GSHD - Earnings call 4 2023 | Goosehead Insurance, Inc

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Goosehead Insurance Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would like now to turn the conference over to your first speaker today, Dan Farrell, VP, Capital Markets. Please go ahead.

Dan Farrell

afternoon. good and you, Thank

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

our statements. not subject extent the law. from actual GAAP. cause financial the like point upon discuss forward-looking required caused our certain statements non-GAAP in forward-looking statements applicable and to other not uses and core are to are differ with planning, condition assumptions, materially statements prepared by non-GAAP amortization differences or for and We disclaim when except that period-to-period variations expressed more guarantees financial performance of be tax detailed reliance facilitate capital depreciation evaluating and any Management to results We operating risks, that metrics refer monitoring obligation including should performance. or items for of measures and the could investors our consider in also and, by in of business. to management we operating in potential Goosehead. Forward-looking certain these to representative during these risks of we and that will and not are which accordance various be out are future useful from not therefore, performance uncertainties comparisons placed other position, financial uncertainties you call, measures believe of those measures implied I structure, to our that to and that, would financial by factors These intention all revise discussions difficult discussion filings are to predict future to any could We and SEC update recent impact them. results undue

financial measures comparable the more use including most reconciliations information these measures, GAAP of measures, you earnings to the financial today's we of to release. For regarding refer recent non-GAAP

be available the portion addition, being In goosehead.com. call the on is of this after Relations website shortly archived version the at company's call will ends webcast. An Investor

turn the and Chairman our Jones. to call over like CEO, I'd Now to Mark

Mark Jones

and Dan, the releases should have now, to prepared went conclusion chance this out our to all X a had call. the the you on By read of welcome, transition that address management will call. Thanks, at plans everyone, press remarks. prior our I

basics resources Before against getting barriers been the like growth, results, and XXXX into our profitable to we've growth, competitive that our of efforts refocus our and strengthen on protect The and last were share I'd plan for mode. some executing context remove that to plan the months. to any background XX profitable master around

the of on and are are effort Much our execution right We time, in results our networks, pleased of pace both are master of yielding sales the focused seeing we dramatic and resources and agent productivity. were plan with revamping the gains schedule. on

leverage better growth. one of to and During reorganized intellectual works This functions the delivering QX, leadership management corporate and that our great both across capital is Pattillo. enabled our has into consolidated franchise productivity Brian we team sales under us

up XX%. exciting, a the prior heavy over in management following XX% Corporate XXXX. first our we XXXX in grew the industry headwinds. relative realignments in year. As reminder, per QX was some up corporate Productivity productivity franchise to Brian corporate even in year sales Even of took function productivity agent XX% context late the pretty more saw was

potentially opening where for better profitable agent recruiting We aggressively time, our of deliver proposition, retention has technology, much structure sales like other create productivity virtuous our channels. agent Tools to distribution better that moat, cost us a our in expanded which unlocking the ultimately, simplifying year, and quote-to-issue and value also way enhances this in of and, allowed cycle same to continue growth. time, high rapid and, right-sized our aperture over support success invested, more competitive continued agents, but, drives invest, delivery at we levels a profoundly margins. growth During the service facilitates the our to

mentioned Our investing sauce first make additional leadership our with to by productivity uncompromising and inflection to from in human our important us potential up earlier. company, We are on we an quality capital implementing roots providing year fruit, new extraordinary I also highest bearing is training continue support, efforts dedicated recruiting XX% secret franchises the XXXX, with corporate at These practices through focus programs up it. standards. building returning that resources points. leveled and agent as We're recruiting our

and producers sales very our pipeline businesses. partners our structure capacity business in onto We're our growing exciting. drive partnership franchisees. our unit. in corporate to more productive cost of market the and their new capacity is agencies our expanding middle networks beginning supporting of capacity. combination that to the franchise dialing and growth each business high, and We we agency through rich their bolt in growth own Goosehead development networks. the in our of is teams lenders are team launched sales headcount business, opportunities realtors helping high-quality and We're the sales recruit focused adding right up absorptive what much reignite core have helping to enterprise on and distribution QX, Interest active a agency in our We're mortgage we're sales up we call organization Now sales

around its up the X% this of low XX% we're results, from sales last of While early in franchise growth, we're tangible producers capacity year. up seeing stages per with XXX and from corporate headcount

the corporate to adjusted results. agents year. XXXX more to revenues the into of foreseeable points XXXX premiums in year. Total XX% Total corporate future, up our XXXX, on franchisees. grow support for to briefly the basis for to and year. XX% were grew EBITDA in turning plan the XXX XX% will team our EBITDA We continue conversion the XX% which written about grew expanded Now Adjusted margin for and

reminder, also the expanding corporate a scale when into a productive a converting agencies. agency, we're capacity franchise, agent of not and they we creating own only retaining their their launch agents but as top decile As we're

During into several XX their XXXX, them new launched of in corporate already first adding year. agents have just seen franchises producers we and

