Goosehead Insurance, Inc (NASDAQ:GSHD) Q4 2023 Earnings Call Transcript
Goosehead Insurance, Inc (NASDAQ:GSHD) Q4 2023 Earnings Call Transcript February 21, 2024
Goosehead Insurance, Inc misses on earnings expectations. Reported EPS is $0.28 EPS, expectations were $0.32. Goosehead Insurance, Inc isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Ladies and gentlemen, thank you for standing by. Welcome to Goosehead Insurance Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would like now to turn the conference over to your first speaker today, Dan Farrell, VP, Capital Markets. Please go ahead.
Dan Farrell: 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 the expectations, estimates and projections of the management as of today. Forward-looking statements in our discussion are subject to various assumptions, risks, uncertainties and other factors that are difficult to predict and which could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These statements are not guarantees of future performance and, therefore, undue reliance should not be placed upon them. We refer you to all of our recent SEC filings for more detailed discussions of risks and uncertainties that could impact future operating results and financial condition of Goosehead.
We disclaim any intention or obligation to update and revise any forward-looking statements except to the extent required by applicable law. I would also like to point out that, during the 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 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 Chairman and CEO, Mark Jones.
Mark Jones: Thanks, Dan and welcome, everyone, on the call. By now, you should all have had a chance to read the 2 press releases that went out prior to this call. I will address our management transition plans at the conclusion of our prepared remarks. Before getting into our 2023 results, I'd like to share some background context on the master plan that we've been executing against for the last 18 months. The basics of that plan were to refocus our efforts and resources around profitable growth, remove any barriers to profitable growth and protect and strengthen our competitive mode. We are pleased with both the pace of execution of the master plan and the results we are seeing and are right on schedule. Much of our time, effort and resources were focused on revamping our sales networks, yielding dramatic gains in agent productivity.
During Q4, we reorganized our sales management functions into one consolidated team that works across both corporate and franchise under the leadership of Brian Pattillo. This has enabled us to better leverage our intellectual capital and is delivering great productivity growth. As a reminder, Brian took over the corporate sales function in late 2022. Corporate productivity was up 27% in 2023 relative to the prior year. Even more exciting, we saw first year corporate agent productivity grew 46%. Productivity per franchise was up 30% in Q4 following our management realignments even in the context of some pretty heavy industry headwinds. During the year, we also right-sized our cost structure in a way that continued to support high levels of growth but, at the same time, allowed us to deliver much better margins.
We invested and continue to invest, aggressively in our quote-to-issue technology which has profoundly expanded our competitive moat, unlocking productivity of our sales agents, simplifying service delivery and, over time, potentially opening the aperture for other distribution channels. Tools like this create a virtuous cycle where agent success enhances our recruiting value proposition, drives better agent retention and, ultimately, facilitates more rapid and profitable growth. Our human capital is the secret sauce that make us an extraordinary company and we continue to focus on building it. We leveled up our recruiting practices by returning to our roots with uncompromising quality standards. These efforts are bearing fruit, with first year corporate agent productivity up 46% from 2022, as I mentioned earlier.
We're also investing in our highest potential franchises through additional leadership support, providing dedicated recruiting resources and implementing new training programs at important inflection points. Now that our sales teams are much more productive and we have the right cost structure and organization supporting the business, we're beginning to reignite growth in sales capacity in each of our distribution networks. We're growing corporate sales headcount up to our absorptive capacity. We're expanding our partnership networks to drive growth in our new enterprise sales unit. We're dialing up sales capacity in the franchise business through a combination of helping our agency partners recruit producers and adding high-quality franchisees.
We launched what we call our middle market agency business development team in Q4, focused on helping mortgage lenders and realtors bolt their own Goosehead agencies onto their core businesses. Interest is high and the pipeline of active opportunities is very rich and exciting. While we're in the early stages of this capacity growth, we're seeing tangible results, with corporate sales headcount up 20% from its low of around 250 and producers per franchise up 7% from last year. Now turning briefly to our 2023 results. Total written premiums grew 34% for the year. Total revenues were up 25% for the year. Adjusted EBITDA grew 90% in 2023 and adjusted EBITDA margin expanded about 900 basis points to 27% on the year. We plan to continue to grow our corporate team in 2024 and for the foreseeable future which will support the conversion of more corporate agents into franchisees.
