Thank you for standing by, and welcome to the Goosehead Insurance First Quarter 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded. Now I'd like to introduce your host for today's program, Dan Farrell, Vice President, Capital Markets. Please go ahead, sir. Thank you, and good afternoon. Before we begin our formal remarks, I need to remind everyone that part of our discussion today may include forward-looking statements, which are based on expectations, estimates, and projections of management as of today. Forward-looking statements in our discussion are subject to various assumptions, risks, uncertainties that are difficult to predict, and which could cause actual results that 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 on them. We refer all of you to our recent SEC filings for more detailed discussion of risks and uncertainties that could impact future operating results and financial condition of Goosehead. We disclaim any intention or obligation to update or revise any forward-looking statements except to the extent required by applicable law. I would also like to point out that during this call, we will discuss certain financial measures that are not prepared in accordance with GAAP. Management uses these non-GAAP financial measures when planning, monitoring, and evaluating our performance. We consider these non-GAAP financial measures to be useful metrics for management and investors to facilitate operating performance comparisons period to period by including potential differences caused by variations in capital structure, tax position, depreciation, 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 In addition, this call is being webcast, and an archived version will be available shortly after the call ends on the investor relations portion of the company's website at goosehead.com.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 President and CEO, Mark Jones. Thanks, Dan. Good afternoon, everyone. Thank you for joining our Q1 earnings call. Since the inception of Goosehead more than 20 years ago, we have had one goal: to become the largest distributor of personalized insurance in the U.S. in our founder's lifetime. In the pursuit of that goal, we have built a vast distribution network that includes more than 400 corporate agents, 1,000 franchises, 2,500 total licensed agents in 48 states, and 200-plus carriers. As impressive as these numbers are, we still have a lot of work to do to accomplish our goal. Today, we have a premium base of approximately $4 billion. To be the largest distributor of personalized insurance in the next 10 years, we need to be roughly 25 times larger than we are today. We believe this goal is possible, and we're focused on making it a reality. In Q1, we delivered solid performance Year-over-Year. Total revenue grew 17%. Core revenue grew 17%. Premium grew 22%, and adjusted EBITDA grew 32%. Over the past three years, we have steadily grown premium, revenue, and earnings while battling what most experts have called the hardest product market in 50 years. For Goosehead, this challenging market has been a blessing in disguise. We have focused our efforts on learning how to strengthen every aspect of our company. Adversity has only made us stronger, just like it has throughout our company's history. We're prepared to systematically expand our reach to deepen and widen our competitive moat as the market inevitably recovers. While the market is still hard compared to historic norms in some of our key markets, such as Texas, California, and Florida, we are seeing some tangible improvement in product availability and in many geographies' price stability. We're thrilled about these shifting market dynamics because the history has taught us price stability is highly correlated to client retention. Improving profitability of auto carriers has led to an aggressive rebound in auto product availability. We're beginning to see new home product re-enter multiple key markets. In the admitted home market, we are seeing product slowly creep back in, but the product has more risk-sharing features with clients, and carriers continue to be highly selective about what risks they will take. At the same time, home closings fell to a 30-year low in 2024, but our agents doubled down on their marketing activity, and our current lead flow is close to historically high levels. However, our buying rate on those leads is still below our historical averages. Our buying rate is directly related to product availability and price stability, and we expect meaningful improvement in both over the next 6 to 24 months, given our strong carrier relationships, diversified geographic footprint, and improving carrier economics. I get very excited about the business when I think about what it looks like when product fully recovers. Until that day arrives, we're building a business hardened for exponential growth. Let me give you a few examples of what we have changed and why these changes have positioned us to accelerate into the recovery and move toward the Rule of 60 company that we strive to be. First, on the franchise side of the business, we have narrowed our aperture on who we want to own franchises, and we've tightened our focus on selected geographies. Historically, we have indexed toward ex-captive agents located in a handful of states. This strategy is shifting quickly. We are still looking for the best of the best ex-captive agents, but we're aggressively targeting business professionals with capital that want to build multi-agent, multi-location businesses. These professionals recognize the power of a recurring revenue model with low capital intensity and high retention rates. The future growth of the franchise network is also tightly integrated with a strategic geographic dispersion plan. We have rebuilt the strength of our franchise development team, and they're scouring the country to find the