Goosehead (GSHD) Q1 2026 Earnings Transcript

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Date

Wednesday, April 22, 2026 at 4:30 p.m. ET

Call participants

• Chief Executive Officer — Mark Miller
• President and Chief Operating Officer — Mark Jones Jr.
• Chief Financial Officer — John Martin
• Investor Relations — Maddie Middleton

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Takeaways

• Revenue -- $93.1 million, representing 23% growth.
• Core Revenue -- $79.5 million, increasing 15%.
• Adjusted EBITDA -- $24.4 million, growing 57% with a 26% margin.
• Cash Flow from Operations -- $22.9 million generated during the quarter.
• Share Repurchases -- 985,000 Class A shares retired for $49.8 million; shares outstanding are now below IPO levels.
• Contingent Commissions -- $11.9 million reported, up 141% year over year, with guidance of 60-85 basis points of total written premiums for the year.
• Cost Recovery Revenue -- $1.7 million for the quarter.
• Total Written Premiums -- $1.1 billion, representing 13% growth.
• Policies in Force -- 2 million, up 14%.
• Client Retention Rate -- Achieved 85%; management expects to reach 86% within the year.
• Enterprise New Business Growth -- New business commissions increased 29%, attributed as the fastest growth in five years.
• Franchise New Business Royalties -- 14% growth reported.
• Franchise Producer Count -- 2,150 total producers, a 3% year-over-year increase; average producers per franchise rose to 2.3 from 1.9.
• Corporate Geographical Diversity -- 37% of premium in Texas (down from 39% sequentially); over half of corporate agents now located outside Texas.
• Franchise Launches -- 20 new franchises started in the quarter across 10 states, with 12 launched from corporate offices that performed at nearly 2.5 times the average franchise in their second month.
• Producer Adds -- 133 franchises hired at least one producer, driving nearly a 50% increase in gross producer adds year over year.
• Digital Agent Platform -- Expanded to enable digital purchase of multiple homeowners products in Texas, including with carriers SageSure and Mercury.
• AI Initiative -- “Lily,” the AI-powered virtual phone assistant, fully resolved about 19% of inbound calls, and efficiency tools redeployed approximately 40 full-time service team members.
• Enterprise Partnerships -- 2.3 million mortgage-related leads and 4 million from other verticals now in the partner pipeline.
• Debt and Cash Position -- Ended quarter with $26 million cash and cash equivalents; $324 million total debt outstanding.
• Guidance -- Full-year organic revenue growth of 10%-19% and written premium growth of 12%-20% reiterated.
• Adjusted EBITDA Margin Outlook -- Management expects margin trajectory unchanged, acknowledging Q1 compensation expense grew 5% due to hiring timing, and G&A was elevated by a $1.5 million conference expense.
• ASP Sourcing -- The Agency Staffing Program sourced 53% more franchise producers year over year.

Summary

Management highlighted a leadership transition, with John Martin appointed CFO and Mark Jones Jr. elevated to President and COO. The company advanced its digital strategy by launching fully digital home insurance purchasing in Texas and reported that enterprise channel growth now substantially contributes to overall new business. Franchise system consolidation led to greater average productivity and an 18% year-over-year rise in producers per franchise. In discussing the geographic expansion initiative, management noted success in reducing premium concentration in Texas and strong performance from offices in Seattle, Washington, D.C, and Minneapolis. Corporate-to-franchise launches are tracking at 10% annually, supporting talent development and new business expansion.

• Management stated, "We have now built the country's first choice online shopping experience in the history of personal lines insurance with our Digital Agent 2.0," reinforcing their technology adoption focus.
• Partners have expressed willingness to pay higher commissions for Digital Agent–originated business. This may enhance economics for this channel.
• Aggregate commission rates are now increasing. Management credits carrier incentives tied to supporting new business growth.
• The partner enterprise channel contributed approximately 20% of new business commissions and fees in the quarter, with partnership-sourced leads across home, mortgage, and financial services segments.
• In just their second month live, these 12 launches contributed new business production that was nearly 2.5 times the average franchise, according to management.
• Franchise location count was affected by 20 openings, 10 exits, and 63 consolidations into larger agencies in the quarter.
• Contingent commissions for the quarter were described as seasonally elevated by first-quarter true-ups. They are not expected to impact full-year guidance.

