Goosehead Insurance (GSHD) 24 Apr 242024 Q1 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Goosehead Insurance First Quarter 2024 Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Dan Farrell, Vice President, Capital Markets. ahead. go Please

good and Thank afternoon. you,

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

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

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

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

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

X,XXX Thanks, and that substantive Personal very time with call. a a Insurance it we those quintessential distribution with when company not have change quarter producer more pleased our be progress bore the in headcount We the that our Staybridge but first changes It's our quarters toward ridge the last I'm to to quarter made I over is pleased has welcome, all Lines the quarter. first again. made in fruit am very I work people achieve, sticky tend business. and our ended get to generally years business, to long sustained. growing Dan, X.X report time the everyone, goals. takes many driving give-uick business. is hard tell over begun Franchise but to producers. tail

add placed total Our to extremely agencies want producers recruitment being that a going support with well existing QX. during to producers of in efforts are franchisees XXX

agency. new in a improves average, adds producer, everyone As the agency a reminder, on productivity when of that an it

So an area important helping lever our and incredibly an focus. producers franchise long for us of partners remain and

productivity on producers also of the is driving large enhancing Our quality focus our very gains.

First that to but year is not franchise cohort. productivity limited year-over-year, are XX% gains the up

heels in sales growth same-store growth in franchises of on sales the first existing Our have same-store the fourth quarter. XX% the quarter delivered XX%

currently Our premium accounts franchise volume. our of network XX% for

We focus these for benefit time. earnings come. and all smart really business deals productivity proud gains cost believe have to So growth move structural to maniacal on our years will discipline and the over continued also to be through of can deliver strong to We're enhancements here productivity. margins and

happy with effectively of together. very the off Miller, the our they hand working team to and senior prepare I the role way so As capabilities I'm Mark CEO are to

While we're the headwinds. term, short for some temporary facing we're these in wins excited

hardest are between is That market X We and know product last client market X macro said, with the hard Historically, in that our in years being cycles XX-plus a pricing operating availability market and we and that cycles derivative experienced impacts insurance insurance environment soft and retention. these in to impact business. cycles we've years. on hard

level carriers affect profitability An long-term first increases hardening allow example by California's our cycle we claims close enhancing costs up resulting cover increases rationally, steps reason to but amplified can positive same-store inflation have this market we more forced toward to rationalization. as skills because our the of sales hand. the a Black price competitive to impact in When have of we regulators business gains and well report from saw even we optimism carriers temporary game, California. know health you has as COVID insurance how of for our current unless been event, There's challenges arsenal. rate normalcy business to Swan face strengthening Our been on and our the XXX% March, the to in adding in our and product that market are to

our We high we but market progress current are the in seeing rates, our cycle. very return challenges are retention highly temporary we to through confident historically will retention as

and time. invest our current earnings deliver of on the our cost through committed of on an we're hour scrutiny dollar environment, and the capital we management continuing our aggressive where While to careful navigate growth to we

to that the and our on long-term will a authorized invest we shareholders, Directors impact stock headwinds dynamics plan, will and that temporary long of buyback have are seek dislocations. pleased of challenges. largest and the which take these our our bulk our smarter has our substantial announce as investors, Our of understand results. business, the I'm Board utilize we know They trivial advantage improvements a market transitory term of structural these to for our

distributor which iInsurance in today positioned our deliver have of we our in goal, better about You'll this States are during on largest the Lines in United I we than to hear long-term call. more Personal company's the the been my history. lifetime becoming later on ever believe is

best, maniacally underwriters Officer, partners. another experience to on team client for what quarter. delivering And service focused bring remain deliver to our continue Thank our will our to We clients, President and you deliver with best on risks our carrier call Operating for attractive and and I successful we available do favorable will to over the and the agent most turn Chief the world-class Mark Miller. that,

commission Thanks, updates on everyone. Mark, producer and QX, summarize in franchise and operations provide afternoon, key areas: To good productivity, headcount. retention I'll X

led our accounts improvement of success. This new less saw XX% an dive XX% increase even in our production. count we QX of correlates for franchise in First, and by first The of After to total productivity. into increase XX% X-year agent in an network let's franchise long-term XX% productivity strongly in increase stronger business XXXX, a QX now XX% productivity franchises. We than franchise XXXX. was year note franchise

will So we believe many newer come. vintage well to perform franchises very our of years for

ramping continue had We're quality a with have see to franchises. for business. strategy over a faster is as bearing quality we on strong grow relentless set fruit multi-agent past scaling candidates We quantity focus starting new launch higher the to and skill to signs and this the year, desire targeting

into partner leads productivity, dive increase per the referral driving you what's of increased an agent. in it's number primarily If the

on get to productivity environment, rates, With close to to the only to way is insurance referral leads. best is And putting pressure solution drive do the by downward partners. more that marketing challenging the

impact had efforts Going some time, productivity strategy. marketing into on we primary QX, are QX the growth. our These down QX, and take driver on doubled they they formal but partner of

agents our refer access America. clients agent tool that reminder, with professionals production frustrated to, have an every data a have mortgage an all As originator but in many they of experience. shows them exclusive the that to insurance loan are These

