Thank you for standing by. This is the conference operator. Welcome to the Goosehead Insurance First Quarter 2022 Earnings Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there'll be an opportunity to ask questions. To join the question queue, you may press Star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing Star and zero. I would now like to turn the conference over to Dan Farrell, VP, Capital Markets. Please go ahead. 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 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 the 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 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 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 An archived version will be available shortly after the call ends on the investor relations portion of the company's website at www.gooseheadinsurance.com. With that, I'd like to turn the call over to our CEO, Mark Jones. Thanks, Dan, and welcome to our first quarter of 2022 results call. I'll provide a summary of our key results in the first quarter, and we'll discuss some strategic initiatives we have underway to drive continued strong revenue and earnings growth over time. Vice President Brian Pattillo will then discuss some of our technology enhancements related to the Digital Agent. Then Mark Colby, our CFO, will go into greater detail on the quarterly financials and our outlook for the rest of the year. We delivered very solid first quarter results demonstrating the incredible resiliency and consistency of our business and putting us in a great position for the remainder of 2022 and beyond. Our total written premiums, the key leading indicator of future revenue growth, increased 41% for the first quarter, where policies enforced were up 39%. Total revenue and core revenue were up 32% and 37%, respectively, an improvement over fourth quarter 2021 growth rates. Excluding contingent commissions and roughly $2 million of costs related to our Ascend agent conference, which did not take place in 2021, our EBITDA margins improved nearly 6 points in the quarter. As an organization, we remain laser-focused on delivering our three core drivers of growth. Onboarding of high-quality agents and franchisees, ramping up their production, and critically, client retention. Our renewal book continues to perform exceptionally well with client retention of 89%, up from 88% a year ago, and helping us deliver very strong overall premium and revenue growth. While the macro environment remains challenging for new business generation, I'm encouraged by the improvement in productivity we saw in the first quarter relative to the fourth quarter. The rate of growth, both franchise and corporate productivity, improved by mid-single digits versus the fourth quarter. While we cannot predict macro trends in the near term, our year-ago comparison on new business growth does begin to ease meaningfully as we progress through the year. I'm also encouraged by several other underlying factors which remain squarely in our operating control. First, our cross-selling and other referral efforts leveraging the Digital Agent remain in the early stages, but we're already beginning to see it bear fruit as we leverage our sizable book of business to drive existing growth with minimal acquisition costs. We have seen sequential monthly acceleration thus far in 2022 on our cross-selling measures. Second, given our still tiny share of the market with roughly 3% of mortgage transactions and less than 0.5% of U.S. premium, we continue our efforts to pivot to gaining market share through new referral partner relationships, leveraging additional technology to assist agents in these efforts. During the quarter, we activated 45% more new referral partner relationships than the prior year and saw a reactivation rate of referral partners that hadn't sent us a lead in over 90 days that was 3x the prior year. Lastly, our growing number of tenured franchises are continuing to scale their books of business, and our corporate agents continue to provide important support in this area. The benefits of this are just beginning to take hold, but will become increasingly material over time as their increasing levels of production convert to renewals, at which time both our revenue and earnings increase substantially. Moving to agent count, total franchises increased 41% and operating franchises grew 28% in the quarter. We've been focusing on addressing the elongation we've experienced in the launch process through increased engagement with signed but not yet launched agencies to drive faster launches. We've also shifted compensation for our recruiting team during the quarter towards successful launches of franchises to better align with this objective going forward. I'm encouraged with some of the recent KPIs we have seen, and believe this will translate to improved operating franchise growth as we progress through the year. In April, for example, we observed a 44% increase in launched franchises versus a year ago month, and scheduled May and June launches also reflect strong continued momentum. During the height of the pandemic, we temporarily limited terminations of some underperforming franchises, but have begun recently managing them out of our system using our traditional standards and thereby reducing drag on our resources. Accordingly, we experienced a higher number of operating franchise terminations and transfers during the