Industry glossary

• Contingent Commissions: Variable compensation paid by insurance carriers to agents or brokers based on achieving performance targets such as premium growth, profitability, or retention, typically recorded outside standard commission structures.
• Bind Rate: The percentage of quoted insurance opportunities that result in a bound (finalized) insurance policy sale.
• Agency Staffing Program (ASP): Franchise-support initiative by Goosehead Insurance, Inc. designed to recruit, train, and place new producers within franchise agencies to accelerate growth.
• Excess and Surplus (E&S) Lines: Insurance products underwritten outside admitted carrier markets, often for higher-risk or specialized exposures where standard coverage is not available.
• Digital Agent 2.0: Goosehead Insurance, Inc.'s proprietary digital sales platform enabling clients to shop, quote, and purchase personal lines policies through digital and hybrid experiences.

Full Conference Call Transcript

Maddie Middleton: 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 discussions are subject to various assumptions, risks, and uncertainties 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, reliance should not be placed on them.

We refer all of you to our recent SEC filings for a more detailed discussion of risks and uncertainties that could impact future operating results and financial condition of Goosehead Insurance, Inc. 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, and 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, 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, and an archived version will be made available shortly after the call ends on the Investor Relations portion of the company's website at fusehead.com.

Now I would like to turn the call over to our CEO, Mark Miller.

Mark Miller: Thanks, Maddie, and good afternoon, everyone. Thank you for joining us today for our first quarter 2026 earnings call. I would like to begin by welcoming John Martin as our new Chief Financial Officer, succeeding Mark Jones Jr., who has been promoted to President and COO. John brings a strong combination of financial expertise, operational discipline, and a background rooted in technology and e-commerce, which aligns well with our focus on execution and our high-performance culture. The team is excited to welcome John and I know he looks forward to engaging with our investors and analysts in the quarters ahead. We are equally thrilled to see Mark expand his leadership responsibilities.

John will report to Mark, and I will work closely with both of them, continuing my role as CEO. These leadership announcements are evidence of our commitment to a comprehensive succession plan and our focus on ensuring Goosehead Insurance, Inc has the right leaders for today and well into the future. Let me start by reinforcing something we have said consistently: Goosehead Insurance, Inc is a compounding business designed to drive long-term growth in policies in force, revenue, earnings, and ultimately, cash flow. We achieve that by operating a highly scalable distribution platform supported by world-class service.

For the first quarter, we delivered strong and consistent financial results, with revenue growing 23% to $93 million, core revenue growing 15% to $79 million, and adjusted EBITDA of $24.4 million. Last quarter, we spent a significant amount of time discussing investments we are making in our digital agent platform and AI initiatives. We have been very intentional in prioritizing long-term value creation while managing to strong and sustainable margins in order to maximize shareholder returns. Today, I want to focus on the strong start to the year and how the investments we have been making are beginning to translate into tangible business results.

Goosehead Insurance, Inc has always been a technology-forward distribution business, but over the past several years, technology has become even more deeply embedded in every part of how we operate. What is in front of us today is what I believe is the single largest opportunity our business and the broader personal lines industry has ever seen. In nearly every industry, customers have the ability to choose how they want to interact and transact. That has not existed in the independent personal lines insurance space—until now. Choice has always been part of Goosehead Insurance, Inc’s DNA. Historically, that choice has been centered around access to a broad set of carrier partners.

We have proven that we are a market leader, providing clients coast to coast with access to over 200 underwriting partners. But today, we are expanding that definition of choice. We are now giving clients a choice in how they prefer to actually transact. For the first time in the United States, clients can shop, quote, and buy insurance through a true choice model—whether that is fully digital, partially digital, or entirely human-driven. During our last earnings call, we announced we went live with this capability with multiple auto carriers in Texas, including partners like Progressive, Liberty Mutual, Mercury, and Root.

Today, we are excited to announce that clients can now digitally buy multiple homeowners products in Texas with carriers such as SageSure and Mercury. This is an important milestone in building a large-scale digital marketplace, which is now that much more achievable because of the real demand that now exists with our carrier partners. Carriers want this capability, and they want it specifically with Goosehead Insurance, Inc because of the trusted relationships we have built over decades, our access to large amounts of integrated data that drive better underwriting outcomes, and our differentiated go-to-market strategy executed through highly curated client acquisition channels. At the same time, the broader insurance shopping experience—particularly online—remains fragmented and often broken.

You may see advertising across social media for AI insurance agencies that claim they can bind and service autonomously or headlines that declare instant best rates. Those false claims end up generating terrible experiences for the end user. Customers are frequently routed through lead aggregators and data resellers, creating the illusion of choice but ultimately leading to confusion, lack of transparency, and in many cases, poor coverage decisions. Goosehead Insurance, Inc’s digital agent platform is solving these pain points. We are delivering real choice, not just in product offering, but now in purchasing experience. And by implementing this platform with a targeted audience through our partnerships, we remain the trusted adviser our clients and carrier partners rely on.

