levels high-quality very initiatives corporate afternoon, key market Thanks, of agents. everyone. in our and in efforts has on both stream in control.As for

with Our industry. down and in learn focused the will This technologists greatly faster will driving a team.From world-class cost on agents indicators, now rapidly radically is the simplify of insurance our to implementing efficiency.Instead utilize that built serviced come significantly dramatically and platform. having our different service platform XX technology quickly is increase team help carrier team we've the systems, way sold one across efficiency performance a This perspective, integrated QTI from of will technology curve we're our agents the insurance learning many team outside has key this improved future. and

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scale our the hired franchise of hires add from growth with XXX talent quarter, team.We're to their new the these by this franchises. acquisition our recruiters During to keep demand infrastructure existing to to and facilitated up Many team were continuing businesses. franchises producers our increasing

agents have Today at have the The Florida. of they be $XX book by we're equivalent generating franchise our founded they've years agent franchise, we've a and Hazeltines have the better is the productivity in productivity owners that quarter to expect franchise of home We year. of million could Sarasota, months. convert corporate they example that support.To investing of corporate highlight gap we give marked and about anniversary million achieving productivity take like added best our also a XX% Hazeltine at will believe by XXth per business well still untapped why traditional consistent in premium Franchise sell agency. and ownership businesses. scaled and They meaningfully want base. leadership. is agency X to brothers, our of Xth close $X.X in to on possible These XX help roughly not over franchise new reason XX% the prouder franchise with more had to and grow allows have no year. recently still way seen franchise to currently time in the productive levels only franchise the industry quarters, launches.Although, community the Xx what business Hazeltine existing last week over to and producer.We X agents conversions grown potential and remain the recruiting one with we are way in we than a our is their what our we about to our Goosehead corporate conversions new That XX behind full for agent not Goosehead's partners of grow very them couple on we significant improvements the last franchise Chance X I'd this and best ago Chad accomplished.Last resources average see X the and Hazeltine, type producers hometown

approach. in towards This Jr. call and more unique the will employees, our experience employees, position talented personalized a industry. and out-hustle disruptive revolutionize will and employees than to we and our and grow with ever the believe We're that, our opportunities XXXX company will go-to-market close insurance our out-smart higher in any agency has technology and the in we continue move will competitors over shareholders. Mark out growth I for brokerage We done profitably beyond.With rapidly I'll amazing to great turn provide and as Jones XXXX owners

Mark Jones Jr.

Thanks, Mark.

Before on been and our geographies, rates function, package consistent the significantly a to and pricing tailwinds challenges to appointments we larger we've added needs levels. mitigate year touching manifested Both areas operating in to have production, product rates I'd our headwinds and to has service, measures market record for we've been headcount. because previously lack business. service bind experiencing of on from on number been high, declines.As carrier sales the have from decline technology product and headwinds in from A And are modest clients product on referral serving actions. despite how relentlessly in franchises Net moment are challenges in to gain focus that but share we of new at operations growth have ago.Our down our indicated, a across Promoter producer on intentionally several certain compared like despite some our new headwind market availability and our offices, and a representing housing remain increasing reducing generating Score a results, sales, a a On ways. spend processes historically the These of unique away new for to transaction of improving key than response our and year-to-date, retention partners. recruiting partners, carrier improve client very a XX pivot of these reduction XX

our business generation, of individual's referral affect interest buying able the rates value because bind more many add up our rates our record agents package despite to insurance our lead at in is partners, even new allowing unprecedented XX% our are year-to-date, challenges generation closing is history.In power, is XX-year and This challenges. this rates Our proposition to of process. value home an rising product and offset more to costs the amidst lower helping achieve evident and to impact agents environment,

from have lead We wait We're pressing geographic the service lead function, we headcount are efforts.In housing call our of to service times also the with and transaction XX% generation environment. specialization. demands and the forward generation digital the through meet reduced the diversifying significantly service by partnerships increased increasing

