Goosehead Insurance (GSHD) 26 Apr 232023 Q1 Earnings call transcript

Thank you for standing by. This is the conference operator. Welcome to the Goosehead Insurance First quarter 2023 Earnings Call.

As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. Instructions] [Operator

like Markets. conference Please now Farrell, to turn Capital VP, go to would over the Dan I ahead.

Thank you and good afternoon.

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

detailed the differ discussion the statements our uncertainties reliance upon all except impact discussion placed operating predict risks, from obligations that factors to other and difficult the or disclaim and refer future in any of the could are required you to assumptions, or and applicable implied or to intentions guarantees therefore, statements, We We and be to Goosehead Forward-looking recent Insurance. of forward-looking statements that which update future and actual law. those of expressed cause more revise statements. undue by could financial uncertainties SEC and any not performance, condition materially are results our subject risks them. to a results to of are filings in should various extent for not These forward-looking

our and and to items point our discuss investors structure, various performance. by business. during we capital for certain GAAP. facilitate variations We consider are evaluating management period by amortization excluding out representative like call, non-GAAP are from not that position, we these this useful non-GAAP be measures caused will uses to depreciation, other tax of Management believe also would performance prepared in I differences planning, core when metrics certain to and operating monitoring to comparisons potential that measures period with in financial that not accordance financial financial measures these

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

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

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

and to Dan, welcome Thanks on the everyone call.

to and smarter from our of teams singular I winning business tangible started efforts in managed leadership the working have of to sophisticated much is value. the and am with senior see and scalable on middle together how a We our upgrade proud more really well focus and creating way. team results very

Core future strong growth. delivered the We XX% increased with compared top first premium, revenue grew best indicator the revenue of line quarter. and Total of an exceptional bottom to XX% increased quarter XXXX XX% year quarter. during prior and growth, the revenue

margin Our adjusted expanded XXXX approximately basis points. EBITDA

gain than to to continued of some taking focused industry expect in this turbulence we with market, more the share. overcome we see have advantage housing While headwind execution, more better, market

tailwind remain premium and Additionally, try profitability. throughout us to for rate as most will likely restore underwriting pricing of take XXXX a carriers their

very We across have demand all a stable with economic business are to backdrops. chosen fortunate virtually

value service chain or something, If in set knowledgeable and potential economics of the and the to sales technology adequately agents. elements; in operate needs believe insurance our has cannot leading a strong more we we and industry buyers of We've the that choice, among of meet need sell. product somewhere or lack we due been play product one professional thoughtful we competitor and drive you live consistent industry, where segment you the in for the greatest critical

product number decisions. our right to addition of in are In in deliberate the varied being results place of value a the the chain,

as execution Our large transition of turbulence. to we on proactive take corporation, clear capital scale strategy, human profitably our disciplined our a advantage upgrading relentless to to focus our management needed economic team against business into the

XX% have market despite allowed ongoing XX% our to slowdown more example, over the flow of share year. by gain the last to housing lead For efforts us than grow

A more utilizing same doing grew about optimizing We're being less. quarter new year-over-year, more we at with by of resources and out rationalizing where corporate and X% while business XX% this company example was agents. premium time headcount in the great unproductive we in by strategic sales manage much the current as

clients' that strategy We're and of quantity focused in us returning teamwork, exceptionalism, quality work, for that first to on the principles in remarkable in recruiting in delivering over hard the made place, innovation, one needs. grounded our and integrity is

us All to and with margins. of expanding drive strong enabling bottom line top this is growth

campuses business period see XX% for We a Corporate less agent have up early fall. year productivity with year in the continue agents to new rebound was key strong college we new of throughout be with productivity quality us same XX%. joining than well in rest sales. strong is June last from and classes the per QX sales recruiting that and corporate and one on us progressing summer the will high in performance up business

X% very about people receiving threshold on an only close and than more of us is quality doubled. with with The have offer high rates our interviewing offers

is owner franchisee proposition very significant wealth with to a path with to opportunities creation as at apprenticeship corporate. campus essentially hires a what paid becoming Goosehead truly clear Our a after extraordinary value a is business

of time become and development to over franchise drive this quality owners. We strong in agents high seasoned to the expect eligible growth

on focus The to is business of our quality progressing. franchise agencies retooling

effective candidate on believe model. the us to remove leveraging meaningfully reorganized rationalize opportunities the we with for turnover by contribute base attractive to peak been Franchise cost most churn end at represent revenue sophisticated campaigns for the to QX our that unproductive of follow to to marketing digital continue and franchisees leaner a We geographies more tightly point. franchise normalize ideal resources to that We consume don't to begin anticipate recruiting specific focus sales force. profile in and or the but again an productive has

investment scaling our capital their to support business. that focusing our intellectual agencies We're of are