Others and Goosehead partners our of only turnaround be delays. to of closing they're refer agent should agents not value insurance, on one offering referral but the other industry. agent has in offer Some more the to to frustrated any captive agent which by independent who than business these may proof cause time an competitive. a

on components: centers value choice. X Our

product most make the the we clients at price. the the industry right sure in have We right Speed. coverage offering robust to find

get referral can insurance We hour servicing means an which have of partnership. a in these under service team we dedicated partners, proof them to

agents have in made the rates officers more to generate loan The ever. and ever to higher referral with our than strategy to more on value and also support executing partner business. agents local realtors proposition interest market environment our before. these We're will challenging training to pronounced Our providing home than more insurance partners

close visits, For example, that leads XX% generally in over execute number improvement see a activations. with greater will we in of on investments for the past housing these into leaders QX, visits agent over of month. the we the half-day year-over-year we out partner field than to years come. believe is sustain the us that This these more best market record. What's productivity allow quarter market send as our We was our partners will to high levels to improves, exciting referral those of sending sales partner In have referral a following productivity. one new our lift field leads higher these as to increased X After saw higher deferral the agents go quarters, And to of at leading agents. number will on improves, gets been the partner rates, XX% agents. referral insurance leads the volume of the a

the in productivity. We are by incredibly trends franchise the encouraged

increases, reminder, higher of royalties and dive the in a activity, weather of as on changed these renew XX%.Second, price worst costs To that, on combination from productivity many our will, policies. retention. aggressive XXXX line. fix let's policies a revenue second XXXX. gains however, inflation, taken year As underwriters the record to underwriting contractually Because renew have go materialize immediately not reinsurance some results boost not guidelines experienced carriers to XX% do and commission unprecedented of decided revenue insurance into They as and in

average went homeowners this more pronounced to unprecedented of is over homeowners our rate have increases Texas Texas than insurance led shopping These clients. concentration up national twice largest insurance, activity. XX% over the in XXXX, rate. Nowhere

carriers In activity led increased of raised retention. few These client captives a dollars. losing rates decrease losses to addition, in are that billions have aggressively large sustainable as Texas, a shopping there mispriced with captive are in haven't are and not who and

on our who carriers is distress under near-term X significantly commission retention. lowered negative a extreme impact addition, In rates, commission which been having financial have

more Importantly, that Merger impacting we is view such see the who reputation news a schedules a flexible not get carriers no as insurance that moving when can levels are be for again long-term know to truly impediment higher and back commissions so they able right. the in great changes will taken a good business. time retention Many being market want allow partners among state the to generally and to is as Progressive, Insure, make carriers historic depreciable and need growing maintain These where at Safe they start up have many have our a all. route they they Texas product heals. the to to can others, deductibles that agents carriers and a are back create long-term profitable. to Safeco memory The to carriers to order open is

our up XX% the partners our As open captive to plus. and back will retention raise carrier carriers believe back rates, go we

Third, growth. producer let's dive into headcount

new one a existing continue Every that levers and almost to value low is for franchises add is the is source an very our cost producer equivalent incredible franchise in to a of new of to franchises helping new provides our producer We business, franchises. X existing the believe our high-performing longest launching for helping us. added franchise producers

new producer franchise of productivity see everyone the in a we when is increase. added, Additionally, else

in combination and X.X through added their and X.XX sourcing QX Our ago. quarter a ended scaling efforts. the at program of our franchises a recruiting the compared to producers quarter Producers year corporate for own X.X franchise in XXX

this XX expect Our to more to several us add team hundred help now franchise network year. producers to team this total recruiting dedicated producers franchise and the we

quickly XXXX, the as from believe sequential March growth X,XXX As back of out Flowery agents had a ended has agency this Agency Zac our Georgia. since will an launched been first at Franchise inception. of per producer staffing overall Gary as X quarter. part and from quarter of has producer, program Gary has Miller result. success program, no see producer hired he great producers producers in count great quarters. an agency and levels, One the in relation utilizing agents Log. a particularly franchise. of Gary represents the X,XXX me, Branch, of example Miller in with the result, franchise X This a number fourth the to and current the we increasing has adding He agency we is last up will grow

revenue average in quarter, per Georgia. X.Xx $XX,XXX of than approximately the business Zac new higher which month, Over around produced is the producer

as will we've continue. college summer We success assist and continue in top his through had majority recruiting hiring needs in talent for with tremendous our have agency class. signings Gary the his to recruiting locked corporate, On of