This Florida, unique a the service of Orlando, East quarter, meeting office needs the in markets. opened dedicated Florida and we Coast to

a long-term we inflection underwriting from to to with we're medium signs be an near may beginning This the industry, agents lines early will reach and powerful our products meaningful risk long-term efficiently putting our in point seeing point of our retention to the our most profitability appetites has service quote-to-issue the term. are to XXs retention the time impact better over no marketplace our retention and needs. normalized help highs.We independent the see revolutionize and carriers, carrier new function in effort our validation across an will us economics. to towards will time, in of and on abate serve in a in In time, see will challenges clients technology, structural carrier doubt no is where product environment which impediment every Our of encouraged match personal is of I looking brings not are scaled in geographies.Importantly, available and lines more efforts model agent have are a becoming client time, market, our more believe the to uniquely some into client long-term value more getting our clients carrier attractiveness industry. and this way the and partners technology, The resources grow over these the indicate we

our become from their $XXX from total objections. XX%, be ultimately no of premiums for coiled have We as how results of this hone the conditions that future $XXX normalize written a our learn that overcome taken the $XXX franchise the efficient, product to to productivity We will indicator growth, premium, to substantial.Moving and XX% up have like a craft, time includes spring agents sales and for more corporate million. across doubt leading we will third will premium million, housing.Our gains year act see to believe organization ago. improved and increased product in market million, our up availability revenue XX% This growth, quarter, more

at Our quarter up force were year $X,XXX,XXX, ago. policies end from in XX% a

of producers growth new from environment.Total million, year expect the rate business to $XX.X production on tailwinds. months up we highly rate as longer-term over are XX product onboard re-acceleration should the revenue effects product over are realized improvements fully continued policy XX% quarter a more the favorable temporarily million was We retention actions normalized revenue on new increased and year agent in This ago. and were XX%, and availability, of improvement renewal by agent increased royalty business business.Our and more last new the rate retention, in the business accelerating beyond. driven growth up revenue force in productivity set the added, Conversion includes production of result to increases, see earnings a franchises XX%, growth, million, $XX XXXX revenue aggregate the aggregate XX revenue to will producers.The of agents for new a compared in XXXX in accelerating quarter Contingent increase period. as the more highly taken in productive in from have $X productivity, acceleration by these to high not fee corporate growth prior and same driven our XX% pricing but in new productive is year, client core million, moderate XXXX, commissions an additions, drive because $X.X producer to us franchises compared

amortization $XX.X an discipline and expense technology, reinvestments full-year driven the year-ago contingents excluding basis operating partially around investments by of partnerships, a in ago. million year to $X.X in decline quality to to expense expenses, our $XXX,XXX was benefits, XX% of the compensation, of growth. we of a from million, XX up we increased count. declined Bad excluding from X%, debts offset not producer in EBITDA the but the depreciation year-ago to substantially XX% G&A increase and to million, launched as have continue year-ago continue EBITDA margin by adjusted in quarter.Compensation improved points $XX.X Other and XXX% the compensation equity-based to was $XX.X period. up and from functions, yet were and Total signed, our from compared quarter as marketing, equity-based quarter, XX% million, service X%, premium.Shifting pool we while be perform of We expenses, franchises.Adjusted to well for expect increased optimize

been margin first strong Our has year. the of in this quarters X

and expect margin the quarter normal of Given base. moderate continue timing XXXX only revenue seasonality, previous investments fourth our to we expect annual the margin to expansion out, for further we over of the year.Looking grow

margin intermediate-term operating plus, XX% had Our we around equivalents $XX.X goal September XXXX, our XX, margin.As XX% remains and our cash cash of see million. we of long-term, and business

and drive $XXX outstanding end notes million, and guidance Our of on XX% at have premiums of to to low industry Total quarter and value X.Xx, Operator? sheet debt range are we XX% the was between XXXX on on XX% to the end. strong XXXX XX% payable year high revenues full of unused range the of $XXX trailing written total work, as journey the the was growth are the $XX.X delivering and billion continue between million, for our be range.Again, $X.XX XXXX. With line the representing to open flexibility billion, let's our we to are results for representing of term the financial for the thanks discipline, and balance low line their credit such high EBITDA end returns shareholders.We for the to placed to our be and growth focus hard net reiterating future of $XX.X to expected on substantial that, on end leadership.With at balance $X.XX million Total X-quarter questions. end up for of expected of team million range. just our

Operator

Our the BMO. Zaremski first comes line with question from Michael of

Michael Zaremski

breadcrumbs what XX% of or first us guess us on curious, help share question, around able would on a that maybe long-term margin goal, your to you level kind our margin? be would of today's of comment any put kind levels, around productivity I kind to imply XX% your just breadcrumbs versus about reminding of any lift heads

Mark Jones Jr.

Mark Michael. is Hey, This Jr.