As a reminder, when we launch a corporate agent into their own franchise, we're not only creating a top decile agency but we're also retaining and expanding the productive capacity of converting agents as they scale their agencies. During 2023, we launched 30 corporate agents into franchises and have already seen several of them adding new producers in just their first year. As a reminder, these 30 corporate conversions yield production equivalent to about 200 franchises that we hunt in the wild. This remains an incredibly long lever for us and a massive competitive moat. No other insurance agency has an asset like our scaled [ph] team of highly skilled, hard-working and disciplined corporate agents. We further invested in our highest potential franchises during 2023, rolling out a producer recruiting program that has seen immediate success.
2023 was the hardest product market we've seen in our 20 years of operations, as underwriters struggled to take premium rate fast enough to offset the increasing cost of claims. To combat this, we developed more resources. We deployed more resources to our carrier management function to work with our most important carrier partners to maximize product access for our agents. We're very encouraged to see signs of the product market beginning to thaw and hope to see broader product access around midyear this year. On top of historic product restrictions for many carriers, we faced substantial headwinds in the housing market, as existing home sales fell to a 28-year low. It would have been easy for our agents to panic, wring their hands and say it's out of our control but that's not part of our DNA.
We continue to deliver through these headwinds by doing what we do best, execute our value proposition with referral partners to maximize our inbound lead flow which was at an all-time high in 2023 and deliver an exceptional client experience. Since our last earnings call, we've launched 5 new carriers on our quote-to-issue platform, including Progressive Auto. Our QTI platform improves the client experience, increases agent productivity and improves our ability to deliver carriers the business that matches their underwriting risk appetite. I normally conclude our internal financial review meetings with a single comment: "This is a damn good business." Let me explain why this is a damn good business. We operate in a highly fragmented, approximately $450 billion premium industry where we account for less than 1% of market share.
If you live somewhere or drive something, you need the product that we sell. We have remained disciplined and focused on the link in the value chain where we can and do win in distribution. We don't get distracted by shiny objects and we have a firm belief that ideas need to compete in a marketplace. So when we arrive at the office for work, we check our egos at the door. Our entire business model is based on placing the client at the center of our universe which has allowed us to deliver world-class NPS scores and maintain client retention at levels that allow us to aggressively attack new business growth while maintaining strong profitability. The competitive set in personal lines distribution cannot fully meet the needs of today's clients.
Single-carrier platforms do not offer the power of choice and other independent agents lacked the industry-leading technology we've spent decades building on the back of our millions of proprietary quotes. The industry has historically not attracted the very best talent. Goosehead, on the other hand, has. So we find ourselves possessing massive competitive advantage in an industry that, for all intents and purposes, is of infinite size with very attractive recurring economics, deeply aware of what we are and what we are not and I am grateful every day we face the competitive set that we do. We believe the only thing that could stop us from reaching our full potential, becoming the largest distributor of personalized insurance in the United States during my lifetime, is our own execution and we do not plan to let that happen.
I'm very excited for our future and I want to thank our team for a tremendous 2023. With that, I'll turn the call over to Mark Miller to go more in depth about our operations for the quarter and the year.
Mark Miller: Thanks, Mark and good afternoon, everyone. As Mark mentioned, 18 months ago, we thoughtfully architected a master plan that included a list of initiatives designed to improve quality and execution across the organization. Our goal was to transform Goosehead into an even better company, one that could grow faster and more profitably at scale and expand our already wide competitive moat. We knew that, by executing our plan, we would slow the revenue growth in the short-term but we believed these actions will build a stronger foundation to deliver sustained high levels of both revenue and earnings growth in the future. In some areas, we were able to move quickly and start realizing benefits in the P&L within a few quarters.
In other areas, we need to invest in people and processes and develop new business capabilities. Even when executed with precision, these types of growth initiatives can take multiple quarters to bear fruit. I'm pleased to report that, in 2023, we executed exceptionally well against these initiatives. We restructured our corporate and franchise agent force to drive higher levels of productivity. We doubled down on our recruiting function and raised our hiring standards to bring in significantly more high-quality talent. We drove cost discipline across the organization. We built a new enterprise capability that widens our distribution aperture to work more effectively with inbound lead flow from our online digital agent and partnerships. And we built a world-class technology team that has successfully developed what we believe is the best agent shopping platform in the industry and we have proven we can directly integrate that technology with the largest carriers in the industry to bind and manage policies.