partners. would great XX,XXX surpassing an as milestone like franchises emulate. a help policies proud and other For our Miami We couldn't to Jonathan our of important in many example, of we They just in force. represent Agency Mike be more what the of Pinto hit Pinto model

in of what closer producers with of of providing we agencies, area X.X to franchisees year and ramped year XXX this in revenue QX producers XXX expect recruiting roughly these for year each new the executives. is that equivalent corporate in from of XX the have year, with year. in second assisting launching historical to This been quarter Historically, began we're XX key generating this least third productivity for placing up QX, have franchisees. started above producers, tracking XX last five support this to of A to account placed and producers when producers quarter at we the anticipate producers we

franchisees execute this We continue convert and to to our launched agents to sales corporate We on continued corporate agents. in see XX QX producing strong least year. plan very demand top at seven from into

these a most She a were in in Jessica a two launched McNally, is launch has already and producers producing corporate class. January over in of to agents their recently productive who manager. new $XX,XXX franchise sales One and among the March former had Jessica training commissions. hired training month in agents is personally completed

drive it's adding six In they times franchisees franchise. case, new who to steroids franchise like are from growth up anticipate they which ramp we number XX agencies. Jessica's be an as to large Over on highly as conversions. profitable. like we perform the of in a We the corporate are approximately that corporate more will Remember of time to portion eight and our expect convert business, average productive plan new

the and just is major plan to team detail, executing our tracking but discuss Issue the priority marketing with to technology remains progress and in fully will year. are share Quote added our digital of QTI more couple in Miller much this offerable have Mark talent top on have velocity highlights, quality. to and higher we we carriers several significant a To now

driven rating strong and Aviator, close to our both we gains help rates, improvements retention. productivity higher comparative package Tech rates proprietary expect with to also has which strengthen application,

capabilities which with are of later digital cost results these efforts, a volume take our leads, further now leverage emerging advantage year substantial this of excited We and producing QTI quality we're high the effective full our are capability. to to pleased marketing of

he we in major out will Legal of longtime has Finally, President as first to served a our role investment announce role Capital, a played role Ryan has then and Corporate our to Goosehead grateful an that with advisory to continue it Goosehead family's a that since for Chief become with NXB Ryan development transitioning Board. support private full-time my Officer, very mixed will emotions has and his and arm. and pleased that the XXXX been as public is are We're us ably his be of Langston, service in Secretary. company our with

our and expect be team closely working We over become He Counsel what veteran Gotshal about take we Secretary. to to a is added legal all of we department. legal John prepared Corporate with of in XX-year ago. our very year for with been General Goosehead. our and facets strong are profitable happy to a John extremely XXXX and has start Ryan growth for year well and qualified a Weil, our Overall, O'Connor,

like Mark time I'd over our the Miller. to thank to efforts their incredible for and team turn

cross renewal profitable franchise quarter, selling new digital and upgrading business everyone. XXXX, through marketing I other to and recruiting for referral improving corporate and and are franchise function our distribution talent strategic business, expanding overall our to service our base, growth improving which mark, corporate priorities in development included afternoon to Last outlined in productivity, technology good Thanks, our efforts investing drive our business and expanding support core platform for protect and both partnerships. distribution,

and is of progress strategic recruiting significant initiatives with in across business. as opportunities these build the of returns excited these high energy the our outsized We made every thoughtful represents of I'm building expansion time business franchise franchises portion and in to organization. pleased about on a generating believe my America. the a performing Currently, the quality one very positive franchise I'm we we've around city are scale focused create high priorities greatest

talented thriving job these profitability the growth. We've Today many and and years. in businesses strong have with of owners many a good done revenue franchise over successful attracting owners

However, our improve to going adjusting health are the of approach long-term franchise recruiting entire community. forward, the we

to franchise geographies. our the resized, our phase of marketing next franchise of franchise Together is owners the and aligned development goal the right For the team with type it our franchise we have and right refocused and evolution, operations. target and restructured

We're many recruiting demographic states and huge a name with five long-term favorable the and to launches We're where few. perseverance Carolina, roughly characteristics. have currently for Arizona, revenue low owners potential Utah, areas to XX% perspective penetration our and growth also untapped passion franchise directing North State, assets. account toward franchise product Colorado, Georgia, with such Goosehead just we as South states Minnesota, in Washington a has and build Today, and of

highly like that difficult we franchises states existing these to York, have been current Texas, franchise We thrive. new access excellent believe product and and again While opportunities will geographies for successful ownership. over these for franchises launches Florida, have made we as in slowing market challenges New will once time forces self-correct represent in California, it geographies have

operations, the I franchises. see demonstrated each up franchises be strategy will one and scale new a expansion ramp paces. that for across franchises, more business U.S. at corporate have in producers point or of XX accelerated smaller growing recruiting franchises to to the our part agents training we and many and mega in could future A where of large with this into have ability increasing by launch the of efforts thousands and driven businesses support, dedicated the additional

