Goosehead makes progress with QTI efforts

Goosehead Insurance hosted its Q2’23 earnings call on Jul 26, 2023. Select highlights:

• Successfully navigating challenging industry conditions (sluggish housing market and hard insurance market).
• Working smarter and harder, delivering strong profitable growth.
• Restructuring business driving strong top line growth and sustainable profitability improvements.
• Q2 Summary results:
  • 31% revenue growth
  • 27% core revenue growth
  • 36% growth in premium
• Focused on the distribution link in the value chain with a powerful choice model.
• Proactive approach to industry turbulence by broadening the product portfolio.
• Onboarded 24 new carriers to the platform this year.
• Engaged agents acquiring new referral partners and deepening existing relationships.
• Significantly insulated from market volatility compared to underwriters or single entities.
• Single product platforms pulling out of a market leave agents with nothing to sell.
• Decision to avoid holding risk is paying off.
• Restructuring corporate sales team leads to 57% productivity growth in the quarter.
• Onboarding new agents from college campuses, strong feedback on their performance.
• Three key levers for future franchise capacity growth: adding new franchises, recruiting producers into successful agencies, converting corporate agents into franchisees.
• Intend to launch about 30 franchisees this year from corporate.
• Corporate agents performing at much higher levels than externally-recruited franchises.
• Strong momentum in recruiting candidates from campuses with a powerful pitch for a paid apprenticeship leading to franchise ownership.
• Strategies to improve franchise productivity: robust training programs, technology investments, launching more agencies from corporate agents and managers, culture building activities.
• Emerging quote-to-issue technology expected to lead to corporate partnerships and extraordinary growth potential.
• Progress made with QTI efforts, set to launch Travelers, Nationwide, and Clearcover auto products in the third quarter, improving efficiency for agents in policy buying.
• Momentum to continue in Q4 with additional carrier implementations for home and auto lines of business.
• Integration of ChatGPT into Aviator to assist agents with insurance questions and state-specific guidelines.
• Potential expansion of ChatGPT functionality for clients to navigate insurance market complexities.
• Partnership with Vivint Smart Homes announced in Q2 to supplement lead sources and leverage QTI over time.
• Current market share: 4.4% of new mortgage real estate transactions in the U.S., up from 3.7% a year ago.
• Adding new viable carriers to offset pullback from larger existing carriers and enhance client service.
• Premium in Q2 increased 36% to $767 million, policies in force up 21% to 1.4 million.
• Total revenue for the quarter was $69.3 million, up 31%, driven by high client retention, improved agent productivity, and pricing tailwinds.
• Contingent commissions of $4 million in the quarter compared to $1.9 million a year ago.
• Total franchise producers at the end of the quarter were 2,069, up 3%.
• Total operating expenses, excluding equity-based compensation and depreciation and amortization, were $46.2 million, up 14%.
• Compensation and benefits increased 19% due to investments in partnerships, technology, marketing, and service functions.
• Proud of having probably the best carrier portfolio among independent agencies.
• Unhappy when a carrier shuts down, but it reduces competition for them.
• Acknowledging the challenging market for personal insurance distribution.