With strong execution in 2023, we are now ready to start pulling the levers to accelerate PIF growth in 2024. We plan to add distribution capacity across both corporate and franchise networks. Our corporate recruiters have already locked in a significant portion of our new agent needs for 2024 and our agency staffing program is on pace to help our agency partners recruit several hundred high-caliber agents this year. As we mentioned previously, these agents that we help place in thriving franchises are nearly 1.5x more productive than the average new franchise. We plan to continue increasing corporate and franchise agent productivity by leveraging improved sales processes and technology. With our new management structure, we believe we can continue to reduce the gap between franchise and corporate agent productivity.
And our expanding QTI capabilities should improve overall efficiency of our entire agent force. In addition, our new enterprise sales and partnership network efforts are starting to add meaningful volume. We believe we can further improve our already-strong service function to effectively support our growing renewal base, enhance the client experience and ultimately drive client retention. Let me take a moment to go a bit deeper on some of the achievements in 2023 and how we believe this sets us up for profitable growth in 2024 and beyond. We saw a dramatic improvement in our new corporate and franchise agent productivity in 2023 and we believe the runway for further improvement is substantial, particularly as the challenging macro environment ultimately abates.
For the year, our corporate new business revenue productivity on a cash basis which will be disclosed in the 10-K, increased 27%. Our agents with less than 1 year of experience increased new business productivity by 46%, a remarkable accomplishment in the current environment and a testament to the value of returning to our roots with our recruiting strategy. We saw substantial franchise productivity improvement in the back half of 2023, particularly in the fourth quarter compared to the first half of the year. We have now seen 4 consecutive quarters of franchise productivity improvement. Specifically, we saw a 30% increase in Q4 versus the prior year. To put this in perspective, franchise productivity in the fourth quarter was the highest on record.
We believe there is substantial runway for continued improvement in franchise productivity as we reduce the gap between corporate and franchise agents with better technology, training and recruiting. Under Brian Pattillo's leadership, we are managing corporate agents and guiding franchise agents as one cohesive team. We believe the changes that Brian has implemented already helped to drive fourth quarter gains. Our recruiting function was significantly upgraded in 2023 and we now have the foundation and process to bring on larger numbers of high-quality producers. In corporate, we ended the year at 300 agents, up from the low of around 250 in the middle of the second quarter. We're now confident in our ability to significantly grow corporate producer count while maintaining quality in 2024.
On the franchise side, we intentionally reduced the number of franchises recruited and focused on dramatically improving the quality and launch speed. Our franchises are now launching around 20% faster than they were in the prior year and are 29% more productive than they were this time last year. We have been franchising for over a decade now and we are continuously improving our model on who and where we want to launch franchises. We are currently focusing our franchise recruiting efforts on underrepresented geographies and on owners that want to run large multi-agent growth businesses. It is important to reiterate that our franchise growth is no longer about simply growing the number of franchises. It is about growing productive capacity and overall producer headcount.
One of the most efficient ways to accomplish this objective is by helping our best agency partners grow more quickly. Let me highlight one example to illustrate how this new muscle works at one of our top franchises. The Sacchieri Agency is one of the most successful franchises in the country. The owners, Ryan and Scott Sacchieri, brothers, are masters at onboarding and ramping up agents. At Goosehead, we're exceptional at sourcing high-caliber sales talent. Last year, we created the agency sourcing program to help franchises like Sacchieri's find talent more quickly. In May of 2023, Goosehead helped the Sacchieri Agency recruit Demitri Kent. In his first 8 months, Demitri averaged a little over $13,000 in monthly new business revenue, earning him Rookie of the Year award.
In November, he finished with $30,000 in new business revenue in just his seventh month. This is just one small example of how we work with our existing franchises to maximize growth. Ultimately, removing underproducing franchises has muted our overall producer growth numbers in recent quarters but I'm confident we will see strong overall franchise growth production in 2024, driven by adding high-quality new franchises, scaling existing franchises, driving productivity gains and converting high-performing corporate agents to franchises. In addition to sales productivity gains, our dramatic profitability improvement in 2023 was driven by very disciplined P&L management. Since taking on the CFO role, Mark Jones Jr. has personally taken on responsibility of the expense structure and helped drive cost discipline across the company.
