Hello, thank you for standing by. Welcome to Goosehead Insurance second quarter 2023 earnings conference call. This time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Ask a question during this session, you will need to press star 11 on your telephone. You will hear an automated message advising your hand is raised. Withdraw your question, please press star 11 again. I would like to turn the call over to Dan Farrell, VP of Capital Markets. Sir, you may begin. 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 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 SEC filings for more detailed discussion of the risks and uncertainties that could impact future operating results and financial condition of Goosehead Insurance. We disclaim any intention or obligation to update or revise any forward-looking statements, except to the extent required by applicable law. I would also like to point out that during 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 excluding 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 An archived version will be available shortly after the call ends on the investor relations portion of the company's website at goosehead.com.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. Thanks, Dan. Welcome everyone to our Q2 2023 results call. I'm very pleased to report that we continue to successfully navigate challenging industry conditions with a sluggish housing market and an extraordinarily hard insurance market. Meaning, we've been working both smarter and harder, but have delivered strong, profitable growth. I'm also happy to say that the decisions we've made and actions taken over the last year to restructure our business are helping drive strong top-line growth, producing the planned strong, and we believe, sustainable improvements in profitability. Summary results for Q2 include 31% revenue growth, 27% core revenue growth, 36% growth in premium, and adjusted EBITDA margin expansion of 900 basis points to 33%. These results underscore the strength of our strategy and quality of our execution, focused tightly on the distribution link in the value chain with a powerful choice model. In our 20 years in business, we've seen many challenging circumstances. Each time, we've applied the same maniacal, external focus on our clients and the market. While our competitors circle the wagons, wring their hands with worry, and focus internally, we've been aggressive and externally focused on capturing share. One example of our proactive approach to industry turbulence is broadening our product portfolio. While reduced product access is a headwind in some regions, our choice model allows us to seek out carriers that are looking to gain share and distribute through us at scale. So far this year, we've onboarded 24 new carriers to our platform. Our technology, scale, quality control, and unique human capital make us an attractive partner for any carrier looking to grow. Our agents remain completely engaged in acquiring new Referral Partners and penetrating deeper with their existing relationships to bolster lead flow. Because of this laser focus, we have agents today hitting all-time new business production highs, notwithstanding external challenges. While we're not unaffected, we are significantly insulated from market volatility that an underwriter or a single carrier product platform is experiencing today. When a single product platform decides to pull out of a market, their agents are left with nothing to sell. Most carriers continue to struggle with the impacts of the Covid Black Swan event and the plague of inflation driving higher claims costs. We are hopeful that the Fed can soon complete its job of taming inflation. The decision we made long ago to avoid entering the business of holding risk is paying off powerfully now. While we acknowledge the challenges we're facing, we don't allow them to become an excuse for weak performance. Market turbulence only serves to magnify our competitive advantages. The restructuring of our corporate sales team has yielded extraordinary results. Productivity is up 57% in the quarter compared to Q2 2022. This growth is despite the fact that we launched seven new franchises in the quarter from among our most productive corporate agents. In June, we began onboarding new agents, primarily from college campuses, restarting capacity growth again. Feedback from the corporate sales management team has been that this group of new agents may be the strongest in corporate history. The class that completed training in June this year is outpacing the results of their counterparts from 2022 by more than 65%. We're moving into the later innings of the restructuring work of our franchise business. Our focus has been to move unproductive franchises out of the system so we can devote our finite resources to those that are likely to produce the best yield. We still have some more work to do in this regard through the remainder of the year. We also want to be fair to people. That process takes some time. That being the case, I think we can safely say that the heaviest lifting is now done. We'll continue the cleanup work over the next few quarters. There are three key levers that drive future franchise capacity growth: adding new franchises, recruiting producers into strongly performing agencies, and converting corporate agents into franchisees. Franchise developments team is the first priority, is the first lever, adding new franchises. They have been focusing on specific high priority geographic areas where we believe new franchises could be the most successful and help our carriers gain share in markets they want to grow. With each passing quarter, we become more effective and efficient in developing strategies to attract the right candidates. That, coupled with our improved digital marketing strategy, has generated a much more cost-effective go-to-market strategy. This strategy is resulting in fewer but higher quality new agencies launched that we believe will be significantly more productive and onboard producers more quickly. Lever number two, adding producers to successful franchises that are ready to scale, is proceeding nicely and according to plan. While the removal of underperforming agencies has had a muting effect on the growth of total producer count, the average producer per agency is climbing. As a reminder to what we've said in the past, these producers have tended to be almost twice as productive as an average new franchise. Lever three, conversion of corporate agents to franchises, is also going according to plan, and we intend to launch about 30 franchisees this year from corporate. It is important to remember that these have performed like new agencies on steroids and continue to produce at much higher levels than an externally