Goosehead Insurance, Inc.

Thank you for standing by and welcome to the Goosehead Insurance Second Quarter 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1-1 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 1-1 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Dan Farrell, Vice President, Capital Markets.

Thank you and good afternoon. 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 expectations, estimates, and projections of management as of today. Forward-looking statements in our discussion are subject to various assumptions, risks, uncertainties that are difficult to predict and which could cause actual results that 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 on them. We refer all of you to our recent SEC filings for more detailed discussion of risks and uncertainties that could impact future operating results and financial condition of GUSED. We disclaim any intention or obligation to update or revise any forward-looking statements except to the extent required by applicable law. I would also like to point out that during this call, we will discuss certain financial measures that are not prepared in accordance with GAAP. Management uses these non-GAAP financial measures when planning, monitoring, evaluating our performance. We consider these non-GAAP financial measures to be useful metrics for management and investors to facilitate operating performance comparisons period to period by including potential differences caused by variations in capital structure, tax position, depreciation and amortization, and certain other items that we believe are not representative of our core business. For more information regarding the use of non-GAAP financial measures, including reconciliations of these measures, to the most recent comparable GAAP financial measures, we refer you to today's earnings release. In addition, this call is being webcast. An archived version will be available shortly after the call ends on the investor relations portion of the company's website at goosehead.com. Now I'd like to turn the call over to our president and CEO, Mark Miller.