In the area of AI, we are now seeing tangible benefits as we roll out multiple use cases across our service organization. “Lily,” our AI-powered virtual phone assistant, is now fully resolving approximately 19% of all inbound calls without requiring transfer to a live agent. This improves speed to resolution for our clients and allows our service teams to focus on more complex and consultative interactions. In addition, we have deployed tools behind the scenes in areas such as intelligent case routing, which has allowed us to reinvest roughly 40 full-time service team members toward more complex and value-added interactions.

These tools are driving real-time efficiency gains, while also adding scalability to what has historically been the most complex and labor-intensive part of our business. All of this progress is occurring alongside a rapidly improving product market. Our carrier partners are increasingly leaning into growth across both home and auto products nationwide. As pricing stabilizes and product availability expands, we are seeing consistent improvement in many of our key operating metrics. For example, our client retention continues to climb at a steady pace, and we expect to achieve 86% client retention during the year. Bind rates and package rates are increasing, supporting higher agent productivity.

Given these strong market conditions, we believe the time is right to more aggressively expand our offensive capability with more agents and more geographies. When we spoke to you in February, I commented that we had fundamentally reset the corporate agent footprint. At that time, we had expanded into new geographies like Tempe, Arizona and Nashville, Tennessee. We are continuing to make excellent progress on this initiative. During the quarter, we opened three additional corporate offices in Seattle, the Washington, D.C. area, and Minneapolis, and we had a fourth opening in April in Indianapolis. As of the end of the first quarter, we now have more than half of our corporate agents outside of Texas.

These three offices are outperforming our expectations, but even more importantly, these offices serve a strategic purpose that far exceeds the short-term production they generate. They are quickly diversifying our agent base, making Goosehead Insurance, Inc an even more attractive partner for our major national carriers. And these offices are talent incubators for future franchise ownership. Since the beginning of the year, we have launched 12 new franchises out of our corporate offices, all of which are outperforming the average franchises we have launched from outside of our ecosystem. In just their second month live, these 12 launches contributed new business production that was nearly 2.5 times the average franchise.

Our existing franchise base also continues to lean into growth, with 133 franchises hiring at least one producer during the quarter, generating nearly 50% increase in gross producer adds year over year. As agencies continue to focus on hiring and driving productivity, they are reaching new highs with 208 franchises hitting monthly production records during the quarter. On top of that momentum, our enterprise sales and partnerships are rapidly gaining scale. What was a start-up inside the organization just two years ago is now meaningfully contributing to total revenue. When we step back, we are building more than an insurance agency.

We are building a technology-enabled distribution platform that delivers real choice, frictionless experience, and better outcomes for clients and carrier partners. I want to recognize and thank our teammates. This quarter's performance is a direct result of their discipline, execution, and commitment to delivering a world-class client experience. I will now turn the call over to Mark Jones Jr., our President and COO.

Mark Jones Jr.: And good afternoon to everyone joining us. I want to echo Mark's sentiment in welcoming John as our new CFO. I look forward to working closely with him in the future. What an exciting time it is here at Goosehead Insurance, Inc. We have now built the country's first choice online shopping experience in the history of personal lines insurance with our Digital Agent 2.0. As we enter into a new world for insurance distribution, it is important that we take a step back and fully understand what that means for clients, carrier partners, strategic partners, and agents alike.

As Mark Miller discussed, for clients, you now have choice—not only in what underwriter you have access to, but how you engage and transact. Why did this never exist before? Because there has never been a personal lines agency like Goosehead Insurance, Inc. Selling and servicing multiple product lines across 50 states with over 200 carriers is a challenge no other company has been bold enough to tackle. A frictionless choice shopping model has many hurdles in development that cannot easily be solved by throwing money at the problem. It takes deep domain expertise across regulators, product knowledge, client behavior, and the inner workings of fragmented technology solutions across the industry.

Each regulator has different requirements, each carrier has bespoke underwriting criteria and a differing technology stack with degrees of sophistication, and each client segment has unique needs and preferences. How are we able to solve this? We have been very intentional about our location in the value chain and distribution. We built strong and lasting relationships with our carrier partners to make sure our goals are aligned and we can deliver a differentiated experience to them. We have been thoughtful about geographic expansion so we understand the specific nuance of each critical state. We have spent 20 years and hundreds of millions of dollars in our history investing in technology to drive the industry forward.

And we have always placed the client at the center of our universe, so we have a clear understanding of what matters not just at the initial sale, but throughout that client's entire life cycle. I am incredibly proud of our team for what we have delivered so far, but we are just getting started. In the coming quarters, we plan to continue to expand our offering with new carrier partners, roll out to additional states, and add features and functionality that improve the client experience and conversion rates to maximize the economic returns. As exciting as the rollout of our Digital Agent 2.0 is, I am equally excited about the direction of our corporate, franchise, and enterprise teams.