Thanks to Mark's contributions, we're starting to realize unit cost improvements in some of our largest expense categories, such as service. We believe we have the best service function in the industry but we also know we can get even better and more efficient over time. Towards that objective, we recently announced the hire of David Lakamp as Chief Service Officer. David brings substantial experience operating a large service function at USAA. David is uniquely qualified to help take service function to the next level, bringing benefits to clients and driving further scale efficiencies which will be key to building a service department that can support an organization and client base that we believe will be multiple times its current size.
In 2023, we made substantial progress in laying a solid technology foundation for the future. One great example of this progress is the rollout of our quote-to-issue capability. We launched 5 carriers on QTI since our last call and we have ambitious targets for ramping this technology in 2024. We expect a substantial portion of our carrier volume to be QTI-enabled by the end of the year. We believe this technology will drive significant efficiency for the sales agents and service agents over the next several years. And this technology will greatly strengthen our ability around enterprise sales and partnership opportunities. For much of my career, when a company's year-over-year revenue growth and EBITDA margin added up to 40, we would say the company was performing well at a rule of 40.
This implies the company was balancing growth and profitability effectively. Over the long-term, I believe Goosehead can perform at a rule of 60 level, with a healthy balance of revenue growth rate and EBITDA margin. Very few companies can sustain these levels of financial performance over a long period of time but we believe our unique business model, huge addressable market and wide competitive moat make it completely possible. I want to thank the entire Goosehead team that worked tirelessly to make dramatic improvements to the organization. I couldn't be more pleased with the progress we've made over the past year and our strong positioning for 2024 and beyond to drive accelerating high-quality and sustainable growth. With that, let me turn the call over to our CFO, Mark Jones Jr.
Mark Jones Jr.: Thanks, Mark. Mark Senior and Mark Miller have both referred to our master plan. Let me take a minute to provide more details of that plan, what we've accomplished to date and what you expect in 2024. First and foremost in our plan was to refocus on profitable growth and remove any barriers to future profitable growth. When we kicked off this plan, corporate sales headcount was just over 500 but we were not delivering the productivity that could drive the level of margin we know this business should produce. We evaluated our management resources, our recruiting practices and our incentive structure and ultimately decided that the best step we could take would be to reset the size of the team with total productivity being the guidepost for the appropriate team composition, essentially a shrink-to-grow strategy.
We reached our productivity targets, a 56% increase at a headcount of around 250 and have been adding back productive capacity, with the only limiting factor being our absorptive capacity. We took a similar approach in the franchise network. The business was carrying too many underproductive agencies that were blocking other successful agencies from onboarding new referral partners, hurting our brand in the market and clogging up management resources. We shifted our focus from the number of operating agencies to what we view as the true measure of productive capacity, the number of producers and begin healing that network by investing in additional management resources, fostering engagement and incentivizing monthly goals where possible. We began aggressively culling underperforming agencies early in 2022 and have made great progress to date.
Through the combination of franchise culling and new producer onboarding, we transitioned from a peak of just over 2,100 producers to a much healthier 1,957 at year-end while seeing fourth quarter productivity gains of 30%. Because we were aggressive in executing to our plan in 2023, we are already seeing the strategic initiative bear fruit. Total new business production on the year was up 12%, while the average producer count company-wide was down 5%. As planned, we have reaccelerated growth in new business production, as total new business production in the fourth quarter was up 14% over the prior year. Re-establishing these high levels of productivity in corporate and driving significant improvement, particularly in the fourth quarter in the franchise network, allows us to shift our focus back to rapid and responsible growth.
Looking forward to 2024, we are excited to be transitioning into the next phase of our overall plan, faster and more profitable revenue growth. We will achieve that through a few specific strategic actions: meaningful growth in corporate agent headcount, particularly in the second and third quarters of the year, further investment in our franchise agent staffing program, for which we have significant demand and through productivity enhancements from a combination of strategically-timed training programs and increased leverage of our proprietary QTI technology across all of our sales and service functions which will drive new business productivity and client retention. On top of that, we expect to onboard additional strategic partnerships that further decouple our results from the housing market and allow us to reach new clients outside of our traditional go-to-market strategy.