recruited franchise. This source of the most capable franchise candidates is an example of a very deep competitive moat that is exceptionally difficult for competitors to mimic, because nobody has a large, super productive corporate agency like ours. Momentum for the longer term is very strong in this channel of candidates. Our recruiting pitch on campus is powerful, as we describe the account executive job as essentially a paid apprenticeship that can lead to a candidate opening their own Goosehead franchise just a few years out of college. We expect this to become a very long lever over time. While we're pleased with the progress we've made on average franchise productivity, the gap between a corporate producer and a franchise producer would indicate there's still significant upside in franchise productivity. We will continue to attack this with more robust training programs, investment in client and agent-facing technologies, launching more agencies out of our highly productive corporate agents and managers, and hands-on culture building activities in the field. With our emerging quote-to-issue technology becoming a reality, we anticipate that corporate partnerships will become another channel with extraordinary growth potential over time and be highly scalable. Mark Miller will talk more about this opportunity in a minute. We've made significant progress with our QTI efforts through the second quarter and expect to launch Travelers, Nationwide, and Clearcover Auto Products during the third quarter. As we launch additional carriers, our agents are able to be more efficient as QTI significantly reduces the time it takes to bind a policy. During the second quarter, we announced our partnership with Vivint Smart Home as a new lead source to supplement our existing go-to-market strategy and to leverage QTI over time. Mark Miller will also provide more details on this exciting opportunity. Our business continues to generate significant cash flow, and we paid down an additional $10 million of our term loan during the quarter with cash flow from operations. Mark Jones Jr. will address some of our balance sheet management opportunities in his section of this call. We are incredibly pleased with the results our team's been able to deliver in both a slow housing market and a challenging product environment. We believe that both of these headwinds are temporary, and when we come out the other side, we expect to be a tightly coiled spring with significant future revenue and earnings growth embedded. With that, I'll turn the time over to President and Chief Operating Officer, Mark Miller. Thanks, Mark, and good afternoon, everyone. As I look back on the past year, I'm proud of the business decisions we made and the speed with which our team has executed. maximizing revenue and profitability has required us to focus intensely on the productivity of our corporate and franchise agents. The core of our strategy was simply to drive quality across the organization. I believe we have made meaningful progress in driving quality in almost every aspect of the business, but there is no area more apparent of this progress than in corporate sales. Last fall, we raised productivity expectations across the corporate sales team. As a result, many agents significantly increased their productivity levels. Agents that could not meet these expectations exited the company. These were not easy decisions, but they allowed us to focus on sharpening the skills of our best team members and driving material productivity improvement. Net-net, we dramatically increased productivity per agent and maintained overall production levels with much less cost. From a productivity perspective, these efforts are already starting to yield significant dividends. Productivity per corporate agent has increased by 57% since this time last year. These record levels of productivity were achieved while transferring approximately 25 of our highest producing corporate agents to franchise ownership. While we're optimizing corporate sales productivity, we're also preparing for growth by strengthening and refocusing our recruiting function and reestablishing the hiring standards that historically set Goosehead apart. Now that we've built a healthy and thriving corporate sales organization, we are once again geared to hire agents rapidly over the next several years. This summer, we are quickly adding back top-tier college recruits to the corporate sales team. These hires all met our new rigorous hiring standards. This fall, we are now planning to accelerate our recruiting efforts on 12 college campuses to bring in even more high-caliber talent. We anticipate ending the year at approximately 320 corporate sales agents. It's an exciting time to be part of this refreshed, high-octane corporate sales environment, which gives us confidence in our ability to successfully absorb and ramp these agents. I could not be more pleased with the progress that Brian Pattillo and his team of talented leaders have driven in a very short period of time. On the franchise side of the business, we're also making great progress. Overall, we're pleased with the health of our franchise community, but there are a few areas where we would like to focus on and strengthen. Much like we did on the corporate side of the business, we're positioning the company for long-term, sustainable growth. To achieve this, we are being much more selective in the franchise recruiting process and targeting particular geographies with low penetration and favorable market opportunity. We are removing existing franchise owners that fail to follow the model and put in full-time efforts. We are also helping existing successful owners with hiring and scaling their businesses and converting some of our best corporate agents to franchise ownership. We made strong progress in removing underperforming agents from our system, but there is still more work to be done over the next several quarters. Our new initiative, Recruiting Producers for Franchises, is evolving quickly and starting to take shape. We ended the quarter with eight recruiters and one manager fully dedicated to this effort, and we will expand this team as demand continues to grow. During the quarter, 119 agents were added to the existing franchise network through a combination of in-house recruiting efforts and franchise direct hires. We have the demand. We're focused on hiring velocity. Additionally, we remain very excited about our efforts to convert highly productive corporate agents to franchises. We converted seven agents to franchises in the quarter. They continue to launch at much higher productivity levels than traditional franchises. To give an example, I'd like to highlight Colby Seamster, a high-caliber corporate agent who is