best owners in every town and city in America. One powerful component of our new franchise strategy is helping Goosehead corporate agents move into franchise ownership. Many of our most successful, newer vintage franchises are ex-corporate agents. As we continue to focus on quality of new franchises versus quantity, we have discovered that our corporate agent-to-franchise owner program is one of the best ways to ensure quality, quantity, and geographic dispersion. The opening of the new office in Tempe, Arizona, is a major step forward on this strategic initiative. We seated the office with experienced corporate agents from several other offices, which has resulted in this office being 20% more productive than the next best corporate office. As a reminder, our corporate team remains 2.8 times more productive than industry best practice. This shows the power of our corporate team when located in a geography with a robust product offering. Going forward, this office will be staffed with recruits from local universities. These new corporate agents will then be on what is effectively a paid apprentice program, where they learn to sell insurance and, more importantly, manage people and build a business. Many will return home to open franchises in California, Washington, Oregon, Nevada, and Utah. Based on the early success of this office, we expect to strategically place additional, smaller-footprint corporate offices across the U.S. over the next several years. We're using this new office as a blueprint for how we recruit and develop the highest-quality franchise owners in the future. We expect that up to 10% of our corporate agents annually will ultimately launch high-velocity agencies across the country. These owners tend to be growth-oriented and, in some cases, up to 10 times more productive than our traditional franchise owners. Let me give you one recent example. Grant Sheets, who was previously a successful sales manager in our Houston corporate office, launched an agency in June of last year. He very quickly scaled his agency and made his first hire last July. Grant's agency currently has five agents, with two more in training, and plans to continue to scale up to 12 agents by year-end. On the production front, Grant and his team have made Goosehead history by becoming the fastest agency to ever cross $100,000 in new business revenue production in a single month. We're extremely proud of Grant, and we expect to see more exciting growth from him and his peer group of ex-corporate agents-turned-franchise owners over the next several years. To support this franchise growth strategy, we have built a world-class recruiting machine that can attract high-caliber college graduates to our corporate offices. As of today, we have over 90% of our corporate sales openings already filled for 2025, and our corporate agents from last year's class are retaining well and moving up the tenure curve. In addition, our growth strategy includes our enterprise business, where large and medium-sized companies with an existing base of clients want to embed an insurance offering into their model. These companies need what Goosehead has to offer: a client-first choice model with superior technology and exceptional service. The relative strength of our carrier portfolio and national geographic footprint provide powerful strategic advantages relative to any other insurance agency and make Goosehead the logical choice for many companies looking to participate in the personalized ecosystem and add value to their clients. Over the past six months, we have implemented new technologies that allow our systems to ingest lead flow from multiple partners and route it to the best available agent to meet the client's unique needs, speeding up the time to action and increasing close rates. Over time, we believe that enterprise sales and partnership business will turn our core business from hand-to-hand combat to a hyperscale platform using generative AI to remove many of our traditional bottlenecks. Leveraging the high-quality client base of mortgage servicers allows us to reach a population that is both highly attractive to our carrier partners and has a high close rate. We believe the direction we are headed with tangible AI achievements will deliver extraordinarily profitable growth, even remarkable relative to what we have delivered over the last 22 years. We have made outsized investments in technology over the last several years compared to our competitors, and we're adding new types of talent to our team to accelerate the transformation in all aspects of our business. One great example of this is the addition of Bill Wade to our board of directors. Bill has a proven track record with over 25 years at Bain & Company, driving transformation with technology innovation. He is exactly the type of thought leader we need to win the AI race in the insurance industry. In the quarter, we continue to make progress on our technological advantage by rolling out our Goosehead mobile app. To ensure a smooth rollout, we are introducing the app in stages through an invite-only process. Currently, the app displays and explains coverage information, allows for live chats with our service team, and will soon display renewal information and the option to explore other quotes with your agent. We expect to continue to launch technological advancements that improve our client experience and strengthen our service team. The insurance landscape is evolving, and the demands on our client service team are higher than ever. We're committed to delivering outrageously good client experience and plan to point outsized resources to ensure the client remains at the center of our universe. As we look ahead, we remain laser-focused on the path to becoming the largest distributor of personalized insurance in the country. We know this journey will not be easy, and we don't expect it to