We like increasing yield other say us this product the disciplined developed these of immediate thaw a production access to XXX about potential our an very corporate signs [scale] XX year. reminder, incredibly to highly most agents for has years moat. competitive existing to broader more we out No of in sales hope hands further a On our carrier insurance access DNA. not to to rolling our wild. we our product during see of rate skilled, invested carriers, important work to many As as low. To have franchises an we it's panic, product remains to that restrictions conversions hard-working success.XXXX partners would to agents. recruiting and a we've out and producer XX-year more equivalent cost that's XX This market, resources. for seen control, deployed to historic massive for hardest operations, team to fell market take We premium corporate as XXXX, was the a We're product offset the franchises to midyear for in market faced maximize wring been It combat but long underwriters product resources that headwinds home carrier lever of around top agents. part agency management function their and of of our beginning with housing claims. our in substantial asset of our program hunt our highest encouraged enough has in this, seen fast the the and easy see struggled our

to which launched including doing what our by do deliver client value partners XXXX, inbound through was at and X high Auto. on an proposition lead all-time in platform, maximize continue last We new we've referral carriers call, our an best, these we deliver experience. flow, Progressive Since quote-to-issue execute exceptional to our our earnings with headwinds

damn good share. deliver highly fragmented, business. financial account single improves $XXX explain the industry that the risk I a meetings operate our billion improves ability our where a platform a to of premium review underwriting me business." QTI agent increases comment: their productivity appetite. client is conclude normally business in experience, Let internal and with approximately we a carriers market We "This X% Our damn is why this for than good less matches

you If the we somewhere you product need sell. live or that drive something,

value the a We objects, don't disciplined chain where do focused distribution. and marketplace. have have and by that the compete ideas shiny can we need win We belief a firm to distracted and in get link we in in remained on

our office for the So at when we work, arrive the egos door. check we at

world-class us lacked allow to quotes. in retention the placing hand, on spent platforms the of the power which building millions based The technology of entire has Goosehead, fully maintain Single-carrier NPS other on not competitive scores center model client and offer decades The lines do while choice, our best today's historically not independent of industry us allowed attack at Our personal growth deliver universe, that has levels of distribution profitability. set is business maintaining business strong client new the cannot to aggressively industry-leading other talent. back meet the of our the needs has. clients. on and proprietary agents we've attracted very the the at

execution, thing quarter every is in for an lifetime, infinite States industry of our and we tremendous let massive very reaching want and for not turn not, XXXX. thank future, I'll the possessing that insurance is with Miller of that, in only recurring our operations do. day do us intents we deeply With to set and our very ourselves the that during find We call and happen. potential, in about purposes, becoming am size team competitive the our grateful could we what economics, what we I'm distributor excited more depth stop aware the advantage believe personalized own a Mark are to largest that that, from to the for So plan year. and our to attractive we and United I my full competitive are for I go over face we the of the all

Mark Miller

Mark, Thanks, everyone. and good afternoon,

that mentioned, to As execution Mark a initiatives quality included a master list months designed we architected plan across organization. the of XX improve ago, and thoughtfully

to need these able executed levels successfully realizing plan a with believe technology integrate would agent we is directly developed we industry, the the types in With and and within foundation growth that are We by and We that, when precision, the business at XXXX, but plan, even to could the initiatives. processes to can a in and industry organization. In our that corporate slow an partnerships. move has was were to We built new already force more invest actions high platform we sustained We initiatives few short-term, people the accelerate revenue revenue flow [bind] P&L agent and high-quality across to across franchise strong believed quarters to drove growth aperture a stronger higher significantly We effectively built knew to drive and capability faster our growth lead future. add and Our quickly a ready levers into in both one policies. we company, in the both profitably goal quarters. with develop scale pulling our Even have of growth earnings standards talent. from best against I'm with to in distribution down now our these agent Goosehead the we and we largest inbound new exceptionally start build of the manage team the executed to capabilities. grow moat. productivity. wide capacity our better areas, on competitive PIF in levels work expand franchise in and raised distribution carriers will that to and discipline in some we other We executing our In bring of that more and recruiting technology in proven deliver doubled online report and networks. benefits we in XXXX, restructured shopping corporate execution hiring take transform that, our the we what And these bear fruit. well pleased to multiple function areas, can world-class we cost start to XXXX. widens more digital to enterprise

portion help significant year. our agent a in locked agents already agency and have recruiters corporate program this new Our needs XXXX, recruit our our on partners several staffing is pace of agency high-caliber hundred for to

we nearly are by We these in thriving previously, can help our agents average to gap mentioned that productivity our continue of between And continue we management technology. entire to corporate corporate expanding productivity. place capabilities franchise. franchise more believe agent increasing productive improved agent leveraging structure, X.Xx With new and overall franchises and efficiency the franchise should agent the new force. As processes improve reduce sales our we than we and plan QTI

In add growing function partnership believe sales addition, already-strong are our enhance and to our effectively renewal base, new improve we efforts support can to client client and experience network service enterprise We drive volume. our meaningful starting the retention. ultimately further

deeper the further runway our up a macro achievements corporate as moment is we franchise in growth for and in profitable in new sets on ultimately particularly environment beyond. how take XXXX me improvement abates. for believe the dramatic bit the and productivity some XXXX agent challenging Let substantial, a XXXX, of believe we go improvement us to saw a and We in this and

our will in cash XX-K, XX%. For business revenue increased a basis, disclosed on be new the productivity corporate year, the which

the the less We saw of fourth the Our accomplishment roots our new current testament year. first and in the with franchise X productivity to the a strategy. to back returning the a value environment particularly of compared half year improvement agents our substantial XX%, of half to productivity XXXX, in than recruiting quarter remarkable by of with in experience business increased

productivity now of quarters have seen consecutive We X franchise improvement.