XXX were During model. not franchises XX launched following the closed franchises underperforming quarter, our and new we that

underperforming quantity signs early over seeing improvement approach. We're these franchises from of quality of Importantly, business. only X% about for new also accounted this

are XX% than Our first launches better first year quarter production in launched pacing new quarter franchises a franchise business the ago. on

than of efforts will from productivity confident historical operating over franchise higher by all rates. I'm franchise this more time slowing that offset are and While higher growth levels, these be success

generate corporate of Today, franchise agents levels our productivity. top and similar

our franchise corporate roughly one agents. year equivalent less However, average agents XX% productive are than than with of tenure greater

gap to We strive meaningfully close time. that will over

areas to business. in other the Turning

we're business, QX in XX% productivity levels seeing company corporate On highest agent in agent the productivity history, total corporate the the side of recent year-over-year. increased

us college are our For with agents allowing of to one are and year's last rapid growth. less a shift seen production year-over-year cultural that significant graduates helping past of seeing confidence that in sales quality less adding of than XX% year headcount business the months, several generate These We've to number expansion. XX% XX% the us we're exceptional summer. this gives we fuel over high levels corporate productivity margin back pronounced

for reached quality sales joined function ago, of the this a had behind by delivering on promoter as the corporate couldn't the were When but Overall, clients our I rapid I levels. team we and had headcount more agents call be rest of evidenced experiences scores, transformation industry our the pleased and year. our year trajectory of for net wait with unacceptable service leading high fallen times the

down I'm middle pleased times that average are report the of XXXX. XX% to the Today, from call wait peak our in service

Now facing to structure service initiatives the ongoing non-client and beginning on optimize through increased outsourcing we're cost functions. technology

One our technological to of continues advantage. be differentiators our significant most

significant During the Aviator XX technology quarter, our is our team agents. cornerstone for output improvements platform, we our capabilities. our productivity to of added advantage which significantly The engineers drives increasing proprietary this

delivered driving of enhancements While quarter, QTI increased first remains notable Aviator, and technology rates. our a number we bind package investment most in are which the additional to

to industry. deliver to client the a the artificial with allow access vast We believe second intelligence to client tools the to agents bot our interface chat expanding integration have same provide relentlessly quarter, quickly so allow continue this can the agents integration we fully we will quarters to We questions. this resource. our of integrate agent the language to large related access our in information amounts that our anticipate efficient best answer digital that In future insurance experience rapidly agents focus to expect clients Aviator. In on and

Vivint allow existing to innovative embed Smart security and geographic we pipeline Earlier the add their This million that business partnership have reach, momentum home of a grow. organization motions. high QTI we strategic building confident week, demonstrates announced will leading model X.X services how our our go-to-market this choice with to To with customers. adjacent this our partnership a smart remain with Issue differentiate year. us Home, and Goosehead's meaningful and we partnership capabilities carriers into On is the Quote company in The development value technology partners competitors rapidly from continues number

help We and believe homes securing for this partnership claims and further protecting of and the benefit carrier and the clients for clients losses simplify will process both of reduce to partners.

various of of about several and Vivint be with other technology stages potential discussions I'm and continue variety to in the a our excited industries. potential across progress. with our We of continued partnerships extremely partnership partners

up for driving through Our digital new diversification. we double revenue Quote a sequentially digital we consistency marketing cross-selling as also quickly lift further digit our business and leverage efforts lead Issue are new becoming and business expect Cross-sold To benefit capabilities. new is and lever powerful

also by also additional this cross-selling is customer initiative client rates We a business years. critical know retention of lifting line retention motion an in several as increases adding

improvements in with revenue extremely to a believe the company and lines allow the drive achieved as have about to even improvements and growth more I'm that sustained over I'm become excited us year. will universe. larger we happy operational we we the the come personal earnings past significant

it With that, over Jones, let turn me Jr. Mark to

the on hello mark call. everyone to and Thanks,

we are We strategic decisions power seeing earnings the very in are implementing. and to pleased productivity continued be from improvement

momentum expect revenue growth. further consistent and drive earnings high time of we levels as We these drive changes over to

quarter, Our $XXX up the revenue, from million, first includes increased million. and premiums to future a corporate ago. indicator $XXX in premium of premiums up year leading $XXX franchise XX% of the million, This XX% of XX%

or captive operating that from results the agencies are a creates that us strong the value is insulates We carriers naturally in hedged, consistent and of and challenges chain which face. segment

saw client XX%. retention compared XXX% the market our personal in premium as XX% year XXX% lines in the first to continues and quarter a quarter retention accelerate to we the versus of of fourth strong Pricing in ago

back retention increases, towards carriers see premium client retention. underwriting should we their recovered As trend profitability premium through