Thanks, Dan. Good afternoon, and thank you for joining our Q2 earnings call. Before we begin, I want to take a moment to acknowledge the devastating floods that struck Texas earlier this month. As a company rooted in Texas, this is not only where we do business, but these are the communities where we serve. We are working hard to support our employees, clients, and agency owners during this devastating time where tragically lives were lost. Catastrophic events such as these are unfortunately a constant reminder of why we exist. Our hearts go out to the families affected by this devastation, and our Goosehead team is here to support you. Here at Goosehead, we continue to pursue our goal to become the largest distributor of personal lines insurance in the U.S. in our founder's lifetime. We've steadily ramped our vast distribution network, which has grown to over 2,500 licensed agents and 200-plus carriers. Our growth plan centers around a few key strategic initiatives, supporting the accelerated expansion of our existing agencies, a strategy we've continued to optimize over the last several years. placing the right new franchise owners in the right geographies, expanding our corporate team to further support top decile agency growth, ramping new go-to-market motions through our enterprise sales and partnerships teams, developing new and maturing technologies to help us win the AI arms race and accelerate our path to industry leadership. I'm going to expand on each of these topics, then Mark Jones, Jr., our CFO, will provide more information about the quarter's results. First, our agency staffing program, which we call ASP, has been a highly strategic asset for Goosehead. Simply put, this program helps existing agency owners find talented agents to grow their franchises. Twenty years of industry experience has allowed our recruiting function to gain unique insight into identifying the highest potential sales agent recruits. We have leveraged our knowledge to create an internal recruiting firm that is dedicated to sourcing top talent to put in front of our most successful agency owners. Since the inception of this program in Q4 of 2022, our agencies have hired over 500 producers sourced through this internal recruiting firm. With 132 starting in 2025, and roughly 150 more slated to start before the end of the year. When an agency owner adds an incremental producer, the productivity of all agents in that franchise improves. They add accountability, share best practices, and lead flow. The feedback we've received from our franchise community has been incredibly positive on this program. It allows our agency owners to focus on what they do best, capture lead flow, and drive sales teams, allowing them to outsource a very time-consuming recruitment process to our trusted ASP team who presents them with highly qualified talent. One example of this in practice is Troy Cropp, an agency owner in Tucson, Arizona, who served as an Army Ranger and is a previous State Farm agent. In July of 2021, Troy opened his Goosehead franchise and has since grown his agency to nine producers, seven of which were recruited through the agency staffing program. Today, Troy Cropp is not just an agency owner. He's a sophisticated business owner with a $10 million-plus premium book and over 6,500 policies in force. He has been part of our most advanced agency training programs, most of which focus on business growth. And he has put those trainings in practice by acquiring two other agency books, as well as opening a second office location with two more office locations in the pipeline. We're incredibly proud of the business Troy has grown thus far and look forward to seeing him continue to grow in our ecosystem. To find the next group of agencies that look like TroyCrop, our franchise development team has built pipelines into new talent sources that we believe have the grit, intelligence, and leadership capability to be successful in our ecosystem. First, we've developed a program to attract franchises from the veteran community. We believe former service members possess many of the intangibles that we know separate our top agencies from those in the middle of the pack. They're smart, determined, and execution-oriented. And most importantly, they know how to follow a proven business model. As a son of a veteran, veterans are near and dear to my heart for the tremendous personal sacrifices they made to our nation. and many have proven to be excellent franchise owners like Troy. We have also recently rolled out a new MBA franchise development program. As we've discussed in the past, we want our franchise community to evolve from largely consisting of solo agent operations to a tight-knit community consisting of more growth-oriented owners that have multiple agents with multiple locations. By leveraging our existing campus relationships, we can provide an incredibly compelling offer of business ownership for current or recent MBA graduates. This initiative includes an accelerated training program that allows for rapid ramp and sets them up to scale by leveraging their entrepreneurial business education. While we're very excited about our veteran and MBA initiatives, it is abundantly clear to us that the single best source of new franchise owners is our own corporate sales department. Our corporate sales agents are steeped in the Goosehead corporate culture and highly educated and experienced in the Goosehead business model. As a reminder, when a corporate agent launches a franchise, they're up to 10x more productive than the average new franchise launch and have a very clear path to a seven-figure income. To further support the growth of both the corporate footprint and franchise community in the right geographies, We recently expanded into Arizona with the launch of our Tempe office. This has been the most successful new office launch in many years. This location should help us seed new, high-powered franchises in the western half of the U.S. that we might otherwise not have been able to reach with our corporate footprint. We're also now announcing plans to launch a Nashville, Tennessee office in the fourth quarter of this year. We've developed a repeatable blueprint for successful office expansion and plan to continue to leverage that in the most strategic geographies over the next several years. Over the past decade, we have refined a highly sophisticated go-to-market strategy that focused on corporate and franchise agents and building strong relationships with individual loan officers and realtors. This strategy has proven to be extremely scalable and highly profitable. However, for the past two years, we have been quickly developing a new sales motion that we believe will be a solid third leg of the stool. We call it our Enterprise Sales and Partnerships Team. This new group has grown exponentially over the last year and continues to accelerate. I'm excited to announce two additional strategic partnerships that we'll be launching from this team. First, Baird & Warner is one of the most prestigious real estate firms in Illinois, founded 170 years ago. They currently have more than 2,000 realtors, over 40 loan officers, and a title operation. They're launching a goosehead franchise inside their existing business that allows them to further reduce friction in the home buying process, provide better outcomes for clients, and capture insurance economics. They generate over 10,000 transaction annually, which should allow them to scale rapidly. In the last month, we have also entered into a partnership with Fay Servicing, a large, prominent mortgage servicer founded in 2007. Their partnership with Goosehead allows them to solve industry pain points and address the rising cost of home affordability by providing a robust portfolio of home insurance offerings to their existing clients. Fay's franchise has the embedded lead flow that could rapidly take them from a new franchise launch to one of the largest agencies in our system. While both of these partnerships are goosehead franchises, we also have a robust pipeline of traditional partners who would like to offer insurance products to their client base, but do not necessarily want the complexity of owning and operating the business. Because we can provide multiple ways to engage with our tech-first platform, supported by agents nationwide, We believe we're the partner of choice for organizations looking to add value to their clients while capturing very compelling economics. I believe our industry will be profoundly impacted by the rapid development of new technologies, particularly in the AI space. The list of potential use cases for AI in our business is incredibly long. However, we're thinking strategically and focused on what we believe will generate the maximum return. First, we're already leveraging AI to optimize the client experience for our existing book of business while reducing the cost of service. Second, we will utilize our data and our carrier relationships to create the US first direct consumer marketplace that maximizes outcomes across the value chain. We want to create a frictionless process that stands true to our founding principles, placing the client at the center of our universe. Our data should allow us to be intelligent about matching carrier risk appetite with client demand to optimize outcomes across the value chain. And third, we expect to capture additional market share through pinpoint marketing campaigns to drive client referrals and cross-sells. We know that we provide a differentiated client experience, and we should be leveraging that to continue to drive new business and fuel future growth. We built a tech team with the human capital and the appropriate infrastructure that we believe is highly capable of delivering on each of the critical initiatives. Even with all the progress we've made in AI and tech, the foundation of our business hasn't changed. Great companies are built on great people. Today, we've been able to build a great business by attracting talent that doesn't exist elsewhere in the industry, by having high standards for the quality of our work, and by operating with the utmost levels of integrity. While our day-to-day operations may shift in the coming years, our commitment to our people will not change. We will continue to invest in training, coaching, and leadership development that will take our already phenomenal talent to the next level. It has been a challenging fight for the last several years battling a historically hard product and housing market. but we're coming out the other side poised for rapid and profitable growth with full commitment to our goals. I would like to sincerely thank our employees, franchisees, carrier partners, and shareholders. We're just getting started. I'll now turn the call over to Mark Jones, Jr.