We in expect their started success our graduating then view us activating corporate months. over opportunity learned report.One revenue to within be an ever for higher-caliber XXX in from agents. Noah attract a allowing end to partner years, the come generating least month craft, developed in Many University year Denver. relationships is to Taxman. a a at expert their new and corporate corporate franchise. example August experience than at network, referral the of is partner with They time per Noah found pay leadership this few He at after joined apprenticeship. as This talent X a of referral and large launch immediately gained go mutations $XX,XXX Denver office

is Noah of generating his in over his Now out advantages. he the revenue largest has on launching so. $XXX,XXX remains year have recruit continue continuing historically and future. to campus, This top that talent and opportunity of options then USA likely industry our do college, Recruiting into talent now of join month he to to will level in and over $XX,XXX will is many compelling this in seventh them an in Noah struggled earn we month, franchises one grow. competitive and per first career is unrivaled to

they and are Insurance and have over market here we call abate. and team We the strategy founders Jr. We eventually will capacity. perfectly of our stay. We're incredibly we absorptive corporate on distributor productivity right are grow our continue will growth. the will to QX, to reaccelerate our to summarize, the to extraordinarily believe in about to to color on team created we the this we capitalize With changes positioned turn long-term And and gains do, vision confident give Lines execute that, our headcount Mark up to strategy excited revenue in rapidly To largest know structural when the the Personal growth. more financial We're becoming franchise headwinds right our I Jones of lifetime. that results.

we history. XXXX. the good Thanks, count core in the premium Mark, revenue, in to quarter new reacceleration began the phase. our on producer first sequentially than top generated year growth more afternoon our the and business first revenue, quarter quarter in Total everyone growth company's In call. franchise of that, of over any of we On XXXX, cash and all accelerated fourth

aspect a the strategic control. were every We the tremendous from end, producers minimize made total scrutiny have within of and X,XXX control of of placed franchise X,XXX our forces as our our impact in amount to decisions year-end. outside up of business of Quarter

producers producers into added franchises existing our fifth the their mentioned, per to XXX consecutive agencies, for quarter Jones X.X%. Mark franchise As growing our

adding an drives production existing typically to the a X predicter of equivalent new a reminder, agencies. agency As

of staffing their strong producer results, cash cycle of Our program confident virtuous has to franchise continued next Each the franchise and growth momentum time agency. fund drive should program onboards a producer, a overall been in the generate agency the and successful which delivering they become in flow more business. a

producers it incredibly As improves XXX, time in Corporate end tool the agency. a year up is business future a prior remains added the quarter a for everyone new This X% producer that to were at reminder, each period. powerful of franchise, productivity growth. from an

having health class summer. a the and to a XX% of offer in new corporate a their in over significant locked of our approximately position already of excited with we're cruise onboard now about hires corporate of signed to are the class portion our We've team, We letters. summer already planned

also from further environment up acceleration Because taken expect the avenue our impacted the generate year, our housing a generated One close activity, lead have to will per some rates. additional and end partners, Mark corporate business referral partner the flow In prior we the is seen we sets discussed be to and at of in of agent quarter, to us to of share drive a to XX% over rates generation, referral have with drive lead XXX, increase in year decline, period marketing face have how business wallet need funnel the not in Miller of only new the but agent the gap. efforts diversification lows challenges the flow those the retention faced We of activations of increase more production new a by cyclical lead strategic temporary in carrier combination increased existing our combat top flow. our new the first impacts to we've we through fill those which in headcount in partnerships. XXXX. over

future the product inevitably million. $XXX increased XX% percentage there $XXX through Total leading temporary includes million of the upside franchise premium the to As growth for a believe XX% flow. of over grew of to abates, million. corporate converting is growth and this significant productivity lead in headwind prior XX% period of to higher premium indicator year revenues This written premiums, we availability $XXX

by temporary The retention both due quarter momentum slowing premiums to is of distribution new second our observed declining quarter XX%. growth, was to business new the business market consecutive continued corporate challenges. we in an new with renewal building XX% and premium the the premium business partially networks, new offset up being business first premium The acceleration of franchise related in up rates

increases pricing retention quality the investments drive grew made towards both million, our $XX.X the our year and us million, period, for average in modifications to XX% of ability expect over quarter the retention will sequentially XX% restored of growth client models, year long-term prior that and carrier accelerating representing growth revenue XX%. improvements in service profitability to increasing historical with fourth through Total normalizes. client period, give of XXXX. $XX.X we back significant the our combination revenues the of of the function that representing prior We've core carrier as our market over over quarter confidence As is progress underwriting a to

quarter's XX% our first network the in of As royalty and accelerating portion by of the we XX% the compared of have first quarter previously a fees is with being revenue revenues mentioned, to driven XXXX. coming larger core franchise from core

franchises trend reduce in steps we recognize productivity gap revenue business the fee XX% policy, We our only expect rates this royalty average This Policies producer. producer decline between of year growth as the terminal versus to rates in which term. continue as muting improved temporary the and and impact producers subsequent a onboard XX% quarter effect average the on the lag franchise generation. ago the first grew to corporate the force new each as in XX% up are in has retention

We force versus million this rate the a expect quarter growth for in to quarter million $X.X the in policy of year beginning $X.X reacceleration were Contingent commissions year. ago. the third see in a

contingent For points XX total of XXXX, are we assuming premium. to basis be roughly commissions written

contingent to total the of expecting historical average basis in written We premium. XX points see commissions of approximately period. of to $X the $X we contingent Longer second year expect to term, contingent quarter million the are ago million commissions returning compared of in

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

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

mitigate lower expect on moderately impact total the margin continue year growth as remain cost focused we expectations the expansion to line to We for for term. full near the revenue bottom management of

during and majority class margin converts profitable of the business expansion contingent fourth the the new expect the to We as quarter accelerating of commissions. new production, franchise quarter occur our to ramp the fourth of from of for the corporate agents year more renewal the timing up year-over-year business XXXX

a of result additional in we tax significant our in for tax tax these additional deferred state state deductions. result in deferred certain state resulted current which a state tax state As business benefit now geographies, various nexus have tax increased filings, taxes of assets future met period produced thresholds, Because large filings.