be, but we're confident we have the people, the platform, and the plan to get there. We've built a resilient foundation, and we're investing ahead of the curve so that when the market returns, we are not just participating in the recovery; we're leading it. I want to thank our agents, franchise owners, carrier partners, and employees across the country who continue to drive our mission forward. We're just getting started, and the best chapters of our story are still to come. Thank you for your continued support, and we look forward to sharing more progress with you in the quarters ahead. Now I'll hand the call over to our CFO, Mark Jones Jr. Thank you, Mark, and good afternoon to everyone on the call. As Mark Jones mentioned, we've been working diligently on several initiatives aimed at building a foundation for a hyperscale platform that has the potential to further revolutionize how personalized insurance is distributed and serviced. These innovations are designed to deliver value across all key stakeholders, offering clients access to the right products, enabling carriers to achieve profitable growth, enhancing the agent experience through greater efficiency, and maximizing client retention and lifetime value for Goosehead. Historically, this industry has struggled to attract top-tier talent. However, we've been fortunate to succeed in doing just that, which has been instrumental in creating the exceptional business we have today. Over the past several months, we've doubled down on this approach, bringing in highly skilled individuals who are drawn to our company for several compelling reasons: the resilience of our business model against varying macroeconomic conditions, the enormous market opportunity—more than $500 billion in annual premiums—the lack of a strong competitive set, and our significant head start within the industry. We're channeling this exceptional talent towards solving some of our most exciting and complex challenges in both our business and the industry at large. These efforts include streamlining the complexities of back-end service functions within a nationwide diversified distribution model, leveraging automation and AI to reduce service costs, unlocking the value of our data to drive smarter decision-making across the value chain, and developing disruptive go-to-market strategies that are entirely unique in the U.S. today. We believe these initiatives position us as the clear leader in redefining how personalized insurance is delivered, creating meaningful long-term value. I'm incredibly excited about the future of Goosehead and the unique opportunity we have in front of us. In the First Quarter of 2025, we observed some underlying momentum in several KPIs that should drive continued growth through this year and beyond. While this is not fully visible in the financials yet, we're very optimistic about the future. Our franchise community continues to add more producers and get more productive. At quarter-end, total franchise producers were 2,097, up 7% from a year ago, and productivity per agency was up 21%. The investments we've made in our franchisees to shift the focus from solving the challenges of an insurance agent to building a long-term and sustainable business are truly taking hold. We're seeing the natural evolution of our franchise system as it matures. Our top-performing franchises are acquiring some of the smaller, less productive, less proficient franchises and injecting better business practices into their operations. We've always had a liquid market within our franchise community, and that remains true today. Of the 41 franchises that exited the system during the First Quarter, only 9 of those were terminations, with the remainder being purchased by another operating agency. The acquiring agency then takes that opportunity to introduce themselves to the existing client base, hunt for cross-sales and referrals, and use the cash flow off of that agency to fund new producer growth. We believe the liquid market for our franchises also increases the value proposition for new potential agencies, as they can realistically calculate an attractive IRR on the business opportunity, which in turn helps us continue to gross up the gene pool of our franchise base. During the quarter, we launched 36 new franchises across 16 states, the highest launch quarter since the Second Quarter of 2023. We continue to expect growth in operating franchise count for the full year 2025, as our franchise development team targets high-quality candidates in the right geographies. Our enterprise sales business, while still small at 89 total producers, continues to grow very rapidly, producing 60% more new business in the First Quarter of this year when compared to the prior year. With the pipeline we have for new strategic partnerships, we expect that growth to accelerate throughout the year. These partnerships are the stepping stone to unlocking the value of a true direct-to-consumer marketplace that does not exist in the United States today. By integrating with a partner, we can be very targeted in which potential clients would be best suited to purchase insurance through a guided flow based on various data points, and which would have a better experience being handled directly with an agent. Our model allows us to provide both options. This means we can optimize outcomes not only for our clients but also for our carrier partners. Moving to the corporate sales force, we ended the quarter with a total of 337 traditional corporate sales agents, bringing the total combined with the enterprise sales team to 426 corporate producers, up 46% from a year ago. With the success of the launch of our Phoenix office, we expect to continue this strategy through select geographies over the coming years with smaller footprint offices. This allows us to populate a variety of product-rich locations with our most talented