Earnings Call Transcript
Goosehead Insurance, Inc. (GSHD)
Earnings Call Transcript - GSHD Q3 2021
Daniel Farrell, VP Capital Markets
Thank you and good afternoon. With us today are Mark Jones, Chairman and Chief Executive Officer of Goosehead; Michael Colby, President and Chief Operating Officer; and Mark Colby, Chief Financial Officer. By now, everyone should have access to our earnings announcement, which was released prior to this call, which may also be found on our website at IR.GooseheadInsurance.com. 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. The forward-looking statements in our discussion are subject to various assumptions, risks, uncertainties, and other factors that are difficult to predict, and which could cause the actual results to differ materially from those expressed or implied in the forward-looking statements. These statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them. We refer all of you to our recent filings with the SEC for a more detailed discussion of the risks and uncertainties that could impact the future operating results and financial condition of Goosehead Insurance. We disclaim any intentions or obligations to update or revise any forward-looking statements, except to the extent required by applicable law. I would also like to point out that during this call, we will discuss certain financial measures that are not prepared in accordance with GAAP. Management uses these non-GAAP financial measures when planning, monitoring, and evaluating our performance. We consider these non-GAAP financial measures to be useful metrics for management and investors to facilitate operating performance comparisons from period to period by excluding potential differences caused by variations in capital structure, tax position, depreciation, amortization, and certain other items that we believe are not representative of our core business. For more information regarding our use of non-GAAP financial measures, including reconciliations of these measures to the most comparable GAAP financial measures, we refer you to today’s earnings release. In addition, this call is being webcast. An archived version will be available shortly after the call ends on the Investor Relations portion of the Company’s website at www.GooseheadInsurance.com. With that, I would like to turn the call over to our CEO, Mark Jones.
Mark Jones, CEO
Thanks, Dan, and welcome to our third quarter 2021 results call. We had another outstanding quarter with continued strong growth, significant talent acquisition, and notable enhancements to our technology platform. On the call, I will provide a summary of our key results in the quarter and highlight some of the continued investments we are making today that will drive our growth for years to come. President and Chief Operating Officer, Mike Colby, will discuss the launch of our Digital Agent platform during the quarter and further improvements we have made to our products and technology. CFO, Mark Colby will then go into greater detail on the quarter financials and our outlook for the remainder of the year. During the third quarter, growth in all areas remained powerful against a very strong year-ago comparison, further validating our dynamic and unmatched platform that puts the client at the center of our universe. Let me take a moment to highlight some of the substantial accomplishments during the quarter. Premium growth, the key leading indicator of future revenue growth continues to be very robust. In Q2, premiums grew 44%, compared to a year-ago quarter, policies in force were also up 44%. Our premiums in the franchise channel grew 50% for the quarter. And this growth provides excellent visibility into strong embedded and highly profitable revenue growth, as those policies reliably convert to renewal after one year, and our commission share jumps to 50% from the 20% we earned on new business. Our core revenues increased 41% over the prior year period. Total franchise count at the end of the third quarter was up 55% compared to a year-ago, operating franchises grew 38% during the quarter. Operating franchises outside of Texas grew 45% year-over-year, while Texas franchises increased 20%. As we achieve more diversification in our book of business, nearly 52% of our total franchise base is either in their first year or preparing to onboard. While this cohort provides minimal premium and revenue today, their predictable launch and production ramp combined with our increasing retention rates should yield significant growth over the next decade and beyond. Also, while our franchise unit count is growing rapidly, the unit productive capacity is also growing, as some of our more seasoned franchises are beginning to scale their business with new producer additions. This will be an important growth lever going forward. Our corporate agent team is up 35% year-over-year. And this is particularly impressive against the extraordinary growth we experienced in 2020, where we benefited from COVID effects in the job market and hired aggressively when unemployment was nearly 15%. Continued investments in the corporate channel remain critical to our long-term success as efforts in training, mentoring, and beta testing of new technology and processes help drive extraordinary growth and improve productivity of the more leveraged franchise channel. As a reminder, our corporate agents produce at approximately four times industry best practice, providing critical training, mentoring, and research and development functions for the company. Our data shows franchises within close proximity to corporate offices gain benefits in their business ramp-up and overall productivity. During the quarter, we expanded our offices in Westlake, Houston, and the Woodlands, Texas. By year-end, we plan to complete the office openings in Columbus, San Antonio, Austin, as well as a second office in Chicago. In addition to providing support to franchisees, these corporate offices help us scale nationally and enhance our college recruiting and career advancement opportunities in both the short and the long-term. We expect these new offices to support our near-term headcount growth, and they should scale very nicely through 2022. I'm particularly proud of our continued strength in the areas of client retention and net promoter score, which were 89% and 92%, respectively. This is a similar strong level to last quarter and higher than the year-ago level of 88% and 91%, respectively. These improvements have taken place in a challenging environment of active weather and increasing premiums. It is also noteworthy that we are driving retention improvements despite some level of drag from new business bias, given our exceptional growth rates and strong new business production. Once a policy renews, the likelihood that it will renew again grows