quarter, which slightly reduced operating franchise growth. Importantly, the short-term decrease in operating growth has not materially impacted franchise premium growth, which was up 48% in the quarter. Terminated franchises made de minimis contributions to premium and revenue growth. Corporate agent growth in the quarter was up 35% to 490. As a reminder, we onboard the majority of our corporate agents in the second and third quarters of the year around college recruiting. Corporate channel plays a critical role in supporting the development of the franchise channel through process and tech development, training and mentoring. While we expect both the corporate and franchise channel to continue to grow, the corporate footprint is beginning to achieve a size where we expect to start achieving some scale benefits over time. We will remain active in recruiting new corporate agents, but we'll also identify strong corporate managers and producers that we feel could be exceptional owners and operators of franchises and that would be well suited to build their own sales teams and provide a pathway for them to become franchisees. A number of our most productive franchises are owned by former corporate producers. We do not expect this to have a material impact on 2022, but could provide efficiency and growth benefits in the intermediate to long term. The launch of our Digital Agent is significantly enhancing our clients' experience and improving our agents' ability to drive revenue beyond our existing go-to-market strategy. There is literally nothing like it in the market. The next phase of our Digital Agent work is to provide a full online quote-to-bind experience for clients who prefer to shop in this way. We recently launched our first of several carriers with the ability to go quote to issue, and Brian Pattillo will provide more detail on this in his remarks. As I've said before, we believe the potential of this platform is significant as we build out and continue to invest in digital marketing and actively explore possible partnership opportunities that would embed our digital agent into partners' client acquisition processes. While this new channel is in early stages of development, I have been very encouraged by some of the partnership discussions of which I have been a part. There is nothing remotely competitive to our value proposition in the market. I want to thank our employees and franchise agents for their tireless efforts in delivering another strong quarter in an environment that remains challenging. I'm excited for our many long-term strategic initiatives to take hold as we press along our highly enviable runway for sustainable high levels of both revenue and earnings growth. With that, I'll turn the call over to Brian. Thanks, Mark, and hello to everyone on the call. I'm excited to announce that in Q1, we enhanced our consumer-facing quoting platform to allow a complete online checkout experience for our first carrier partner. Consumers can now get the benefits of the choice model with the convenience of an all-digital experience. To understand the significance of this technology, it's critical to recognize how the extreme fragmentation of the U.S. personal lines market has created a cumbersome shopping process. There are currently over 400 insurance carriers, 150 of whom have greater than $100 million in premium. The complex regulatory environment and differences in carrier underwriting appetite have created wide pricing disparity where no one carrier is the right fit for more than a small fraction of the market. Even more rare is finding one option who is best for both home and auto insurance. Most consumers shop with single carrier platforms such as captive agents or direct-to-consumer options, but they often only check with three or fewer carriers before picking one. This means they have shopped with less than 1% of the market, virtually guaranteeing they end up overpaying for insurance or having to make coverage trade-offs. The best current solution is to contact an independent agent who can shop for them. The problem is that at most independent agencies, consumers are required to have a lengthy call to relay their information and then wait for a call back in the next few days with a quote. The modern consumer wants an easier and faster solution to quickly identify the insurance company who will provide the coverage they need at the best available price without having their data sold. That's exactly what our digital agent platform does. We have now launched our first carrier who allows consumers to go all the way through the process to buy home, auto, and umbrella insurance online. During the checkout process, consumers can make coverage adjustments, add discounts, choose a start date, and enter their payment information in less than two minutes after receiving the initial quote. This full quote to issue option is provided in instances where the carrier ranks as the best price for the client. Each client is assigned to an agent who will review the policy and be available to discuss any recommended adjustments. Every Goosehead agent has their own unique link and QR code to route clients directly to them through this platform. This enhanced capability allows our agents to provide clients a full omni-channel experience. Whether consumers prefer to speak with an agent the entire time, get a quote, and then finish with an agent, or buy online, we can accommodate each. We