based in our Columbus office. Colby has been with Goosehead for 17 months and averages around 100 new policies per month. He has mastered our model by having 25 active Referral Partners that send him over 50 leads a month. Paired with a high close rate, Colby Seamster consistently delivers new business revenue results of over $30,000 per month. Colby Seamster has been approved to launch a franchise in September. Releasing Colby Seamster from corporate to launch a franchise is not only good for him, it is also good for us. For Colby Seamster, he will generate higher commission splits and have tremendous career opportunity being a business owner and having a clear runway to a 7-figure income. For us, it will extend the life of Colby Seamster's career with Goosehead, and it will also highly incentivize him to replicate himself many times over by hiring his own producers, which we believe will yield significant and accelerated growth. We look forward to seeing what Colby Seamster accomplishes over the next several years. Turning to technology for just a moment. Auto policies for three major carriers will be QTI-enabled for all states in the third quarter. We expect this momentum to continue into the fourth quarter, with additional carrier implementations for both home and auto lines of business. As a reminder, QTI drastically reduces the time required to quote and bind policies, which will enhance the productivity of our agents while significantly improving the purchasing experience for our clients. Additionally, we integrated ChatGPT into Aviator, our internal rater, to assist agents with general insurance questions and state-specific guidelines. As we continue to observe the outcomes of our sales and service agents, we may expand this functionality toward the client to help them navigate the complexities of the insurance market. In the second quarter, we also initiated the Vivint partnership and completed the purchase and integration of their existing book of business. Converting high-volume enterprise leads is a new and exciting sales motion for Goosehead. To fully capitalize on this opportunity, we're building new technological capabilities that allow us to manage and convert leads at much higher levels than we have historically experienced. We're continuing to operationalize the Vivint partnership nationally, and we will expect to have lead flow and conversion rates optimized later this year and into 2024. I'm also excited about the existing pipeline of potential partnerships we are currently working and look forward to providing you more information on future calls. I'm confident the changes we are implementing will lead to stronger, more sustainable revenue growth and increasing levels of profitability in 2024 and beyond. I want to thank our entire team for their tireless efforts as we continue to harden our processes and operating platform for the future. Now I'll turn the call over to Mark Jones Jr., our Chief Financial Officer. Thanks, Mark. We are very pleased to be delivering exceptional top and bottom-line results in an increasingly challenging operating environment. I'm incredibly proud of the discipline and grit of our team as they navigate through the unprecedented P&C product challenges. We have continued to gain share. Our runway remains massive. We will still be under 1% market share of this $390 billion industry by year-end. We've done a great job expanding our lead flow and gaining market share in this tough environment. The current state of the P&C product market is more than offsetting the benefits we're getting from higher rates as carriers intentionally slow new business in favor of profitability. Importantly, we believe all the actions we have taken to address the product availability and continued real estate headwinds are making us a significantly stronger company that will be a tightly coiled spring for growth as macro factors improve. Just to highlight a few of our operating improvements that will provide ongoing benefits. Our agents have improved sales processes and activated new Referral Partners at an unprecedented rate. We expect to see tremendous benefit when the real estate market volume reaccelerates and product options expand. We currently account for about 4.4% of new mortgage real estate transactions in the U.S., up from 3.7% a year ago. While premium increases will likely level off as market conditions improve, we should be writing a higher volume of business at increased premium levels, further enhancing productivity and profitability. We proactively slowed talent addition in select states, such as California and Florida, to align productivity and opportunity for producer growth once more product is reopened in those locations. We've worked diligently to add new viable carriers that help offset the pullback and underwriting appetite from some of our larger existing carriers. This increased product will further enhance our ability to serve clients as the market improves. Our agents are using the current market conditions to generate new lead flow and gain access to their clients earlier in the home closing process. The value proposition of our choice platform has never been stronger versus our competitors. Moving to our results. We have been delivering exactly what we set out to do a year ago. We have significantly improved our profitability and agent productivity. While there's more work to be done, particularly on franchise productivity, we're now in a position to add producer capacity, as evidenced by our strong recruiting class in June and expected hires through the balance of the year. Our deliberate actions over the past year, along with the current product environment, will, as expected, result in a temporary slowdown in our premium and revenue growth numbers through the third and fourth quarters. We should continue to see very strong earnings and cash generation as a result of our expense discipline and focus on quality. As we add back to our producer count and continue to drive productivity improvement, we expect to see a reacceleration of revenue and premium growth throughout 2024. We expect to be achieving these top-line results on a much higher and still improving profitability base. We remain confident in our ability to deliver roughly 30% premium CAGR through 2027 and EBITDA margin in the range of 30% between 2025 and 2027. Over the longer term, we maintain the belief that our margins can be in the range of 40% as the business matures and the renewal book becomes a larger portion of total premium. Our premium in the second quarter, the leading indicator of our future revenue, increased 36% to $767 million over the prior year period. This includes franchise premium of $588 million, up 40%, and corporate premiums of $180 million, up 22% from a