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Edited Transcript of GSHD.OQ earnings conference call or presentation 1-Nov-19 12:30pm GMT

Q3 2019 Goosehead Insurance Inc Earnings Call

Nov 20, 2019 (Thomson StreetEvents) -- Edited Transcript of Goosehead Insurance Inc earnings conference call or presentation Friday, November 1, 2019 at 12:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Mark E. Jones

Goosehead Insurance, Inc - Co-Founder, Chairman & CEO

* Mark S. Colby

Goosehead Insurance, Inc - CFO

* Michael C. Colby

Goosehead Insurance, Inc - President & COO

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Conference Call Participants

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* Christopher Campbell

Keefe, Bruyette, & Woods, Inc., Research Division - Analyst

* Garrett Edson

ICR, LLC - SVP

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Presentation

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Operator [1]

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Greetings, and welcome to the Goosehead Insurance Third Quarter 2019 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Garrett Edson, Senior Vice President of ICR. Thank you, sir. You may begin.

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Garrett Edson, ICR, LLC - SVP [2]

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Thank you, and good morning. 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, 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 is 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.

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 from period to period by excluding potential differences caused by variations in capital structures, tax position, depreciation, amortization and certain other items that we believe are not representative of our core business. For more information regarding our use of non-GAAP financial measures, including reconciliations of these measures to the most 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 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.

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Mark E. Jones, Goosehead Insurance, Inc - Co-Founder, Chairman & CEO [3]

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Thanks, Garrett, and welcome to our third quarter 2019 earnings call. As we've done on previous calls, I'll provide an overview of the quarter and year-to-date as well as discuss our long-term strategy. I'll then hand the call over to our President and Chief Operating Officer, Mike Colby, who will update you on our technology development progress and how our ongoing innovation continues to support our high levels of sustained rapid organic growth and profitability. Our CFO, Mark Colby, will then follow and provide more detail about our third quarter and year-to-date results.

Let me start by focusing on the most important bellwether in assessing the strength of our core organic growth strategy: premium growth. During the third quarter, we delivered 44% organic premium growth over Q3 of 2018 to $202 million. Revenue grew 32% from the prior year quarter to $21.2 million. Year-to-date, we grew premiums and revenue by 45% and 40% to $543 million and $63.7 million, respectively.

During the third quarter, 2/3 of our premium growth was realized in our Franchise Channel, where our royalties are 20% of revenue for the first term of a policy and 50% on renewals. While this weighting of new business toward the Franchise Channel causes a gap between premium growth and revenue growth, in the first term of policies it creates a spring loading of top and bottom line future growth as new business converts to renewal. We maintained our 88% client retention rate in the most recent quarter, which gives us a high degree of confidence in our ability to realize this mechanical revenue and earnings growth in the future.

Overall, our Franchise Channel continues to perform extremely well. The accelerated growth we've achieved in this channel this year is due primarily to investments we've made over the last several years in our talent and technology.

Investments in our Corporate Channel have also been critical to our success in the Franchise Channel. Our corporate team drives the development of our intellectual capital; tests new ideas and technologies; serve as trainers, coaches and mentors to our franchise partners; and set performance standards and best practices that make Goosehead the envy of our industry. We believe these investments create increasingly insurmountable barriers for those who wish to challenge us and position us well for achieving our goal of industry leadership.

At the end of the quarter, franchise unit count had grown 49% from Q3 2018 to 828, while operating franchises grew 38% to 583. Both the quantity and quality of business being generated by our new franchisees continues to grow, aided by our decision to institute additional work modules prior to new agency owners attending on-site training at our corporate headquarters. In addition, enhancements in recruiting, onboarding, training, coaching, support and technology are making a major difference in accelerating new franchisees' productivity and contributions to Goosehead. We also continue to retain a robust pipeline of franchises in the implementation phase. Corporate sales headcount grew 33% from 2018 to 232 as we continue to have another successful year of recruitment in that channel.

