Goosehead Insurance, Inc Q4 FY2025 earnings call

Mark Miller discussed the business positioning, stating personal lines insurance distribution is a long - term business. For 2025, growth in total revenue, adjusted EBITDA, and improved client retention, policies in force, and productivity across distribution networks. The insurance market is coming out of a hard market, and AI is beginning to impact the personal line space with strategic implementation. In the franchise network, prioritizing quality over quantity led to productivity gains, higher gross payments per franchise, increased producers per franchise, and more book acquisitions. On the corporate side, reset the agent footprint, expanded to new geographies, and saw new business growth reaccelerate. The enterprise sales and partnership network gained traction. Mark Jones Jr. talked about how strategy translates to execution and economics, with focus on franchise network productivity, corporate sales organization, enterprise sales growth, and technology's role. Technology investments include a digital agent platform with end - to - end binding capability, and AI integration in service, matching carrier risk appetite with client demand, and new business generation.

For the full year 2025, total revenue grew 16%, adjusted EBITDA grew 14% with an adjusted EBITDA margin of 31%. Core revenues for the quarter grew 15% and 16% for the full year. Total written premiums for the quarter were $1.1 billion, growing 13% over prior year, and $4.4 billion for full year 2025, up 17% over 2024. Policies in force grew 14% to $1.9 million, accelerating from 13% growth in Q3 2025. Franchise premiums for the quarter were $896 million, up 15%, and corporate premiums were $194 million, up 4%. Ancillary revenues were $25.3 million for Q4, full year $41.1 million. Cost recovery revenues for the quarter were $1.8 million. Adjusted EBITDA for the quarter grew 5% to $39.2 million, full year adjusted EBITDA was $113.6 million, growing 14% with a 31% margin.

For 2026, total revenues are expected to grow organically between 10% and 19%, total written premiums are expected to grow organically between 12% and 20%. Expect low double - digit core revenue growth in the first half of 2026 due to year - over - year pricing dynamics and franchise consolidation short - term impact, with acceleration in the second half as pricing changes are more consistent, client retention improves, and benefits of partnerships and Digital Agent 2.0 investments take hold. Expect margins to be modestly down in 2026 as investing in AI, Digital Agent 2.0, and partnerships. Board of Directors authorized an additional $180 million share repurchase authorization.

Q: Just in terms of the guidance for next year, how are you thinking with regards to home closing transactions? And how are you thinking about the insurance pricing environment?

A: Mark Jones Jr. said in terms of home closings, agents have continued to get lead flow and they are decoupling business from housing market ebbs and flows, and pricing, bottom end of guidance range includes generally down pricing, top end includes moderate increases in homeowners pricing.

Q: A couple of big picture questions. First, thanks for all the color on kind of how you're using AI, but maybe you can talk a little bit about why you don't think agents will be disintermediated through the use of AI?

A: Mark Miller said auto may become more commoditized over time, home remains complex and clients want human guidance, carriers want to sell to high - quality clients, and Goosehead's service function is unique. Mark Jones Jr. added about the complexity of distributing in a choice model directly to consumers, state regulators, product variety, and only Goosehead can bind policies end - to - end without human intervention.

Q: What is the latest number, and I apologize if you gave this earlier in the call, but the investment spending, kind of elevated investment spending in 2026?

A: Mark Jones Jr. said 2026 investment spending is $25 million to $35 million total cash, $8 million to $11 million hits P&L, with $2.9 million in Q4 2025 related to Digital Agent.

Q: Back to the producer trend lines. Could you comment on franchise producers. It's been a bit volatile decline just a bit sequentially. I know it's better than expected last quarter. I think we heard you loud and clear about the franchise consolidation. But how about -- do you expect producers at the franchise to increase at a more meaningful rate as the market opens up?

A: Mark Jones Jr. said agencies are looking forward to hiring, producers per franchise was up to 2.1 in Q4, and expects to continue pushing that number up, with larger franchises being able to hire and onboard more people easier.

Q: I wanted to circle back to the Net Promoter Score for the quarter. And normally, I wouldn't focus on this metric so much. But if I think, the lowest that we've seen in quite a while. And I just wanted to, a, ask for a little bit more color on perhaps what impact about this quarter? And b, circle back to the discussion of the impact of the rollout on the Digital Agent 2.0 platform, and how that has sort of impacted your clients view of interacting with Goosehead and really how you foresee the further rollout of the Digital Agent 2.0 platform competing with other similar platforms from your competitors?

A: Mark Miller said NPS is a trailing 12 - month metric reflecting earlier price increases, started working on CSAT score which is holding steady, and retention is moving up.

Q: Also a little bit of a follow - up. I apologize if you already hit this or maybe you could just expand upon it. The guidance or at least you're thinking for the next year or so, does that have any view on product availability changing over the time? I know that was at 1 point an issue with sales. And maybe just some general thoughts on the -- are we at the point where everyone is open. It's just not an issue? Or is there some sort of expectation that maybe it continues to get even better?

A: Mark Miller said on auto side it's been wide open for a bit, home is about 50% open towards end of year, and generally no significant product availability issues now.

Q: First question, I want to make sure I heard this correctly. It sounded like in your discussion of '26 objectives that you're assuming a slightly lower take rate on the contingents. So that's question one. And if that's right, I was wondering if your margin guidance, excluding contingent commissions allows for any improvement?

A: Mark Jones Jr. said base case assumption for 2026 contingents is between 60 and 85 basis points, and margins are expected to be impacted by investments in Digital Agent platform and partnerships, with confidence that long - term at scale it will be accretive to margin profile.

Q: So first question, you've framed the high end and low end of guidance in terms of drivers such as pricing and retention. So should we take your comments about the first half core revenue growth being in low double digits as a representative of the midpoint? Because yes, it seems like a steep trajectory in the second half to get the midteens for the full year. So just wondering if you could comment on that point.

A: Mark Jones Jr. said they try to be as honest as possible in guidance and guide to what they believe will happen.

Q: Just a quick one. On premiums coming out of Texas, I think last update, that was at very high 30s. And just curious if that's -- do you expect that to stabilize and go back up? Or are we still kind of mixing out of Texas a bit?

A: Mark Jones Jr. said they are continuing to diversify outside of Texas, and expect the Texas proportion of total written premium to continue to decline as the rest of the country grows