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

of unused line the $XX.X $XXX,XXX to was term compared of and use million. in credit note a Our year was payable cash to flow million, total generated cash of balance million $XX.X $XX.X operations the Operating ago. quarter outstanding was

the Our of period. in a year generated compared of cash in free was ago to million quarter flow use $X.X million the cash $X.X

an quarter a earnings reminder, perspective. and quarter first seasonally the As cash our from the weakest of generally year generation represents

Given client product its the for temporary full revising guidance on the our environment carrier are in uncertainty impact we the year. and retention,

for achieve year. on guidance transparent be is our accurate As guide the as to a possible. and believe we as to we reminder, We what actually philosophy will

drive For end expected is of $X.XX seen the range decline continued low term. we've renewal made hard in retention organic range be a expand remain growth XXXX, many for we and of XX% the end of performance be million the representing end between of the billion and more improvements years high confidence to excited The will long guidance to the challenges significant end expected continue margin possibility future QX. $XXX placed to premiums of and representing Adjusted the temporary in range. and of is in that growth and XX% current book end in guidance XX% high end $X.XX expected incorporating million, billion, in the year. incorporates the are and business the low the growth written and range facing for to organic structural total we transitory. are low our on marginally than come. the revenues near full about rates growth the history The of to underlying has between We've the Total organic the the are our operations insurance performance organization market foundational experience are reduction the believe our cycles the full EBITDA have The to incredibly core year XX% in soft of the and in We ever. high in of and $XXX of range. the

create sheet value. balance cash to strong flexibility shareholder generation options Our us additional with provide and

And EBITDA debt of of last Our adjusted dividends. we the returning to months, net form to million. current shareholders the Historically, we've have in significant cash $XX XX generated just special cash excess trailing is operating X.Xx. favored over

significant dislocation a believe growth we there's versus our current valuation expectations. our in earnings long-term However,

upside expansion and grid agreement. total will and of credit connection in result, revolving an the of our an the tenor of approved facility. million, repurchase with while a the term increase Board an of our The credit include to $XXX existing As of facility our $XX of upsizing $XX share facility a million authorization maintaining loan pricing million existing Directors

an want to and we that, Operator? sales thank our let's team, open With believe continue on opportunity. shares I carrier for leadership support industry path we represents questions. current a stock line our Given our as valuation, service buying for up to dosed our our our shareholders our their the that team, attractive agents, leadership. partners

[Operator Instructions].

with the come Citizens Carletti of Matt question first Our JMB. will line from

And if it that's bit lot. about little asking like lot product talking I a you fit is personal crystal lines, a question is no out obviously your first to paying is you think surprise about environment. talked but My anybody attention the ball, think, a I

terms pricing Just the you in are process? into it where and do in in of innings underwriters in and kind the you of feel are ground think thinking future? more guys we're getting improvement later little you day-to-day. in think come. starting that do expect Does changes that book it's will an to terms conditions the it middle on see a feel innings? of you and good a not-too-distant Like we the Or time spot you Are

of to is and think to Mark starting talk Matt, the improving in. teams back this come when say in, Miller. some and towards executive them. major I because the home start closest I we carriers I'll by would are we're and it to auto would usually of say down I more end cycle, probably then then quickly auto that or I home. Brian come and carrier break the then auto is see it

been expectation We about, now slower offering to that tough our be. this than product would recover reasonably are coverage market but still expectations in Texas, it's right was On the home like would side, pretty by and at time still. carriers of kind the our places good of prices, and have the it start broader

we're your of But we're the it coming what's say opinion? know of it. of but But whether and middle and the would at least the end at out So don't Brian, we're towards waiting I I cycle, seeing.

starting When and dial have they're progressive exactly think mid- to back look combined to right. I Yes, up been restrictions. you growth at results posting you now that's ratio. dial They're looking

until restrictions a add Texas. late markets waiting dive little like especially Mark's auto back still Some is is home to bit see, of I carriers think better to the to point, place. in and bundled in are And a the home

home, So I innings mill think later innings probably in on auto. more

Yes. That a we big mean optimism... I makes California see some like me sense. correction which gives

seeing this Mark is we are Jones, are Matt. -- early We some --

come mean has yet, for at early substantially the of and end it size, a seeing which some the tunnel is necessarily -- it's down Home, at doesn't in train. it's Progressive the the we light that progress a like, are at we're ratio don't but combined end of example, game the that We from its their least, think

by ones it's And moves the I think -- quickly, so Yes. that carriers. different the

quickly profitable and call, price that compared like game. ones of have the now. price captives said they're but And a moves raise relate the Some handful we've their to the not are becoming everybody to and are raised there on mispriced else yet. Other