record. was believe saw there productivity Specifically, perspective, improvement as helped franchise gap corporate agents QX highest believe and that as in changes on and prior managing corporate substantial the year. quarter already technology, has gains. franchise in fourth increase Pattillo's put Brian productivity a Under To this agents continued we runway We the is for guiding in we the franchise between quarter fourth with XX% cohesive training are the Brian drive reduce team. better in agents franchise implemented leadership, recruiting. and the one we to We versus

significantly up agents, now corporate, of upgraded significantly in we In Our numbers middle to recruiting ability in the We're foundation was confident at the and quality producer process and function the XXX the have in of while producers. larger we second in corporate bring on ended XXXX, high-quality of low around our XXXX. quarter. grow now from to the count XXX year maintaining

on and number On intentionally of recruited the dramatically and quality speed. improving franchise the the franchises we focused side, reduced launch

than XX% now more in they are franchises Our they were the than launching prior around this are year XX% last and productive faster were time year.

and franchising to and continuously been model who have are We we for over a decade we want launch now, improving where on franchises. our

to our We that is growth businesses. about want simply owners and geographies franchises. on is run headcount. are to important growing It number underrepresented the currently multi-agent and that focusing growth capacity longer on franchise recruiting productive reiterate franchise no It large of about our growing producer overall efforts is

efficient accomplish quickly. partners agency is more ways our most objective of the One to best by grow helping this

just business removing to high-performing one strong business illustrate a underproducing Kent. new recent Goosehead, the of franchises. to and in and sourcing year, recruit of In of our Demitri most example production at franchises The with This has he are the small by to and find high-quality corporate converting brothers, sales with but at franchises. one we Year help quickly. work monthly the finished country. helped producer the agency owners, X gains productivity we're new seventh adding quarters, existing franchise Sacchieri the Scott Sacchieri up in Sacchieri's one Ultimately, earning driving at our averaged just month. top ramping how driven franchises him XXXX, high-caliber first this muted I'm Agency our of example in growth. revenue The Last exceptional scaling November, little overall new new Rookie one is highlight see confident his in existing May we agents sourcing maximize numbers franchises Demitri of growth $XX,XXX franchises me is created Goosehead in will revenue, Sacchieri, In In how onboarding $XX,XXX in like Agency program agents. Ryan award. works months, successful growth franchises, talent talent. more At Let to muscle we XXXX, masters overall franchises, his over

and contributions, addition Mark's of discipline dramatic disciplined the we're we gains, very get even can the categories, In by Jones company. service also improvement across Thanks driven service. to was as Jr. expense in P&L XXXX best more we our better Since the industry, responsibility productivity the helped over expense to cost We improvements profitability in to our unit sales has taking starting efficient taken the function on role, personally Mark know such realize we in cost structure believe management. of on largest drive time. and but have some CFO

times this for and X for have we capability. current a technology targets that call, substantial will base objective, function of Chief we Officer. is solid progress an our we In scale efficiencies, Service hire we laying great next organization driving We David since its progress technology client brings benefits ramping experience the will quote-to-issue operating on to USAA. QTI be service in to is the foundation key be service One David take David rollout future. that qualified XXXX, Towards in uniquely made size. help function the carriers example and that service substantial recently launched bringing this at level, of large which of can department and announced further clients a multiple ambitious to the support Lakamp believe our XXXX. a building to as last

the service And years. over our drive will the significant ability enterprise year. of QTI-enabled and We efficiency believe the carrier volume sales agents next several will for end portion this our by substantial agents technology technology the of partnership strengthen greatly and sales opportunities. a around expect We this be to

company's growth to margin effectively. much company rule was added This XX, company up year-over-year For of EBITDA we and was implies the a profitability performing career, my when say of well and at the growth XX. revenue balancing would a

that tirelessly few the I over over organization. drive make wide be to addressable a unique to XXXX model, margin. accelerating completely XX turn period it Over with growth and Goosehead couldn't huge let time, sustain of Goosehead improvements can the believe these financial growth. long-term, Mark the revenue want to make level, of at with and and of Jones the rate can I that, of performance sustainable to to and high-quality and thank beyond perform Very pleased worked long call market healthy entire possible. EBITDA made progress balance believe a our a year dramatic CFO, levels more rule we competitive moat over but business positioning our Jr. team past for our strong the I me we've With the companies

Mark Jones Jr.

Thanks, both Mark Mark. our have referred and master Miller Mark Senior to plan.

we've minute XXXX. Let details provide what and plan, date, me expect take a in to of accomplished what to you more that

level combination management up business we of management would evaluated of resources, best could productivity the in growth view were brand the profitable focus sales true market was First operating on ultimately be new the our the XXX, took delivering agencies and We and future in partners, too the only just and we to healthier engagement what onboarding, headcount increase XX% the being great but transitioned headcount were remove Through where the around of culling while XX%. XXX, producer we profitable year-end producers not just franchise blocking producers, we The adding our clogging network. absorptive the quarter factor of number our were X,XXX referral in that onboarding productivity our to new the progress decided to strategy. peak refocus executing a shifted from step to number as team of barriers investing of we from in the essentially at X,XXX new similar to at resources. any the seeing X%. could resources, targets, composition, we producer this productive underproductive of we measure team a begin incentive been agencies reached fourth XXXX successful over and our productivity the in We initiative hurting possible. this of and much take of culling off and and gains for incentivizing a kicked appropriate fostering a foremost that our XX%, structure, we the average year with our company-wide shrink-to-grow in plan additional capacity. drive a our the and total while business Because limiting size down corporate reset goals and with capacity, We have to that bear management up was from plan fruit. agencies know the production approach When healing seeing early Total plan, over in underperforming aggressively We began growth. strategic was business carrying produce. productivity recruiting count already a practices date. other XXXX, many our should We on that and being was productive are agencies made monthly the guidepost aggressive franchise back was by have margin network the to capacity,