I'd like to highlight just one of our recent initiatives to leverage the resources of our Corporate Channel to drive accelerated growth in the Franchise Channel. Earlier this year, we introduced a sales coaching pilot to our franchisees that is supported by some of our most talented corporate agents. As part of the program, a corporate agent will take on a group of franchise agents and provide them with detailed coaching on sales process, lead development, time management optimization, closing best practices and referral partner relationship management.

This pilot program has developed tremendous traction in a short period of time. 3 months after completion, our franchisees participating in the program have increased their production by an average of more than 55%.

I'm frequently asked by investors which distribution channel is our priority. The answer is both. We could not achieve the results we do in our Franchise Channel without our industry-leading Corporate Channel to support it. We manage the business in a fully integrated manner across both channels, and this creates incredible competitive advantage that is exceptionally difficult for potential competitors to replicate.

In addition to achieving great top line growth, we also saw a strong earnings growth during the quarter and year-to-date, accompanied by a margin expansion. During the third quarter, adjusted EBITDA grew 37% compared to the prior year period to $4.6 million, while adjusted EBITDA margin expanded from 21% in Q3 of 2018 to 22% in 2019. Profits generated by our renewal business more than offset our investments in technology and talent.

Year-to-date, adjusted EBITDA grew to $18.8 million, a 51% increase over 2018, and adjusted EBITDA margin expanded to 29%. Policies in force increased 45% from the prior year to 448,000, and we once again maintained our industry-leading client retention rate of 88% and world-class Net Promoter Score of 90.

Our service team's ongoing commitment to excellence helps ensure that we're able to maximize client retention, which is a key driver of our long-term growth and profitability. With 3 quarters of 2019 now in the books, we're tightening our guidance for full year premiums. Mark Colby will share details with you in a minute.

We expect to finish out 2019 strongly, achieving what we set out to do at the start while ensuring that we remain well positioned to continue to rapidly and responsibly expand our market share and significantly grow our business and profitability over the longer term.

In summary, we had a very strong quarter. We have a simple business with a clear strategy, and our team continues to execute very effectively. We have built extraordinary competitive advantage over time with human capital and technology that is without peer in our industry. The result is a highly defensible competitive mode.

All of that being said, we recognize the criticality of keeping laser-focused on the prize of industry leadership and on keeping the pedal to the metal so as to create maximum distance between ourselves and others who may wish to challenge us. We feel privileged for the trust our investors place in our team, and you have our commitment to leave it all on the field every day. I'm proud of what we've accomplished, but we are just getting started.

I'll now turn the call over to Mike to update you on the progress of some of our recent technology initiatives.

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Michael C. Colby, Goosehead Insurance, Inc - President & COO [4]

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Thank you, Mark, and hello to everyone. Over the course of 2019, we've made significant investments in our technology platform, including application and data source integrations, migration to a cloud-based voice solution, deployment of artificial intelligence capabilities into our service center, development of a client-facing portal and cybersecurity enhancements, areas of focus that allow us to sustain and build on our already considerable competitive advantage.

Today, I'll provide you all with an update of the status of these areas of investment and exciting new developments within our technology road map. Our integrated comparative rating technology has been rolled out in 44 states, covering over 99% of our new business production for home and auto lines of business. We're now turning our attention to what we call last-mile integration, where agents can manage the entire sales process from quote to issuance within our proprietary platform, eliminating the need to go to a separate carrier system to complete the process. This project has a longer runway, requiring deeper carrier integrations and additional data source integrations. However, we are well on our way to accomplishing this and ultimately bringing the first choice model direct to consumer online via our customer portal, which I'll provide an update on later.

Additionally, we're focused on bringing other ancillary lines of business outside of just primary homeowners and auto to our comparative rater, starting first with flood insurance, an extremely valuable line of business to anchor the client account and increase the likelihood of retention.

Direct integrations with flood insurance carriers, along with additional data source integrations to obtain flood zone determinations, are underway and will soon give us the capability to present bindable flood insurance quotes to our agents more efficiently during the homeowners' quoting workflow.