So it kind of depends on what they do.

this of kind you or given in any could the terms then I in And that was 'XX you color I'd model think as there got guidance staying -- lot way is, we and worse? that, through what better 'XX kind but you how imagine XX% a to ask to premiums change it. your view look internally. temporary was like last of little being or really right like provided as things of guess, the is. of I you, thought in quarter you convert why change more form over so, of have that and of guidance 'XX revenue conservative and and good understanding the internal the might this ask some And you guidance made on if I Got a the like

this Matt, Jones. Junior No. is Mark

onboard Looking if corporate agents indications college we're have not they year. as many in first lot our class in better, be over at well, the just previous we next as putting year a XXXX, field ramping here players are few new the up and the months in the going to more

feel that. good we are existing So hire. agencies continuing And to our very about

count the first producer this number for in grow the You time quarter saw that while. sequentially

XXXX. generation very expectation the market of feel from tailwind product into get actually to of has we normalizes, as it right a business our a you opposed looking sort And is retention about as new good as the been headwind So as big now. client

which number percentage not we're profitability, like. your what XXX% attractive restore really thing as any are, have longer grow to again, in very than look premium is other or that contingencies, as for and And the So commission a you expectations the to of earnings. start looks that get carriers higher base starts changes XXXX as contingent

to where remarks costs The back the don't immediately made those other would a that sacrifice in the bottom dealing comments I make point rationalize base cost in Those all the get sure line we've -- we're to that steps of prepared with we is make had kind taken another revenue put XXXX. earnings of short-term number. P&L kind don't of in growth we

So as as soon more you environment. you normal to and a effective this of product come out more leaner get

UBS. will next Meredith Brian the Our line question from of with come

couple A for you. here

commission kind maybe divided to But do the I rate at First, at core I'm the by, if it, same and cuts. getting that just corporate fact call you're just call look curious, fees years. of that's of revenues consistently corporate, that is written some thing looking couple over It's and rates? with what's it, something there? of premium called with by on kind curious, I'm else franchise premiums. the because franchise there of been divided on for going commission last the declining Or going is

Yes.

last the over a of the we just we expect growth, a about of of to scale majority, your was rationalization it that. XX% That's little health total flow couple but the the driving -- largest in But right new XX% the grow the from the peak a production the bit just to mentioned headcount. issue. not naturally That decision. really of subsequent of that. improvements franchise we policy lot and it, growth corporate team, the of just considering XXX necessarily the A of of years. causes majority part to renewals corporate short-term the drag team that is years, driver just future, rates of And a after first it's side lot majority the see the of kind production, couple made broad majority although talked mix from to not aggregate is the driving in it following of carriers. a as to material we side, premium lag revenue growth business corporate the the It's shifts terminal causes the that the business that it commission you'll the in new which into on and into continue of the So

lower would Got of that home? are auto home versus affect too, auto Would than assume mix commissions you. the though

or do commission difference carrier product lines. a a big impacted not is would Where a rate between a just auto. don't that an policy, home We see in be renewing whether it's

to all of feel better because is retaining carriers could is amount auto XX% extent got impact your if like disproportionate that pricing, book is ours they've a So the which better your you there, home.

be a Got to that greater. have sales to Is that's I the soon? corporate going of you. greater just decline. agentsm continue got curious, going productivity at the bottoming appreciate is to And assume tenured than a overall more year, lower out going looking And impact lot X end at to agents when you've here to then year meaningfully of with also my I agents but corporate second percentage you're question, tenure your much your

mean I a call. this about in last the we talked bit Yes. little

and because As of best, and of out looks you and into you're most or putting on productivity tenure management. cap naturally a either promote places network, agents people into out continue franchise the and to productive side franchises launch that kind what like them the your in different management bucket that distribution taking

just necessarily don't to at have last to But versus got the year, I you slide we have we see franchise expect this this seen launch So started year looking to year. that the program. remember, continue

at so point who last are that in at And number who now that XX people beginning you've included number. in included not got of this the are year,

shouldn't kind see trend year-over-year that impact. you XXXX, into the looking as normalizes So of

out year and may pump a bit this franchises skewed. more the you a more Although year-over-year of little we numbers little continue that as to look see

Zaremski from with BMO. line next the Our of will come Michael question

makes analyst their of I hindsight, to being sense some cutting carriers comments back it to an carriers are their think going look improve guess profitability. about commisions. the the because seeking I in kind Maybe just

and the do kind this of baking case this just then contingent. into I'm would on same? So the -- surprised carriers is new impact just in kind other lever, And curious into much of guidance a that trend if that then you're just but you I'm just how your all of contingent I'm assuming

I So historical back the over unless their to went would back old actually go commission to the have continue better to time. levels carriers structure,

guidance, contingent the some expecting the isolated It that. Mike, that more XXXX This can from commissions on any your more and we are very that. in an contingencies XXXX. situation, to just is in not color give those of carriers because not are Mark expecting also impact on to or receiving shouldn't see comment to Miller we're we were

contingency impact vast understand how the like. move. also, this doesn't carriers very having agent very And I it outlook successfully. of benefit what argue the shortsighted independent on knows your that distribute majority of or So an longer-term would to And medium a the look that product is