producer force and accelerate the growth of top decile franchises. Total written premiums, the leading indicator for future revenue growth, were $1 billion for the quarter, up 22% from a year ago. This included franchise premiums of $824 million, up 27%, and corporate premiums of $177 million, an increase of 5% from a year ago. As a reminder, the First Quarter is seasonally our lowest premium and revenue quarter for the year, which implies our business should now be generating well over a billion dollars of premium quarterly going forward, a tremendous milestone for the organization. I want to reflect for a moment on how far our business has come over the last several years, crossing $1 billion of annual premium for the first time in 2020, $2 billion of annual premium in 2022, to now over a billion dollars in premium each quarter. Today, we're roughly 10 times the size we were at the time of our IPO in 2018, and we're still in the very early innings. Total revenue for the quarter was $75.6 million, an increase of 17%, with core revenue also up 17% to $69.1 million. We're beginning to see client retention improve, and while still at 84%, we have an upward trajectory and a line of sight to improving client retention in the year. As the year-over-year increases in premiums have begun to abate, we've seen the expected improving trend in client retention. To give you a data point on how sensitive retention is to pricing actions, renewals with premium increases of less than 25% retain 25 percentage points higher than those that have higher premium increases. As the current statutory rate filings, which document much lower premium increases, flow through our book, particularly in Texas, we expect our upward momentum in client retention to accelerate. I'm very proud of how our team has handled this historically hard product and pricing market, and we're coming out of the other side a stronger organization. Contingent commissions for the quarter were $4.5 million compared to $2.7 million a year ago. As a reminder, typically the First Quarter of each year includes some revenues that were uncertain as of the previous year-end. We are continuing to forecast contingent commissions for the full year of approximately 40-65 basis points of total written premium, while there is still potentially upside in that forecast depending on carrier underwriting performance and catastrophic losses. Cost recovery revenue, which is mainly comprised of initial franchise fees, was $1.5 million compared to $2.5 million a year ago. As franchise turnover is down significantly Year-over-Year, this results in less accelerated recognition of initial franchise fees. We expect the First Quarter run rate to be an appropriate forecast guidepost for the rest of the year. Over time, revenue from initial franchise fees should grow with new franchise launches. Policies in force at quarter-end were 1.7 million, a 13% increase over the previous year. We expect to drive acceleration in the policies in force growth rate throughout the year as new business generation increases and client retention improves. Adjusted EBITDA for the quarter grew 32% to $15.5 million, up from $11.7 million in the prior year period. Adjusted EBITDA margin for the quarter was 21%, and adjusted EBITDA margin excluding the effect of contingent commissions was 16%, expanding over 80 basis points compared to the prior year period. As I mentioned, we've onboarded some very high-powered human capital, which resulted in faster employee compensation and benefits growth for the quarter than in previous years. We believe these human capital investments will pay dividends as they roll out initiatives to drive cost out of the organization throughout the year, ultimately paying for themselves multiple times over. As of quarter-end, we had $70.2 million of cash and cash equivalents and total debt outstanding of $300 million. As a reminder, our philosophy on debt has been to add leverage to the point where it never impacts a business decision through either the debt service cost or the covenants. Our strategy since 2016 has been consistent, levering up to three to four times adjusted EBITDA and delevering naturally through earnings growth. During the quarter, we generated $15.5 million of cash flow from operations, a 28% increase over the prior year period. Because our business has such high-quality earnings generating significant cash flow from operations, that provides us with optionality of how to deploy capital in the way that best drives long-term shareholder value. Today, our board of directors approved a $100 million share repurchase authorization. We plan to be opportunistic when there is a market dislocation in our valuation and drive shareholder value by repurchasing our stock, accelerating the compounding of earnings for share growth. We are reiterating our guidance for the full year. Total revenues are expected to be between $350 million and $385 million, representing organic growth of 11% at the low end of the range and 22% on the high end of the range. Total written premiums for the full year are expected to be between $4.65 billion and $4.88 billion, representing organic growth of 22% on the low end of the range and 28% on the high end of the range. Thank you to everyone at Goose head, our agents, our clients, and our carrier partners for helping us drive towards industry dominance. With that, let's open up the line for questions. Operator? Certainly. And one moment for our first question. Our first question for today comes from the line of Tommy McJoynt from KBW. Your question, please. Hey, good afternoon. Thanks for taking our questions. Last quarter, you talked a little bit about the strategy of partnering with some of the large mortgage servicers out there. When we look at the sort of the roster of mortgage servicers, there are some really large names out there. Can you talk about the