year ago. Our policies in force at quarter-end were 1.4 million, up 21% from a year ago. Total revenue for the quarter was $69.3 million, an increase of 31% from the year-ago period. This includes core revenue of $61 million, up 27%, driven by continued high client retention, improved productivity per agent, and pricing tailwinds. As we continue to launch more corporate agents into franchises, this creates a near-term trade-off on revenue growth because of the differences in revenue recognition.... but significantly benefits longer-term revenue and profitability as the productive life of the agent increases, and they duplicate themselves through producer hiring. Contingent commissions in the quarter were $4 million, compared to $1.9 million a year ago, as the timing of growth-based contingencies are typically more uniform as compared to underwriting profitability contingencies. We continue to expect full-year contingencies to be around 40 basis points of premium for the full year. In the franchise network, operating franchises were steady in the quarter as we continued to average of the gene pool by removing underperforming franchises and replacing them with those of significantly higher quality. Our best franchise agents have similar productivity to our top corporate agents, and the agencies we are removing from the system contribute almost nothing to new business production. Total franchise producers at the end of the quarter was at 2,069, up 3%. We expect both operating franchise and producer count to trend flat to moderately down year-over-year through the balance of 2023. Then accelerate in 2024 as we finish our restructuring work in the franchise business and focus on greater franchise productivity gains. The productive capacity of our agent workforce should increase at a rate faster than the total producer count as we are adding back higher quality producers to the system versus those that are being removed. We fully expect the combination of producer growth, productivity improvement, and retention will support the longer-term premium growth objectives. Shifting to expenses, we continue to perform well as we focus on expense discipline and reinvestments for growth. Total operating expenses, excluding equity-based compensation and depreciation and amortization, were $46.2 million, an increase of 14% compared to the year-ago quarter. Compensation and benefits, excluding equity-based compensation, increased 19%, driven by our investments in partnerships, technology, marketing, and service functions, partially offset by rightsizing our producer count versus a year-ago. Other G&A expense, excluding one-time impairment charges, was $13.7 million, up 11% from a year-ago. Bad debts improved to $900,000 from $1.7 million, as we have substantially improved the quality of our signed but not yet launched pool of franchises. During the quarter, we consolidated some of our existing office space, resulting in a one-time non-cash impairment charge of $3.6 million. We have continued to improve the margin profile of the company, generating five consecutive quarters of EBITDA margin expansion and seven consecutive quarters of EBITDA margin expansion, excluding contingent commissions, a fantastic accomplishment for the whole team. Adjusted EBITDA in the quarter was $23.1 million, up 85% from the year-ago quarter, while adjusted EBITDA margin increased to 33% from 24% in the year-ago period. For the remainder of the year, we expect more modest margin improvement as we ramp investments for growth in a number of areas, including corporate agent headcount, marketing, and technology. As of June 30, 2023, we had cash and cash equivalents of $19.1 million. Our unused line of credit was $49.8 million, and total outstanding term notes payables balance was $81.3 million at quarter end, as we paid down an additional $10 million in principal. We are managing our balance sheet very conservatively, given the insurance market conditions. As the market normalizes over what we expect will be the next 12 to 18 months, we will be evaluating options to make our balance sheet more efficient by increasing our debt to a reasonable but conservative level. Our guidance for the full year 2023 is as follows: Total written premiums placed for 2023 are expected to be between $2.89 billion and $2.98 billion, representing organic growth of 30% at the low end of the range and 35% at the high end of the range. Total revenues for 2023 are expected to be between $260 million and $267 million, representing organic growth of 24% on the low end of the range and 28% on the high end of the range. We expect full-year adjusted EBITDA margin to expand over the full year of 2022. Again, thanks to our team for their hard work and focus in delivering such strong financial results as we continue our journey to industry leadership. With that, let's open the line up for questions. Operator? Thank you. Ladies and gentlemen, as a reminder to ask the question, please press star one on your telephone and wait to hear your name announced. To withdraw your question, please press star one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Matt Carletti with JMP. Your line is open. Hey, good afternoon. Hey, Matt. Just have a quick one. You guys were, you know, covered a lot of what I had on my mind. It was, it was very thorough commentary. I guess what I want to ask is a little longer term. You touched on the Digital Agent and some of the quote-to-issue, you know, progression that's being made. As you look forward, you know, kind of how do you see the Digital Agent evolving? I mean, I know we're not expecting Super Bowl commercials and things like that, but as we, as we think forward as a tool for you guys to use, you know, how do you, how do you envision it as more kind of large national carriers get on quote-to-issue? You know, it's a, you know, 24 months to 36 month sort of question, not a next quarter question. You want to start, I'll add on? Sure. I think there's a lot of ways that that can evolve over time. Right now, it's a fantastic marketing resource for our existing agents to hand out to RPs to generate new lead flow. We're getting a substantial amount of leads through the Digital Agent. It's about optimizing that process and creating an inbound sales motion. Our team right now is very, very good at hunting and generating new lead flow, which means that they're not as good at handling an inbound lead as they could be in the future. There's plenty of room for us to go with that respect. The carrier product environment right now, as well, the carriers are not necessarily looking to make investments in generating new leads and new distribution networks. They're focused all on underwriting profitability. As that changes over time, we should see significantly