significantly, but new business accounting for so much of our total overall retention rates are currently lower than we anticipate long-term. Our industry leading and improving performance on retention and NPS is a testament to our best-in-class service efforts which continue to benefit from investments in product, people, and technology, and the client first approach we bring to all aspects of our business. Even small improvements in retention provide material economic benefits for our business over time, as the overwhelming majority of our profits are in renewal revenue. A significant highlight of the third quarter was the launch of our Digital Agent Platform. We are extremely excited with the favorable response we have received from our clients, agents, and carrier partners. We are highly confident that this tool will allow powerful new revenue opportunities over time and in the near-term will enhance our existing go-to-market strategy and strengthen our agents' other referral business efforts. This is absolutely a completely unique offering to clients in the marketplace that provides an effortless, seamless, fast, and accurate shopping experience. I continue to encourage you to try as many other competitor offerings as you are willing to endure and then try our Digital Agent; you will be amazed. Mike will go into greater detail on the launch of the Digital Agent as well as additional technology and product enhancements we are making to the platform. So the Digital Agent is a new powerful tool for us; it is just one piece of the enormous total value proposition we bring to the entire marketplace. Clients, agents, and carriers are consistent and significant investments across product, people, and technology over nearly two decades are key to what makes us unique. Investors frequently ask us what is the most important thing that drives your business success? The answer is everything we do around the three pillars of our business: choice products offering, the very best sales and service agents, and unmatched technology. There are some companies with reasonable access to products, some with good technology not as good as ours, and some which use agents. But no company in the market brings all three of these critical elements to bear for clients with the expertise that we have. And no company has come close to delivering results like Goosehead. Building this incredible business requires the benefit of time, which provides the advantages of vast and valuable accumulated experience that can only be achieved through hard work earned with clients for nearly two decades. This is the driver of our significant and expanding competitive moat. Our company has been built with laser focus on the needs of the client. And I maintain that if our model could be replicated, it would have been by now. I couldn't be more excited for the future of Goosehead; we are by far the best-positioned company in the marketplace and we are only getting better. Our runway for growth is expansive and our ability to take sizable market share continues to improve. We will remain consistently externally focused and maniacally driven towards our long-term goal of U.S. personal lines industry leadership. I would like to thank our amazing employees and franchisees for their tireless efforts and enthusiasm in our march toward our goals. With that, I will turn it over to Mike.
Michael Colby, President and COO
Thanks, Mark, and hello to everyone on the call. We are very pleased with the launch of our Digital Agent Platform. And as Mark indicated, feedback from all our key constituents has been overwhelmingly positive. This simple seamless digital experience is highly differentiated considering that it is powered by agent-driven machine learning and accumulated experience from nearly two decades serving the personal line space to vast amounts of data accumulated from over 30 million quotes designed by our expert agents across the U.S. Deep integrations with our insurance company partners and other data providers allow us to deliver a digital client experience that is unmatched in the space. I can't overstate the disadvantages compared to the other competing offerings using artificial intelligence powered by uninformed and inexperienced consumer behavior. Our clients make no trade-offs; they get the benefit of expert agents providing a high quality custom insurance solution, and competitive transparent pricing delivered seamlessly and digitally. We are very pleased with, but not surprised by, the excellent ratings received from clients that have engaged us on this new platform, evidenced by a 96 net promoter score since the business launched. We continue to enhance the Digital Agent platform with additional product offerings and deeper carrier integrations. Along with home and auto insurance, we are also offering flood, condos, and renters coverage options as part of the digital agent experience. Additionally, we partnered with Echo's Life this past quarter and will soon be offering life insurance coverage digitally. These product enhancements will continue to benefit the client and will also enhance cross-sell opportunities, improving the lifetime value of our clients. Specifically with flood insurance, we have seen significant improvements in retention when it is added to the client's insurance portfolios. With continued efforts around deeper carrier integrations, we expect to be able to provide a full quote issue experience to clients across multiple carriers and products in 2022. Most importantly, however, the significant benefits and safeguards that an expert agent brings to the process will not be lost to the client and remain active and present in the background. For the release of this technology, as we have done with all new technology released previously, we look to get it into the hands of our clients and agents as quickly as possible, and then focus on driving user adoption, optimization, and best practices. We see immediate opportunity to leverage this technology through an enhanced referral partner experience that will allow us to capture more share of their business, increased opportunities to drive referrals from our existing clients, and increased opportunity for cross-selling as we continue to expand products and the platform. Looking further out to 2022 and beyond, we see opportunities for additional growth through targeted marketing and other digital strategies to drive traffic to the site in ways that will be economically sound. We have been able to build an amazing company with growth rates in excess of 40% a year with virtually no advertising spend. Importantly, as we look forward, we will always compete on our terms and will define our field of competition to find the best ways to fully leverage our enormous competitive advantage and moat in the marketplace.