As Mark Miller mentioned, we launched three new corporate offices in the quarter, including Seattle, the D.C. area, and Minneapolis, all of which are hitting the ground running. As we have discussed, we are highly intentional with where we grow our presence for the benefit of our teammates, our clients, and our carrier partners. Productivity in our corporate channel continues to improve, supported by increased lead flow and better conversion from a combination of the improving product market, expansion into untapped geographies, and investments in our management infrastructure.

The enterprise sales team, which is fueled by our partnership efforts, continued its rapid growth in the first quarter, generating new business growth of over 70% and contributing approximately 20% of the production of new business commissions and agency fees. The partnerships that feed that team now include 2.3 million potential clients across mortgage origination and servicing, as well as 4 million potential clients from other home and financial services organizations. While there may be some overlap across our partner client base, that improves our likelihood of conversion as we increase the number of touch points we have with potential clients.

The momentum we are seeing across our corporate and enterprise sales teams generated a new business commissions growth rate of 29%, the fastest pace of growth we have seen in nearly five years. The franchise business also saw strong acceleration in the first quarter, growing new business royalties by 14%. Our Agency Staffing Program, which we call ASP, continues to be a highly strategic asset, aiding our franchises in faster growth and expansion. Sourcing from the ASP program grew 53% over the prior-year quarter. Our average producers per franchise expanded to 2.3 from 1.9 a year ago. Total franchise producers at quarter end were 2,150, up 3% year over year.

Turning to our financial results for the quarter, total revenues were $93.1 million, up 23% over the previous-year quarter, with core revenues growing 15% to $79.5 million. As we look towards the second quarter, we expect a similar growth rate in core revenues when adjusting for the $4 million of previously unpaid renewal commissions and royalty fees that we recovered from a carrier partner in 2025. Throughout 2026, we expect improvements in client retention from our strategic initiatives and the improving product market to begin to outpace the impact of slower year-over-year pricing in our book of business. We expect that to result in faster core revenue growth when combined with continued strong new business generation.

Ancillary revenues, which are largely comprised of contingent commissions, were $11.9 million for the quarter, growing 141% year over year. Our outlook for contingent commissions on the year remains unchanged, at 60 to 85 basis points of total written premiums. We will provide more updates as underwriting performance advances throughout the year. Cost recovery revenue for the quarter was $1.7 million. During the quarter, we launched 20 new franchise locations across 10 different states. We also had 10 agencies exit the system and 63 agencies consolidate into another larger franchise. Total written premiums for the quarter were $1.1 billion, growing 13% over the previous-year quarter. Policies in force grew 14% for the quarter to 2 million.

We expect the growth rate in policies in force to accelerate during the year as client retention continues to improve and we drive strong growth in new business production. Adjusted EBITDA for the quarter was $24.4 million, growing 57% and delivering an adjusted EBITDA margin of 26%. During the quarter, we demonstrated strong cash generation, with $22.9 million of cash flow from operations. Utilizing our excess cash, combined with drawing $26 million on our existing revolving credit facility, we repurchased and retired 985 thousand of our Class A shares, representing $49.8 million. We believe there is a significant market dislocation in our stock price, and retiring these shares will generate excess shareholder return.

As of the end of the quarter, we now have fewer shares outstanding than we did at the time of our IPO. We plan to continue to be opportunistic with our remaining $148 million on our existing share repurchase authorization. We ended the quarter with $26 million of cash and cash equivalents and had total debt outstanding of $324 million. We remain committed to conservative balance sheet management and do not expect to add leverage outside of our historical precedent of 3 to 4 times trailing twelve-month adjusted EBITDA. We are reiterating our guidance for the full year 2026. Total revenues are expected to grow organically between 10% and 19%.

Total written premiums are expected to grow organically between 12% and 20%. I am incredibly excited about the position our business is in. Our business is healthy and delivering strong growth, and because we have been prudent stewards of our capital, we are able to invest in new and exciting technology that we believe will change the industry to our advantage. Thank you to our teammates, partners, franchises, and shareholders for your continued trust. We are just getting started. We will now open the call for questions.

Operator: Thank you. As a reminder, to ask a question, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. One moment for questions. Our first question comes from Andrew Andersen with Jefferies. You may proceed.

Andrew Andersen: Hey, good afternoon. How should we think about the 2026 PIF acceleration? Do you view this as more renewal retention-driven or new business-driven? And could you also help us think about seasonality in Q2 and Q3?