Miller. just I'll I'll Mark comment that on -- this a Yes, jump is second. for just

seen that, in in I any all, not they financially of carriers. mentioned other a with as away. in we back need think or us call, nature. this I've position any said, to First where they discussions X the distressed, These term had we short and are to were is are came we carriers potential

to of the and wanted reduce pull out it. Homeowners a this America commissions and they was of of market They to wanted as result So HIPPO.

for underneath it well. One changed our as of contracts those carriers dramatically the clients

our the to paper that haven't any correcting paper. major right out market it's than carriers at price. adjusts X. the market the carriers the of the that is seen don't, itself. So case, I this of In naturally the And they right those other same not have even so

to -- say the business temporary, other I it's carriers. when starts to So it starts move

Okay.

I the Just in ask feel I because switching but want like it just teased prepared and you bit, a out remarks, believe it's I to more gears complicated. this

have So the bigger revenue guide decline on guide revenues. when the the much premium the we look in versus written you guide, a at

franchise your more of And [indiscernible] revenues so segment are you from producers. or explaining new more that your the of comes from

offer is os commission. more So -- Or the is an lower as that delta? that's a driving there

that's Yes, right, exactly Mike.

with year, of great performance the as of the So seen happen year the expectations to really, now really doing productivity, and side business we've drive thus continuing a remainder is for of franchise this will well. the far our job the

on is And impact the in same impact revenue, as It's That's so revenue guide as you see you not premium dollar. move why immediately have guide that but on large $X.XX the premium. of the move, the right? doesn't feel that a

So right you're on exactly that.

that Or the product terms of lastly, I you know you've guess, the your the enter insurance carrier, don't maybe all could Okay. say, U.S. been [indiscernible]. trade potentially large say looking a had or I if to know auto help in rags, the much very to Got can to you levels rags that anything? have don't that I maybe something third largest in trade maybe about insurance is there it. clients? but you offer could the has how in

the mean Brian. both there's we've trend happen I seen the This where belief, is direct channel. independent on our side for towards now and the Yes, years captive been movement this side on

calls Progressive performs auto similar direct going that some of If that go you have the a the We model well. Progressive acquisitions home thought Client, made hesitated and really billion and what customer is big the retains a done big that market on choice direct-to-consumer, news. companies really has at then focus know look to preferred following of distribution the dual captives to Robinson in $XXX right, model to moves

of auto I that wants every of think type business. carrier more

that to that after to believe speak go the but and segment do can't continue I carrier the more we any direct carrier, So distribution and will will market. of captive embrace that of specific trend the independent

line Our next come question from Kligerman. Andrew the will of

But the And it then XX% it being, those can I America, and apologize percentage these background kind a Homeowners hear of I quarter? ask carriers? my advance a just into what for statistics. citing couple real was you're I X And I I get One Where your X in names this when noise. nonevent of of before questions, retention. quick like business the of HIPPO components. mean, of are book to sounds of regard with

Andrew.

XX% for a [indiscernible]. Homeowners we America the second question in with business your quarter, On for client So longtime. there, retention have been

the value sizable time, naturally And that book make, other a we've client decisions built of as has nice so the going And to that in has they're and and a of a to partnership business. to really a as period up to rotated product. off the agent that they've carriers lot declined made of book business over of relatively

days. have naturally, for us carrier, they but seemed super happens. big a important early not that partner like just that's So were the relatively in It may a

has... that So

is like big saying as they were us. they were really As [indiscernible] Mark auto and for HIPPO

how that? I reduction, And much the commission was see.

we're think I specifics get for on it to out. Yes. enough the was but rate, don't into going to it call us

clarify a listed X%, Okay. out to saw comp the was with expenses, the on bit I press why went up tempered was more; it up only of could which pressures a, G&A Fair XX%, was a maybe b, wondering have release, bit just revenue. regard much the enough. you that up given lot great. in And But that little then you, if that and a reasons but employee I'm

I mean, continuing future hire how and people. we growth by to secure talented really, is revenue onboard really our

secret sauce that in And capital able to industry. so is our to forever the we're bring that's set the we've human so differentiated table

So we believe strongly continuing to do that. and

going the a very have impact. be business, bar to G&A to don't side with long-term well who into cost on to the limit the manage can hiring short-term decision because we bringing going of who want while that's we're system So we're that I and that's

of you then to real there you agents. was move sense. as new Does forward? any legislation at And lot a reducing makes commissions some you that just on concern all? estate Should That have lastly, that pressure

any estate I recent a into interest negative brokers wanting business. franchise side haven't to some other seen but as mean side business, seen I real insurance our of get the on to we've

going So sales Is thinking will -- will get sales commissions the about home your I and you'll lead? lower still it? how isn't fact be that they're seeing you're what that to be home mean

volume partners, upsized relationship be that and but to going not going they're to an and change volume real industry our highest get and the is, that targeting the getting be estate the brokers volume referral realtors affected. lower the with well, are ones growing doesn't will the of It real leads for is be realtors come It a real squeezed. also percentage productivity we're we're estate estate I of to the and the think Correct. out

that on much so have effect And us. less will

with McJoynt This question of line the will Tommy come KBW. from

lowering on understand sure explanation of change in on good want a guidance range gave premium the to bridging make lower on I You sort of the I the the the kind side. of end revenues. just the the the

policy of rate just count explaining could you that there just bridge terms changed kind producers of number of whether If change? premium in what