Mark Colby, CFO
Thank you, Mike, and hello to everyone on the call. For the third quarter of 2021, total written premiums, the leading indicator of our future core and ancillary revenue growth, increased 44% to $435 million. This included franchise premium growth of 50% to $318 million and corporate segment premium growth of 32% to $117 million. This growth is being driven by increasing retention rates, strong new corporate and franchise agent growth, and increasing agent productivity in the franchise channel. The continued shift in our mix of business towards the faster growing franchise channel implies significant embedded future revenue growth, as the new business premiums reliably convert to renewal premiums, which in turn increases our royalty fee from 20% to 50% for ongoing renewals for the life of the policy. At quarter-end, we had roughly 948,000 policies in force, a 44% increase from a year-ago, and another leading indicator of the momentum in our business. Revenues were $41.7 million for the quarter, an increase of 30% from the year-ago period, while core revenues grew 41% to $37.2 million for the quarter. Ancillary revenue, which includes contingent commissions, was $2.5 million in the quarter compared to $4.2 million a year-ago. While it is difficult to predict foreign contingents, even at this stage of the year, given auto loss trends and weather activity thus far, we expect contingents in the fourth quarter to be in the $2 million to $4 million range. This would put foreign contingents at $9 million to $11 million, or roughly 60 to 70 basis points as a percentage of full year premium. On a normalized go-forward basis, we believe it is reasonable to assume around 80 to 85 basis points of contingents, as a percent of annual premium. However, any year can vary significantly from this level, as evidenced by 2020 and 2021 contingencies. The franchise channel generated core revenue of $17.2 million, an increase of 54% from the year-ago period. At the end of the third quarter, we had roughly 1,958 total franchises, up 55% from the prior year, and 1,139 operating franchises, up 38% from a year-ago. We also continue to invest heavily in corporate agent hiring and national expansion to facilitate the franchise channel growth and productivity. Corporate sales headcount at the end of the third quarter was 502, an increase of 35% from the year-ago quarter. Our corporate investments are critical to driving franchise productivity levels and we envision that the investments we have made over the past year are an appropriate level of investment to successfully support our expanding franchise footprint. Corporate channel core revenues were $20 million in the third quarter, an increase of 32% compared to the year-ago period, as new agents continue to ramp up productivity over their tenure. Total operating expenses for the third quarter of 2021 were $38.1 million, up 52% from $25 million in the prior year period. Compensation and benefits expense was $26.1 million for the quarter, up 46% from the year-ago period on a 41% headcount. The increase in compensation and benefits is driven by our ongoing investments in headcount across the organization, particularly the hiring of corporate sales agents in support of the franchise channel growth, service agents to manage our largest revenue stream renewals, recruiting and onboarding functions to continue our growth trajectory, and systems developers to ensure our technologies are on the cutting edge for our clients and internal users, as evidenced by the recent launch of the Digital Agent platform. General and administrative expenses for the quarter were $10.1 million, an increase of 73% from a year-ago, with the increase due to expanding real estate footprint, higher travel and entertainment expenses, as the U.S. economy continues to reopen, and investments in our newly designed website and client-facing portal as well as the number of carrier integration projects. Additionally, 2020 G&A expenses were artificially low due to COVID lockdowns; the hiring of employees and onboarding of franchisees, combined with the opening of new offices had an immediate impact on the G&A expense that will benefit revenue scale over time as we onboard agents and they ramp up their production. Total adjusted EBITDA in the quarter was $6.6 million, compared to $9.3 million in the prior year period. We have been investing heavily for future growth and producer headcount, expanded office footprint, and our Digital Agent platform. Heading into next year, we expect these investments to begin to scale nicely as we do not expect to see the same step function increase in real estate expenses. We also expect some new revenue benefits from the Digital Agent to ramp up and help offset initial and ongoing development costs. Although laying the foundation to drive growth is more strategically critical to the business than focusing on margin expansion at this time, we view the last two years as unusually high from an expense growth