Over the course of the third quarter, we've enhanced the capabilities of our mortgage activity database to include both the buy-side and sell-side realtor information and the title company information for new mortgages, giving us a 360-degree view of the home purchase transaction.

While we have lender data on 100% of the mortgage activity in the U.S., we currently have the realtor data feed on 49% of all new home purchases, up to 80% in some states, and we're working on increasing this hit rate as more data becomes available. The power of this data and how it amplifies our ability to execute our go-to-market strategy cannot be overstated.

We completed our voice solution migration to the RingCentral platform and the integration of this solution into our sales force environment. Now our focus is the broader implementation into our service centers of more advanced omnichannel features, including text and chat and new features like voice analytics that allow us to monitor the customer experience more completely. We expect these tools to not only allow us to continue to deliver best-in-class service for our clients but to also realize scale benefits in the service center over time.

We have successfully rolled out our first artificial intelligence application focused on client retention in the service center. This required us to migrate the entire organization to a compatible user interface within Salesforce, build the client retention data model and develop workflow within the system that will display the retention drivers realtime to the service agent and suggest next-best actions to increase the likelihood of retention.

Our focus for the remainder of 2019 and into 2020 will be to enhance the predictive capabilities of the data model by including new relevant data points such as call sentiment during the client interaction provided by the voice analytic feature mentioned before. As we accumulate more data, the model continues to learn, increasing the level of precision in the predictive analytics.

We also turn our attention to additional use cases, for which there are many, where we can apply this technology to drive business results. As mentioned on our last call, we've developed the first version of our client portal, focused on the onboarding of new clients. Now all new clients are onboarded using our client portal where they can sign their policy applications and easily upload supporting documents.

From day 1, we set out to provide our clients an intuitive and robust experience in our client portal. And we are now focusing on back-end integrations with carriers that will allow us to broaden the online self-servicing capabilities of the portal as well as eventually being able to quote and issue new policies in the portal.

These major technology initiatives allow us to compete with cutting-edge tools that until now have been unavailable in the choice model. But as important as these major projects, we've completed over 1,000 individual system enhancements through multiple releases this year that, together, provide meaningful improvements to the efficiency of our system and to the user experience. To accomplish this, we've increased our internal development team by 50% so far in 2019. And it's also worth mentioning that many of the enhancements originated from agent feedback.

Our development efforts remain in high gear, and our commitment to excellence and culture of continuous improvement keep our people highly engaged and enthusiastically supportive of the rapid innovation. The focus on technology is a big driver of our ability to compete aggressively in our space and win big over time by providing the best possible customer experience and attracting the best and brightest talent into the business. I look forward to updating you all on continued progress on future calls.

And with that, I'll turn the call over to Mark Colby to provide some color on our third quarter.

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Mark S. Colby, Goosehead Insurance, Inc - CFO [5]

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Thanks, Mike, and good afternoon to everyone on the call. For the third quarter of 2019, we grew revenue organically 32% to $21.2 million compared to $16.1 million in the prior year period. As noted in prior quarters, the improvement was driven by strong growth in both our Franchise and Corporate Channels from new and renewal business.

Total written premiums during the quarter, which is an important leading indicator of our future revenue growth, increased 44% year-over-year to $202 million. Our Franchise Channel total written premium once again grew 55%, implying significant embedded future revenue growth as new business premiums convert to renewal premiums after 1 year and we increase our royalties from 20% to 50% on an ongoing renewal basis.

At the end of the quarter, we had over 448,000 policies in force, a 45% increase from 1 year ago. We continue to generate consistent, rapid year-over-year growth, positioning us well for long-term success.

Total adjusted EBITDA grew 37% year-over-year to $4.6 million driven by higher margin renewal revenue in both channels. Adjusted EBITDA margin likewise expanded to 22% from 21% in the prior year period as higher margin renewal revenue, particularly in the Franchise Channel, more than offset additional employee compensation and benefits related to investing in the hiring of corporate sales agents, franchise sales agents and ongoing investments in technology.