That's largely retention. a function of

for don't And slide to to market home there quickly continue to year. as is opportunity the retention we the so throughout the if we client little stabilize get like, more as would a bit

do seeing what it's of slightly But peak being of not that. back half lower have a we really, the the it so that believe reduce has should be carriers than historically what Now we from function we is, of on client retention been.

you certainly, than returns what be faster if would rather range, but could never the closer So the of we expecting, that in I conservative high end see are the premium that getting forecasting. to

schedules it side, you it. And expense should like the then on that just then vesting that? visibility should any we do have about be and down the of know given into related of just as step rest you the into about to what kind XXXX, question comp but what up equity-based the year-over-year other for year? there Got touched And have this, step either it reason on you or think sounds may is Okay.

Yes.

that QX full what be Looking it for at your as past should year. estimate

here. directors typically, quarter So to first managing get new options the is awarded when you the

to number be quarter that then so of recorded each year. And the -- that in a would similar

the team a additional step to and equity-based are XXXX, up compensation. you there senior be awarded at which Looking at that options would in point will see

philosophy between appropriate of because the awarded dilution on reality of those options to and level share in our the the stock the tends X% our employees. to an been economic is reminder, volatility the given overvalue for actual that a valuation X% of as kind count has Just Blackships the

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

XXX% premium The you renew the do measure. -- not retention to going

on books Yes, premium not the on be because this be that the will was that they that books year. year last a would do

is retention number. XX premium trailing that a so And

in of book. in exactly that. effect the And lag so are happening what included a is it's on they kind got But yes,

of Can from settlement. a business And Okay. you about [indiscernible] realtor you NAR breakout comes lender. great rough how much for That's then the a talk your mortgage versus have

from mortgage I realtors. bit mean, definitely plus a of We a say probably I comes lenders. lenders. that would work majority think quite the with I obviously But XX% majority

which you our our If referral roughly probably business, X/X at maybe realtors. XX% new is partner of XX% business look altogether, from lenders is from

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

laying just but we like pieces. commissions the down problem, have price of I increases sort sort sounds we've -- down that the revisit another And been thought a by and was home force is, of the -- I auto. guess piece that in I equation. part there for more is question well that large offset are guidance we're thinking that will were fairly there as and wanted would should to policy of have change in we actually retention are for missing? seen I and slow example, growth the is thinking, as

case, said Yes. in that this quarter Paul, to growth we be remarks, do quarter one our of policy-in-force third I do think of in year, rate which you would reaccelerate number. expect have means more will deceleration in prepared the which believe we we the that

client numbers is but our on very I of force growth guide as Now fully It's to The we rate. still, be done, believe revenue able we'll a what policy temporary headwind. historically to temporary, function relatively we've back it's historical growth. retention think, a of drive in not truly strong kind

certainly the is side franchise And We new at on this section the expect not very point XXXX, number improve ideally doing why business that, of but as number. the much you of very, move that as well. But in see a tailwind. the productivity revenue end becomes this the will it by business year, that's the premium

out just bit is? guidance before the growth actual quarter was of of sort with , little So unchanged was the the the do decelerated prior PIP -- that to a push from

are unchanged. the No, of amount renewing. that of It's just a function number is policies that

now, and a to it's keep But the price home the of challenging environment clients necessarily moved They're is increase. couple you of think moved it's those it. is book XXX% on a So how massively. weeks. home maybe getting by much It's challenged not just how if about

productive talking were second the question, looking productivity I that at we my are of And cohorts? And Is as by sort more imagine they would an become average Or about regardless. agents. cohorts for number? age we

any [indiscernible] that's tease the if average average. much of of the but way wondering talk productivity actual sort about? happening, automatically is out maybe to was sort maybe of I talk So rid your like maybe it of there's productivity improve because what could to there than But from that. you year would productivity an improvements is better getting you this that Is perspective, agents -- can is by actual just average but cohort

there Yes, is. definitely Yes.

So it if provide, side. that into than both you'll than X and down the the on at you X-year agents branches see disclosures we corporate look broken the less productivity greater year

tenure the lower side, of months corporate that the bucket On was year, this last it timing of just from couple than actually of a is year what onboarding.

the it previous as good very just so feel ramp-up as was of in We first year And that the corporate agents good years. is productivity. those agent about

a than greater X-year already or management. corporate in the bit about that agents talked bucket, of franchises we On little transition into

do those you kept XX% improvement X-year And in those so if if math, agents launched franchises it can you greater the corporate it's bucket. productivity you around adjust items, that that than same for

are in seeing I strong believe, corporate very improvements, we So side. productivity the

it's business, even more franchise side the On profound. of the

again to to year, in year we number up just you XX% so franchise franchise at exited agents pulling this this if with same-store like this was the feel existed that's QX, It's numbers, and that the do that which you're And of going sales and has amount last grow. continue look another to nothing XX%. QX,

the get near necessarily the force, see cap productivity especially the in very if about term, on feel that and we So good product a you some we of don't agent tailwinds.