are working with other carriers to offer the full quote to issue experience, and we'll add several more over the course of this year. As Mark mentioned, this technology is built to connect and be embedded into any other platform. Any business who wants to offer insurance to their clients can now leverage our technology to do so. This can be done by creating a co-branded link to our platform from their site or by leveraging an API that enables partners to return quotes without ever leaving their platform. In many cases, these partners already have the data needed to get quotes, such as name, date of birth, and address, making the process even easier for consumers. Mortgage servicers could leverage this technology to allow customers to get quotes and switch out their home insurance policy renewal with a few clicks. Mortgage originators, builders, and real estate companies could allow home buyers to get their home insurance set up for closing without ever leaving their platform. Online fintech platforms and banks could now offer insurance to their clients without the complexity of having to build their own agency. We are starting to discuss this opportunity with several potential partners. The ability to provide a full online checkout experience powered by an agent-informed choice model is critical to the success of these opportunities. We are incredibly excited about the roadmap ahead for our Digital Agent, and we'll keep you updated on the progress in future calls. I will now turn it over to Mark Colby to review our Q1 financial results. Thank you, Brian, and hello to everyone on the call. For the first quarter of 2022, total written premiums, the leading indicator of our future core and ancillary revenue growth, increased 41% to $451 million. This included franchise premium growth of 48% to $341 million and corporate premium growth of 24% to $110 million. This growth is being driven by strong franchise new business generation, new corporate and franchise agent growth, and increased retention. Our book is also becoming increasingly diversified, with Texas accounting for 51% of the total written premium compared to 57% in the year ago quarter. This continuing trend should help with contingent commission volatility year to year and further diversify our overall book of business as we race towards our goal of industry leadership. Revenues were $41.3 million for the quarter, an increase of 32% from the year ago period. While core revenues were up 37% to $36.5 million, both revenue metrics growing faster than fourth quarter 2021 results. Ancillary revenue, which includes contingent commissions, was $2.2 million in the quarter compared to $2.8 million a year ago. The decrease driven by true up adjustments booked in 2021 related to 2020 contingencies. On a normalized go forward basis, we believe it is reasonable to assume around 80-85 basis points of contingents as a percentage of annual premium. However, any given year can vary significantly from this level. Franchise generated core revenue of $18.3 million during the quarter, an increase of 54% from the year ago period. At the end of the first quarter, we had 2,298 total franchises, up 41% from the prior year, and 1,268 operating franchises, up 28% from a year ago. Franchise core revenue growth is driven by strong new business production from franchisees, increased retention to 89% from our already industry leading levels, and growing franchise count. We remain encouraged by the increased contributions in revenue from our tenured franchisees as they continue to ramp their production and hire new sales agents within their franchise. As Mark indicated, we have increased our engagement with signed but not launched franchises and made adjustments to our compensation to align with the goal of improving operating franchise launch time. We are seeing encouraging signs in franchise KPIs that indicate improving trends as we progress through the year. Our April launched franchises were up 44% versus the year ago, and we are seeing nice momentum in scheduled launches for May and June. Additionally, it is critical that we focus our investments towards our most successful franchises. Part of ensuring that focus requires evaluation of our lowest performing franchises. As a result, the pace of our terminated and transferred operating agencies has returned to pre-pandemic levels of around 15% annualized attrition. We view this level of churn as healthy for a high-performing sales organization, and importantly, our churn continues to account for less than 1% of our new business generation. Corporate sales headcount at the end of the first quarter was 490, an increase of 35% from the year ago quarter. Corporate core revenues were $18.2 million in the first quarter, an increase of 23% compared to the year ago period. Corporate investments have been critical in scaling and improving productivity of franchise sales. While we will continue to grow both corporate and franchise headcount meaningfully, we do believe we can gradually realize some scale benefits over time given the size of the corporate producer force and the significant office expansion from 2021. We are also reaching a scale at corporate where we feel more comfortable proactively identifying corporate agents that would be highly successful at starting and scaling a franchise opportunity. Total operating expenses for the first quarter of 2022, excluding equity-based compensation, were $40 million, up 38% from a year ago. Compensation and benefits expense, excluding equity-based compensation, was $25.7 million for the quarter, up 33% from the year ago period. The increase in compensation and benefits is being driven by our ongoing investments in headcount across the organization, particularly the hiring of corporate agents in support of franchise channel growth, service agents to manage our largest revenue stream, renewals, recruiting and onboarding functions to continue our growth trajectory, and systems developers to ensure our technology is on the cutting edge for our clients and internal users. General and administrative expenses for the quarter were $13.5 million, an increase of 46% from a year ago. Growth in G&A expenses was due to an expanding real estate footprint, higher travel and entertainment expense, and marketing expenses around our Digital Agent initiative. Additionally, our annual conference, Ascend, which was not held in 2021, was approximately $2 million of expense. Excluding Ascend, our G&A growth rate would have been approximately 24%. Total adjusted EBITDA in the quarter was $1.3 million compared to $2.1 million in the year ago period. EBITDA margin was 3% versus 7% a year ago. Excluding contingent commissions, our margins expanded one point, even including approximately five points of margin impact from our Ascend conference versus the year ago period. We expect the many investments we made in 2021 to continue to scale nicely through the remainder of this year as new offices add producers and new opportunities from the Digital Agent, particularly in the areas of cross-selling and client referrals, begin to ramp up and help offset initial and ongoing development costs. As we have said previously, we believe it is strategically more important to focus on investing for growth now, which we believe will drive long-term margin improvement. At our high growth rates, most expenses are largely variable. However, this year we continue to anticipate significant growth in EBITDA and strong EBITDA margin expansion. As a reminder, the first quarter is seasonally our weakest earnings quarter of the year, given the historical seasonality of our insurance sales and lack of ability to recognize any material contingencies this early in the year. Net EPS for the quarter was a loss of $0.11 versus a loss of $0.02 in the year ago period. Adjusted EPS was $0.04 versus $0.03 in the year ago period. The reason for the wider gap between net and adjusted EPS is due to higher equity stock compensation, which was 16 cents of EPS versus five cents in the year ago period. The change in this non-cash item relates to the Black-Scholes valuation of options, which takes into account stock price on the grant date and historical volatility, among other inputs. More importantly, our option grants this year account for roughly 2% of shares outstanding, similar to historical grant levels. As of March 31, 2022, the company had cash and cash equivalents of $21.7 million. We had an unused line of credit of $24.8 million at year-end. The total outstanding term note payable balance was $98.1 million as of March 31, 2022. For the full year 2022, we are reiterating the company's outlook for premium and revenue. Total written premiums placed for 2022 are expected to be between $2.086 billion and $2.215 billion, representing organic growth of 34% on the low end of the range to 42% on the high end of the range. Total revenues for 2022 are expected to be between $197 million and $212 million, representing organic growth of 30% on the low end of the range to 40% on the high end of the range, driven by high levels of core revenue growth and historically average contingent commissions. We also continue to expect significant EBITDA growth and EBITDA margin expansion for the full year 2022. In what remains a challenging macro environment, we have continued to deliver strong and consistent growth and have started to see signs of margin expansion in the business. Additionally, recent KPIs, as well as an easing comparisons in the back half of the year, position us very well as we move through 2022 and beyond. I want to thank everyone for their time, and with that, let's open up the lines for questions. Operator? Thank you. We will now begin the question-and-answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We will pause for a moment as callers join the queue. Our first question comes from Paul Newsome of Piper Sandler. Please go ahead. Well, thank you, and good morning, or good afternoon, pardon me. Could you talk a little bit more about expenses and the run rate prospectively? You know, that seems to be the main consideration, I think, in terms of getting the EBITDA up for the remainder of the year, and maybe just maybe I'm wrong with that. But maybe you could talk about that. Is there You know, a run rate that's less than what we see in the quarter or anyway, I'll let you just answer the question. Thanks, Paul. Yeah, it's good to hear from you. So yeah, we do expect significant, you know, EBITDA margin expansion this year, and we've started to see that in the first quarter. You know, if you exclude contingencies, we saw EBITDA margin expansion of 1%. You know, further than that, if you exclude the annual meeting that we had, you know, it would've been 6% EBITDA margin expansion that we didn't have last year because of COVID. We're starting to see some trends there, and thinking