more speed and ramp in the QTI projects as well. I'm very pleased with the way our technology team has been able to add carriers onto the platform, even in today's market. Really is a good tool for agent productivity. Over time, that could develop to be a very profitable distribution network. Yeah, great answer, Mark. This is Mark Miller. I would just say along the same lines, right now we're trying to work the technology aspects of it out. We had to back off of it a little bit, kinda rebuild the foundation that QTI runs on. We're really proud of the team for being able to put three new carriers on this quarter, and we'll kind of see where it goes from there. I think about it in the short term as really being an automation tool for our agents, and moving its way into service in other areas. We'll see where it goes longer term. I wanna see how many carriers we can get on it, but what I'm really happy about is the carriers are really leaning in and helping right now. That's great. Super helpful color. Thank you very much, and, you know, congrats on a nice quarter. Thanks, Matt. Thank you. Please stand by for our next question. Our next question comes from the line of Michael Zaremski with BMO. Your line is open. Hey, great, good afternoon. I guess just stepping back, I took a lot of notes on all, you know, gave a lot of great color, and a lot of positive momentum, which we can clearly see in most of your KPIs. You did use the term in the prepared remarks towards the end, I think, ramp growth. Just curious, you know, cognizant that growth was a little slower than maybe some expected this quarter, but why wouldn't you guys take up kind of your growth rate into the back half of the year if it feels like there's just a lot of momentum, including you said, you know, spending a bit more money to grow as well? Is this a naive question, or, you know, or do you feel like you're embedding some conservatism? Yeah, no, I think we're doing exactly what we set out to do for 2023, which was get our corporate team as productive and profitable as possible and make it incredibly healthy, so that when we add new agents into the system, they're set up for much, much more success. We've increased the recruiting standards, increased the accountability on the team. Brian Pattillo, who leads that organization, is doing a phenomenal job maximizing every single ounce of productivity. We're generating a lot of profitability on new business. We're in the point now where we're adding agents back into that system who are significantly more productive than agents we've ever added into the system before. We feel very good about the long-term growth of the corporate channel. On the franchise side, as we talked about, we're still working through some of the agencies that are underperforming, but we feel great about the progress that we've made there. We're seeing more agencies hire, the people that they're hiring are continuing to deliver very good profitability and productivity. We just gonna need to let that burn in for the rest of 2023, we should see growth reaccelerate in 2024. Okay. And if we, you said to invest a little bit more near term, which could kinda cause less of the, you know, uplift in the year-over-year margin. You correct me if I'm wrong, but can you just. I know there's lots of investments. Are there a couple you'd like to highlight, or is it mostly just, is one of the big ones, hiring folks out of college that are just inherently gonna be way less productive or anything you'd like to call out there? I mean, we'll be onboarding a significant amount of individuals over the next we started that in June and over the next several months. As well, investments in the marketing function to drive inbound lead flow for new franchises as well as new policies. It's significantly more efficient than having an outbound motion with hundreds of people pounding the phones. That takes a little bit of setup on the front end, but pays off very nicely on the back end. You also get a more highly qualified candidate who understands the opportunity a little bit better, you can pre-qualify them with some of the information that they'll submit. That takes some infrastructure build out, some technology build out to continue to operationalize the Vivint partnership so we can maximize and get as much out of that as possible, as well as just continuing to grow the rest of the back office to scale the entire organization. We saw very substantial margin improvements over the last six months. We continue to expect to see margin improvement over the next six months, but probably just not at the same rate as the first half of the year. Okay. That's helpful. Maybe lastly, just, you know, also kind of on the macro level, you know, there's very hard kinda market pricing on the personal lines side, clearly, and that's probably gonna persist, but those are my words. Just curious, you know, when we're asked, you know, to think about that dynamic versus, you know, you talked a lot about the challenging real estate market, and also just less, some less capacity. Do those three macro elements kinda net out to be a wash ultimately, currently? It sounds like, you know, eventually, you're talking about, you know, eventually, if the real estate market opens up more, it sounds like you're saying there could be even if hard market pricing falls a bit, there's still net going to be some positives in the outer years? I would say that the product challenges in the P&C environment today are more of a drag than any of the tailwinds we're seeing from pricing. housing, certainly, we would prefer it to be running super hot, but our agents do a really good job of just taking share when the housing market contracts like it is today. we don't expect that to continue forever, so that will be a tailwind eventually, again, in the future. Product is, the thing that we're dealing with the most right now, and a significant, amount of our agents are in areas where there's, very real product challenges. That will alleviate. Our expectation is sometime over the next 12-18 months. You know, it's not necessarily up to us, but, you know, we're doing a really good job of pivoting and finding new partners to distribute with as well. We mentioned in our prepared remarks, we added 24 carriers onto the platform so far this year. I really think our choice platform shines in this environment better than anywhere else. Ultimately, I wouldn't say it's a net wash or even a positive. I'd say we're doing a good job of fighting through an incredibly challenging environment today. I promise this is the last follow-up. How does the, you know, you've talked about a lack of capacity a number of times. Can we see any of that showing up in any of the KPIs? Or is it more of a soft, like, you just