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

Yes.

quick on had Just a franchises. question wanted -- just the I

conversions? Are track? about franchises talked franchise adding on you going talk didn't about in still Is XX? that still now? you producers. before prepared that And you can the had to more the think hundreds I be they the existing mention franchise remark. like -- have said you to on You mainly the Is

still to the wondering So I just that's expected if be was case.

Yes.

less $XX in year I we we've be would full million. in talked like XXXX, than necessarily with So million, -- in year not million to that more $XX XXXX Remember, XXXX. did we the about agents $XX think it we corporate this started

to So pick which is pool a from. smaller

As in that be over the remarks which team year. the by will, of indicated prepared on that end the grows, it XXXX, we'll we XXX

more producers feel into high-quality this great your existing franchises, year. as that. a that think new to vast of we But producer So We're than But launch going just majority be agencies, about franchise. continue the more creates reminder, going out obviously, growth I coming be more will hundreds adding yes, producers is productive franchises. to to of which existing a into capacity much

full-time added I program we've for nothing to Half said franchises but now XX of established, which the come recruiting those has franchises. recruiters our people being doing recruiting through that

The the franchises of other about new less quantity worried half launch we then quality own. of that on and come we're from franchises. And more their the the franchises about recruiting

very state. right letting selective And so the the franchise very selective into we're we're just network being and about now people about being

very in need geographically. right where we grow now we're to So state-specific

Got it. referenced quick comment. question. Understood. the Mark, And margin then expansion just you a

of QX. know most up majority you is you have QX QX, and that be said anything still and you on but come and margins the in from I QX QX. said expect You QX would year-over-year? I do add Do to

Yes.

to good contingents Just third you the get I the on a previous it. But see and basis. should total out compared get scale the percentage do second down still in margin, the the year-over-year timing year, core could quarter of of margin you

in to July, and of Although, reupdate they August, which as number like doesn't remember, start. that agents of onboard lot largely a licensing, significant onboarding that September, we're corporate soon happen as they is before a due costs, start, about things cost

and see quarter you third compensation scale the the throughout and into then you get and their lines in QX. the they summer up growing nice ramp So as production should a second

is I it -- retention. lot that happening too, it's one, last brings and significantly by similar just been or it state lift Texas? But or it you're across And Okay. different kind and X down is on and in a know Or that is just things it being Is of the XX% X XX% so states board? dragged pretty what's talked in up? targeting about by now.

all Home and suffering I right And premiums really our product Yes. states I mean largest but Texas state. believe bit is, Texas far, our issue are largest have product. number is just numbers, a a on Texas historic by now is of is one our to year-over-year. from indicator of XX% availability up, retention is what's compared going the of

XX%. a national they're average, If look about you on up or XX%

So it's activity twice as shopping our in up mirrors much that.

that's So reshop, them for when get price goes trigger a up upset their certain they we many asked at by point. people have look how amount, we a

XX%, I shop. So to want

coming number of And so Texas. twice out shopping is activity and of much of policies is for the up as a that lot

going fight struggle. can, to market, to we a but the retention as And so it's be carriers we're come going into as back until hard the home

question Morgan. next Singzon Augusto the Pablo Our will of JP from line come with

up I when a us should then you just fully part commission could that but just that a on give the sense to impact I rate. wanted what there? as of have in the When mix on were of and Because I that disclosure. of book when better related an the exactly corporate response? I guess franchising, to we so that, multi-texas think the they follow be thought the sectors, if know started is And update is run

Yes.

about XX% XX% book think or is I whole in the Texas.

XX% big it's and it's that Texas. a So disproportionate got still

in here those really a So impacts we it's first Texas. quarter. sort the effects feel And amount, commission of of disproportionate the

the of given those directly question, surprised by or just not to. But comments maybe negative? what's captive bit I relevant by have Okay. California, patrons positive was the And right? view, been made in amounts California, plus then happening a net homeowners. is bears exit or dislocation the your So insurers, second in there know all my and some little I in And

It's definitely a net positive.

is business product the availability. and we our California, So in significantly have a on

like told they environment an a haven't So our that this me seen agents time. before have in long

I sorry, then get be increase a capacity. operating buyback just or that cash if will be missed I last, the wanted And will that to that the funded. program, flow financed by how sense of

a It's the Yes. both. combination of

in is million, you and the their increased that remarks, mentioned term transaction closed And loan prepared so by being that $XX so today.

revolver So a funded by portion needed, on by down to be of the share additional And repurchases. fund draw will it will Unfortunately, the buyback we flow. that. funded plan operating be as cash the will capacity

to I'd That concludes question-and-answer turn to back today's Jones remarks. session. the like for call closing Mark

We everyone. call. Thanks, the your on participation appreciate

participating. for today's conference Thank you concludes This call.

disconnect. now may You