Goosehead Insurance, Inc. (NASDAQ:GSHD) has reported its second quarter 2024 financial results, showcasing the company's resilience and strategic execution amidst a challenging industry landscape. The personal lines insurance distributor delivered strong top-line growth, improved profitability, and continued to invest in its people and technology to drive long-term success.
Financials
For the full year 2023, Goosehead reported annual net income of $14,140,000, annual revenue of $261,276,000, annual operating cash flow of $50,758,000, and annual free cash flow of $31,706,000. In the second quarter of 2024, the company generated total revenue of $78,088,000, representing a 13% increase from the prior-year period. This growth was driven by a 20% increase in core revenue to $73,407,000, which includes commissions, royalty fees, and agency fees.
The company's total written premiums, a leading indicator of future revenue, grew 30% year-over-year to $998,875,000 in the second quarter. This included a 35% increase in franchise written premiums to $793,087,000 and a 15% increase in corporate written premiums to $205,788,000. Policies in force grew 11% compared to the prior-year quarter, reaching 1.6 million.
Business Overview
Goosehead's management team, led by newly appointed President and CEO Mark Miller, has been laser-focused on reaccelerating growth by strategically investing in people and technology. The company's corporate sales headcount increased 12% year-over-year to 313 agents, with plans to exceed 400 agents by the end of 2024. Additionally, the company has been supporting its franchise partners, helping them add over 150 new agents since the beginning of the year, bringing the average agents per franchise to 1.8, up from 1.5 a year ago.
Technology Innovation
One of the key drivers of Goosehead's success has been its focus on technology innovation. The company's proprietary "Quote-to-Issue" (QTI) platform has been a game-changer, allowing agents to more efficiently bind policies and deliver a superior customer experience. Management noted that an increasing percentage of policies are now being bound using the QTI infrastructure, with the number of binds growing exponentially as agents become more familiar with the technology.
Beyond sales productivity, Goosehead is also leveraging technology to drive scale and quality in its service department, the largest cost center. By automating various tasks, the company aims to improve quality and reduce costs, further widening its competitive moat and expanding margins.
Risks and Challenges
Despite the challenging macro environment, with continued carrier profitability concerns and housing market headwinds, Goosehead has demonstrated its ability to navigate these obstacles. The company's strong partnerships with its carrier network, coupled with its comprehensive geographic footprint, skilled agent force, and superior technology, have allowed it to deliver impressive results.
Outlook
Looking ahead, Goosehead has reiterated its full-year 2024 guidance. The company expects total written premiums to be between $3.62 billion and $3.82 billion, representing 22% to 29% growth. Total revenues are expected to be in the range of $290 million to $310 million, implying 11% to 19% organic growth. Importantly, the company expects to expand its adjusted EBITDA margin for the full year.
Conclusion
Goosehead's management team remains confident in the company's long-term growth and earnings potential. The strategic investments in people and technology, coupled with the company's unique business model and strong industry partnerships, position Goosehead for continued success. As the personal lines insurance market evolves, Goosehead is well-equipped to capture a larger share of this sizable opportunity and deliver value to its clients, agents, and shareholders.