potential for partnering with some of those large names? Do you guys have the operational capacity to do so through your enterprise offering? Just to elaborate a little bit around that. Yeah, thanks, Tommy. This is Mark Jr. Yeah, there's a lot of really interesting things going on, especially in the mortgage servicing space. If you think about the TAM there, it's 85 million mortgages across 1,000 different servicers. There is a lot of different people we could potentially be working with. We're having a lot of very interesting conversations right now with several groups that could make meaningful differences in how our enterprise sales team produces over this year and into the future. We're feeling really good about that. There's plenty that we can continue to do to drive efficiency in that team, both from a technology and then just a people and process standpoint. I feel very optimistic about our ability to capture significant market share in the mortgage space, especially as the need for that continues to be really material for these servicers, where the interest is higher than ever we've seen before. I feel really excited about it, but we're not going to talk about specific names right now. Got it. Switching over, as we think about the opportunity for adjusted EBITDA margin expansion, perhaps looking at it on a basis excluding contingent commissions, can you talk about maybe the cadence of the opportunity for expansion in the remaining quarters this year? Yeah. I think similar to comments we've made in the past, our objective is always to grow core revenue faster than the expense base. Now, the timing of that throughout the year kind of depends on when we onboard people, when specific initiatives roll out. I don't think we're going to give specific guidance on a quarterly basis of when you should expect earnings expansion, but we talk about it more in a full year. Our plan is to drive core revenue faster than the expense bar. Great. Thank you. Thank you. Our next question comes from the line of Pablo Singzon from JPMorgan. Your question, please. Hi, thank you. G&A expenses have been running at about $16 million-$17 million per quarter over the past four or five periods. Is that a good run rate to think about for the go forward here? It's been sticky. I was just wondering if there are any initiatives that might bring that number up or down. Yeah, Pablo, good question. The growth rate of G&A in the First Quarter is lower than I think you should expect for the remainder of the year. We have some really interesting things going on, especially in technology and ways that can drive automation that, in theory, should be reducing headcount costs throughout the year. I would expect to see the pace of G&A pick up. I'm not going to give you a specific number at this time, but we've got some really interesting tech initiatives that should both enable cost reduction but a better client experience, and then in the longer term, actually be able to apply that to the go forward motion to really capture market share at a rapid pace. Got it. Then the second question is on the benefit of pricing, right? If you just do the rough math of premium growth, less PIF growth, it seems like the benefit of pricing this quarter was 8%. That's down from mid-teens last year. While we heard your comments on what's happening with the market, right? Clearly, personal auto is getting more competitive. I was under the impression that most insurers are still taking a rate on homeowners. I just wanted to get a and recognizing that there's a mix in your book too. I just wanted to unpack that a bit more, right? Are you seeing rate in homeowners? Is auto just are your capacity providers taking down rates there? Anything you can provide would be helpful. Thank you. Yeah, the auto rates are really flattening out on a year-over-year basis. Some of this is geography dependent. The home rates are still considerably higher than the auto rates. You can see in our whole book, just looking at the premium growth versus the policy-in-force growth rate, that generally pricing is coming down, which we ultimately think is a good thing for the business that allows basically more product access broadly. It also helps improve client retention. We mentioned that in the prepared remarks, we're starting to see the upward trajectory in client retention, which should be a really meaningful contributor to revenue growth in the longer term as well. We're doing a great job keeping clients on the books. Just as more product opens up, it'll be easier for our agents to go out and continue to win business. Generally, we're feeling relatively optimistic about how the product market is moving. Thank you. Thank you. Our next question comes from the line of Brian Meredith from UBS. Your question, please. Yes, thanks, Mark. I'm just curious, in your guidance, when you're thinking about making the guidance for the year, what are you thinking about with respect to the macro environment? If we go into a recession of some kind, would that at all affect your revenue guidance and premium guidance? Also maybe you can add to that the tariffs that are going through. When you're discussing that with carriers, how do you think they'll react to it? Could that actually maybe cause retention to slip a little bit if we get another pricing cycle here for auto? Thanks, Brian. I'll tackle the guidance portion of that first. I don't really think a recession or kind of tariff concerns impact the way we're thinking about guidance. I mean, good news is our business is really insulated from kind of broader macro effects like that. You still have to buy the product if you live somewhere or drive something. And so much of the revenue of the business is built into the renewal book. With the way we're seeing pricing trends right now and generally the upward movement in client retention, I don't have any concerns right