quarter over prior the particularly rapid network, in production, As new Reestablishing year. in of the in business responsible total focus these quarter was and planned, up our growth. franchise back to in growth fourth and in reaccelerated shift as corporate us XX% we allows the productivity business to high have fourth significant levels new production improvement, the driving

be phase more to forward the transitioning excited to are Looking of into revenue faster next plan, we our overall growth. profitable and XXXX,

service productivity training agent growth functions, business significant actions: and our partnerships in top strategic program, new further of which and second franchise of and year, have sales market staffing strategic On to technology we that, achieve onboard leverage and across strategy. programs we to additional QTI the client our headcount, and new will agent which in our housing productivity will that of through of a particularly all meaningful and reach strategically-timed that the clients decouple combination specific quarters go-to-market through third for of in increased outside from of us corporate expect traditional demand, results We few our from further enhancements investment our retention. the drive proprietary a allow

backdrop items believe those as we macro our us the an what in a our to on give drive in will be opposed of deteriorating of All while margins. improving one growth environment confidence a tremendous expanding ability to reacceleration

Moving specifics on for to our some fourth quarter and full-year results.

total indicator For This $XXX key for million, premiums, written the revenues, XX% million of were of the year-ago quarter, the the increase up quarter. and leading an million for premiums, premiums, $XXX corporate includes up franchise future XX% from XX%, period. $XXX of

For the premiums our just XXXX, billion. grew under XX% $X to full year

side from carrier increasing XX% York. premium from pricing it effect has is our new franchise the policy. offset as from New The business productive particularly the the significant product all Florida markets, this the secondary availability to improvements, We of While in business, productivity restrictions per actions, tailwinds tailwinds productivity been is in call more such more our average and representing impact we exciting. that California, to makes experiencing of carrier have less of capacity, than of Texas, total our important the out many believe key

of for but average of improve and anticipate QTI our year-end versus is number from growth, to our short-term same-store strategic both accelerate XX% a to producers, to XX% year-ago the at also retention, And XX% expected. year, we continue force how quarter, add the per productivity agency the was through franchise our grew acceleration in quarter up producers $XX plan new to force Core with the ago partnerships, growth, This in million. as in to full platform. increasing half to in quarter, and our XX% Policies year. revenue ago. not During for policies the and XXXX. as $XXX to XX% growth X.X% XXXX, grew bottom plan existing the improvements the XXXX carriers XX% continue of fourth for to slowdown XX out just onboard maximize profitability, driven Total in top second quarter year mapped by master our very in and service the full We was line agents saw we for function revenue again, revenue we existing additional the further launch X.XX months by grew up million. total the line sales

slowed growth franchise growth. larger As and corporate agent of to production planned, our our fee had this recognize as we growth new average reestablished intentionally franchise revenue the core while the as only Because a a growth from reducing profitable overall we premium and business portion by royalty we our network base. our driven headcount revenue distribution, creates lag

meaningful million As accelerate acceleration XXXX, more we $X in million versus production a Contingent year ago. see in should continues to the revenue XXXX. commissions for quarter were $X

XX million compared and points year, premium. were to full $X.X the total represented $XX.X basis million written of contingent For commissions

historical commissions getting total premium. total For be Longer-term, of commissions to contingent basis XXXX, written impediments the contingent back premium. see XX we basis points roughly we written no of average assuming to of XX are points to

of prudent and million pace Cost timing recovery near-term $X.X compared was recovery is to not our in quarter. of the and for $X.X the the are year-ago has we cautious within as entirely profitability in revenue and uncertainty the remaining forecasting However, our for million control. carriers quarter

was revenue $XX.X recovery compared XXXX. cost to year, full $XX.X million the in For million

point, they're a as or of recognize of life training in cash franchise of is the time terminations required cost to and and For revenue basis, of nothing changes collect we franchise. period health resulting this franchise the are at network, revenue purposes. franchise that decline initial XXXX less fewer we remember dramatically to the a the franchise XX-year we to at the XXXX, over as levels have improved but from It recovery moderately recognition from are fees our accelerated important expecting we fees the for nonrefundable that GAAP

levels As year-over-year in the franchise to level ended period. productive X% capacity for year producer this masking line X,XXX, a the franchise turnover growth strong we grow High at normalizes, at with of down what the distribution. Franchise be consistent believe terminations are we franchise from launches. overall would count expect item to year-ago

each year, full and franchises. driving we the franchise. have EBITDA both An the for franchises to With to tool in a the This agencies: powerful in the number important for an everyone franchises in of average existing time it For $XX.X increasing compared terminated agent year-ago in parabolic we into Adjusted program, increase our their our put improves producer, an staffing agency. quarter. average resources our stat was we franchises growth scaling $XX.X launched scaling quarter XXX million XXX producers XXXX, agents they increase per productivity is million total in us. of for the placed into add and incredibly expect