we historical markets, contingent return growth challenging stabilizes, pricing more in and believe available should as commissions becomes which product carrier to power averages. will further the However, most

was will year have Our enforced a that $X.X productivity slowing our ago, at policies growth the as year. of PIF actions up rate quarter half expect back in on move impact We growth. we the end near-term stabilize million, XX% expect growth to of the would through improve from some a begin to second quarter, reaccelerate and as rate the but PIF we the

increase the quarter were by up $X.X the Contingent for quarter, includes million and momentum. of levels high increasing quarter was ago. Total prior million, revenue year $XX This XX% $XX PMC the productivity commissions retention, driven of client year to compared revenue core million, period. an $X.X in of the compared to pricing a in XX% million

third year We basis significant fourth continue persist the and for majority to prevent commissions the full to hitting premium growth. with of as in expect contingent contingency profitability carrier XX be about quarter points and the challenges

In XX force of XX% geographies. improve in our prospective a with balance to and our quarter, additions. quality to the higher continuing we our transfer are recruiting annualized the rate. and our terminated quality continued launched of quarter, more underperforming We pipeline franchise XXX representing operating in as franchise franchises at targeted we robust franchises churn We standards the about

remain to XX%. of churn towards the high trend beginning historical to before our second expect to gradually We down XX% levels quarter in

this piece remains of X%. trend franchises generated new of de about Importantly, underperforming a minimus at business

franchise Operating higher operating some second at end unit quarter X,XXX growth for was rate see due impacting are culling the further slowing quality growth. franchises in to recruiting as the actions and quarter We in efforts standards. the could culling expected our of near-term count overall

increasing productivity we total time. will However, growth over believe franchise offset more this producer and than

at Our year end X,XXX from total franchise ago quarter XX% a X,XXX the was down from and at XXXX year producer up count slightly end.

hiring begin accelerate year with half launch as successful underperforming total recruiting producers in agencies, most franchise the of growth is conversions our more back culling particularly expectation to franchises team and corporate our and Our normalizes. our places franchise producers the of for in the

our improvement actions to beginning some productivity of development force. business from the franchise are see We new

in which growth partially number slowing Louisiana, challenging product being New of the our York. environments offset including states, However, this Florida, California, are larger franchise a by and is

operating by availability actions and states improve will for product pricing expect underwriters our in We improve and the these gradually environments agents.

Turning to significantly pleased with extremely agents. production our we distribution, generating we with fewer corporate are the are

the year from the The is was partially decline headcount of quarter in corporate ramps season. headcount of due end. and Our third hiring, XXX, during XX% down on-campus the the second the a seasonality quarter, negligible ago corporate but sequential from down recruiting in to end year at which at the first also quarter was the XXX in and

believe We in and platform an in corporate high culture act of sales and our us the team improved corporate we reestablish potential productivity improvements give have agencies. talent mega made to a management, pool as importantly growth conviction

expect end corporate year for the We full the headcount grow and XXXX. current the will from versus year levels

As level agent governed productivity. said, we and of our will be trends have the growth by

for agent We invest into to agents further of room may marketing temporarily one be one year campaigns less and flow. strategic time high execute meeting productivity the incremental they're Aviator While standards. will there the agent agent ensure closely than is our than addition productivity, new in rates add we believe enter monitoring as new to expansion in successful significant success year we over partnerships the lead greater to our continue platform, impact

performed partially Moving partnership, we of were from and headcount XX% declines in functions, year based service technology, we and as excluding talent corporate XX% increased top in sales. and offset compensation by quarter ago. the to our level balance a with in to as for an benefits expense Total Compensation million, growth. expenses, increase marketing discipline $XX.X reinvestment expenses our we well continue equity invest

was for expense G&A XX% of Other up $XX.X quarter. the million

make year not was Bad related in to corporate the to increased as and travel $X.X We expect on culling franchise due expense expense the of franchises. debt increase expenses execute $X.X see investments our development a for quarter our growth plan, compared launched million to rate we but ago marketing million during our plan. to recruiting G&A additional yet year signed

$X.X XXXX XX%. Adjusted year EBITDA Adjusted basis improved in the to million quarter ago EBITDA up the approximately points was $XX.X from million, period. margin in

through expect for year the do the margin of While and not of the quarter expenses improvement year, at it the expect timing first the of remainder earnings. we seasonality the quarterly of pace we given

balance XX, XXXX, $XX.X unused March million notes of $XX.X $XX.X term million of million. of cash cash and had an of we outstanding We had payable As credit of line and equivalents. total

billion our follows. $X.XX XXXX the We for a of guidance representing to XX% end premiums year high raising growth are for on XXXX the are of organic between Total written the full expected XX% end of placed on billion as be to low the range and $X.XX the range.

expected high million are the end and to the $XXX Total XX% of growth on range low organic of revenues range. representing for XX% end and the million of the on between XXXX be $XXX

year strong year full strategy the expect the margin and believe in dedicated expand one of our and adjusted XXXX. remainder want We most of making their us to team We the of EBITDA lines our well efforts thank the execution industry. that of all I over companies to year our for growth in disciplined the beyond. full positions personal for Goosehead amazing

line open that, up let's for Operator? With the questions.

ahead. Certainly. [Operator Please JMP. Carletti first from go from question Instructions] comes Matt The

Hey, thanks. Good afternoon.