We continue to significantly invest in our talent and technology to support our high levels of agent and franchise growth. And as a reminder, the costs of most of these investments immediately run through the P&L.

We also continued to expand investing in our corporate agents' role to further support high levels of productivity within our Franchise Channel. We remain confident these investments will help fuel sustained revenue growth and long-term margin expansion as the new business premiums we are winning reliably convert to more profitable renewal premiums.

Our Franchise Channel generated revenues of $9.8 million in the third quarter, a 47% improvement from the prior year period driven by the greater royalty fee generated on renewal business versus new business, higher royalty fees from a larger number of operating franchises and higher initial franchise fees driven by an increase in franchises onboarded. We believe the consistent outstanding growth in our Franchise Channel this year is a direct result of the investments we've made in talent, recruitment, technological innovation and ongoing support of our franchise agents over the past few years. This bodes very well for our long-term prospects and ability to generate high margin, sustainable revenue growth as new business converts to renewal and our share of revenues grows to 50% from our new business share of 20%.

As of September 30, 2019, we had 828 total franchises, up 49% from the prior year and 583 operating franchises, up 38%. We are continuing to see significantly higher levels of franchise production in recent months, thanks to our targeted support investments and improved onboarding processes in terms of launching franchises. Our franchise pipeline remains robust, and we are continuing to grow our franchise recruiting team to advance this channel's rapid growth.

Adjusted EBITDA for the Franchise Channel in the third quarter was $2.9 million, up 56% from the prior year period, while adjusted EBITDA margin was 29% versus 28% in the prior year period, thanks to higher-margin royalties related to policies and their renewal terms more than offsetting our investments. It was a banner quarter for our Franchise Channel, and we believe the best is yet to come as this channel continues its strong growth trajectory.

In the third quarter of 2019, our Corporate segment grew revenues 21% over the prior year period to $11.3 million. This growth was driven by a 23% increase in new business revenue primarily due to a rise in corporate agent headcount and a 23% increase in renewal revenue due to sustained high levels of client retention. Our Net Promoter Score, which is the key metric of our service team and a key driver of our exceptional retention, remains at 90.

As of September 30, 2019, we had 232 corporate sales agents, up 33% from 1 year ago driven by new hires during our seasonally strongest recruiting months. It was another solid year for agent recruitment. And as a reminder, given our long-term strategy, we focus on ramping up our new agents' production over time, typically 2 to 3 years. These increasing levels of production predictably convert into higher-margin renewal revenue, resulting in enviable levels of sustainable profitability.

Additionally, as Mark noted in his remarks, our Corporate Channel doubles as the backbone for our Franchise Channel's rapid expansion. We refine best sales and training practices and beta test our technological innovations with our corporate team before rolling out our initiatives nationally to our Franchise Channel. It is crucial to our success and provides us with a fortified barrier to entry for potential competition.

Adjusted EBITDA in the Corporate Channel was $2.3 million compared to $2 million in the prior year period, while adjusted EBITDA margin was 20% versus 21% in the prior year period primarily due to the company's continued investments in growth of corporate sales agent headcount and the scope of their responsibilities.

Net income in the third quarter of 2019 was $2.8 million, up from $0.8 million in the prior year period. Adjusted EPS in the third quarter of 2019, which backs out equity-based compensation, was $0.08 per share.

For the 9 months of 2019, our revenues grew by 40% to $63.7 million driven by higher commissions, agency fees, franchise royalty fees generated by renewal business and an increase in contingent commissions received. Total adjusted EBITDA for the 9 months of 2019 rose 51% to $18.8 million, while our adjusted EBITDA margin was 29%, up from 27% in the prior year period even while absorbing public company costs for an entire year in 2019.

Total written premiums for the first 9 months of 2019 have grown 45% from the prior year to $543 million. We remain uniquely positioned to grow rapidly and responsibly over the long term. As of September 30, we had cash and cash equivalents of $10.8 million as well as $46.9 million of debt outstanding.