perspective—2020 as it relates to compensation expense growth, due in part to opportunities created by the pandemic, and 2021 related to other G&A of strategic investments we have highlighted. Looking ahead to 2022, we would expect overall expense growth and margins to roughly align with levels observed in 2019. Over the longer term, we expect to deliver high and sustained levels of both revenue and profit growth. As of September 30, 2021, the company had cash and cash equivalents of $25.2 million. During the third quarter of 2021, the company refinanced its $25 million revolving credit facility ability and $77 million term note payable to a $50 million facility and a $100 million term note payable agreement. Our unused line of credit was $24.8 million at quarter-end. Based on our experience to date, the company is raising its full year 2021 outlook with respect to total written premiums and revenue. Total written premiums placed for 2021 are expected to be between $1.54 billion and $1.56 billion, representing organic growth of 43% from the low end of the range to 45% on the high end of the range. Prior guidance issued was for organic premium growth between 40% and 45%. Total revenues for 2021 are expected to be between $149 million and $155 million, representing organic growth of 27% on the low end of the range and 32% on the high end of the range. This assumes continued strong growth and $2 million to $4 million of contingent commissions for the fourth quarter of 2021. Prior guidance issued was for organic revenue growth between 25% and 33%. Our strong growth in the first three quarters of 2021 and the important strategic investments we have been making over the last couple of years position us well for a strong close to 2021, with continued momentum into 2022 and beyond. I want to thank everyone for their time. And with that, let's open up the lines for questions.
Operator, Operator
Thank you. We will now begin the question-and-answer session. Our first question comes from Matt Carletti of JMP. Please go ahead.
Matthew Carletti, Analyst
Mike, you commented on the new direct portal out, I think you termed it 'overwhelmingly positive.' I was hoping to give maybe a little more color just on what you are seeing, either qualitatively or quantitatively in terms of productivity, conversion rates, just kind of how things have progressed over the quarter since that has been live versus what your initial expectations might have been?
Michael Colby, President and COO
I think there is very limited data to provide anything quantitatively to you. I mean, certainly, it is something that we are paying close attention to, and over the course of time, we will decide kind of what are those KPIs that we want to release. I can tell you qualitatively that our initial thesis of saying this is going to be a powerful tool to augment the efforts of our existing go-to-market strategy, which includes leveraging our agents' efforts and driving productivity through referral partner penetration and capturing full share of business through enhanced levels of client referrals, and then also on the retention front, we look at the data and the feedback qualitatively has been very positive and encouraging, and there is surely opportunity there. And I just want to reiterate what I said in the prepared remarks: this is consistent with every technology release that we have done historically. It is about speed to market, getting the technology in the hands of the users, in this case, also the consumers and our clients, and then starting to focus on optimization, iterating the technology through feedback from the users, and defining best practices and disseminating best practices. So we believe that it is much more valuable to have an aggressive release timeline and to focus on user adoption and optimization. And we are certainly very confident that that approach will deliver results that we manifest in the financials in the near future.
Matthew Carletti, Analyst
Got it. Thank you for that call. It was very helpful. And then just the numbers question, I guess, Mark, the bigger tax benefit in the quarter than what we have seen in a lot of the recent quarters. Just wondering if there is anything, you know, outlier there, how we should think about that. And then just, you know, how we can think about the tax rate going forward?
Mark Jones, CEO
Yes, the primary thing that is driving that is employees exercising the stock options, which creates a taxable expense. That is different from the way we do it from a GAAP perspective. As far as modeling that out, your guess is as good as mine, really, it is all about employee behavior. When we got best and whether or not they choose to exercise them. I think it is important, absent any kind of information on options' exercise activity, I think it is reasonable to assume a more normalized tax rate and then throughout the quarter, just kind of monitor for options that are exercised to see if there is any potential tax benefits that could be created.