Mark Jones Jr.: Yeah. Hey, Andrew. Thanks for the question. If you think about how big our book is, pretty clearly retention is what is going to aid in PIF acceleration more than what new business will, just given so much of the book is in the renewal base. We expect to see continued improvements in client retention. We mentioned in the prepared remarks that we expect to get to at least 86% during this year. That said, we are seeing really strong new business momentum, which is super fun to watch. You see the new business commissions line growing 29% in the first quarter. That is the fastest growth rate in the last five years.

So it is a combination of both things, but the renewal side has a bigger impact on PIF. From a seasonality perspective, generation of new business will likely follow the normal seasonality trend, which would mean the second and third quarter typically contribute more than the first and the fourth quarter. I am not expecting that trend to change.

Andrew Andersen: Thanks. In the past, you have addressed why AI is not a disintermediation risk at policy inception. But how do you ensure that increased digital convenience does not create a greater disintermediation risk at renewal over time?

Mark Jones Jr.: I think the hurdles on the renewal side are even bigger than they are in new business generation—and that is not to downplay how challenging the new business generation aspect is. There is so much in terms of competitive moat that goes into our ability to actually put policies in force. But there is a lot of manual labor that cannot easily be automated on the back end to make sure policies continue to retain and that clients get all of their service needs met. I do not think people fully understand how much work goes into that. It would not be very easy to automate a lot of what we do.

We have been able to take big chunks of work and automate it, but that is going to be a really long tail of stuff. And as you know, all of the economics in this business are in the renewal. So if you try to automate as much as you can, but you leave off some portion of it, you are not going to be able to actually generate profitability over the longer term.

Operator: Our next question comes from Brian Meredith with UBS. You may proceed.

Brian Meredith: A couple of quick questions here. First, just quickly on the Digital Agent, are the economics there the same as your other business from the perspective of commission rates that you are receiving from the carriers?

Mark Miller: From the carriers? Yeah.

Mark Jones Jr.: So it is a really interesting development, Brian. Because our go-to-market strategy with the Digital Agent is largely to integrate it into partners where we have good information about who the clients are, and we can make sure that we are providing carriers with really high-quality business. There has been increased demand to have outsized compensation in that partner and Digital Agent channel. That was not really something that we contemplated when we started this process, but it has been a positive development that carriers have indicated they may be willing to pay more for policies distributed that way.

Brian Meredith: Interesting. And then what is the pipeline of potential new carriers on the platform, particularly for the auto insurance side?

Mark Miller: Yeah, Brian. We have four auto carriers now already on the platform, which gives us really good coverage. As you know, auto is not as specific to region as home is. We have pretty good coverage and a couple more to be added in the next two months. It has been interesting to watch—initially there were a lot of hurdles for us to jump over to explain how this product will work, how we are able to safeguard underwriters and clients from making poor decisions through digital distribution.

As we have had more and more conversations and explained why it will work so well with us, demand from new carriers wanting to get in line to get on the platform has been really fun to watch as well. There are people now saying, “How do we get involved because we feel like we missed the first wave?” We are focused on where our partners have client needs. We have been very focused on rolling it out in Texas and working on our conversion. It is kind of a new muscle for us—once you get them into the funnel, how do you get them to actually buy?

So we are really focused on Texas, then we will roll out to the next biggest state and the carriers that we need to fill those states out.

Brian Meredith: Great. Thanks. And then one quick numbers question. Commission rates that you are seeing across your book—are we starting to see them lift?

Mark Jones Jr.: Yeah. The aggregate commission rate is now up year over year, which is great to see. The communication with carriers has all been around how we incentivize more growth, and if you want to incentivize more growth, compensation is a tool that you can use. In pockets of the country where there was maybe higher E&S usage in previous years, you can see that in the renewal commission rates, but I do not expect that to be a long-term thing. I am happy to see the aggregate commission rate now going up.

Operator: Our next question comes from Thomas Patrick McJoynt-Griffith with KBW. Good evening. You may proceed.

Thomas Patrick McJoynt-Griffith: A couple of questions around your Digital Agent. First off, is that experience really entirely targeted through your enterprise partnerships, or are you also advertising the Digital Agent as a full comparison and appearing in top-of-funnel search results?

Mark Jones Jr.: We are not really trying to drive eyeballs to goosehead.com. What we want to do is put it in a place where it is going to drive the maximum value for everybody across the value chain, which we believe is through the partner channel. I think there is going to be stumble-upon business—we have stumble-upon business of people buying auto and home insurance directly through the website—but we have been really clear with our carrier partners about what the go-to-market strategy is, just so we can make sure everybody is having a good experience. So it is largely going to be with partners.

Over time, that may evolve as the brand gets a little bit bigger, but we are not necessarily going to deploy a bunch of capital to try and draw eyeballs. It is not an efficient use of money.