bigger picture and longer term for the year. I think consensus has us currently around 19%-20% EBITDA margins, which, you know, we feel is a reasonable assumption without giving guidance for the year. Do we need? That second quarter was right. You can see that, you know, pretty substantially. Again, if you exclude contingencies, we do expect some significant margin expansion. If we don't have contingency expansion, would we not have margin EBITDA margin expansion? Well- Is it. Yeah. Remember last year was historically a very, very bad contingent commission year at 65 basis points. You know, we're hopeful that we can get back to at least the average of 80-85 basis points. I think even, you know, with contingencies as a percentage of premium still staying flat, we still think margins should expand given some of the scale we're seeing on our comp and G&A this year. Great. Thank you. I'll let some other folks ask questions. Appreciate the help. All right. Thanks, Paul. Our next question comes from Mark Dwelle of RBC Capital Markets. Please go ahead. Yeah, I guess, my question was more. My first question was more or less the same as Paul's. Just in terms of as you think about, looking ahead over the course of the year, are there any other, you know, notable items like your agency meeting and things like that, like one-time things that'll either be added into the mix or expenses you incurred in the year-ago run rate that we should consider in subtracting out of the mix as we think about, you know, EBITDA progression over the balance of the year? No, I don't think so. I think it's just continued scale. You know, last year, thinking back, we significantly expanded our office footprint. We should, you know, continue to grow into that cost throughout the year. Headcount costs should continue to scale for the business. So I don't think there's any other big drivers at this time. You know, one of the reasons we don't guide to earnings is because we wanna leave some flexibility there. So I'll leave some flexibility for any kind of interesting investments that we see coming along. You know, we'll be sure to, you know, bring those to everyone's attention as we learn of them. The annual meeting and during the first quarter is a big expense item, and that's done now, and there won't be another equivalent this year. Okay. That's helpful on that. As you think about the digital agency rollout, you know, are you able to? I guess the thing I've always wondered on that is really how you're able to tell that you're getting incremental new customers as compared to customers that you might would've just gotten in the ordinary course. Really, I guess what I'm talking about is channel conflict or cannibalization. Do you have a way that you can kinda track that and itemize the degree to which you're kinda getting distinct new business volume off of that channel? Yeah, absolutely. Remember, we're not really investing in digital marketing right now just to drive people to goosehead.com. It's a lot more targeted than that. Initially, the campaigns are, you know, cross-sell and client referral campaigns where, you know, if someone clicks that email and goes through the process, it creates a lead in Salesforce that we tie directly back to that. We're already seeing really good traction through the first quarter of the year and through April as well. It's not a material part of our kinda new business yet, but we feel like as that continues to scale throughout the year, it could contribute nicely. Again, with strategic partnerships- Do you have any sense, I mean. Go ahead, Mark. I'm sorry. Sorry. Also with these strategic partnerships that we've talked about, again, that's most likely 2023 before those are really material. We'll have ways to directly tie any traffic from those partnerships directly, you know, to those efforts. Mark, this is Mark Jones. The corporate partnerships, we're actually really excited about that as a new channel that could create a really attractive growth vector. You know, we created, we invented this digital agent. There is nothing like it in the marketplace. No one can even come close, and you've seen the demo of it. We have put one of our most senior sales leaders in charge of building out a corporate partnership channel where we would embed that digital agent in other companies' client acquisition processes. There's a lot of companies that would really like to tangentially get in the insurance business without getting in the insurance business, and this provides a way to do that, create more monetization opportunity for their clients. you know, as we've had discussions with some pretty large organizations, you know, I shouldn't really admit this in a public forum, but you know, we're learning how truly differentiated our product offering is. Sort of a number of these folks had thought, well, you know, maybe I can, maybe I can get in the insurance business myself, and Goosehead will make it easy. I can create a franchise and, you know, sort of deal with my sort of new client acquisition opportunities that way. The key thing that they don't have is deep local market expertise and product. We have that across the country. Literally, nobody else does that has a large scale agent force that can handle leads that would come in at a, you know, at a big scale. We've got 2,500 or so agents scattered across the country with deep expertise and deep products in every market. I'm just you