Goosehead Insurance(US:GSHD)2021-05-02 15:14Financial Data and Key Metrics Changes - In Q1 2021, total written premiums increased by 49% to $319 million, with franchise premium growth of 55% to $230 million and corporate segment premium growth of 35% to $89 million [46] - Revenues for the quarter were $31.2 million, a 53% increase from the previous year, while core revenues increased by 47% to $26.7 million [48] - Total operating expenses rose to $32 million, up 58% from $20.2 million in the prior year, driven by increased headcount and investments in technology [54][56] Business Line Data and Key Metrics Changes - The franchise channel generated core revenue of $11.9 million, a 60% increase from the previous year, while corporate channel core revenues were $14.8 million, up 38% [50][53] - The total franchise count at the end of Q1 was 1,628, up 61% year-over-year, with 987 operating franchises, an increase of 45% [51] Market Data and Key Metrics Changes - The company’s premium base in 2021 is expected to represent less than 0.5% of the $360 billion U.S. personal lines market, indicating significant growth potential [19] - The company has diversified its premium sources, with Texas making up only 60% of total premiums, down from previous years [67] Company Strategy and Development Direction - The company is focused on accelerating growth through investments in recruiting, productivity, and retention, with a long-term goal of achieving EBITDA margins north of 40% [20][26] - A direct-to-consumer quoting platform is anticipated to be released in Q3 2021, enhancing the company's omnichannel strategic advantages [18][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, citing strong retention rates and increasing agent productivity as key drivers [47] - The company raised its full-year 2021 outlook for total written premiums and revenue, expecting organic growth of 40% to 45% for premiums and 25% to 33% for revenues [60][61] Other Important Information - The company generated $7.9 million in operating cash flow during the quarter, compared to cash used for operations of $1.5 million in the prior year [59] - The company has an unused line of credit of $19.7 million and cash and cash equivalents of $30.8 million as of March 31, 2021 [59] Q&A Session Summary Question: Impact of Texas freeze on contingents and claims - Management indicated it is too early to determine the impact on contingents from the Texas storm, but it was classified as a catastrophic event which could help [64] - There has not been a noticeable uptick in client shopping activity following the claims, as the company's strategy focuses on home closings rather than online shopping [65][66] Question: Margin improvement expectations - Management clarified that while they are focused on growth and investing heavily, they do not guide to margins, but long-term margins could exceed 40% [75] Question: Timeline for direct-to-consumer product rollout - The direct-to-consumer product is expected to be delivered in Q3 2021, with a demonstration planned before the launch [76][78] Question: Corporate channel expansion roadmap - The corporate channel is strategically expanding to support franchise growth, with a focus on placing resources in regions with rapid agent footprint growth [81] Question: Franchise productivity and mortgage market share - Management noted that there is no peak in productivity for agents, and they are making deliberate investments to enhance franchise performance [87] - The company's mortgage market share in Texas is estimated to be between 13% and 14%, with national market share below 3% [90][92]