Because of our continued strong adjusted EBITDA growth, our leverage ratio has further shrunk to approximately 2.0x from 2.2x in the prior quarter. We expect to further delever during the remainder of 2019, and we'll evaluate our leverage and cash position in early 2020.

Finally, as Mark noted in his remarks, we are raising our full year 2019 outlook with respect to our total written premiums and maintaining our outlook for revenue. Because of increases in the Franchise Channel's total written premium, we now expect total written premiums placed for 2019 between $715 million and $730 million, representing organic growth of 40% on the low end of the range to 43% on the high end of the range. The previous range was between $700 million and $725 million of total written premiums placed.

We expect total revenues for 2019 between $80 million and $85 million, representing organic growth of 33% on the low end of the range to 41% on the high end of the range. We continue to deliver outstanding results in 2019, setting us up for continued success in 2020 and beyond.

As noted before, our 2019 revenue guidance is based on ASC 605 accounting. We will report under ASC 606 on the Form 10-K for the year ended December 31, 2019, but we will provide a reconciliation at that time so investors can understand our performance under ASC 605.

With that, I thank you for your time, and we'll now open up the call for Q&A. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Christopher Campbell with KBW.

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Christopher Campbell, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [2]

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I guess the first question is on the distribution growth. It was a little bit lower than we were expecting. And kind of I just had a numbers question in there, too. So when I'm looking at the Texas operating franchise count, it looks like that declined quarter-over-quarter. It looked like last quarter, it was 202. And then this quarter, it was 195. So I guess just what drove that decline within the home market? And then just how should we think about distribution growth going forward in each channel?

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Michael C. Colby, Goosehead Insurance, Inc - President & COO [3]

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Chris, this is Michael. As it relates to the Texas operating franchisees, we've made a very focused effort to diversify our production outside of the state of Texas. In fact, over 90% of our new agent growth is coming from outside of the state. And the reason for that is because we're trying to provide a more diversified book of business with our key carrier partners. It's important to them to provide a book of business that has uncorrelated underwriting risk, and we can do that by growing outside of Texas. So we actually have not had any focused proactive recruiting efforts taking place in the state of Texas this year.

Now that being said, I think we're getting to a point where the book is being sufficiently diversified. And we're planning to repurpose some of our recruiting resources back towards the state of Texas. But that's strictly an effort to provide our carriers with a more diversified book of business.

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Christopher Campbell, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [4]

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Got it. And then I guess just in terms of the agent count, like how big can you get? How big can like Texas be for you? Just I mean is it like 300, 400 agents?

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Michael C. Colby, Goosehead Insurance, Inc - President & COO [5]

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So I mean Texas, we've been operating in Texas since inception. It's our largest concentration of agents, and we're in less than 1% of Texas households. If you -- we've been deploying our go-to-market strategy in Texas longer than anywhere else. And we -- our go-to-market strategy is executed more -- in a more sophisticated way than any of our competitors. And we were only involved in less than 14% of new home loan transactions year-to-date.

So we have an incredible runway for growth still in Texas. But again, our growth efforts in agent recruiting specifically, our efforts have been outside of the state to accommodate a more diversified book with our carriers. Texas, we have an incredible runway for growth here in Texas still.

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Christopher Campbell, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [6]

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Okay. Got it. That's very helpful. And then I guess just -- I'm sorry. Go ahead.

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Mark E. Jones, Goosehead Insurance, Inc - Co-Founder, Chairman & CEO [7]

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Chris, can I just add one thing? This is Mark Jones. One of the things I think that's important to take into account is if you look at the large captives, you look at State Farm or Allstate, and you look at the number of agents that they have in the state of Texas or in any state, those numbers are bounded by the portion of the market for which our product is a good match. So they're very limited because they're a single-carrier platform and they have a more finite addressable market.

We, on the other hand, have a very broad base of carriers and our ability to address somewhere between 80% and 90% of the market with our carrier portfolio. So we've got literally 4, 5 and more times growth opportunity than even the sort of the captives currently represent.