know that your producers could produce even more if they had, you know, more options? Yeah, we have, we have a bunch of KPIs that we look at internally that can point to product challenges are hamstringing productivity a little bit, which makes the productivity gains we're making today all that more impressive. We're trying to be cognizant and not measure productivity on a dollars basis, but on a unit basis. Are we selling more policies today than we were previously per agent? The answer is yes. Our agents are becoming even more productive in an environment where they have less products to sell. That will eventually switch from being a headwind to a tailwind. The carriers just need some more rate to take hold. Thank you. Thank you. Please stand by for our next question. Our next question comes from the line of Meyer Shields with Keefe, Bruyette & Woods. Your line is open. Hey, guys, good afternoon. This is Tommy McJoynt on for Meyer. My question is on contingent commissions. Obviously, we saw some good growth there in the quarter, and you mentioned that there's contribution from both the growth side and the underwriting profitability side. Could you just put a finer point on how much of that contingent commission growth was driven by the growth side versus the profitability side? Yeah, it's really a de minimis amount related to profitability based contingencies. The reason why it looks more in this quarter comparatively is the ones that are mainly volume based are more uniform throughout the year, just the logistically, the way the revenue recognition works per GAAP. We don't expect to have a gangbusters contingency year. We mentioned again in the prepared remarks, you should expect somewhere in the neighborhood of 40 basis points of total written premium, which that is around all-time lows. I wouldn't look at the second quarter contingencies and think, yeah, we should continue to model that level of growth going forward. Got it. Thanks. My second question is just thinking out about this hard market cycle in P&C. To the extent that rate adequacy from the personal line carriers takes longer than some expect, would that in any way temper your sort of growth expectations, or are you guys pretty committed at this point with your sort of recruiting and new franchise initiatives that you have for the rest of the year? I'd say we're pretty committed. I mean, I certainly wouldn't say I'm satisfied with the levels of productivity that we're seeing, but I'm incredibly pleased with our agents' ability to continue to make productivity gains, even in this challenging market. You know, if it continues to persist for a while, okay, our agents will get, you know, the increased paycheck on renewals. They'll continue to have to fight through this environment from a new business perspective, but it will eventually come back the other way. It's about patience, it's about being long-term greedy and not short-term greedy. Makes sense. Thanks. Thank you. Please stand by for our next question. Our next question comes from the line of Mark Hughes with Truist Securities. Your line is open. Thank you very much. You suggest that the margin improvement ought to be more modest through the balance of the year, but coming off of a 10-point gain, more modest, could it be two points, or it could be eight points or something else? I wonder if you could maybe provide just a little more clarity on that. Historically, we haven't been incredibly specific on margin guidance, really to give us the freedom to make decisions that may impact timing, of when some expenses may flow through. We'll continue to keep that level of, I would say, specificity on margin guidance. We've got some projects that we need to do to secure future growth as well, and those require investment. You know, whether that falls in Q3 or Q4, I wouldn't want to get too specific on that. Okay. Then, could you give the number for how many franchises you onboarded in the quarter? Yes. Yeah, we onboarded 72 agencies in the quarter. When some of the corporate agents switch over to franchises, do they take some of the renewal economics with them? Do they go from a flat start, or is there some amount of commission volume that they take that might switch from the corporate channel to the franchise channel? No, they're starting over. Okay. great. Thank you very much. Thank you. Please stand by for our next question. Our next question comes from the line of Paul Newsome with Piper Sandler. Your line is open. Good afternoon, thanks for the call and the congrats on the quarter. I, sorry if I'm just confused here, but I was hoping you could help me understand a little bit about the timing of both the corporate agent adds with your recruitment. Is all the folks that you know, hired through the summer essentially showing up in the June number? Do they get added on in July and August as well? I'm just trying to think about the timing of what you've been talking about with onboarding people, compared with what the numbers we see on a quarterly basis. I'll take that one. If I'm not clear here. That's very clear. This is Mark Miller. They will continue to onboard throughout the summer, and we will continue to recruit all the way into the fall. We have expectations of a certain amount of recruits. I won't get into that, but I will say that we, you know, in my prepared remarks, we said that we wanted to be at about 320 by the end of the year. That's what we're targeting. It, it depends somewhat on what attrition levels are. Our attrition levels are very low right now, so it's easier to hit the number based on where we are, but I can't control where attrition goes from here. That's about what we expect it to be. Interesting. Any thoughts on impact of distribution outside of your company specific? I imagine a lot of the franchise recruitment is sort of dependent upon what's been happening with other agency systems. Obviously, last year, we had the Nationwide getting the independent agents. Your broader thoughts on what you think is happening with distribution in general. Yeah, I would say we probably have the best carrier portfolio out there of any independent agency. I don't know that for 100% fact, but I don't imagine there's anybody with a team as strong as ours out there acquiring new product as aggressively as we are. I don't like it when a carrier shuts down. You know, State Farm shutting down in the state of California, hopefully, that helps California and their DOI understand some of the challenges that they're imposing on the consumer. It is one less competitor for us out there to work against. It is an incredibly challenging market out there for anybody trying to distribute personal lines insurance. I think we have the best offering. It does help us from a recruiting