Matt. Hey

give Just agents. an early related with, where reception's you a the obviously, still four been, partnerships, a on stand, are announced just start mortgage just potentially in days just three I that you seem partnership it's us back we of and couple. go I'll amongst of look you? months partnerships maybe but back, could to bigger was the how the of bit going kind of what would update. hoping what but announced, I know what of with, January the Maybe couple in was Vivint touched kind on, implementation, terms maybe Hey,

we months color provide few have now that any Just to a more you look back. can

definitely Yes, Vivint bought new or through were the mean, good signs brought more live much about this excited referral those I and would excited of it, about, I'm it. about we partners couple say opportunistic some opportunity early. in I partnership. some first and

days potential that tremendous, feel about, of I partial one. it's it to think of about it the few it's We've uplift, sample, lot a been a so so And has great just a I but it. few only had far. a

And a slowdown that been I generate strong from just think seen with mathematical of mortgage is, the standpoint us. that and drive market willingness it's certainly benefit. be we've a activity credibility the But one give though, that and tertiary draw to to partnerships to thing would people Yes, hard to need between housing line we've in able straight we these yet us just growth. big work would the leads

Yes, us opens I would doors it just, for say in general. it

our referral directly, As go a hard credibility it to like out gives the these agents flow on and call partners, get from measure. that's you measure it's you direct us can lead Vivint that relationship where

how big about think of, thinking it's sense. model? sticking Or is the moment, I release that, their agency On existing for part to think you'll press anything of caught of or that we Vivint it I makes Is That in plan it be, as business? I on about mean, to. it terms acquiring Is of in is small a that book enough that kind material? is need we not

piece the to it's it's I Sure. Yes, But of would accretive biggest not Matt say, partnership. us. really the

think importantly future. homes, and system that forth well about clients insurance be most most the it policy. out in help get back We the their both information and more really, to alarm There'll as took I on of service helping value more. the clients as is their that lead flow

basis. out digital direct the update get another similar carriers, in a efforts stands you've just in to I agent, of, has kind you if Okay, build and, buying working on the that great. Can update you but of spoken And of what question, kind progress a about, been kind where made? past sneak could an us give more as one

Yes, this is Mark Miller.

two could the team. about way, it at joining up had and more we progress. maybe think ton a came ago, He the and rapid that so to, and think remember you I of carriers at to platform more it a we've was this about easier, how the Ricketts we into looked forward, talked architected more carriers a easily. ago, Do do better if quarters the ways we quarter and was pace Justin going we add decided there made in it redesign, we plug point you

And that have list wouldn't time are carriers in got so We've levels great we're progress. to different this recode point. about a every we at of XX activation making of

Our more there on. in like the into will the carriers August pipeline this the timeframe end the it's the be upon start some between rest And Then heavy of the would there right carriers a through significant carriers we're the end of now towards we all point. now the year. bit dependent looks year. and adding pretty at of fall But

So we've the we of on do built out need our to side platform. everything

carrier of the it's Now on side. resources availability

congrats very Great. to Thanks on for the color. a And start year. nice the

Thank you, Matt.

Thanks, Matt.

The next from question ahead. Hughes comes Truist. Please from go Mark

very afternoon. Good you Thank much.

mentioned is? to and on the You of think that the states of pricing business, tough it's I How regulatory where place say environment. much because you a restraint growth would

not you're with California headwind significant a being placing available, efforts. targeted for think places agent with there, has a trying it like where that are specifically where carrier really to more recruiting And our we're new is why franchisees. if product certainly That's I with growth we agencies launch in

growth that's And the and naturally we very as the premium it rates profitability back. product up in also normalize yields hedged. of beautiful future said thing that, of to remarks, our I about start like that back opens and is prepared is market that kind get our So kind think business carriers

be premium rates out for we'll best and there. become to as environments again, extremely where carriers challenges carrier the favorable any soon the making and partner as start money, stabilize the we're will seeing most So are

renewal a step question between sequentially on the the fourth you've quarter steady A up QX pretty fees, first and it's between Historically, QX. had royalty and quarter. the

anything there is different you quarter? and Was out. this You've got thinking that progression again, helping or from and QX pricing a very unique was strong that that that in number, QX the

strong mean, again No, I we XX%. client at have retention

of got there. the the right we've to kind of quality impact calling the agencies sure in make of seeing You're efforts

so it's that royalty in So the so rate shows a, there's in over business XXXX year, the of there. growth nothing generation XXXX, it's over note new that in renewal year fees that previous previous up this the XXXX, year,

is call those Yes, book, that that and renewal correct? you when agents still retain you that those

