Goosehead Insurance(US:GSHD)2020-08-01 01:24Financial Data and Key Metrics Changes - Total written premiums increased by 41% to $274 million compared to Q2 2019, with Franchise premium growth of 47% to $191 million and Corporate segment premium growth of 29% to $83 million [36][38] - Revenues for Q2 2020 were $29.9 million, up 54% from the prior year, with core revenues increasing by 41% [38] - Adjusted EBITDA for the quarter was $9.8 million, compared to $4.7 million in the prior year, reflecting strong core revenue and margin improvement [42] Business Line Data and Key Metrics Changes - The Franchise Channel generated core revenues of $10.4 million, an increase of 51% from the previous year, driven by strong growth in new business and renewal royalty fees [38] - Corporate Channel core revenues were $14.4 million, a 35% increase from the prior year, supported by an increase in agents and high retention levels [40] Market Data and Key Metrics Changes - The company had over 590,000 policies in force, a 45% increase from one year ago, indicating strong market penetration and growth [37] - The mix of business is shifting towards the Franchise Channel, which is expected to drive significant future revenue growth as new business premiums convert to renewal premiums [36] Company Strategy and Development Direction - The company is focused on long-term value creation and maintaining a client-centered approach, leveraging technology to enhance client and agent experiences [8][10] - Investments in technology and human capital are prioritized to sustain organic growth and expand market share in the personal lines market [22][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver consistent growth despite economic uncertainty, raising guidance for total written premiums and revenue for 2020 [45][46] - The company remains committed to making strategic investments in technology and talent to maintain its competitive advantage [22][24] Other Important Information - A special cash dividend of $42 million or $1.15 per share was approved, to be paid on August 24, 2020 [44] - The company has a strong cash position with $54.3 million in cash and cash equivalents and an unused line of credit of $19.7 million [43] Q&A Session Summary Question: Changes in customer behavior due to recession - Management noted no significant changes in consumer behavior, with premium rebates from carriers helping to maintain policy retention [50] Question: Impact of technology initiatives on expenses - There is an uptick in technology expenses, but it is proportional to revenue growth and not expected to cause a significant increase in overall costs [51][52] Question: Expense savings from reduced travel - The company repurposed savings from reduced travel expenses into incentives for the service team, resulting in positive outcomes [55][56] Question: Equity-based compensation increase - The increase in equity-based compensation is related to stock options awarded to the Managing Director team and is not expected to fluctuate significantly in the near term [60][63] Question: Contingent commissions and profitability - Management indicated that contingent commissions were booked conservatively this quarter, with positive results expected as the year progresses [65] Question: Recruiting agents from other industries - New recruits from outside the industry are seen as more coachable and adaptable, providing a broader talent pool without the burden of existing bad habits [66]