standpoint, when we can say, "Look at the number of carriers we've onboarded in your specific region that can help you out-compete anybody else that would be trying to operate an independent agency or be a single product platform out there." It's definitely not necessarily a net positive, but I think we're doing it better than anybody else. Thanks. Appreciate the help. Thank you. Please stand by for our next question. Our next question comes from the line of Katie Sakys with Autonomous Research. Your line is open. Hi, good afternoon. I wanted to dig a little bit deeper on some of the questions about producer economics. I guess first, you know, it looks like the producer count is only up about 3% year-over-year. I was curious if you guys have a, you know, bogey as to where that might end the year, and, you know, what are some potential opportunities to exceed that mark? Yeah, we said in our prepared remarks that it would be flat to moderately down. You know, importantly, the follow-up to that is the agents that are exiting the system are doing close to, if not zero, and the agents we're adding back into the system are much more productive than anybody we've added in before. While the agent count may be going in the direction that is inconsistent with the actual revenue generation. The productive capacity of that workforce is continuing to increase, even if the total number doesn't look that way. I think it's also important to remember that we have just gone through a major restructuring exercise with our corporate sales force. You would expect it to be down in conjunction with that effort. As we said, on the call earlier, that restructuring is now complete, and we're seeing extraordinary productivity for the new people. I said in my remarks, it's over 65%. It's actually about 70%. The class that went through in June, training is producing 70% more than their counterparts were a year ago. We are, we're adding back real high-quality people. I, you know, I think that's important context on the actual number of butts in seats. Yeah, just to be clear, as a follow-up to that, to make sure there's no confusion, corporate sales ended the quarter at $280, which was up from Q1, down significantly from last year. We expect corporate sales to be ending the year around $320. Total franchise producers, we are expecting to trend flat to moderately down in the second half of the year. That restructuring process is still ongoing. The ones we're taking out are not very productive. The ones we're adding in are much more productive. You can average up the productivity level per agent. That makes perfect sense. Thank you so much for the clarification there. As a quick follow-up, it looks like you guys are still growing your tenured agents in Texas a little bit faster than those that are, you know, outside of the Texas geography. I'm kind of curious, do you anticipate that to continue to be a trend going forward, or do you anticipate, you know, having a bit more growth outside of Texas as you guys continue to look at hiring and, you know, transitioning agents from the corporate channel into the franchise segment? That's a great question. It's exactly what we're trying to do, which is spread the franchise agents out more geographically across the United States. It doesn't mean that we wouldn't support our franchises in Texas if they want to grow. We help them hire on their behalf. You know, we bring candidates to them. However, when we're looking for new franchises or candidates to be franchise owners, we're paying particular attention right now to Geos, where we have where we're underpenetrated. Yeah, I would think if you look at the map of where our franchises are, you'd see more growth outside of Texas in 1 year from now than you do today. Thank you. I'm sorry, just one quick follow-up to that. Go ahead. I mean, we've heard quite a bit about, you know, particular states where personal lines underwriters are no longer, you know, writing new business. I'm kind of curious, of those penetrated states that you guys can, you know, see on your own maps, are there any particular states that you guys would call out as growth opportunities for Goosehead, keeping in mind that these are also markets maybe where underwriters are no longer open for new business? We're specifically prioritizing away from markets where the underwriters are risk off. Like, for example, Florida, California, we're only responding to inbound calls out of Florida, and I think we're completely shut off all of our recruiting activity in the state of California. What we're trying to do is focus our, you know, franchise development efforts on the most attractive markets for our carriers and the most attractive markets for us. Because, you know, we've been in Texas for 20 years, we have a big business in Texas, and all the carriers want us to give them not Texas. Awesome. Thanks so much. Thank you. Please stand by for our next question. Our next question comes from the line of Scott Heleniak with RBC Capital Markets. Your line is open. Yes, hello. I had a question on cross-selling. I'm just wondering what kind of traction you're getting there in terms of customers that have multiple products, and this includes some of your ancillary products, the RV and flood and renters, condo. I know those are smaller, but just any kind of update in terms of what you're seeing on the, you know, the cross-selling part and customers buying multiple products from you versus where it had been trending. That's a best practice that we preach with our agent workforce, is you want to try and capture full share of wallet, get as many lines of business as you can with a client as possible. I think our agents do that best in class, probably better than any of the other insurance agents out there. I would say it remains high. We haven't seen a material change, I think, in any direction on that. It's a good retention lever. Having another line of business adds multiple years to the client's life. It's not a lot of news to report on that, but I believe our agents do it better than anybody else. Okay. This is sort of along the lines, but just curious, too, how much increase in shopping activity that you're seeing just because of where rates are in auto and home, and I imagine a lot of people or more people are coming your way. If you can comment on that, and I'm also just curious how many people that you're seeing are actually switching that come across, you know, the Goosehead agent, the, you know, the typical person, just any kind of trends there? We are seeing a significant increase in shopping behavior from clients, which, you know, if you look at our client retention numbers remaining at 88% is a strong credit to our service team for being able to deliver phenomenal client experience