So XX%, to in order necessarily you to productivity massive get need improvements. don't see to

Now this we've year. margin expansion seen nice

productivity profitable works, servicing is improvements is renewal significantly generating just less type Some of naturally, effort, much given of way all XX%. and the business by book, as you of in a those compensation policy that business. that more driven a renewal is than become and the But you more the bias an on and that get on business profitability new roughly less this There's fulfillment the new agent to policy. things, more

of So over time, the larger lot leverage get as a out the renewal larger the operating down, see you and and piece you a trend naturally book becomes of rate growth business.

Michael Zaremski

productivity continue know year. things that your productivity differently it a of lately in gave franchise just expect you improve And said But is about maybe plus I And that you and different, corporate. a sticking comments, number to increase. to you productivity guess to the I to been big it why likely since it's versus coming from you about

knock availability, if wood, on heals. about talked product industry more the You

franchises then the Xx they being more about talked Are more QTI being new productive. as hire the I corporate productive You substantially too. conversions existing and guess -- folks and there's

So of of lot to kind in -- going lot it am levers? -- there's there's of Mosaic more could characterizing What and -- but positive. feels things lot there's big that's what correctly the I be a you I a a going like on, know a

Mark Jones Jr.

we're would of seeing leads product And think dramatically receiving. to reducing be I I Yes, given today point the the challenges are we're amount absolutely. where today, productivity could

a strong if profitability XX% pretty product looking in and up of a that mentioned carrier we the level prepared reason that. efforts there's and and year-over-year to variety we flow environment wide So there's the at back housing can carriers a remarks is get lead where environment.Now, pretty all challenging underwriting to grow, things of QTI we're with year-over-year basis no continue making partnerships a with productivity for other improvements see on a and why technological to shouldn't like the we while come, along

Mark Miller

on this just a goes And happens, I correlation we're thing employees of it. add there's up, thing And is is retention tenure Mark seeing Miller. and rates your One one would of also that as and our is tenure productivity. direct our top increasing. between

And lower so year attrition year, rates that, higher attrition now. a before last rates,

factors also that your into So equation.

Michael Zaremski

with And -- a Like, there, save and average I saying of But its you to a into could appreciate better than could articulate outsider it? since amount plug-in think I a per more? guess you're that like, sell more I maybe and looking them Or if would sell we profound. carriers it guess, time X kind should why to on profound just to it's went it of QTI, otherwise? saving -- impact KPI all, that saved more use giving way guess they QTI it's I have about time and we time your lift is just like be minutes lastly, trying in, the is or your heavy an majority that Or type, day employee whatnot. think and is of just

Mark Miller

the of a world Miller I efficiency I This Mark today, sales state current significant say it this play Yes. as would for is again. team. in would think

And connections policy. everything all else side get the has today to future greatly. So that to the service and use afterwards, sale have carrier.What in the do service are it helps into system it if native to after same happen trailing the that the that is go to into of the that to they the you of -- the with in paperwork to we have you QTI want service policy, a has would a then the service team ones

customer So, type mentioned, exact policy want it we will think future. great in And the the exact direct to type of of I help efficiency savings. we

Mark Jones Jr.

Yes.

also kind the I that an in this ancillary technology a here benefit exist think that of anywhere doesn't there's is else marketplace.

And you to choose even for so don't acquire lesser has that We've you technology first-mover independent an roadmap already new We evaluate got people as talent would able their it. to go anywhere and have accomplish. something that and there. be have agency, else they why advantage ever to options a

Operator

Sandler. Paul Piper Newsome Our next the line comes question of with from

Brian of Securities. line next Our UBS Meredith from the with question comes

Brian Meredith

couple ones A quick for here of you.

First just for saw It we to margin seasonality Is given and benefits one, and have got we up relatively on that going like fourth something what the we're seeing? that see a guide understand bit quarter. stayed there. a little not or usually comp the I'm increase trying there ramp you've some looks modest this low, just quarter, just

Mark Jones Jr.

Yes.

to So, if you typically, QX don't about and think look our if lift QX, revenue of you from from QX, you seasonality revenue in revenue a QX the to see big the the would not I'm cost guide, move to for the where you fourth quarter.On expect you to expecting can quarter. be from bar, quarter fourth the third to big get a that at

I you So, come expect up can you to a margin should QX, with for think. be number what

Brian Meredith

question, second again. up know it gave but year, strong just driving pretty but I'm third you talked really for just what's quarter guide, benefits, some curious, was guess, you commission? then the in I volume the curious, stepped And commission last that contingent I I'm about contingent quarter.