Matthew Carletti, Analyst
Okay great. Thank you for the answers and best of luck on board.
Mark Jones, CEO
Thanks, Matt.
Operator, Operator
Our next question comes from Ryan Tunis of Autonomous Research. Please go ahead.
Ryan Tunis, Analyst
Good evening, guys. First question on, I'm thinking about expenses moving forward. I think you said that next year, you expect the growth rate of operating expenses to be more like 2019, less like 2020 and 2021. A couple years it has been a high 40% since in terms of percent expense growth, but in 2019 it was low 30s. I just want to make sure I heard that correctly that you are thinking that your expense growth next year will be somewhere around 30% to 35%?
Mark Colby, CFO
Absolutely. Now, we are going to continue to make investments. By 2020 and 2021, we were very unique. 2020, there was a spike in compensation expense, just given the labor market and our ability to onboard a bunch of employees. And then for 2021, there was some additional spend on G&A getting ahead of some of our rent expenses, and really a step function increase there. Again, we are going to continue to hire next year; we are going to continue to grow. G&A will be more in line with 2019 levels.
Mark Jones, CEO
We did over several offices and with the new kind of accounting standards around leases, when you start to swing a hammer, you have to start recognizing rent expense. Even though, we don't pay it until we are moved in generally. So you have some artificial inflation there as we kind of build out the office network. We don't anticipate a lot of addition next year for new offices; you should expect in 2023 that there will be, but in 2022, we don't anticipate many.
Ryan Tunis, Analyst
Got it. And then you also mentioned that agent productivity is up. It is tough to mitigate the output; I have been having a hard time getting there. I was just looking at franchise, the new business franchise royalty fees and like 30% this quarter, that was a deceleration versus what we have seen the past few; like if I concluded, was that new business productivity was actually slipping a bit? But can you just talk a little bit about what is going on there? What are the headwinds: mortgage origination, commission rate, lower premium per policy in new states? What are some things to think about in terms of why that number could be decelerating?
Michael Colby, President and COO
When we talk about agent productivity increases, it is really bifurcating between Texas and non-Texas. Texas is arguably the best insurance market in the U.S. with the highest premiums. And we have been here the longest and have fixed concepts here. But that is why we are bifurcating; we are seeing growth in both Texas and non-Texas productivity. However, we have launched 82% of the franchises, I believe that is the number this year, outside of Texas. So I think that might be kind of on a blended basis where you are seeing that in the business royalties.
Mark Jones, CEO
I think there is a natural seasonality in the business that is built in. It is not, I think, accurate to look at things quarter-over-quarter, but you do see natural seasonality there. I mean, the internal metrics that we look at on a report basis suggest that we are seeing very nice levels of - the metric we look at internally. We don't disclose that new business, same-store sales. So we are very, very happy with the productivity results there.
Ryan Tunis, Analyst
And I guess, kind of productivity or renewal premium type question is just we are talking about a hard market in personal lines both home and auto. I get that there are some issues with retention, but for those who do retain, I would think there is a one-to-one relationship between rate increases and renewal commissions, the economics closer to you want to make some thinking about that, right?
Mark Jones, CEO
So we have a small tail end, and I mean, but when you are growing organically total written premiums at 40% plus, it doesn't really make a material difference. As it relates to retention, we have been through hard market and soft markets, and the value of an independent agent with a choice product portfolio allows us to keep the client relationship intact while we move them into different insurance solutions. So we don't anticipate that being a negative impact on our retention rates.
Michael Colby, President and COO
In fact, our client retention has gone up from 88 to 89 recently, and because of the harder market, premium retention has also gone up from 89 a couple of quarters ago to 92 now. That is why we are really focused on my client retention numbers, because it negates all the premium fluctuations that can happen and are outside of our control.
Ryan Tunis, Analyst
Thank you.
Operator, Operator
Our next question comes from Mark Hughes of Truist. Please go ahead.
Mark Hughes, Analyst
Thank you, good afternoon. Could you maybe spend a little bit on the marketing strategies you are considering or executing on now that drive traffic for the Digital Agent platform? I think you said that you wanted to make sure that economically sound, sort of curious what your options are in terms of what you are looking at?