All of those items on the backdrop of what we believe will be an improving macro environment as opposed to a deteriorating one give us tremendous confidence in our ability to drive a reacceleration in growth while expanding our margins. Moving on to some specifics for our fourth quarter and full-year results. For the quarter, total written premiums, the key leading indicator for future revenues, were $756 million, an increase of 29% from the year-ago period. This includes $584 million of franchise premiums, up 33% and $172 million of corporate premiums, up 18% for the quarter. For the full year 2023, our premiums grew 34% to just under $3 billion. While we have been experiencing tailwinds from carrier pricing actions, it is important to call out the secondary effect of that is less product availability in many of our key markets, such as Texas, California, Florida and New York.
The impact to new business productivity from carrier restrictions has more than offset the tailwinds from increasing average premium per policy. We believe this makes our significant productivity improvements, particularly in the franchise side of the business, representing 87% of our total productive capacity, all the more exciting. During the fourth quarter, our existing agency saw 23% same-store sales growth, driven by both improvements in the productivity of the existing agents and by increasing the average number of producers per franchise from 1.49 a year ago to 1.6% at year-end 2023. Policies in force grew 16% versus the year-ago quarter, again, as we expected. We anticipate growth and policies in force to accelerate in the second half of 2024, with further acceleration in 2025 as we continue through our master plan to onboard new producers, improve our service function to maximize retention, launch additional strategic partnerships and continue to add carriers to our QTI platform.
This very short-term slowdown in top line growth but not bottom line profitability, is just how we mapped out our plan 18 months ago. Total revenue for the quarter grew 10% to $63 million. And for the full year, total revenue was up 25% to $261 million. Core revenue for the quarter also grew 10% and was up 24% for the full year. As planned, we intentionally slowed overall premium growth and had a larger portion of our growth driven by the franchise network while reducing our average corporate agent headcount as we re-established our profitable base. Because we recognize only our royalty fee as revenue and the franchise distribution, this creates a lag from new business production growth to core revenue growth. As production continues to accelerate in 2024, we should see more meaningful revenue acceleration in 2025.
Contingent commissions for the quarter were $3 million versus $2 million a year ago. For the full year, contingent commissions were $13.7 million compared to $7.7 million and represented 46 basis points of total written premium. For 2024, we are assuming contingent commissions to be roughly 35 basis points of total written premium. Longer-term, we see no impediments to contingent commissions getting back to the historical average of 80 basis points of total written premium. However, we are remaining cautious and prudent in our near-term forecasting as the timing and pace of the recovery of profitability for carriers has uncertainty and is not entirely within our control. Cost recovery revenue for the quarter was $2.8 million compared to $3.3 million in the year-ago quarter.
For the full year, cost recovery revenue was $12.7 million compared to $12.3 million in 2022. For 2024, we are expecting cost recovery revenue to decline moderately from the 2023 levels as we have dramatically improved the health of our franchise network, resulting in fewer franchise terminations and less accelerated recognition of initial franchise fees for GAAP purposes. It is important to remember that this changes nothing from a cash basis, as we collect franchise fees at the time of training and they're non-refundable at that point but we are required to recognize the revenue over a 10-year period or the life of the franchise. As year-over-year franchise turnover normalizes, we would expect this line item to grow at a level consistent with franchise launches.
Franchise producer count ended the year at 1,957, down 7% from the year-ago period. High levels of terminations are masking what we believe to be strong growth in overall productive capacity for the franchise distribution. For the full year, we launched 209 franchises and terminated 396 franchises. With increasing resources we have put into our agent staffing program, we expect total agents placed into existing scaling franchises to increase in 2024, driving an increase in the average number of producers per franchise. An important stat for our scaling agencies: each time they add a producer, it improves the average productivity of everyone in their agency. This is an incredibly powerful tool for parabolic growth for both our franchises and us.