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Christopher Campbell, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [8]

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Okay. Great. And then just outside of Texas, I mean it sounds like you guys have had, what, 98% of the new agent growth has come from outside of Texas. So I guess what percent of premiums are non-Texas these days versus a year ago?

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Mark S. Colby, Goosehead Insurance, Inc - CFO [9]

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Well, we've got -- it's about -- yes, it's about 30%, Chris. And you're right. 96% of the franchises that we launched in Q3 were outside of Texas. But total written premium in Texas still makes up about 70% of our book.

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Christopher Campbell, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [10]

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Okay. And what was that a year ago? Was that -- I thought that was a lot higher, right?

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Mark S. Colby, Goosehead Insurance, Inc - CFO [11]

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Yes. Yes. It was about 75% to 80%.

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Christopher Campbell, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [12]

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Okay. Okay. Got it. And then I guess how do the commission levels vary between taxes? Are they similar?

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Mark E. Jones, Goosehead Insurance, Inc - Co-Founder, Chairman & CEO [13]

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They are. Commission levels are similar. Premium, average premiums for homeowners and auto vary across states.

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Christopher Campbell, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [14]

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Got it. And what's the average commission level you guys have these days?

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Mark S. Colby, Goosehead Insurance, Inc - CFO [15]

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So it's roughly 15% on new business, and I think it's approximately 14% on renewal.

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Christopher Campbell, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [16]

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And I mean are you seeing any upward pressure in that as some of the auto, some of the personal line carriers get more adequate in auto and then they're kind of switching to a growth mode? Are you seeing -- like are you starting to see a benefit in terms of these carriers being willing to pay higher commissions for growth?

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Mark E. Jones, Goosehead Insurance, Inc - Co-Founder, Chairman & CEO [17]

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I wouldn't say we're necessarily feeling that. We're also not feeling kind of any type of kind of movement in rates. At our levels of growth, where we see growth is we see growth by adding top talent, bringing on top talent in our agent force and by growing productivity, and that's really what we're focused on.

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Christopher Campbell, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [18]

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Okay. Got it. And then I know probably a little bit early, but I mean are there any, like, guidelines we should start thinking about in terms of, like, 2020 guidance relative to 2019 in terms of premiums, revenue growth?

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Mark S. Colby, Goosehead Insurance, Inc - CFO [19]

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Yes. We'll talk in Q4 about our guidance for 2020. We're continuing to invest, and we continue to expect high levels of growth into the foreseeable future, past 2020.

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Christopher Campbell, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [20]

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Okay. Got it. And then just one last one. Are you guys seeing -- interest rates are lower. That's good for mortgage volume and mortgage lenders. Are you guys seeing like a benefit in the sales pipeline?

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Mark E. Jones, Goosehead Insurance, Inc - Co-Founder, Chairman & CEO [21]

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You're seeing your normal seasonality. Certainly, the seasonality has been a little muted this year certainly compared to last year. And I would suspect that rates have something to do with it.

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Christopher Campbell, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [22]

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Okay. Got it. And so just to make sure I understand. So that means like typically, this would be like a low time of year, right, for...

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Mark E. Jones, Goosehead Insurance, Inc - Co-Founder, Chairman & CEO [23]

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Well, it's typically -- right. It's typically you're going into your low season for the housing market. But I would say kind of the seasonal decline may be less driven by -- potentially driven by rates.

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Mark S. Colby, Goosehead Insurance, Inc - CFO [24]

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Yes. And that's the reason that we always talk about looking at us year-over-year rather than sequentially quarter-over-quarter. And so just kind of continue to focus on that and compares to Q3 last year, year-to-date last year, as we move into Q4.

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Operator [25]

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(Operator Instructions) Ladies and gentlemen, at this time, there are no further questions. So I'd like to pass the floor back over to Mr. Jones for any additional concluding comments.

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Mark E. Jones, Goosehead Insurance, Inc - Co-Founder, Chairman & CEO [26]

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Thank you. We'd just like to express our appreciation for your support and look forward to a strong fourth quarter. Thank you.

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Operator [27]

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Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation, and you may disconnect your lines at this time.