Yes, book. it there, hits and our buyer a corporate another they'll Yes. and not out franchisee sometimes sell to then to they, if that there's

you. Thank great. Okay,

The next BMO. question comes from Zaremski Michael ahead. Please from go

steroids you culling corporate Maybe positively, dynamics about agents about thanks. terms of franchisees not digging the the into in some of of or, the maybe well, some Hey, from it I the, the of but the the on positive like productivity. thinking and converting in I'm that, also talked terms guess of the, of

just don't actions any And so, as some are we of improvement there kind course just that you and out profit may on. that good boost the the want to curious we should of things short providing thinking these is into the be dynamics so margin be XXXX, through thinking of come in call the or terms margins and to of of over Just we term over out about get our year? skis future we thinking quarters a

would I a expansion quarters so Yes, in last margin had say four we, the we've row. nice

expansion increase. a same improve continue probably basis, substantial improve, step That we not that rate had pretty function to QX. the and have expect on quarterly a We was margin to at in

So several reasons there's that. for

but expense really actually generating if money main all you One on drivers It's is you're the a industry, you business. renewals know of business where, new productivity, that make also discipline. in of the profitability in the improving new insurance on don't lot

uses managing of some if of did changes had job look something better QX And we efficient QX in resources at more and the that of a of finding expenses that's XXXX. we not those of in XXXX, And you year-over-year.

of that not you going our impactful change way and corporate see opposed so in agency but Our a sacrifice We're assign the kept reduced partners to year to our corporate only effective. cost, and standard. going to very metrics, productivity continue hold to as necessarily efficient this sales flows was much a as partners had agencies and there very profitability we're on force, shouldn't it meeting. conference high a the agency kind from more to We

shouldn't you beyond and margin dramatically of So XXXX the see between changing XXXX, behavior

too of, Hughes’s regard I did there's you because access just make from going natural pricing, I question, you Just guess a I talked number a kind being make to to product but reduced prepared comments your of right? rates Mark on helpful. about getting follow high. That's think remarks, from you back up, tailwind you a in to about you're want because sure, hedge a, a

So a just and hard net-net is even still, is some for access kind lessers having it you're challenges auto or the market that home, to two and is a product wash? of benefit net though

raise a many the a I us entire books side is can, it you're onto we probably much then it's not policies revenue, you from the possibly the XXX% do book as business, adding other and Yes, as of profit. of prevents contingency the then wash. which but on get in as the getting coin, mean,

the we to value of the in So that's are of being some chain. a we part certainly strategic period in the is But populous of look product states. advantage where there most forward where time availability better

growth. and that And of so kind more can we extremely successful have lot hyper being a are agents

thing sometimes new states other that have just appointments, that One harder product the Dan. these is still it's very have this get too add agents are we franchises agents Mike, and these et of and challenges to states cetera. to that in a successful, agent And additional lot

can there franchises, talked on or and a about, lastly, you light you be how Maybe mega margin Mark it. you, there, internally you many kind would with, franchises? Miller to mega shed more on franchises what able the of EBITDA those be to Got day what view today XX envision are mega is

has agency largest our up But per think agency have in if got I today. about X.X producers. theory, it. producers that got, could producers agency somebody about XX at we've we've in look you mega the think to our so disclosures, XX We as Yes, today

the vastly great our long is average partners both parties. different that relationship term like. agency in looks And course on renewal what from MEG somebody like margin agency XX-XX a it's book. is We're outstanding on and, So the the a a for

and could the bottom that both top line growth. a future very think trajectory I So impact have line meaningful the to of

you. Thank

next from Markets. comes Capital Mark question The ahead. from go Please Dwelle RBC

junior, is, and Yes, you be the quarter. in question had in in second the I what's why be in suggested your it think the to think of that better good first I one I guess afternoon. Jones, one Mark do second PIF comments, of that half? your going slower think make you growth there'd

cause in corporate talked Yes, amount so some reduction sales total does production. we've the about slowdown the headcount before, of of kind in