know, when I look at this business, I look at it like I did when we got into the franchise businesses. This is an opportunity to really create another growth vector. You know, as you know, the sort of negotiations and the implementation of these things take a little bit of time. We have a few small partners that we're working with now that we're in implementation, and we're gonna kind of learn what works, how to optimize the value proposition. We are really excited about that opportunity, that potential there. Okay, thanks for that. That's a great update. I'll stop there. Thanks, Mark. Thanks, Mark. Our next question comes from Meyer Shields of KBW. Please go ahead. Thanks. Two quick questions. First, I think, Mark, you mentioned that there was something of a catch-up on underperforming agents or franchises, I should say, terminations in the quarter. Is there any way of quantifying that? Like the impact on- Yeah, really just with the increase in our termination rate. You know, the last year, the challenges they're facing since the COVID cloud has you know, lifted. For all intents and purposes, I feel like we can start getting back to our high standards and working these folks up or out. During the first quarter, we saw that result in our attrition rate going from 10% to more normal 15% kind of annualized rate. Okay. There wasn't like, Again, Meyer, these. Go ahead. ... these franchises are really not contributing anything in terms of new business. These are people typically that aren't devoting full-time efforts to their business, and we're cleaning them out so that they don't absorb resources of the company anymore. Yeah, to Mark's point, they make up less than 1% of the new business that's being produced. Okay, that's helpful. They drag a lot more than 1% of the resources. Again, I feel like it's the right call. Yeah. No, no doubt. That's helpful. I'm just trying to sort of quantify the improving productivity that Mark, you talked about in the franchise channel if we take that component out or if that's a reasonable way to look at things. Our quarter trends that we saw, you know, productivity can vary throughout the year. You know, we disclose that once a year on our 10-K, and we'll continue to give updates throughout the year. You know, we're really encouraged by the franchise productivity, you know, especially among our tenured cohorts, the continuing year after year, even though the ones 2015 and prior contributing year after year to growing their contributions to new business and same-store sales growth as well. Okay, perfect. Thank you. Thanks, Mark. Our next question comes from Ryan Tunis of Autonomous Research. Please go ahead. Hey, thanks. First question, I guess, relative your guidance in the total written premium, your full year guidance this quarter, it came in at kind of the high end of what you're thinking, right north of 40%. When we think about, you know, the headwinds versus the tailwinds I think that investors discuss or, you know, the headwind clearly is, you know, mortgage environment, real estate environment, but there's also the tailwind from the, you know, firm pricing market in personal lines. When we look at the total written premium growth kind of at the higher end, is it safe to conclude that the, you know, the hard market and personal lines is having more of a positive impact than the, you know, the negative stuff going on the real estate side? I think we're seeing. You're correct. We're seeing, you know, a harder market, but we've also increased our client retention from 88%-89%. You know, net-net, maybe it's an incremental positive. It's something that's too early in the year at this time to kind of update our guidance for the year, and we'll have some additional thoughts on that, in the second and third quarters. Yeah, we're seeing positive trends there on the premium side. also in terms of dealing with the headwinds, though, I mean, we're activating a lot more referral partner relationships and was it up 45%? Yeah. 45% of new referral partners during the first quarter who had never sent us a lead before, and then we reactivated, meaning these referral partners hadn't sent us a lead in over 90 days. We reactivated three times more than we did in Q1 of last year. Again, when really the housing market impacts our total revenue but maybe it's only about 20% of our revenue that's exposed to the housing market. When we see kind of declines like we've seen, we pivot, we go to gain more share, and we're starting to see the fruits of those efforts pay off. We also, you know, as we've discussed in the past, we feel like we can mitigate some of those housing market headwinds with the cross-selling campaigns, the Digital Agent stuff that we're working on. Again, the new channel partnerships that Mark mentioned earlier. All these things are will help offset that over time. Got it. I think in your prepared remarks, you talked a little bit about acceleration of franchise launches from implementation to operation in the coming months. Can you just give us a little bit more detail on that dynamic, please? Thanks. Sure. You know, we identify, like the rest of you, the backlog that we saw growing the last couple of quarters and took some steps during the first quarter to help mitigate that. We redesigned some franchise sales business processes or sales processes. We redesigned their compensation to align more with the launches and the signing of a contract. You