in an environment where some people have premiums going up 20%, 30%. I'm very proud of our team and the way they've been able to deliver incredible service throughout this. It's certainly not a tailwind for us. Shopping behavior, you would expect potentially, you know, more clients are leaving their existing insurance agent, it also means that our entire book is continuing to ask for a re-shop as well. Okay, that's helpful. Just the last one, too, I was just curious if you had anything more you could comment on in terms of the franchisee restructuring. Are we kind of 80% to 90% done, or is there any more context you can, you know, offer on that? Yeah, you know, we talked about the majority of it is done, that we're over the 50% line. It does just take a little bit longer for that to work through the system, given the way that the franchise law works. You know, we need to give those agents a little bit more time to cure than you would a W-2 employee. Yeah, the second half of the year, there's still going to be a significant number of terminations, but we do believe we're nearing the finish line. Okay. That's helpful. Thanks. Thank you. Please stand by for our next question. Our next question comes from Pablo Singzon with JP Morgan. Your line is open. Hi, thank you. My first question was a numbers question. Are you able to share written premiums for the corporate and the franchise channels? Sorry, what was that, Pablo? Share what for the- Written premiums, sorry. just to break down between corporate and franchise. Yeah, that was included in the prepared remarks. Okay, sorry, I missed that. All right. Next question, as I look at policy in force or, you know, new business revenue growth, those metrics are still trending down, right? It seems like you're well into refined distribution. You're ramping up recruitment on the corporate side. Would it be reasonable to expect those metrics to start picking up, you know, second half of this year, maybe, and certainly in 2024? Yeah, we certainly are expecting policies in force growth to reaccelerate in the direction of 30%. I would not expect that number to have a three handle in front of it in 2024. We are gearing the organization around achieving a 30% policy in force growth rate. Okay. We've managed extraordinary high levels of growth in the past. I mean, this is something that is not theoretical to us. This is something we've demonstrated a very high degree of proficiency in. As we complete our restructuring efforts, we'll be, sort of turning on the gas all the way. That's actually a good segue into my next question. As we think about your long-term premium growth target of, I think you said 30% CAGR, can you walk through the different components that build up to the growth rate? You know, I'm thinking of number of agents, productivity, and, you know, the natural benefit from yearly premium increases. I think if you look at your premium growth pre-COVID, the number of agents has always grown faster than written premiums, and it sort of makes sense, right? If you think about the ramp up and those sorts of things. I guess with this new model now, how will those different components build up to the 30% CAGR premium growth? It's a combination of productivity improvements as well as increases in the number of sellers in the field. I don't believe the number of sellers in the field needs to increase at a 30% rate. As we generate more accumulated experience, we will be getting more productive over time, and we're continuing to invest in technology and tools that make our agents more productive. Again, that's not theoretical either. We are really seeing that in real time. Agents are getting better every single month. It is incredibly impressive. You know, to generate a 30% premium CAGR in over the next five years, you don't need 30% producer growth. You need some producer growth, but really you need productivity gains. You need the productive capacity to continue to increase, that's how we're structuring the business. Well, also there's three elements of producer growth, right? Some are more productive than others. Mm-hmm. The traditional agency, we know historically how productive they are. We should expect that to increase because we're just bringing on better people now. Secondly, this whole motion of adding producers to successful franchisees is relatively new. Those people, you know, for every producer we add into a successful franchise, they produce 1.6x or 1.7 times the new business that an entire new average franchise would produce. That, you know, that channel is super leveraged. Then the one that is just the channel on, like, nuclear steroids is converting corporate agents into franchisees. Those guys crank it out, and they're as productive as many traditional franchises. We're, you know, we're working, and part of the restructuring that we did in our corporate channel was to make sure that we could provide, you know, sort of volume inputs to seed the franchise channel with new, high-quality franchisees. It's, it's different than kind of the arithmetic you would have seen in the past, just because we have these other new channels that are either very productive on the case of adding a producer to an existing franchise, or unbelievably productive if you're converting a corporate agent into a franchise. That's clear. Thank you. Then the last one for me, maybe for Mark Jones, Jr. I think in the past, when we talked about margins, you had sort of referenced that you think the improvement will be relatable over your long-term target, right? I think you had said 30%. I suppose in the context of a really good margin quarter, right, I think ex contingency, your margins are 29%, right? Pretty good, and at your target already. Is it still reasonable to assume that from here, you know, over the next couple of years, we should sort of have a steady upward march towards your long-term target, you know? Clearly, you're saying that 29% is not sustainable, but, you know, just thinking about the cadence from here and how you get to the, you know, long-term target. We continue to expect to see margin expansion and improvement year-over-year, quarter-over-quarter. We don't believe that 29% is an unsustainable level. That may not happen every single quarter. Some quarters have better margin profiles than others, given the way that seasonality works and when hiring works and when raises work. I certainly don't believe that 29% is a, is a cap for us. We continue to expect strong margin expansion every year. All right. Thank you. Thank you. I would now like to turn the call back to CEO, Mark Jones, for closing remarks. Thanks, everyone, for your questions on the call. We appreciate, your attention, and have a good day. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.