Mark Jones Jr.

Yes.

going volume on benefits. things of more So, there's there, couple right, one being, a you're

than loss based the until to the this made you've that handful work tracking got are, would So, are contingency.The is couple is of carriers, like of outsized on that contingencies in faster the wait that record premium book, there's slightly we other of smaller the of are a it. those contingencies if the to that our revenue hit, looks recognition now of and thing ratio have carriers whole grow actually premium at it you'll up see point, information way majority a to and you that the

the so, the look even year could more contingency. growth-based quarter that like distribution third of And in would a throughout an you to months see as from opposed contingency that X

Brian Meredith

kind of things at product any just there is look that perspective, you are, in other if area of from country? others where geographically geographically, then question, last a of And more the opening versus little kind perspective see a bit carrier curious, you up areas

Mark Jones Jr.

be or the are admitted adding we're pretty product in open E&S product, places It's partners product and other really, across have agents. whether tight a I a us where board, they've think that doing but few keeping we that shut good carrier job really where good of down can, we

that's value of model. our think the I just

Operator

comes the Mark Securities. Hughes question Our of with next Truist from line

Mark Hughes

the of given source you've business. past, new times In

what an able on, Is other saying, kind there XX% you you're looking of be market. might -- sources. share? hear think was at that new earlier from I the updated I came mortgage mix going business it electronic that, through of you're you expanding to

Mark Jones Jr.

have the evident where it's partners excess lead XX% our up transactions.Our in a more now flow mortgage remarks, why I cost building to transaction. rising it's efforts, really prepared fewer which is partnership good still that's a in with interest it's consideration, a been history. real the The generation from right, less year-over-year transaction there, and considerably agents new with that's been out agents and impressive the generation today, the it's on digital think job a today, So about mentioned lead more as and of than XX% especially insurance never lead our that of housing doing even our in we marketing comes just We're mortgage of business value up rates. referral is out

to able today differentiated of we're face a the those so And really headwinds. provide service in

Mark Hughes

and geography I income the be X year, It's then be last would reflected agent and the flow year flow in those all and commissions. the is commissions the right? would had flow from Is corporate I question last business new again, for therefore, renewal in that that those that be correct? that's say that also commissions, into year, the for that be renewal up commissions, would the about renewal, commissions think quarter, into categories this renewal the this activity, When in line this would business renewal presumably a quarter or about statement. renewing that items

Mark Jones Jr.

the to about Yes. That's way right think it.

Mark Hughes

fees, royalty fees, the retention step with of XX% but new X renews, kind the business X, same up to XX%. renewal the royalty that they And versus the

Mark Jones Jr.

Right.

that same multiply on to just get So be portion the only math would XX% obviously so so the and portion. them royalties, thing with do that portion business the the is then just that is you you new that way do you to our gross renewals, royalty years, next would up, by gross of our would XX%, our fees then you is would your up, the you the the XX%. And

Mark Hughes

Yes, question, of and that by growth, quick rate this contribution just policyholders other for pricing, are insurance, the yes, to the kind that the exactly. And quarter, auto changed any the meaningful contribution then one homeowner's perhaps? I that premiums paying changes mean how has

Mark Jones Jr.

so availability, our a more in inflation see inflation, like some lead, that price headwind our than as has seeing been minds, can the we headwind stats in product than retention, side tailwind. has tailwind. in the you been a has of track And remarks, that today still been of and price see you price a but We're inflation, that's we other mentioned rate the that bigger that internally, rate is that price the in environment we well policies buying believe prepared per a product package inflation can

Operator

next Our Shields Meyer from & comes Woods. the of with question Bruyette, Keefe, line

Meyer Shields

A couple small questions. of

First, leads expenses equation additional change are Does at the that channels? and there through associated pursuing partnerships with the digital all?

Mark Jones Jr.

The that spending. from flow as The a built digital be some dollars but is any not channel leads digital would leads, there's our traditional well No, there's digital partnership A, so our already customer and than all agent, previous other more -- is strategy. forth, and go-to-market reciprocal back from of in organizations. that as we the costs acquisition agent, partnerships,

Meyer Shields

is but than the numbers with in loss year? certainty that drove the ratio-based year-to-date back basis for shouldn't regard full imply and what to the increasing more going I'm And points if XX the probably contingents, to a the quarter, contingents contingents step behind,

Mark Jones Jr.

we the is around points. XX Yes, language use basis

impact You comfortable but happen that we we point quarter be in will know, that, least flow. could basis XX still fourth things feel have the adverse could on that at a

Meyer Shields

know about signs think, to regard was seeing because any there there you're I explicit of guess some I initial app I And kind comment, Mark, talked housing? sites you an what of expanding. inflection initial a if change or Is but carriers, don't just in question, with

Mark Jones

We no. different, not. have turnaround wish not seen it in I sort housing market it's yet, were the of a but

Meyer Shields

Absolutely understood.