know, we knew that those weren't gonna pay off this quarter necessarily, but we're starting to see those pay off in the second quarter with April launches up 44% year-over-year. May and June scheduled launches are continuing the momentum there. Again, it might not show up in the operating franchise count number immediately. We need a few more quarters of that. We're also kind of working to manage out some of the underperforming franchises as we've discussed. You know, really the operating franchise number there is just one piece of the puzzle. We need well-performing, healthy franchises in our organization, not just the large number of franchises. That's continue to be a focus of ours on investing in the best franchises and evaluating the lowest performing franchises. Thank you. Thanks, Ryan. Our next question comes from Josh Shanker of Bank of America. Please go ahead. Yeah, thank you for taking my question. Can we talk a little more about this elongation versus closed franchises versus the possibility that with the economy reopening and people maybe not working from home as much and wage inflation, that there's people who sign contracts with you that just don't plan to open a Goosehead franchise? I mean, if we're trying to put things in different buckets, you know, how much of the lack of conversion is people elongating? How much is franchise actually closing? And how much is maybe you haven't been notified that they're not actually going to open a franchise? Yeah. We don't terminate a franchise contract until we're 100% sure that they're not going to launch. To my point earlier, that's been a priority and a shift in focus for the franchise sales team to continue to reach out to the backlog of folks that we've signed historically and haven't yet launched in our system. We're actively engaging with them to either, you know, launch in our system or we're gonna completely restart the recruiting process over with them, which will require a new contract. You know, historically, there's always been, you know, some percentage of signed contracts that haven't launched. We might see that increase a little bit with our kind of COVID signings during 2020 and 2021. I think importantly, we don't feel like that's going to slow down our ability to launch franchises throughout the year. We're continuing to, you know, not only chase that backlog but also recruit brand-new agencies and franchises in the system. We feel like, you know, the 2022 signings will continue to make up a large portion of the operating franchise growth this year. Prior, as I'm understanding you, the franchise sales force was prior compensated on the number of contracts that they got signed rather than the number of open franchise, and now you're changing the compensation model? It was a mix, but we've shifted that mix to, you know, much more heavily weighted towards the launch than the signing. Again, redesigned. Okay. the sales process as they go through to make sure that if you sign a contract with us, you are planning to launch within a reasonable timeframe in our minds. Makes sense. As you're closing these franchises, you get to accelerate the amortization of the initial franchise fees to the present. As you close them, I guess you're going to see a surge in earnings. I think we can see it in those numbers. They're up dramatically. To what extent are you overearning on the initial franchise fee line item, and how long will that persist for? Well, in my mind, we're significantly under earning on the initial franchise fees given the change to ASC 606. Those franchise fees are collected when they come to training. They're fully earned when they come to training and non-refundable. Under the new revenue recognition, we just have to extend that over a 10-year period. Again, in my mind, those should be recognized upfront, but GAAP feels a little differently. I don't think there's any kind of, you know, surge or anything in our franchise revenue from those terminations. It's immaterial. It's getting back to the normalized level as well. It's not like, you know, we saw terminations and attrition go up to 50% or anything. It just got back to normalized levels. This is my last one, I promise. For a franchisee who's just not working out with you, who thought that they might write a few policies and get a book of business and enjoy a stream of renewal income, and you say, "Look, you're not working anymore. We're gonna shut you down." He was kind of looking to get some revenue stream for lifetime source, so to speak. Is there any legal action from the closure of franchises that people feel like their franchise was closed, and they didn't understand or they didn't know, or they feel that they have rights that you can't force them to close? Maybe that doesn't happen at all. Josh, typically, when we terminate, if there's any appreciable policies in force, there's a very active secondary market for that book of business internally at Goosehead with other franchise owners. They're easily able to sell that and monetize it. Yeah. Most of the time it's not like us just forcing them out or we're helping them come to a realization that they're not successful in our model for various reasons, and the best course of action for them is to either sell their book of business, or walk away. Well, I appreciate all your answers. Thank you very much. Thanks, Josh. Our next question comes from Mark Hughes of Truist. Please go ahead. Yeah, thank