Thomas Patrick McJoynt-Griffith: Okay. Got it. And then my other question on Digital Agent. How do you balance the responsibility to the customer that is searching for insurance to the extent that they are using Digital Agent and there are only a couple carriers available for homeowners quotes, versus if they were to use a human Goosehead Insurance, Inc agent they might be able to see a lot more quotes with perhaps better coverage or better pricing?

Mark Jones Jr.: What we have tried to do is make sure the areas we are bringing to the platform initially are the ones that do a disproportionate amount of the business in the geography that we roll it out in. We have got really strong coverage in both our home and auto carriers that are on the platform now. So it is not like you are getting a random one-off carrier that should not necessarily be writing a ton of business in your area. We also are able to build into the platform safeguards and kickouts that basically would say, you may be eligible for a certain carrier, but that is not probably the right spot for you to be.

You should talk to an agent. That helps us prevent carriers from getting business that they should not get and from clients choosing options that they probably should not choose.

Thomas Patrick McJoynt-Griffith: Got it. And last one if I could sneak it in. On the new business commissions, you said 20% of the new business is coming through—was that the partnership channel or was that through Digital Agent? Can you clarify what that number was?

Mark Jones Jr.: That is coming from the enterprise sales team, which is largely the partnership channel. The Digital Agent is not today generating significant revenue, nor did we expect it to be generating significant revenue yet. We expect those contributions to start to begin really in the second half of the year as it gets more deeply integrated into our partnership base. But the enterprise sales team—which is the human fulfillment of our partner engine, which has only really existed now for about two and a half years—is growing really nicely and making meaningful contributions to the revenue growth rates.

Operator: Our next question comes from Analyst with BMO Capital Markets. You may proceed.

Analyst: Hi. Thanks. Maybe just on the new corporate state entries that you called out and the progress with Nashville and Arizona. Can you update us on how much of your premium was in Texas this quarter, and how you expect the evolving state mix to impact premium per policy as we move throughout the year?

Mark Jones Jr.: For the first quarter, 37% of the premium was in Texas, down from 39% as of the end of the fourth quarter. So we are continuing to diversify the book, which is a really good thing. Each individual state has different puts and takes on the economics of their own policies. Where you usually see lower premium per policy, typically you get better bind rates and better package rates. So it all kind of comes out in the wash in terms of productivity. We were really strategic in the locations that we picked. They are areas that have good demand from our carrier partners—they want us to go sell new business there. They have got growing metropolitan areas.

It is a good place to recruit from. It is the right kind of cost of living. I am really happy with where we have planted flags so far, and those offices are off to phenomenal starts.

Analyst: Thanks. And then maybe just one on the guidance. The contingent commission number was really strong this quarter, but you did not bring up the lower end of your guidance for total revenue. Can you walk us through your thinking and how you are thinking about the cadence of revenue as we go through the year?

Mark Jones Jr.: It was a strong contingency quarter, but like we have talked about in the past, the first quarter always includes some true-ups from the fourth quarter where we did not have enough information to record revenue or there was too much uncertainty on whether you would actually earn the commission. So we had an outsized number in the first quarter relative to history. That does not necessarily change our outlook on what contingency should be for the full year. It did not feel like there was a good rationale to update the guidance number given we still do not know if there is going to be big hail or hurricanes or fires.

We will continue to keep an eye on that throughout the year.

Analyst: Just as a follow-up, nothing has changed on your view on core revenue and the cadence there, correct?

Mark Jones Jr.: Correct. We are still expecting acceleration in the second half of the year as the improvements in client retention begin to outpace the offset of the pricing impacts on year-over-year premium changes, as well as contribution from strong new business production across all three sales channels, really driven by agent productivity and adding a few more heads here and there.

Operator: Our next question comes from Andrew Scott Kligerman with TD Cowen. You may proceed.

Andrew Scott Kligerman: I am curious on the franchise producers. It looks like you were up quite a bit year over year on less-than-a-year producers, but those that have been with the company for more than a year declined to 1,525 from 1,577. Could you give a little color on why the more experienced producers came off?

Mark Jones Jr.: Andrew, that is really the consolidation that has been going on in the franchise community, which as we have talked about in the past is really a good thing and done very intentionally in the business to create larger, more successful franchises. We continue to see that as super healthy. So that is largely going to be taken out of people that have been in the system for multiple years. What I like to see is that the agencies continue to reinvest that capital and hire more. We had really strong gross adds in the first quarter. I was really pleased with that. And we are seeing good productivity of those producers.

It feels like the franchise community right now is probably healthier than it has been in many years.

Andrew Scott Kligerman: And the producers per franchise— is that number up materially year over year?