Operator

comes Paul question next from Our with line Newsome Piper the Sandler. of

question Markets. comes next of line RBC Scott Capital from with the Our Heleniak

Scott Heleniak

on had about what wondering, seems the on just I the the franchise and that franchise backlog you with last can franchise kind plans inquiries side? reductions of over, and any just share kind expand of and that just like, was on at the that's information getting quarter you said least comment Can probably call. your you just information beyond, in XXXX the of or you're it to

Mark Jones Jr.

Yes, Scott, just to clarify one point.

we halfway were those in efforts. call, the over terminations calling said last we point franchise and On the

gross in quarter, trend had average. quarter, XX in we XXXX, fourth believe than it towards historical in XX%. be will We back a a be will of average still of kind historical So, this reason pool. should don't high think the terminations. We we see higher up we XX% down that the gene medium to as it term, And XX% higher than why range we

Mark Miller

is Miller. Scott, Mark Yes. this

So, about it's absolute more if the in we franchises. franchises agents that we I number general, just go of back not think it, about many about about have. It's the and how think way

is is number. the net really feel What seeing we down we're adding numbers franchises where strongly really doubling so, into out in kind or about. of And adding that a franchises agencies the back you're

productive a So, them corporate very in few to includes you're into productive with quite franchise agents. converting the We're now. selective very, being community are highly that the agents also replacing losing That very about and ownership. we're that that agents franchises aren't putting

will of geos high-quality they're productive many for getting really question XX% working and way this inbounds outbound a are now? about we our lot quarter, marketing So, Instead type last launches they're reduced we think want.And new which We've finding more franchises. be are see of hunt tremendously the I part from, transformed what greatly was inbound it in how final of was, year, but a the us the that franchises, for number digital of from we well you muscle of leads coming if of calling, you'll from is your doing will. at much of in kind the capabilities, and

Scott Heleniak

number mind, to conversions franchise good to expect that Is assume year. then just And target Is just do years? use, conversions, forward? you agent the said a you kind annual of any of there the next just kind few going XX of have this kind to in

Mark Miller

But is also of jeopardize it mean, the I of ramp I'd don't love high-quality source want to to health corporate I business. our franchises. up. the best that

the to is campuses. we We're incoming lot class mentioned big it in So which really process. of a really, on on be, doing going still well how budget college the depends we're

to the literally with I'd And would this information. consistent year. certainly we people have a But good of take so corporate what year want grows up And until now, we use much we year more have this would next we out say, would convert business. like the that. many had we to out I I if people, can class how budget we estimate for and But right how qualified bigger be and

Scott Heleniak

question, And just you product the then that's Florida, else just states? or is Are X Texas. final last California, you're that it that in seeing just mostly availability I'm citing, those assuming anywhere

Brian Pattillo

been Hey, It's for Petillo. across the this difficult is Brian and states. most board. difficult are really a certainly have California the long Florida Those time.

most better of of as a carriers We're many looking to which seek these But a really, it's that. slow of growth captive seeing states. profitability. restore ways, many in carriers us actually on large have seen, actually lift the down to many they we've California, are down because fact, new business, has given In shut across market

than almost a been So, others. product single every some pronounced more state has challenged from just perspective,

Operator

Our of America. Shanker Josh with of next question from Bank comes the line

Joshua Shanker

and on What new were A the do many questions. you contracts for franchises have pending? couple boardings how quick numbers quarter

Mark Jones Jr.

in the in launched Josh, but we and XXXs. pools XX franchises quarter, yet launched signed, the the believe I not

Joshua Shanker

first operate winner I'm looking you maybe get And about my franchisee about a make to up. type count, guys back way loser this pandemic everything by before operate. could think ought the hires? XX% that company new of it good new hires, long-term seems is XXXX like how Is year, of environment didn't And to a among it shook the franchises to traction. their or out