Now, has the outstanding. been of productivity out that group

get the year-over-year But to fantastic comparisons job. credit a So the the team, in the they're back doing bit easier a little half year. of

a the called last, six out number in large franchises months. have to of We eight

we to of to to expect in year. normalize. work still in normalize QX, but We expect the to the There's begin that back half that do begin to

several in agents add and more dad more already begin on her they agencies agency. how And Jessica and she's about as corporate prepared hired my talked producers McNally spin hiring, people at and we into out his remarks

expect managers We would tremendous single one to relatively have hiring a and we of quickly, new begin that adds out launch of and other business corporate several store. amount that productivity

the expect PIF begin second third then quarter to bottom out that. will we So accelerate and in growth after or

thing. but it the I but we're mean, that summer get would burned it and again, college they those Once fairly is every June I month month the so another the large. we'll, adding, in in productivity the mentioned then that we're for right those low prepared just one class we'll and ramped in I close see corporate add not at coming pretty from quite then, think will we got now. we'll, remarks, start to headcount, and start. We've up

helpful. That's it. Got

think dependent more vital of two, say going would is, expense to over dependent productivity a it, more upon more one those the, little to levers bit towards obviously upon as the long next I you is going a five as be margins just years, both, strict about maintaining but had Second delivering I control? your you realize that which is, or ability is be three, outcome? better however journey you EBITDA envision improvement of that it's deliver in the to question that your

outcome The longest retention. is that lever delivering

does like But obviously in margin. long-term the really is day, and benefits differentiator think so is So critical from profitability The and and every adds the to profitability. the good amount is in the for as is possible seeing maximum as service and team of book as long better higher what's books factor drive retention. we But long far And away to the in the our absolutely. for the discipline incremental is, outstanding productivity that keeping the that possibly reality, biggest I going of XXXX, margin, continue. Maintaining is. on clients retaining expect what as we're business can that far delivering existing the new business expense I adds productivity would

Okay. Thanks that. for

think I those my are all questions.

Great.

comes question Please from next KBW. The Meyer from Shields go ahead.

growth issues interested I of for I just are because or I know carriers thanks. And that changes could of internal I'm or about in and say, clarify stemming unclear me. forward, you sort I talk but issue fifth Great, hoping growth same should these are little that well, we're about going whether the profitability was from just of pressures. a in less

Can cut you the question? You repeat out.

little We broke up a bit.

Sorry.

No, sorry. I'm phone. it's my

How think that presence. sort where welcoming of states cam I'm lot carriers because in growth it of is trying PIF has is Goosehead understand the policy talked less a to sounds slowing opportunities market agents. about states in it a is of just I And of disentangled trying you growth you've the newer these significant to how like I'm just of and got it better looking just much much growth? for

rapid corporate example, in we mentioned grow our significant discipline agents corporate there in, continue is strong Miller the, things, a product we're as we seeing every challenges Yes, But year. good Carrier to hopefully market under reality, we in impact near deepest it's but management are and productive agents term to in continue back that any in. have we'll agencies accumulate the not saturated certainly and has meaningful as alleviated productivity future will being into controls extremely we city Mark in and be and both of unlock really over productivity opportunity. as that system that of the agents market also experience Houston new PIF at is Houston, should paces. naturally well, very that adding those have for improvement

lot good while challenges and have is point because What we are would out in a product ability needed portfolio. California that I the, a been have to have a with get none able have in much the, political to Like product much of of environment we the for of rate. different are do in way Meyer, agents the the carriers sort don't regions. different they of of California in that carriers there the

agencies. appointments of new so new And they're new adding sort for not

in So be California, do just what we've well if can't launch can not okay, people they let's we've is we said, but successful, done that.

where good. areas have are large. are in product. The launch The market Let's to demographics them we markets metropolitan good access

some sort optimal product always really but about of smarter in rates situation the I not we're to it's regulators basically the right an of accordingly. to most good hard So regulatory trying complicated just and, beast there. of rest a just now, now, if even we than will would the most California's country, very get feel there say it be will markets. cycle in California, the and, is other adjust soft go sanity through they cycle,

recruiting that with trying success. where do on And we focus their we're, of people really will maximize what so to efforts what can our put probability franchise we're really is

helpful. currently That's Okay.

the Mark simultaneous. Jones PIF that a bit into want I close I also franchise jump thing on, bottoming. terms to Is and the got Because commented headcount think like Jr. timing from any just more headwind count to sounds bottoming the it are of, corporate say of accurate? those whenever selling? Had same in little you've Is let's

college a start. the summer kind middle of the a of contributing then, the recruiting year. campus and should the kind hires significant of of is Yes, during second factor half corporate as onboarding And PIF be out growth QX that amount QX the of and a agents to we in over bottoming

So yes.

