Goosehead Insurance, Inc.

Thank you for standing by. This is the conference operator. Welcome to the Goosehead Insurance first quarter 2019 earnings call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star 0. I would now like to turn the conference over to Garrett Edson, Senior Vice President, ICR. Please go ahead.

Thank you and good afternoon. With us today are your hosts, Mark Jones, Chairman and Chief Executive Officer of Goosehead, Michael Colby, President and Chief Operating Officer, and Mark Colby, Chief Financial Officer. By now, everyone should have access to our earnings announcement, which was released prior to this call and which may also be found on our website at ir.gooseheadinsurance.com. Before we begin our formal remarks, I need to remind everyone that part of our discussion today may include forward-looking statements, which are based on the expectations, estimates, and projections of management as of today. The forward-looking statements in our discussion are subject to various assumptions, risks, uncertainties, and other factors that are difficult to predict and which could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These statements are not guarantees of future performance and therefore undue reliance should not be placed upon them. We refer all of you to our recent filings with the SEC for a more detailed discussion of the risks and uncertainties that could impact the future operating results and financial condition of Goosehead Insurance. We disclaim any intentions or obligations to update or revise any forward-looking statements except to the extent required by applicable law. In addition, this call is being webcast and archived version will be available shortly after the call ends on the investor relations portion of the company's website at www.gooseheadinsurance.com. With that, I'd now like to turn the call over to CEO Mark Jones. Please go ahead.

Thanks, Garrett, and welcome to our first quarter 2019 earnings call. As we've done on previous calls, I will provide an overview of the quarter as well as discuss our unique and proven long-term strategy. I'll then hand the call over to Mike Colby, our President and Chief Operating Officer, who will update you on our ongoing technology investments and why we believe they further facilitate our competitive advantage and support high levels of sustained, rapid, organic growth and profitability. Mark Colby, our Chief Financial Officer, will then follow and provide more detail about our first quarter results and our outlook. Before I review the highlights of the quarter, I would like to share a few thoughts given that we just celebrated the first anniversary of our listing as a public company. Because our disruptive and highly differentiated business model produces profitable organic growth at levels this industry has not seen, some have voiced skepticism over our ability to sustain these kind of results. We have continued this quarter to demonstrate that we can do just that. just as we have done so over the past 15 years. There is no doubt the Goosehead platform works. Those that participated in our IPO a year ago and have remained shareholders have seen their investment nearly triple. Betting on ourselves has always been a winning proposition for the management team and we are highly aligned with our public shareholders as we continue to be the largest owners of Goosehead stock. Now let's turn to the results of another successful quarter. The first quarter of 2019 saw us continue to build on the success of our banner 2018 and the many years prior to that with our rapid and responsible organic growth model clearly intact. On top of accelerated revenue growth in the quarter, we generated record adjusted EBITDA dollars and margins thanks to consistent investment Our business model has proven to be highly durable and scalable and to produce sustained growth and profitability, even while we continue to invest heavily to create shareholder value over the long term. For the first quarter, our revenue and adjusted EBITDA grew to $23.1 million and $9.5 million, respectively. This represents year-over-year organic revenue growth for the quarter of 59% driven by new and renewal business in both our corporate and franchise channels as well as large increases in contingent commissions received. It also represents adjusted EBITDA growth of 86% as strong and high margin contingent commissions and Renewal Business more than offset our investments in technology and talent. Total written premiums and policies in force both grew by 45% from the prior year. We maintained our industry-leading client retention rate of 88% and once again increased our world-class net promoter score to 90, which is higher than any other company of which we are aware. including Apple, Ritz-Carlton, Nordstrom, Disney, Amazon, and so forth. Our results benefited this quarter from strong contingent commissions. These represent annual bonuses we receive based on the growth and profitability of the business we add to many of our carrier partners. I would like to highlight the important role our Quality Control Department plays in helping us earn strong contingencies. Our 22 professional quality analysts review every policy before it is issued to check for accuracy and underwriting compliance. Their important work enables us to be precise in matching the placement of risk with the appetite of each carrier and improves underwriting accuracy, thereby enhancing the profitability of the business we write with our carrier partners. That enhanced profitability in turn and more, positively impacts contingent commissions available to us. Our Q1 results are, in part, a testament to the value of our investment in quality. On the talent side, we ramped up corporate agent hiring in the first quarter, onboarding net 17 new corporate agents, and remain well positioned to grow that number further in the seasonally strongest summer months. In addition, we added 44 net new operating franchises in the quarter as our dedicated franchise sales team continues to source excellent leads from our pipeline to help maintain the pace of growth in that channel well into the future. As I've consistently noted, onboarding top talent and investing in our people are key drivers of our success, setting us on the path toward continued long-term sales growth and operating expanding operating margins over time. We recently held our Goosehead annual team meeting for employees and franchise owners. This meeting is an event that brings our team together from all across the United States. As happens every year, I was struck by how many of our franchise owners and employees, some with us for a long time, some very recent additions, made a point to share with me that the opportunity Goosehead has provided to them has fundamentally changed their lives. I am proud that we can have that impact, and our goal is to keep transforming the lives of our team members for the better. We are clear about the fact that for us to create sustained shareholder value over time, we need to be highly accretive to every member of our business ecosystem, our employees, franchisees, carrier partners, referral partners, and suppliers. and our management team is deeply committed to doing just that. As we look to the balance of the year, we are confident in our ability to sustain strong growth and profitability. Given that it is still early in the year, we have not revisited guidance and are maintaining our full year guidance for written premiums and revenue. However, we will evaluate this outlook at the conclusion of the second quarter and thereafter and provide further updates as appropriate. I'll now turn the call over to Mike Colby to update you on the progress of some of our recent technology initiatives.