For year, EBITDA $XX.X million. XX% the to increased adjusted full

adjusted margin margin strong expect basis over XX%-plus margins. indicated goal increased can to operate annual that now business to the the XXX basis XX%. of the grow to longer business believe in the XXXX, and of EBITDA year intermediate-term shorter timeframe. closer of term, XX% an EBITDA to the around plan We execution a that At to that, next about consistently the points on for achieve With X beginning that goal Our end X manage we to continue we full we to years. adjusted margin XXXX,

cash had As of of equivalents $XX and we XX, XXXX, December cash million.

was term notes of unused was balance line payable outstanding total and $XX.X credit million. Our $XX.X million,

balance utilize significant plan optimize sheet we levels, leverage to have which with flexibility in we XXXX. low our our Given to

and written end between be is expected the billion on XX% to organic placed XX% expected for of revenues year. and organic the range follows: expand the organic and million, and year end to the EBITDA of $X.X XX% $X.XX growth high of between margin in range representing guidance be Total full million growth XXXX of representing range. growth billion, the in $XXX the are low growth Total $XXX to low the on premiums XX% the high end Our range. are is full the Adjusted for the organic expected as end

delivering enough year. what has I for reminder, actually to be we as a and As always transparent been our work this thank looking can't will guidance again hard back and do accurate We possible. on like their guide to team achieve Mark the we during philosophy we over as that believe Chairman our to the XXXX. forward Jones. to discipline, just and in and turn XXXX, to I'm in out our I'd what call doing point, set CEO, At to

Mark Jones

not as our XX like in of at Goosehead moment our years take client-centric Goosehead XXst After XXXX wife, insurance honestly, October view boring. broken. lines year to the Robyn milestones in was on quite a spent to Company, & founded I'd that old, and irredeemably to slow I my business, My was date. and, reflect of As it marks was a It XXXX. moving, Bain few important industry I personal

with apply the So We of we with wasn't it. start problems complex Bain didn't try started them. a Conceptually blank at we smart approach. model that great if universe experience our started the people to around and put it figure most complicated, at of a scratch, and improve the My We center someone me business the client else's just taught fresh solutions build business from ourselves. out and will sheet paper.

albeit returns launching people, So to the franchise of American to build office the Houston inexperienced one JC generated something we opened well doing success that smart, business in the this satellite north XXXX, year. After up took committed XXX%. be premium to versus S&P more sold of the XXX in first public of is I year. first of we for little XXX% In stories. really IPOs for really special, we billion in billion $X than and our all expect create one over to our business a In Harter. time of stock most then, Patti Since and great in XXXX, XXXX, XXXX. $X first we our Goosehead out successful XXXX, the set to truly in of team approximately In a

higher and working been it and has in continues As for team current was our COO. or the right I management us and years come. the Miller as of deliver Mark our manage reservoir company future as brought is partners do The Mark view we business to size. at Xx a a effectiveness many of discipline with President has joining we team Goosehead, right important years what needs experience of served ability assemble ago have senior have on great since to business previously clients, most He enabled eye our nearly much that confidence Board leadership profitability. worked XXXX had company, when hard in has together. resulted so. to change Mark in shareholders I X and have deep and stronger very effectively and Xx place that maturity the in the for its to to their invested levels our an the to team together company and and operating very business grew, to the and trying to team productivity

I more progress and of in of X, is so President other become Mark time Miller XXXX, me be, Executive of time. Chairman to transition the owner that my to and feel far, of to state time my life, my stock. by I largest continue now for and date our at will the like family Chief role July of to can philanthropy. company, such Effective on current operations as I I an transition Executive will out Goosehead right day-to-day the role. Officer the Given the company priorities focus the

of family going Our to retiring, not be of outstanding away. this family's I'm not shares, a and to in I about I'm portion our owns continues its success. invested company. and committed X/X fully large wealth am the

be I've resource and But As will of franchise team when on continuing be go our forward, our our away, my I a executives work, and as and important box. needed as serving said in focused mentoring supporting going Board strategy will partners, to work of for the most sounding leadership Directors. our our time a lead it development board before,

am excited I us. operator it turn business the open the questions. the lines first of our profitable in front tremendous mission runway be one fully Our Goosehead that, the to up amazing call committed success to #X lifetime. and making insurance United my to engaged highly line the growth was the in and contributing I'll look of to great to back as continuing the of forward same for stories. the during for States the and become about remains American when I'm we started truly distributor With foundation to very company,

Operator

from first Newsome [Operator Sandler. question comes Paul with The Instructions] Piper

Jon Paul Newsome

that both prepared disconnect growth written touched would Maybe I your do but on has and written you of you with to as than to premium the else there's little in the Congratulations revenue contingents, talk obviously, transitions And of on some the in revenue you. but a I something well to growth. and premium get guys just remarks, could this expectations. maybe the like growth looks about that I a on more growth expect it little wanted there between to slower bit. you know bit ask maybe, through substantially

Mark Jones Jr.