Mark Miller

to at are we Mark bring the Josh, bringing rate. that with is corporate into that down that much that higher same agents certainly mean, I corporate expect I time. number not so Miller. to franchises, number ownership in would would the fail assume this that convert we're bring franchise like, quality mean, going I franchises we are way down that can we're, over

Mark Jones Jr.

would we this in to, more launched QX the productive I franchises corporate of launches. Yes, excluding in XXXX were XX% quarter, point

XX% productive. ones just to we the year, compared hunted in more So last wild

of helps the pool franchise at which about new up is would the we as some good feel of don't high quality productivity We like we launches. dramatically, new volume. point need the franchises, rate still increasing so but going success the is to very see on much that So volume this that

Mark Miller

Yes, longer and success. obviously they're if a to directly the lot system productivity more Like, the the going correlates in stay to profitable. they're

Joshua Shanker

a And annual the compensation if I can earn to a hire. about get one more from opportunity X-figure in, college you talked

understand work they agent, convert have get agents pathway someone years and who we a number corporate the have agent, and to And as prove become corporate examples Just for there. of up joins into franchise they earners? of a X-figure successful, you them do a

Mark Jones Jr.

Yes. Yes, They underneath ramp. that have to are to had team how know to them it's get the They people know how pretty typically a clear onboard These recruit. down a we people path. before. do. And and

how They And a to know but how They producer. understand. proposition, to simple I get good it's so up a good a say it's to for be know them won't relatively, easy be producer. people to

a don't in and of very to It's So past. get it path, targets you very need aggressive there. clear hiring have examples we the

Joshua Shanker

at franchisees they are or earners, X-figure those still agents corporate the Are this point?

Mark Jones Jr.

Franchisees.

Operator

of line the from Pablo Singzon comes question with next JPMorgan. Our

Pablo Singzon

roughly similar you profile that revenues be about? discrete should are the thinking Mark when or quarter, then fourth I for think items you heard sequentially Jr., about there margin if think costs you and a would that suggest suggested the consistent XQ? correctly, that I Would

Mark Jones Jr.

Yes.

going third guidance the fourth benefits you move relatively So dramatically. to would common but to consistent people, be for bar few on-boarded quarter. those From revenue numbers. with should the perspective, point got that we've employee line too the quarter year. for a the full a nothing the cost that's I revenue We've

historically, consistent our QX. looks to point and from QX the way a seasonality So revenue bar you from guidance, I cost would QX then to just relatively QX to

Pablo Singzon

And this quarter, clearly much the then lower as revenues. I look at employee grew fourth quarter comps than maybe beyond

what reflecting Do maintain renewal up you're 'XX expense hitting said the scale book you leaner comp base. 'XX, think you ratio think in more some investment? ramp is you as I as you a and much can up and you there do this giveback or partly about

Mark Jones Jr.

specifically so stay will Yes, to laser corporate sure scale. make agents, we employee start comp help that focused that we on as productivity, benefits see with don't lose

the piece service The of department. that, of biggest and big piece the actually that, other is

comp piece line that we sure making need we'll make drive then in will and core of we continuing of a areas benefits investments comp the and that make agents. scale franchise type see of we investments onboard just focused let as you benefits department efficiencies obviously that so in, too those things keep total productivity But smaller and out can smaller shouldn't revenue.And service department, like scale to partnerships new to happen. technology areas. on And development, employee employee as us losing dramatically in We're the

Pablo Singzon

employee also And then comp. last question for me, related to

look you future? the it now. think call stock foreseeable level employee percentage to a comp, at high say increased If to single-digit overall mid-teens mid-teens consistent Is a it's for let's as of comp So ratio right? about, from that

Mark Jones Jr.

the comp So the effect we total share The it stock talked we've way lot. think on a dilution about count. about is

our which of awards. control that of a And number. recognition compensation valuation, the so we've that said is other factors that is dilution stock what Obviously, X% annual to historically X% option in that gap rate Black-Scholes has drive

dilution should to you be rates. non-cash volatility on in And the risk-free in Black-Scholes as interest expense. annual forward basis, and on calculation it what a will so the it a X% will X% go expect depending And market be share an And the you range. is count stock

Operator

to would I call CEO, Jones Mark to for the time, remarks. over this back closing At turn now like

Mark Jones

everyone, We day. you and appreciate it Thanks, time hope a have participation. good for your and

Operator

call. and for this Thank Ladies today's participating. you gentlemen, concludes conference

now may disconnect. You

Goosehead Insurance (GSHD) 25 Oct 232023 Q3 Earnings call transcript