• Total Revenue Growth: 20% for 2024.
• Core Revenue Growth: 17% for 2024.
• Premium Growth: 29% for 2024.
• EBITDA: Nearly $100 million, up 43% year over year, with a record margin of 32%.
• Franchise Productivity Growth: 49% in 2024.
• Franchise Producers: Totaled 2,092, up 7% year over year.
• Corporate Producers: 417 at year-end, an increase of 39%.
• Quarterly Premiums: $966 million, up 28% year over year.
• Full Year Premiums: $3.81 billion, up 29% for 2024.
• Policies in Force: 1.7 million, a 13% increase.
• Client Retention: Stable at 84% as of year-end.
• Adjusted EBITDA Growth: 164% to $37.4 million for the quarter.
• Operating Cash Flow: $71.5 million, up 41% for the year.
• Free Cash Flow: $59.4 million, up 53% for the year.
• 2025 Revenue Guidance: Expected between $350 million and $385 million.
• 2025 Premium Guidance: Expected between $4.65 billion and $4.88 billion.

• Warning! GuruFocus has detected 2 Warning Sign with GSHD.

Release Date: February 24, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Goosehead Insurance Inc (NASDAQ:GSHD) reported a 20% total revenue growth and a 29% premium growth for 2024, showcasing strong financial performance.
• The company achieved an EBITDA near $100 million, up 43% year over year, with a record margin of 32%, indicating efficient cost management and profitability.
• Goosehead Insurance Inc (NASDAQ:GSHD) expanded its franchise distribution, with franchise productivity growing 49% in 2024, and reduced franchise terminations, reflecting a healthier franchise network.
• The company is leveraging technology advancements, such as the quote-to-issue platform and AI tools, to enhance operational efficiency and client service.
• Goosehead Insurance Inc (NASDAQ:GSHD) is strategically expanding its corporate and franchise agent count, with a focus on diversifying geographically and increasing producer headcount to drive future growth.

Negative Points

• The company faces challenges from natural catastrophes and insurance market volatility, which have impacted the overall insurance landscape.
• Goosehead Insurance Inc (NASDAQ:GSHD) anticipates a potential decrease in contingent commissions in 2025 compared to 2024, reflecting uncertainty in loss trends.
• The admitted market remains tight in certain regions, such as Texas, affecting product availability and potentially limiting growth opportunities.
• Client retention has been stable at 84%, but the company aims to return to historical highs of 89%, indicating room for improvement in customer retention.
• The company is cautious about the impact of macroeconomic factors and pricing tailwinds on premium growth, leading to conservative guidance for 2025.

Q & A Highlights

Q: The contingent commission figure was surprisingly large this quarter. Can you explain how this came about and whether this changes your view on normalized contingent commission figures? A: Mark Jones, CFO: We had guided to around 35-40 basis points of premium as contingent commissions. However, core loss ratio information from our largest underwriters showed better performance than anticipated, leading to larger contingencies. For 2025, we remain conservative in our forecasts, expecting contingent commissions to be smaller than in 2024, but over time, they should trend between 80-85 basis points of total written premium.

Q: What are your expectations for EBITDA margin in 2025, considering investments in AI tools and other factors? A: Mark Jones, CFO: We plan to grow core revenue faster than expenses, leading to margin expansion over time. While contingent commissions might be smaller in 2025, core EBITDA margin should expand. Technological advances depend on underwriters' growth appetite, and we'll update as the year progresses.

Q: Are product offerings returning across all geographies and perils, or are there specific areas where recovery is more pronounced? A: Mark Miller, CEO: Product return varies by state and product. In Texas, we're seeing recovery more on the ENS side. Auto products are picking up rapidly across the U.S., and California is starting to open up despite recent wildfires. Overall, we're pleased with the product's return.

Q: How do you expect commission rates and client retention to impact your 2025 guidance? A: Mark Jones, CFO: We expect average commission rates to rise as the admitted market heals and more product access becomes available. We're having discussions with carriers about raising commission rates to incentivize growth. For client retention, we're conservatively forecasting improvements, but the pace will depend on macroeconomic factors and product environment recovery.

Q: Can you elaborate on the direct-to-consumer experience and its timeline for implementation? A: Mark Miller, CEO: We're actively working on it, with auto likely to be implemented first. Home insurance is more complex, so I won't provide a specific timeline, but we're making progress.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.