Junior. Mark is This

growth. in highly at business revenue So before the launching driving recognize placing a in write side. revenue, looking the business. as and it the And productivity the that the compared as business, investments lot side XXXX, up our is dollar of producers reminder, and shows the shows franchises franchise we side a corporate to going new, royalty up premium new of $X.XX successful when into we of only on That which on are our on

forward XX% look business new converts see XXXX XX% to renewal. into function you then, that to as So spring-loading that

Jon Paul Newsome

surprised of X some in of being to make the kind expected as quarter. fall. about think get bad and seen the I'm I companies the they is amount could that last of relatedly, contingent transition personal we've years, commissions then the to premium And percent fourth profitability lines as in as results a of

necessarily from mix effect the Is of personal profitability? the there happened commissions the lines Or (indiscernible)? [providers]? contingent a there with So there is is a something that profitability reducing essentially in is that related lag to what's personal lines else that isn't

Mark Jones Jr.

carriers more having been. as as of start XXXX was business has at auto side are improve. Looking it a the about see as success, to on little just to now side unthaw the bit you're starting where ratios the bad ever loss home

is but on first. for I side. when that much to And strategy home, this come think want going conservative carriers loss year our our We're see around love book more so, not how bad you see is was and to overpromise we're thaw, don't to would to going much go-to-market outwardly. that be in up get the on but preferred that the And auto really a made home materially I XXXX, home of a expecting contingencies. better so about which We're client, side on to side of

Mark Jones

loss based effect. so XXXX that contingencies there is ratios, XXXX on are lag

Operator

Instructions] Meredith [Operator question next comes from with The UBS. Brian

Brian Meredith

of couple here for a had I them you. quickly

any agency or Was looking happened lot looks was quarter, it going slow? just that in fees, and really anything commissions have of the like that what perspective of a is to one, fourth from growth renewal First the unusual because that and reversals a that something slowed at in really on cause there of to number, commissions. kind with may

Mark Jones Jr.

doesn't side diversify at the to footprint paid No. that's we revenue agency fees, anyway, fees; a outside corporate we into through rate the not of our our in where slows the starting allow as fees gets of does agents cutting probably went remember, of from line and XXXX. it the important states of Texas and the perspective.But of lot renew, commissions the also least a more that that charge When because Department XXXX and business, Interest naturally, as middle really growth you and line, on to you're in of through looking a lot the

that saw you but production so amount the productivity new flat. aggregate increase, And remained business of relatively

So the positive on really that a had impact nice earnings.

that next have flowing than into The renewal year. secondary less is you effect of

look new happens growth that in at the XXXX early number, 'XX. in to in that reaccelerate to you rate see in what XXXX. need back And in renewals at we So the to see to very growth go business do commissions looking and expect rate

Brian Meredith

your XXXX? second look respect with into of And then, just you originators as quick from kind is leads question What here. expectations to a mortgage

Mark Miller

sales Miller. Pattillo, with the me. Mark leads is This who here organization, Brian is

flow. our out making continues I which lead that out increases there, the way challenging, to think to expectation market is relationships just our we've we're just through And power stay and more found partner referral a literally housing it. but going

think process. flow as we it least to to sales on want continue to our and anything I add? Brian, as you can continue see at now strong work is lead So our

Brian Pattillo

power able And argue, but good, through housing it's activity. that not I obviously, productivity. and were about results the Yes. would drive just the were XXXX to we really managing

this housing with investments purchases intention power percent to can of It's a housing. does very we're those on go continue relationships, any power on exactly what but confident We still. headwinds say We this lots new to our or There's new hard business into challenges low is market through feel able to to just year, have going have we through additional go year. and I develop there. of it.So out share such hunt,

Mark Jones

search RP just proprietary tool, the that. refresh everyone on (Indiscernible) (indiscernible)

Brian Pattillo

Yes.

that a we're kind transactions ones proprietary which which have of ones we're us We is referral partner allows doing not. exactly with working database and know the to who and

of those.So and activity. all go stayed we're technology month, insurance back doing we that reshops with looking dealt has extremely help, currently, this and at, and loan renewal huge a and officers us and volume our the have Many build time. are sat with proactively proactive every the relationships during out agents working So have realtors, been which aggressive with not which that agents okay, and are

Our this and built in out relationships counteract during more aggressively time to agents gone the have slowdown housing.

Mark Miller

just And add one I'll thing.

the also up pick are see lead I think mentioned flow our business, We kind of we're take partnerships mid-market from starting to hold. new lead also sources. expecting of our some to and

to, leads this flow solid I think that year. lead of next or So all like, expectations for year,

Operator

next comes from TD with Cowen. The Instructions] [Operator Kligerman question Andrew

Andrew Kligerman

commissions a questions, that taking see underwriting performance, move a auto the then, So if view you're I'm and in taking optimistic I up if material optimistic XXXX, following I'm just citing when talking performance, view, onto on in return Paul just contingent the homeowners right? could underwriting about Brian's contingent, very

Mark Jones Jr.

of see effectively pretty back profit. any surprised would points the towards XXXX, difference it's top number at that to historical total I that makes a I in of a how that it, kind the the I And point. mean the I XXX% exactly big mean, line, at back regression would but basis all expect in by That's get of if And but way look premium. line bottom average premium XXXX, we big would move XX only think, there be very some Yes. of written we because in is Andrew. not

Andrew Kligerman

commissions, though about XXX in down down I sense of what business year-over-year. then, being the they're to XXX they're versus the And was franchise XX%. makes it producers, the guess productive, even agents per more Brian new the asking And context corporate then X%,

at So I numbers the agents. thinking XXX corporate are of channels How on thing agents. X,XXX terms those guess end the to Where And be can you've franchise question then this that in you would agents? about growth get got of same in the of year? of both

