Goosehead Insurance Inc. (GSHD) Reports In-Line Q3 EPS; Raises FY19 Outlook, Maintains Revenue Outlook

Goosehead Insurance Inc. (NASDAQ: GSHD) reported Q3 EPS of $0.08, in-line with the analyst estimate of $0.08. Revenue for the quarter came in at $21.2 million versus the consensus estimate of $21.63 million.

Third Quarter 2019 Highlights

• Revenue grew organically 32% from the prior-year period to $21.2 million.
• Total written premiums placed increased organically 44% from the prior-year period to $202.1 million, two-thirds of which occurred in the Franchise Channel.
• Policies in force grew 45% to 448,000 as of September 30, 2019, compared to 310,000 as of September 30, 2018.
• Net income attributable to Goosehead Insurance, Inc. of $1.0 million.
• Adjusted EBITDA* rose 37% from the prior-year period to $4.6 million.
• Corporate sales headcount of 232 was up 33% year-over-year.
• Total franchises increased 49% compared to the prior-year period to 828; total operating franchises grew 38% compared to the prior-year period to 583.
• EPS of $0.07 per basic share and $0.06 per diluted share, Adjusted EPS* of $0.08 per share.

“Our dynamic momentum from the first half of 2019 continued into the third quarter, as we generated another quarter of strong results, positioning us very well for sustained and significant revenue growth and margin expansion over the long term,” stated Mark E. Jones, Chairman and Chief Executive Officer of Goosehead. “Organic revenue grew 32% year-over-year, while our total written premium placed increased by 44%. Based on our experience, written premium growth is the best bellwether of future revenue growth. Once again, our Franchise Channel, in large part due to investments from our Corporate Channel, was responsible for the majority of our written premium growth during the quarter. As a reminder, as growth is increasingly driven by our Franchise Channel, there is a short-term lag created between written premium and revenue growth, since Goosehead receives 20% of first term policy revenues but 50% of renewal revenue in the Franchise Channel. This primes us for significant future embedded revenue and earnings growth, as well as margin expansion, in the years ahead. In addition to our excellent top line performance, we significantly grew our net income, Adjusted EBITDA and Adjusted EBITDA Margin on a year-over-year basis. It was another outstanding performance from our entire Goosehead team.”

“Our ongoing investments are aimed at maximizing client retention, and we are proud to have kept our retention rate steady at 88% and our Net Promoter Score at 90,” continued Mr. Jones. “Maximizing renewals is the longest economic lever in our business and we will continue to invest in our technology and talent to ensure our ability to execute at the highest levels. Our growth strategy remains very much intact and we are delivering on what we promised in terms of our growth and profitability, leaving us well positioned to create significant long-term value for our shareholders.”

2019 Outlook

The Company is raising its full year 2019 outlook with respect to total written premiums and maintaining its outlook for revenue:

• The Company expects total written premiums placed for 2019 between $715 million and $730 million, representing organic growth of 40% on the low end of the range to 43% on the high end of the range. The previous range was between $700 million and $725 million of total written premiums placed.
• The Company expects total revenues for 2019 between $80 million and $85 million, representing organic growth of 33% on the low end of the range to 41% on the high end of the range.

For earnings history and earnings-related data on Goosehead Insurance Inc. (GSHD) click here.

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