you. Good afternoon. Hey, Mark. Did you provide a number for the onboarded franchisees in the quarter, or should we get that out of the queue? Yeah, that will come out in the queue. You don't care to give us a sneak peek, perhaps? No, not till tomorrow. Okay. Very good. In the discussion with the potential partners, I think you said you're already in some discussions with maybe smaller players that'll create another growth factor for you. What does the economic model look like in that case? You know, presumably those partners are wanting to participate in those commissions. How do you envision that model developing over time? It's deal specific. We know what economic model works for us. You know, we're committed to building out a business that has more attractive at least as attractive or more attractive margin profile than the existing business. Those deals, they're all different, and we are in implementation with some smaller partners. We're talking to some really big ones. You know, the economics will be what we end up negotiating and with different partners, different things matter. We've got to be sort of congruent with what they need. Yeah, different partners gonna have different quality of leads that we'll have to take into consideration as well. Understood. You had mentioned how you're kind of identifying corporate agents that you think would be successful as franchisees. When you make that transition, I don't know if it's gonna be material enough, or the details have been worked out, but when they make that transition, how does that impact the P&L? For their existing book of business stays in-house. We do allow them to keep their kind of lead sources and their referral partners, but they start over from scratch when they leave. On that existing book of business, we do see a bump in our bottom line. Going forward, the franchise economics are richer. There is some consideration for the overhead that it takes to manage that person or and everything else that don't exist if they own the franchise. any sense of how material, you know, what kind of numbers? Is that, maybe a few points- Not material. -here and there? Or- Not material. No, not material at this point. Again, there's as we go on kind of in future years, really, it might become a more and more material portion of the franchises that we launch. Specifically for 2022, it is not. It won't be material for 2022, but if we look at the kind of the scale of our corporate agency, we really do feel like we're in a position where we can be a lot more open to enabling people to have that career path of becoming a sort of a franchise owner. Over time, it actually could be quite material. You know, what we've seen is corporate producers that have opened franchises are among our very most successful. They, when they open, they're opening at a dead sprint. There's no ramp up. They're opening at a dead sprint, so they're great partners. It also creates a very lucrative career path for them that we can use in recruiting to continue to kind of manage up the gene pool of our corporate agents and continue to get better and better people in the door and get them to stay with us longer. Great. Thank you. Appreciate that. Thanks, Mark. Our next question comes from Pablo Singzon of J.P. Morgan. Please go ahead. Hi, thanks for squeezing me in. First question is, within your homeowner's book, what percentage of new sales is really due refinancing versus purchase mortgage originations, and what was that mix last year, and how do you see it this year? Yeah, low single digits, and that's been consistent for a long time. Really, we're not seeing any kind of housing market impact specifically related to refinance activity in our new business. Got it. Second question is, have you seen wage inflation having any impact on your recruitment efforts and any impact that you're seeing in your expense base today? No, we have a pretty good, I'd say very good and lucrative, compensation model for our company across all departments, you know. I don't think we're really feeling that. You know, it's not a company historically where they can't go out and get a better job day one than make more money. That's not our value proposition to them. Our value proposition is three, four, five years in with the renewal book of business. That's where you really start to earn the real economics that are competitive across, you know, several different industries. I really haven't seen that to date. I think something we consistently keep an eye on and we'll continue to monitor that. Today, really, you know, I think it hasn't shown itself yet. Yeah. I will say the flip side of that, how does our employee value proposition look with our service center? I'm going down Friday to visit our service center in San Antonio, and our employee value proposition down there is unbelievable. We've got almost no turnover. Great. It's a great base of potential employees. There's a high number of them with Spanish-speaking skills. We're really excited to grow that San Antonio operation and make it a large service hub. Labor market conditions down there are wonderful for us. Got it. Thanks for your answers. Thanks, Pablo. This concludes the question and answer session. I would like to turn the conference back over to Mr. Jones for any closing remarks. Thanks, everyone, for joining us on the call today, and have a good evening. This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.