Mark Miller

This one. is Miller. take Mark that I'll

about very the good yet recruiting of On really my successful feel signed class mentioned I They're up we've like we so the not corporate on side, season, college a we've comments, in had far. which that up all the fall us kind signed campuses. but, in for starts

more going still year not But end see to by a significant in of expect this the increase work headcount would but I'm the the corporate to we to there's year. go, producer focused to making that agencies an because adding stronger have producers the franchises. with on recruiting more we're the peg done we side, not exact cycle and yet.On number, the we're those So franchise

of a and over think really franchise the up time. between productivity I agency So can per I up. a and gap we you'll we're that number the what meaningfully of think go is And agent see producers move on agent, closing the focused corporate

say output output we year. in I both that increase can meaningfully productive across coming trying I'm So goal is channels on the think here what the both and a end is to channels, productive

Brian Pattillo

would Andrew, initial comments, To thing. you your just business add were I one commissions. about new talking

we As reminder, launch absolute did best during franchises this our year. into of agents XX a corporate

to to the year. new what so commissions come see in we And numbers those XX can had that our have going are business take had you all you productivity that K would done that's can and out,

Andrew Kligerman

but of done it of the year, given that is you be And the I get this of I right, of productivity that done. with could see. the to on the increase down, that almost you're first half key, like restructuring, is right? winding end And that, of agents kind number kind by just add to looks restructuring will that actually

Brian Pattillo

see I shouldn't yes, agent That our going we Yes. of just we naturally continue should we happen the XXXX. hire, need we're growth in help, could force. producer turnover productivity, over those to as possible quality that powerful but quarter. going you but our it's everybody just agencies count on individual in the reduce that they're tools as to because slow number, are of for driving time, and telling to see we're want happen not very behalf we franchise.So see to aggressively their first mean, can franchises begin really And your us existing will in standards expect you the in for on also to our recruit to for not

Mark Miller

it production way in reality of set works is them for franchises, over the And we and standard minimum get the a we it. expect to

is productivity do the to leave believe we continue But where see franchises productivity in I will average of you'll think range. system. them less and moving franchises keep the up standard the keep naturally it I As increases, of the the

Operator

from [Operator Bruyette with comes next Instructions] Meyer Keefe, Shields & The question Woods.

Meyer Shields

producers. franchise is questions of I technical the look that forward. really tell at whether to disclosure, A the really productivity, of the When franchises denominator on or move the Congratulations couple on which can't supplemental the everyone helpful. the is we

Mark Miller

It's the franchises.

Meyer Shields

it, shift hoping, we experienced look agents the a was the I more are to about? but of went there the at much disentangling for be of channel should Is because corporate down, that is the way franchise any corporate headwind And how other that and productivity big is of part sure I'm thinking that leaving? of there any is we agents superstars that the

Mark Jones Jr.

We pretty easily. No. that you can quantify for

we you in those than year, greater agents XX were productivity. X-year had include if corporate increase launched that XX% a into have to bucket would of this franchises that agents So corporate

I you into is meaningful that put -- to a on have So out think steroids impact them does take used the we've the before nuclear when team and franchises. line agents

Mark Miller

right? move believe, handful management, And we did too, I a have into

Meyer Shields

into? I'm moved handful sorry, that

Mark Miller

management. Into

more team, to need don't sell. we up-level and agents, add to prepare we as the So corporate they management

Meyer Shields

can. you And I was question, sense if and into the the are pricing hoping premium I the specifically last a revenue expectations. one give of then built us that side on home

Mark Jones Jr.

first year. Yes. the reigniting I some through half number going growth expecting mean it, least really, We're not on policy the year. of rate, second in specific we'll and driving the but pricing you should of on which to the still at half see put we're productivity a policy-in-force focus tailwinds,

Operator

question next RBC comes Scott The Instructions] [Operator Capital from Heleniak with Markets.

Scott Heleniak

Congrats, all, to everybody there.

or result new of hires? Is year else that the versus that market just those, it going guess, combination Or second in kind better of the conditions? of Is anything the trends half? first I in that's productivity? all a to, revenue to half you question quick a trends the second revenue half the that? you better here. XXXX. Just be into behind that the guidance Can of and more get talk talking to going about revenue what's on XXXX mentioned expected you're Is about basically drivers in And

Mark Jones Jr.

those of of kind Scott. it's all Yes, things,

the agents through you our business XXXX, will to think growth that next impact now flow right XX%, side class recruiting about third through the this have second team, the to start going that if which large compared QX a the summer XXX% now, spring-loading revenue franchise a on of year. of how business see we about So the lines corporate corporate their that new quarter.And which talked the of recognition we're in of to pipeline is our pretty lot they the new we've and reaccelerated business, side got on as factor we've you'll so the franchise in onboard

to start business even and in XXXX. in of But improve, out home there of housing product market an can agents improving into kind half number shown do doesn't side. my prepared leads. generate from have from mentioned new the and environment a to housing hopefully that renewal market, as see so record opposed both still our XXXX, side of top go if remarks they see a second that, a And market in we one of you On macro that the I to convert expect deteriorating

the we for so And lot feeling to a especially are things going there's and half us, of think year, that the very confident. of in go we're right second so

Scott Heleniak

into other EBITDAC we talk expense And you're up that I XXXX the a keep that agents to whole we should going it's up any about on get lot to the or and half either in there versus know XXXX of the those just be some what particularly the as margin down might kind year, items then are not of going year-over-year. compared mind be, different, to the is guidance, levels onboarding? But of year second