Adjusted EBITDA in the quarter was $14.1 million compared to $11.9 million in the year-ago quarter. For the full year, adjusted EBITDA increased 90% to $69.8 million. Our adjusted EBITDA margin for the full year increased about 900 basis points to 27%. At the beginning of 2023, we indicated that intermediate-term adjusted EBITDA margin goal of 30%-plus over the next 3 to 5 years. With strong execution in 2023, we now expect to achieve that goal closer to the shorter end of that timeframe. We plan to manage the business to consistently grow margin on an annual basis and continue to believe that, longer term, we can operate the business around a 40% margins. As of December 31, 2023, we had cash and cash equivalents of $42 million. Our unused line of credit was $49.8 million and total outstanding term notes payable balance was $77.5 million.
Given our low leverage levels, we have significant flexibility with which we plan to utilize to optimize our balance sheet in 2024. Our guidance for the full year 2024 is as follows: Total written premiums placed are expected to be between $3.7 billion and $3.85 billion, representing 25% organic growth on the low end of the range and 30% organic growth on the high end of the range. Total revenues are expected to be between $310 million and $320 million, representing 19% organic growth in the low end of the range and 22% organic growth in the high end of the range. Adjusted EBITDA margin is expected to expand for the full year. As a reminder, our philosophy on guidance has always been to be as transparent and accurate as possible. We guide to what we actually believe we will achieve during the year.
I can't thank our team enough for their hard work and discipline, delivering just what we set out to do in 2023 and I'm looking forward to doing that again in 2024. At this point, I'd like to turn the call back over to our Chairman and CEO, Mark Jones.
Mark Jones: As Goosehead marks 2024 as our 21st year in business, I'd like to take a moment to reflect on a few of our important milestones to date. After I spent 14 years at Bain & Company, my wife, Robyn and I founded Goosehead in October 2003. My view of the personal lines insurance industry was that it was irredeemably broken. It was old, slow moving, not client-centric and, honestly, quite boring. So we started with a fresh approach. Conceptually it wasn't complicated, just put the client at the center of our universe and build the business around them. We didn't start with someone else's business model and try and improve it. We started from scratch, a blank sheet of paper. My experience at Bain taught me that smart people will figure out great solutions to the most complex problems if we apply ourselves.
So I set out to build a team of really smart, albeit inexperienced people, all committed to doing something really special, to create one of the truly great American business success stories. After launching the business in 2003, we opened our first satellite office in Houston in 2009. In 2012, we sold our first franchise to JC and Patti Harter. In 2018, we took Goosehead public in one of the most successful IPOs of that year. Since then, our stock is up approximately 800% versus returns for the S&P 500 of a little more than 100%. In 2020, we generated over $1 billion in premium for the first time and expect to be well north of $3 billion this year. As the company grew, we invested in our management team with an eye to the future needs of the company, trying to have the right team in place to manage the business when it was 2x or 3x its current size.
The most important change has been Mark Miller joining us nearly 2 years ago as President and COO. He had previously served on our Board since 2018 and continues to do so. Mark has brought a deep reservoir of business experience and a maturity and discipline to our company that has resulted in stronger operating effectiveness and productivity and enabled much higher levels of profitability. Mark and I have worked very hard together to assemble what we view as the right senior leadership team at Goosehead and that team is working very effectively together. I have great confidence in their ability to deliver for our clients, business partners and shareholders for many years to come. Given our progress to date and the current state of the company, I feel like now is the right time for me to transition my role out of the day-to-day operations of the company so I can focus more of my time on other priorities in my life, such as family and philanthropy.
Effective July 1, 2024, I will transition to an Executive Chairman role. Mark Miller will become President and Chief Executive Officer at that time. I continue to be, by far, the largest owner of Goosehead stock. Our family owns about 1/3 of the outstanding shares and a large portion of our family's wealth continues to be invested in this company. I am fully committed to its success. I'm not retiring and I'm not going away. As I've said before, when I go away, it will be in a box. But going forward, my time will be focused on supporting our strategy development work, mentoring our executives and our most important franchise partners, serving as a resource and sounding board as needed for our leadership team and continuing to lead the work of our Board of Directors.
Our mission remains the same as it was when we started the company, to become the number one distributor of first lines insurance in the United States during my lifetime. I'm very excited about our tremendous foundation for highly profitable growth and the amazing runway in front of us. I am fully committed and look forward to continuing to be engaged and contributing to making Goosehead one of the truly great American business success stories. With that, I'll turn the call back to the operator to open the line-up for questions.
Operator: [Operator Instructions] The first question comes from Paul Newsome with Piper Sandler.
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