Mark Jones Jr.: Yeah. It is up something like 18% year over year. It is up to 2.2 to 2.3 versus 1.9 last year this time. It is moving exactly like we want it to. I still believe we can get to about five producers per franchise in a reasonable time frame. That is where you start to get a real scale business that operates a lot more efficiently than a sole proprietorship.

Andrew Scott Kligerman: Got it, Mark. And then for those producers at the firms more than a year, the franchise productivity was up remarkably—from 30.6 to 37.4. Can you provide a little color on that sharp productivity increase?

Mark Jones Jr.: That productivity number is on the per-franchise basis, not at the producer level. As more tenured agencies keep hiring, that is going to help drive total productivity per location. The individual producers underneath them are also getting more productive. That is a function of those producers ending up in franchises that are more in the top half of the community—the ones that have scaled infrastructure, good management practices, and demand high levels of productivity. We are continuing to push agencies to join that club: invest in your business, invest in your management infrastructure, and hold people accountable. That message is being well received.

Andrew Scott Kligerman: One last one. The mortgage originators and other home and financial services operations where you are embedding your enterprise product—what is the moat that keeps Goosehead Insurance, Inc with these partners and keeps out the competition?

Mark Jones Jr.: There are a lot of elements that generate a significant moat. We have the national scale and local expertise of our 2,500 agents across the entire country, which means we know how to handle your house in Miami, your house in L.A. on stilts, the one in the flats in Nebraska. We can handle everything that happens in your portfolio. We have the ability to route leads appropriately so you are getting to the best agent at the best time. We have the service function on the back end, which I believe is really differentiated in the industry and can deliver strong levels of retention, which is where all of the actual profitability in this business is.

We have a better product offering than most other organizations with over 200 different underwriters. The technology to bind in the human world is, we think, much better than what other people have, and now we have the ability to bind fully digitally in a single location through a choice shopping model. To our knowledge, nobody else has that ability. That is a huge competitive moat.

Operator: Our next question comes from Analyst with Cantor Fitzgerald. You may proceed.

Analyst: Hi. Going back to retention, you mentioned expecting to get closer to 86% for 2026, and you are posting 85%. Can you provide some granularity around why it is taking longer for retention to improve than anticipated?

Mark Jones Jr.: I would not say it is taking longer than anticipated. If you go back, we were at 84% for five straight quarters. We have now been at 85% for three. I am anticipating us to click up to 86% during this year. I am really pleased with the direction of the client retention number. It is continuing to grind upward. We have specific initiatives to try and accelerate the pace of that improvement, and the product market being in a really healthy spot now is super helpful for that.

Analyst: Do you think the reason it is not as high as it once was is maybe agents are more focused on new business, while the servicing aspect does not have the training to deal with the big increases on the existing business? Can you give more detail there, at least on the programs you are trying to initiate?

Mark Jones Jr.: Our agents’ job has always been to capture new business and deliver excellent service when they are talking to clients, but their main focus should be capturing new business. Our service function’s main focus should be retaining the existing business and delivering outstanding service. We have made a ton of structural and foundational improvements to our service function in the last couple of years. We feel like we are delivering an excellent value proposition to our clients. I think what is happening is people are frustrated that pricing got so expensive over the last several years. I do not know if that means consumer behavior has fundamentally changed and they feel like they need to shop more frequently.

If they do, that actually benefits us because they will be shopping in an area where we provide the most options with the best service. If you are coming from a different agency, we should be able to provide differentiated value to you.

Analyst: Thanks. And last question—looking sequentially at your Net Promoter Score, it has been declining since late 2024. Can you dig into what is going on there and if you have any further details?

Mark Miller: This is Mark. I think we have said it before: the NPS score is more of an industry sentiment score, the way we use it. Steep price increases over the last three years, particularly in our biggest market in Texas, have been pretty steep. NPS is a 12-month rolling average, and we have talked about expecting it to come down over time, and that is what it is doing—it is behaving like we expected. We think we deliver an outstanding client experience, and NPS is kind of dislocated from retention rates at this point. Mark just talked about retention rates continuing to climb. We also do client surveys—those scores are extremely strong.

So we think we are delivering a really good client experience.

Operator: Our next question comes from Analyst with Truist. You may proceed.

Analyst: Hi. Thank you. I am calling in for Mark Hughes. Your premium retention has been fairly steady lately, as you have mentioned, but doing a little math, the corporate retention has gotten substantially better over these last few quarters while franchise retention has dropped off just a bit. What is your experience in each channel that you think may be driving the difference here? And how many franchise locations were onboarded in the quarter?