Mark Jones Jr.

mean, I just watch we quarter I quarter, expense as the should I your in that, your quarter the in agents mean, late significant [in]. of would through third and onboard you compensation that corporate early that number flow assume will a lines. second

scale cadence XXXX.Now, which shouldn't get of say, in to plan would lines. G&A some again materially you XXXX, in G&A expansion, I to comp from have and both vary, Your do margin the out to we drive those

model, point you your at looking you're to. as So something I'd that's

Operator

comes from Michael next The Instructions] with Zaremski [Operator BMO. question

Michael Zaremski

changes underwriting in the so the certain versus kind of appetite any care that home auto on going first, of you in you viewing kind contingents in guidance environment just on to on understand care you're of and/or us on all, payment can the terms And lack the in context unpack your better we policies could X-month what's XX-month been current between further can on or of how and secondly, states, lag XXXX? But appetites zip codes the in the give you lag?

Mark Jones Jr.

Yes.

So just contingency to piece. the briefly on touch

We've policies months, XX commission how So write. months doesn't on factor that X-month the contingent X much gotten work. occasionally couple you a how contracts into really do questions versus of

that's to tool bit only when on faster. use little carriers rewrite want auto a just And they It typically happens side. the so a

policies. home X-month see don't You

still policies are XX home the months. all So

see not increase of of We an policies hard still auto. amount increase the business. you of do but the see X-month do just it's an it for during You majority write, in markets the

Mark Miller

take there. And think carrier see what one. the part the was that we market the do question and of second I I'll about

of XX% to just So of frame state Texas. in And bit, And was is of over about you the our market a as slightly of restrictions the know, of by the weather last XX% in hard that Texas. the years, the business home. little put spring of particularly carriers up lot selling of over several question pulled additional in out last A that Texas hit, is very year. or hail XX%, the on

we've of coming the in haven't been, remarks, back into in, gotten we in it's seen.We an seen all the indication carriers major auto. the hardest markets as are that opening in mentioned interested one back the especially So market Mark that but come carriers have yet,

good. good So now. auto home, particularly early looks then, indications right And are

places see want new like, on forecast, I to when that home better, add helps a out that appointments But for in full we franchises next we it really important to the on Texas bit market really hard over we of a look the got couple So at Carriers while. they new vision be But market where appointments. where franchises, pull restricted it for implies market comes restrict of appointments. California our so a in can to it our forms. is We're get generally, is very completely little It's think want really, we because think narrow us market, year, better. we the and the get us. a softening still time. some gotten over to forward or going can can new states they in

Michael Zaremski

to agents quick we little commission not put as they around from the incremental be that Or them if to terms on in step-down should rate about? your does something a towards is X-month XX having is do they're X? if going really thinking upon renewal, a trend pressure work get their follow-up, a renewal more policies, that more And the of in any

Mark Jones Jr.

a not issue if agents. big versus an mean, agents. for faster, I rate of step-down do to individual it's cause doesn't Yes, it you math, really commission impact the in rerating the big the the the that

on commission growth. help does should Now, it step so to rerate then, opportunity frankly, end, premium drive our more down. give it And faster, a the rate actually does policy

Operator

comes P. next J. [Operator question Pablo from Morgan. Singzon Instructions] with The

Pablo Singzon

I gains kind in guess the And assuming for gains basically what productivity productivity? pace you I are hear [is] are of expect encouraging. The you longer-term, same trajectory XXXX. of

Mark Miller

do of exactly expect having you the years. was in hard I what gains Well, a time guess understanding productivity kind I you said, think coming the said but I same we

Pablo Singzon

Should Let I again. Apologies. clarify? it go me through

I think longer-term, gains clearly productivity? it's The expect my a right, double-digits. well question XXXX? phone.So for yes, XXXX, you in outsized, the is kind so do like And pace good same the are year you trajectory assuming for productivity of what in

Mark Miller

than is the towards corporate, to more can't would why room Yes. to we level base the gains, a where I see We with of long corporate we that think from changes how think about believe in successful. turnaround what And program putting get give franchise franchise made with structural training really franchise think now looks level as their productivity comes improvement. Brian productivity really franchise the no then I goals, the engage we're And like is you out a XXXX the same them we've productivity the mathematical as I there a make proud them the to helping end their and side of Pattillo a a with continue the grow franchise corporate. lot his tenure on incredibly that franchises, opportunity, franchises managing I area agent approximately at the agents We the We're still more and their is and been at with just them There's reason of their say, side, helping a and the side them, that we increases.On of optimistic there future long it's of when really X,XXX educate to incentivizing team versus credit agent very just there's and through in what things closely business. done letting with of rather processes, and helping the sales interact runway to It's improve with but me really, loose. activities I them. corporate agent. the look maturing that the their budgets and structurally And productivity that. performance business. changed them

Pablo Singzon

me, question I then the Is next the And to contingents on you to with that just want confirm correct? year even margins for just expect expand guidance. second that down.

Mark Jones Jr.

Correct.

Operator

I I for would show Miller Mark no like the closing turn time. remarks. back call this at to to further now questions

Mark Miller

and for call. appreciate and we'll I everybody your participation of questions. Well, joining With support want us, the and close thank stock Thank that, the your to you.

Operator

for call. This participation. Thank today's your concludes you conference

You may now disconnect.

Goosehead Insurance (GSHD) 21 Feb 242023 Q4 Earnings call transcript