now about the guidance numbers. Yeah, I'd just add, Brian, I mean, we see the same thing that you probably see in the press about auto repair costs and some additional home cost increases as a result of tariffs. We don't believe it's going to significantly impact our business, especially not like what we've seen over the last three years. Like Mark Jones Jr. said, we feel like we're pretty recession-proof. People need what we offer, both on home and auto. Gotcha. Next question. I'm just curious. I saw your NPS score kind of declined again. Anything behind that and what's going on there? Yeah, I'll take that, Mark Jones. I would say generally our NPS still remains above industry standards and very good. As an industry, recent studies, if you've seen them, indicate that there's a decline in client service just in general in the insurance industries. As client premiums are going up significantly, they get less satisfied. We pride ourselves in having exceptional client service. We will always keep the client at the center of our universe. We are making improvements in the service function every single day. In the last several years, I think we've taken significant strides forward in our ability to service clients. At the same time, the product's gotten more complex. We've gotten more geographically dispersed, which makes our job harder. We're just leaning into it with everything we have. We have a lot of confidence that we can continue to keep up with the demand on the service side. In summary, I'm not concerned about the NPS score. Yeah. Brian, I would just add on to that. Just given that the NPS number that we report is a trailing 12 number and how pricing has flowed so aggressively for the last couple of years, you shouldn't be surprised if you see that tick down a little bit more. Remember, 87 where we reported today is still phenomenal in the context of really any industry, including service industries like the Four Seasons out there. I think we're doing a world-class job. It is challenging when you're fighting against a 30% price increase to make people feel like they've really been taken care of. I think we're doing a great job on the service side. Great. Let me squeeze one more in here quickly. It should be a quick one. Given the authorization you just got throughout, I'm assuming you think your stock price is pretty attractive here? Yeah, Brian, I would say we want to have the optionality. The good news is we just generate so much cash that we have the ability to act when the right time is there. You saw what we did last year. We thought we were very undervalued. We went and bought back a significant amount of stock. We want to have that dry powder and that optionality and the ability to do so. That's why the board approved that today. Great. Thank you. Thank you. Our next question comes from the line of Katie Sakys from Autonomous Research. Your question, please. Thanks. Good afternoon. I guess my first question is kind of expanding upon the carrier dynamics you guys are seeing right now. Would you guys mind giving us some color as to what percentage of your geographical footprint is seeing pricing stability and what percent is seeing new product come online versus year-end? I would say we're still quite dense in Texas. Now, the Texas density has dispersed pretty dramatically over the last couple of years as we've been really intentional in putting agents in geographies that underwriters really want us to be in. Texas still has the highest price increases Year-over-Year compared to any other state in the country. That is where we have at least the plurality of our agents and the majority of our premium. We are still seeing new product come online in Texas. Not seeing big national brands come in in a broad way yet. There are new entrants in that are seeing the attractive market here in Texas, which is helping us feel really confident about our 2025 plan. A lot of this, Mark Jones, a lot of the price increases from the prior year are still rolling through as policies renew. Based on the FAIR filings that we've seen recently in Texas, we expect pricing to be more stable in Texas where the majority of our agents are. Okay. Maybe shifting slightly, I mean, it was a decent pickup in PIF growth this quarter. You've definitely spoken to the actions that carriers are taking to sort of help support that. I am wondering if you could expand a little bit on your previous comments about Goosehead's own client service and what Goosehead is doing to keep clients within the ecosystem, especially as they start to have increased optionality and the ability to shop around. I would think relative to other independent agents out there, we believe we've got the best product offering. We certainly feel very confident that we have the best technology, the best training programs, the best kind of geography-specific knowledge on where the right product is for each client. As you've seen other large players who may not be on our platform pull in or out of specific geographies, that gives us a greater ability to go win. I think we're doing a good job of capitalizing on those opportunities. On the service side, we're trying to make sure we're here for our clients whenever they need anything, whether that be renewal or a policy change to add drivers, things like that. We've done a great job of that so far, and we're starting to feel the effect of that in an upward trajectory in client retention, which we expect that to continue throughout this year. I just add, I think the best way to keep our clients is to have the best product at the best price in every single market. That's what we try to do every single day. Layer on top of that is the service function. One thing that we just talked about on the call was the mobile app. Time will see how that plays out, but I think that could be a great retention tool and a great client service function