Okay, perfect.

on starting Meyer, this that are are we We we our the, classes have, the bullish a summer. give so just recruiting, to sense feeling you on

of that to give sense actually to only X% interview offer. one get of an we quality people kind sort you screening, of make of, it through Just

the single successfully but the So built first that myself years is ago going person We're be many to using selective. business old wasn't almost back a with Robin this us. not the in and that starting interviewed it I, do place. I to Robin or able every when one We're anymore, was the that I'm highly we're being model day. going that to

Brian Pattillo corporate now, that sales. corporate, So runs

I think up really, an high. The standards offer. everybody you that inter Brian, you getting really are interview almost ends

we're bullish So this the, starting that's the really on summer. group

you much very fantastic. Thank Okay, color. for the

[Operator Instructions] Please from go comes question JPMorgan. Singzon from The ahead. next Pablo

Hi, thank you in. for squeezing me

you're was the guess had roughly, compensation on it's the of It's various source up that $XX level, million hiring? a I things three question just past assume for So half been $XX about quarters. I effect where at [indiscernible]. million, obviously you first wondering flat And at maybe the that was it to ramp bit on until would corporate I second doing, stays able but be an

see compensation huge into nicely wouldn't to people I They scale swings we expect in continue add bar. expense. Yes, Obviously really function. the the to to service revenue in, need into

office back agents, well. adding but talked the, be we've amount very lot of as a sales very, will corporate of significant We about, the scales

we need employee benefits. be don't in And of add common I increases really to wouldn't so massive see a expecting to ton headcount.

hiring as But nothing go we the some, see year. normal crazy. the of will throughout some You and onboarding

at Okay. And Is correct to the that for about think follow which states this a to the one? sort that that guess, is then quarter, way next X.X that, I the that reload. Until of reasonable the level, complain, assume year be as rest of equity right? just it'd the to

awards option January. so we annual our Yes, do in

up And if so the think a there's There those down about. were any type year of would during may slight be issued employment as to that baseline QX. year changes, movement but movement, for good in or kind be there's

a Got it. me little last And for broader. question then is last one, the

economic think of until for anywhere maybe But attractive And comments renegotiate you or, a was that So partners, basically size your something the point fine. up certain you something the mega us a wondering road to this is have if economic sharing just arrangement there as them, right? franchises these I bigger building there earth about not yet, where, might on on, up right. is you're with come franchise XX-XX, That's or current some at think becomes the can with so, franchise less serves thinking stick sort, near which that is that group? about

Sorry, that? what was

manage Its is Those to very accounting Yes, and an that, and manage very, I than finance salespeople. have very the me? we complex. And hiring are it managing had pressure when hear a service different a very can It's organization different to you anyone. Jones independent Mark you agency. very, thing have things from no

there's how it. and the of get on which All because agency lot consult to a with they that we them and they're build lot value work people a that the agencies, lot largest our of, with of huge is we of there's closest intangible work a intangible we've done them a with

there's that's at that's center we arrangement. so beginning it's the it. a And front something there. that is fair lot That's arrangement of value and and is not We, like and the agree We ever. feel the economic

Understood Mark, much. thank so you

Next question ahead. Newsome Piper from Sandler. go comes Please from Paul

you question are my something call. have two Good or one follow-up others fairly their does community that seeing guess very the around few There's the on either afternoon. marketing maybe in progressive back Thanks like positive area. a to have negative? is, your you and significantly may been costs guys business, recently the and of My particularly Hello. digital lots be yanked Couple, buzz that that investment questions. for an or and impact

on for on mean, distribute progressive of back really product doesn't where doesn't that to write best marketing kind client. agent's ability progressive chain. or we are Paul, if their spend, Yes, to the kind impact the value that cut in the with I change available based, our wants to of us

not that. we're any impact seeing from So

some things independent do suppose, it's there's secondary be for presumably serve don't know Others if way. But they that I from the agents. impact could but either I all

the the on not. whether it client branding that on say any referred we realtor or send progressive to business, the carrier just Pattillo drive market, Brian specifically we're business. the is or relying rely I a to getting or Yes, with has us really so advertising loan no corporate think we're or this Paul, really we don't way agent, so the and officer that on impact carrier can go I from yes, advertises referral, as of to the referral partner

Fair just and sheet enough. any management. the wanted And to balance was separately, see completely sort then of on thoughts if updated capital there

more, little anything lot the that to like that, obviously plan bit EBITDA. You're there the respectively. you investment actually in more pure debt thinking And it structure is a about use or does the a are changing producing or business for just

talked XXXX I comfortable at expect in today debt turns given to the down business reduce in the interest ceiling. interest Yes, debt we've to the of in environment. and comfortable being related sense anything with that of four to leverage. Yes. to excess flow paying wouldn't expense a kind We're see extent investing level cash kind the as about of that, makes rate

Well, I uncertainty then general we'll kind at It's less we'll just come we'll unnecessary point. economy debt the it's once at add not we're we're any look our not economy look debt look take that to mean, in strapped, need it, of is that no it, additional this But more about interest at situation. and to risk. there's the at stable down, rates also and there's

I appreciate I Thanks it. as for call. Well, the appreciate help the always.

Paul. Thanks

remarks. I session. any would for like question-and-answer conference to the Jones, to back concludes the closing turn This Mark over CEO

shareholders. hard working on everybody we're let all and participation that to call our Thanks. like just very know I'd thank the to their for for be going of you

conference today's concludes call. This

participating may Thank disconnect you You have day. your and a lines. for pleasant