Goosehead Insurance(US:GSHD)2021-02-24 03:40Financial Data and Key Metrics Changes - Goosehead Insurance reported a 45% increase in total written premiums for 2020, reaching $1.074 billion, exceeding the high end of their initial guidance range of 32% to 40% growth [25][68] - Revenues increased by 51% to $117 million, with core revenue rising 41% year-over-year [25][68] - EBITDA for the year was $27.8 million, reflecting a 59% increase compared to 2019, resulting in a 24% EBITDA margin [65][68] Business Line Data and Key Metrics Changes - Franchise premium growth was 52% to $202 million, while corporate segment premium growth was 31% to $83 million [52] - Franchise channel total revenue for Q4 2020 was $16.9 million, up 54% from the previous year, with core revenues increasing 55% [56] - Corporate channel revenues for Q4 2020 were $17.7 million, a 43% increase from the year-ago period [59] Market Data and Key Metrics Changes - Goosehead expanded its presence to 43 states, covering over 97% of the U.S. population, up from 35 states at the end of 2019 [28] - The company had 1,468 total franchises at the end of 2020, a 55% increase from the prior year, with operating franchises increasing 45% to 891 [26][58] Company Strategy and Development Direction - Goosehead aims to continue investing in technology and human capital to drive growth, with a focus on expanding its competitive advantage in the U.S. personalized addressable market [34][35] - The company plans to launch a client-facing quoting platform and a mobile app in 2021 to enhance client engagement [47] - Goosehead's strategy includes leveraging its corporate channel to support franchise growth and productivity [30][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth prospects, citing the benefits of past investments in technology and human capital [34][71] - The company anticipates total written premiums for 2021 to be between $1.48 billion and $1.55 billion, representing organic growth of 38% to 44% [68] - Management acknowledged potential challenges to ancillary revenue growth in 2021 due to the unpredictability of contingent commissions [68][69] Other Important Information - Goosehead achieved an industry-leading client retention rate of 88% [16][33] - The company reported a net promoter score of 92, indicating high customer satisfaction [31] Q&A Session Summary Question: Can you unpack the total written premium growth guidance for next year? - Management explained that the guidance is based on various factors including geography and franchise tenure, and they do not anticipate a decrease in productivity for 2021 [74] Question: What are the main inputs driving contingent commissions? - Management noted that volume growth rates and underwriting profitability are key components influencing contingent commissions [80][82] Question: How will the recent weather events in Texas impact the company? - Management indicated that they view the surge in demand for services as backlog rather than lost demand, and they are well-equipped to manage the situation [92][96] Question: Is there a significant margin differential between ancillary revenues and core revenues? - Management confirmed that while ancillary revenues are high margin, they are also very unreliable [101] Question: How does the expansion of carrier relationships impact commission revenues? - Management stated that they focus on working with meaningful carriers and that the commission rates are stable across their product spectrum [106]