Mark Jones Jr.: One thing I would point to is the diversity of the franchise book versus the corporate book. The franchise book has more exposure to places like Florida and California where there was more commission rate pressure over the last several years. As you write more new business into the excess and surplus lines or even the state-run plans, as those become a larger portion of the book, it can drag down your revenue retention rates. I am not anticipating that continuing to be an issue. I am expecting client retention to outpace that in the second half of the year.

The corporate team is much more in places like Texas and Illinois, where there is much more admitted product versus the excess and surplus lines. We onboarded 20 new franchise locations in the quarter—20 new agencies, 12 of which were launches from the corporate team. Those are performing at about 2.5 times the average external launch. That strategy continues to be really important and strategically hard to replicate.

Operator: Our next question comes from Pablo Singzon with JPMorgan. You may proceed.

Pablo Singzon: Hi. Good afternoon. I wanted to ask about the growth in enterprise. I think you had quoted 70% growth year over year. How much of that was headcount versus productivity? And how are you thinking about that channel as it scales up?

Mark Jones Jr.: Enterprise right now—growth is coming from nice, stable, strong productivity, and we are adding more heads into the system. We have built out a strong partner base and have an awesome pipeline of potential new partners. We can meter the lead flow to make sure we do not get over our skis and cannot deliver on the service we are supposed to deliver. We are adding heads now to the point where we feel like we can continue to execute on 100% of the lead flow. We just want to load-balance that appropriately.

Tenure on that team is still pretty low because it has only existed for a couple of years, but you are seeing at the top end of the tenure curve the people who have been with us for a while now perform equal, if not better, than the average corporate or franchise agent.

Over time, it is still a three-pronged approach: we want the enterprise team to operate at speed and deliver for our partners; we want the corporate team to be the talent incubator for the entire organization, to demonstrate best practice and show how high productivity can be; and we want the franchise team to be the growth engine that can get to every place in the country without a massive infrastructure.

Operator: Our next question comes from Analyst with RBC Capital Markets. You may proceed.

Analyst: Hi. Good evening. Last quarter, you talked about EBITDA margins being flat to down a little this year, and I was wondering if this quarter changes that expectation.

Mark Jones Jr.: If you look ex-item, the expense base was slightly lower than what we were initially planning for in the first quarter. That was really just a function of timing of hires. If you look at compensation expense in Q1, I think it only grew 5%. I would not expect that trend to continue throughout the rest of the year as we onboard more talent to deliver Digital Agent integration into partners, marketing conversion-type roles, additional sales headcount, and then some more service headcount to handle the additional workload that comes throughout the year as we continue to sell new policies.

On the G&A side, it was a big G&A first quarter because we had our conference with the top end of our franchise community in Q1 this year, which was in Q2 last year. That was approximately about $1.5 million of expense in Q1 that was not in Q1 last year. If you round all that out, timing of compensation was a little bit delayed relative to initial Q1 expectations, so you should think of that as maybe high-teens to low-20% growth rates throughout the remainder of the year. G&A was higher in Q1 than it will likely be throughout the rest of the year, but that does not necessarily change our margin outlook for the full year.

We still have some Digital Agent investments to make and we want to be leaning into growth right now.

Operator: Our next question comes from Katie Sakys with Autonomous Research. You may proceed.

Katie Sakys: Thanks. I just wanted to circle back on core revenue growth. I think you previously framed first half as coming in closer to low double digits when we heard from you in February. Clearly, 1Q outperformed that. Do you expect 2Q to also trend higher than those initial low double-digit expectations before it further accelerates into the back half of the year? And then on an annual basis, you previously suggested about 10% of corporate agents launch their own franchises. Is that still the right run-rate?

Mark Jones Jr.: Katie, I would just make sure you are tracking the $4 million from the second quarter of last year—that is a year-over-year comparison challenge. We talked about low double-digit first half, not necessarily in each individual quarter. In our prepared remarks, we said core revenue growth rate, when you adjust for that $4 million comparison challenge, will look similar to the first-quarter number. From that point, you should expect to see the renewal book begin to improve its performance, driving faster core revenue growth rates. On the corporate-to-franchise launch rate, that is certainly the right rate to be thinking about over time.

In the last twelve months, we have launched 30 corporate agents into their own franchises, which is ballpark 10%, and, as a close adjacency, we have also seeded about 10 corporate agents into existing larger agencies or embedded partner franchises when it is a good fit. That is completely aligned with the strategy—we want the corporate team to be the talent incubator where we grow the best of the best.

Operator: I am not showing any further questions at this time. I would now like to turn the call back over to Mark Miller for any closing remarks.

Mark Miller: I just want to thank everybody for joining us today. It is an exciting time to be part of the Goosehead Insurance, Inc business, and we look forward to talking to everybody again in July for our second quarter call.

Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

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