to be able to have your policies at your fingertips and be able to chat with your agent. Got it. Thank you. Thank you. Our next question comes from the line of Mike Zaremski from BMO. Your question, please. Hey, thanks. First question, if we look at core revenue as a percentage of premium, the ratio is down just a tad Year-over-Year. Any comments on the drivers there or if that's a trend? Yeah, I mean, core revenue as a percentage of premium is just a function of the mix of the business, of how much of it is in corporate versus how much of it is in franchise. Generally, we feel like we're doing the right things in both of those areas to drive growth. We've got a nice good class of corporate agents that are coming up the ramp now. The retention of those corporate agents is up dramatically versus the previous year. They're getting more productive. Our franchisees continue to hire more people. You saw, again, growth in producer count this year. If you're just looking at core revenue versus premium, it really is the mix of franchise versus corporate that drives that. Okay. Got it. Good to hear. No kind of underlying other trends. Okay. Pivoting to the franchise channel, if you can comment on less than one-year productivity and kind of what's going on there and any kind of insights into how that might turn around. Yeah. I mean, less than one-year productivity in the franchise side of the business is still at a really good level. Some of that just depends on which agents we launched during that quarter. If we had a crop of previous corporate agents that had launched, you would see those numbers be higher. We have a good class of corporate agents that are going to launch franchises this year in the summer across a variety of geographies. I do not think that is anything to be concerned about. It is multiples of industry best practice. We feel really good about it. I think there is upward movement there potentially throughout the rest of the year. Okay. Got it. I feel like that could have driven a bit of the differential versus at least the consensus. Got it. I guess one last maybe modeling question. If we look seasonally at 1Qs, the quarter-over-quarter 1Qs, written premium growth was slower than kind of historical 1Qs. Maybe we could take it offline. I am just kind of curious if there was any bucking of the seasonality trend that we should be that took place this quarter. Yeah. I mean, just seasonally, the First Quarter is typically the lowest revenue and premium quarter for the year. You can have more little things that can impact that just from a year-over-year basis. We are seeing that gap between core revenue and premium growth converge like we have been talking about for the last couple of years. It just makes it a little bit easier to model the business. As the franchise side continues to produce at a consistent level as opposed to like we had seen from the 2020 to 2023 period, you see those things normalize. In the First Quarter, the 17% core revenue growth, there's a couple of little nitpicky things that can impact that. Things as simple as just business days in the quarter. This year, there were three less business days in Q1 when compared to last year. I know that may sound a little nitpicky, but that does drive an impact in terms of total new business production. You could even look at things at the timing of holidays. Whereas last year, Christmas and New Year's were both on a Friday, this year they're on a Wednesday. That can impact the amount of time people take off during those holiday seasons, which can drive a slight new business variance on a year-over-year basis. Those are just some of the things we saw in the quarter. Okay. I think you're probably getting at what I didn't appreciate. I guess lastly, since you've talked about the liquidity of franchise agencies, which we don't typically hear your peers, and obviously very different than your peers talk about, just curious, did you bring that up because kind of something's changed, or are you just kind of bringing up the fact that the less performing agencies have, I guess, a better route to finding some liquidity these days as you have more higher-performing franchises that are willing to buy them out? Just kind of curious if there's anything behind why you brought that up today. No, I think it's a natural maturation of our franchise system. You see this across other businesses as well. Also, we brought it up specifically to call out that we don't have really franchises failing as much anymore. At this point, the agencies that are in the system are doing a good job of continuing to generate new business. The ones that are leaving the system are people that are ultimately opting to liquidate and basically get the cash value out of their franchise. Now, a lot of those people are then staying in and continuing to work for the acquirer, which I think is ultimately a very positive thing for the franchise network. It continues to reinforce what we've always told people, that you're building a generational asset here. It allows us to go to a differentiated set of potential new franchisees and say, "There is a real liquid market for this business. You're not trapped in here. If you can generate something that looks really meaningful, you actually do have an exit opportunity if that's a path you want to take. What we've said before, the size of the franchise dictates the profitability and production of that franchise. As we're seeing these franchises consolidate together, they're going to make stronger franchises that produce more per agent. We look at it as a healthy thing that some of these franchises combine with larger ones. I appreciate the candidness and color. Thanks. Thank you. Our next question comes from the line of Paul Newsome from Piper Sandler. Your question, please. Yeah. First question, a little bit more on the geographic expansion thoughts. Is the improvement in the Texas and California market changing how you think about your expansion outside of those markets on the margin? I think about it. Good question, I think about it the same way that we've discussed on other calls. I still like the Texas market a lot, and we have a super strong presence here. I think the more geographically dispersed we can get, the better. Now, not all premiums are the same in all states, and every state has its challenges. When you just look at it and how carriers come in and out of markets, for us to be more diverse across our geographies will represent the population base in the United States and I think make us more stable and diversified over time. There are pockets of the United States that were way underrepresented, and I want to get to those and capture that opportunity. As a follow-up question, I was hoping you could talk a little bit more about the retention changes. I would have thought, or maybe this is too simple a way of thinking about it, that retention ultimately is about whether or not your customer can find a better product or a cheaper product typically elsewhere. Is that just too simple a way to think about it? Is the stability in the market really about maybe some more than competitive factors maybe becoming less aggressive? I do not know if we know exactly. Paul, I do not know if we know exactly how much is correlated to service and how much of it is correlated to pricing. We believe a large percentage is related to pricing. Back to your comment about best product, best price. Pricing stability does equal better retention. We have seen that outside the state of Texas where we have had more pricing stability, we have seen retention rates come up. We believe retention rates will continue to come up as pricing stability flows through based on what we have seen on rate increases. Yeah. Paul, you are just less likely to go shop if you get a 9% rate increase versus a 30% rate increase. When you get that 9% rate increase, you are probably more likely to go back to your independent agent that placed your policy with you versus you get that 30% increase. You are just mad. You want to go look elsewhere. As the kind of pricing normalizes throughout the year, expectation is we get nice improvement in client retention, which improves the renewal book, which is kind of a differentiated profitability line of revenue. What we've seen is when the price increases less than 25%, you start getting retention rates that look very similar to what we've had over our historic average for the company, like in the 90s, close to 90. We appreciate the help, guys. Thank you. Our next question comes from the line of Matt Carletti from Citizens. Your question, please. Hey, thanks. Good afternoon. I was hoping you could give a little color on, as we think about California and going kind of increasingly E&S and you guys thinking about growing there, can you give us a little color on kind of where kind of E&S capabilities fit into your book? And then numbers-wise, if you were to kind of grow that as a piece of the business, if it would have any noticeable impact on commission rates or anything like that. Yeah. The E&S product has been a really good arrow with our quiver, especially on the coast over the last few years just as there's been product constriction. That remains true today in California, although I don't think that's a permanent and long-term thing. I don't think it's going to be a big enough impact to actually look like it changes the average commission rate. Now, it might look like it changes the average commission rate for California. But remember, California is like 7-9% of our book. It's not going to make a really material difference on the entire business. I do think the admitted market comes back into California over time just as some of this stuff settles. I really don't think that's a long-term phenomenon. Okay. Great. And then a quick follow-up. You talked earlier about just product availability getting better, particularly in some tough markets like Texas, and that you expect kind of that to continue, I think you said, over kind of the next 6 to 24 months. Do you expect that to be kind of just slow, gradual, linear, whatever kind of the right word is there? Is there some sense from talking with carriers that I think about Texas, I think about a lot of the Midwest states where I think some products out in Tier 2, and you got spring weather, but you get to kind of mid-year, you get past that. Do you expect there to be kind of an opening of the valve of sorts once kind of past that risk season? Or do you think that's not really part of it and it's just more open a little, see how it goes, open a little more, so on? Yeah. I mean, the indications we're getting from our major carriers at this point is there's a little bit of a wait and see on wind and hail season. But there's strong indications that they want to come back into some of our major markets. I feel really good about what the product's going to look like going forward. Yeah. It could be kind of a chunky comeback of product, right? It could look like the third and Fourth Quarters look much better on a year-over-year basis than they did kind of the First Quarter. We'll see. I would expect likely after you get through hail season, it's a different market. We have seen. Thanks for your color. We have seen a real rise in these kind of new entrants coming in to fill the gaps where the product's not covered by the majors. So we still have product. They're just new players. Gotcha. Thank you. Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Mark Jones, Chairman and CEO, for any further remarks. Yes. I'd like to thank everybody for taking the time to join us on the call today. I appreciate your continued interest and support. We look forward to talking to you again in July. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.