Michael Colby, President and COO
Well I can tell you what is not an option, and that is competing with the very crowded space of personalized advertising at $100 a click. I mean, the customer acquisition costs in the space are absurdly high, over $1,000 for the customer; it is not where we are going to compete. I think GEICO spent close to $2 billion on advertising last year. So, that is not where we are going to compete; it is crowded. We believe it has created a lot of noise and, quite frankly, has really been a distant from misinformation campaign by a lot of folks in the space. What we can do and what we have done for close to two decades now is focus on bringing the best product and the best client experience to market and leveraging our referral network. We think there are digital marketing capabilities that we are building, and we will be utilizing that will allow us to amplify that effort, but it is certainly not going to be competing in that crowded space and blowing up our margins to do so.
Mark Jones, CEO
Mark, this is Mark Jones. We have sort of taken, as Mike said, the reverse order of what a lot of these competitors that call themselves lead generators do. They come to the market with a lot of hype, spending a lot on marketing, but the underlying product is garbage. They are where they are using AI; it is based on consumer data. So you have people making mistakes that get amplified over and over. What we did, as Mike said, we have sort of developed the product, we are bringing it to market, and if we are going to be completely honest, we don't have all the answers yet as to how we are going to sort of drive market penetration in the direct channel. We are doing a lot of things that will drive organic search results in terms of, sort of getting content out on the web, and we have our Chief Marketing Officer working on a bunch of strategies for that. But it is a little bit like, with our sort of traditional channels of distribution, no one has ever figured out how to grow at 45% a year spending virtually nothing on advertising, except us. That gives me a lot of confidence that we are going to figure out how to drive growth there in a way that doesn't just destroy economic value, like literally all of the other guys in this space are doing.
Mark Hughes, Analyst
Understood. In terms of the expense growth for next year, you were pretty clear, similar to 2019 levels. Did you say that you would look for EBITDA margins to be similar to 2021 next year?
Michael Colby, President and COO
I think it is—we are not giving EBITDA guidance or EBITDA margin guidance. But given some of our comments, I don't think it is unreasonable to model out similar margin profiles to those in 2019. Again, growing at 45% plus, it is hard to narrow down in any given year what you are going to spend—definitely any given quarter—but I think that would be fair.
Mark Jones, CEO
One of the key reasons we don't give earnings guidance is because almost all of our investment risks through the P&L, and we want to be nimble; we want to take advantage of opportunities. That is what helped drive success for almost two decades, and we are going to continue to do that.
Mark Hughes, Analyst
Thank you. And then one other question, that non-controlling interest, if you just look at it simplistically relative to net income was lower this quarter, is that part of that tax phenomenon?
Mark Colby, CFO
Yes. That is part of it, too. And then again, as we said, over time, as the historical owners trickle out, some of the stock sales, and that is going to continue to increase the controlling interest and decrease the non-controlling interest.
Mark Hughes, Analyst
Thank you very much.
Mark Colby, CFO
Thanks, Mark.
Operator, Operator
Our next question comes from Mark Dwelle of RBC Capital Markets. Please go ahead.
Mark Dwelle, Analyst
Yes, good afternoon. Most of my questions have already been answered. But one thing I wanted to ask about your just with the difficulty, so many companies are having in hiring people. I was wondering how you were seeing just franchise applications and follow through to kind of fill the ranks, as it were, relative to what you were seeing maybe earlier in the year last year?
Mark Jones, CEO
I think we are outperforming our internal expectations on the franchise sales side in a very encouraging way. We offer a value proposition that is truly unmatched to entrepreneurs to build wealth and have a fulfilling career with a very modest initial investment, and that value proposition continues to resonate in our franchise efforts. There is not a business in America that could say there is a tailwind in the labor market right now. But nonetheless, we have a very equipped recruiting team to manage through that, and it has not slowed down our growth; what you can see from the guidance that we have provided on that core predictive metric of revenue growth total written premium. We are still very, very confident in that. And we feel like we are well prepared to continue to sustain and accelerate that growth going into 2022. It is not to say we are not met with challenges; it is just, I think, a testament to our team's ability to navigate through those challenges, our culture, and it is a testament to the value proposition that we provide to both employees and franchise candidates.
Mark Dwelle, Analyst
Thanks for the color on that. One other just really brief question is you refinanced or returned out some of your debt in the quarter. The terms on that any seem like different than the older looks like is primarily just an expansion of a term note?
Mark Colby, CFO
Yes, the terms are relatively the same. With the additional leverage, we bumped up a couple of tiers on the interest rates. But again, as quickly as we deliver as we grow our EBITDA, that will come down over time.
Mark Dwelle, Analyst
Thanks for that. Those are all my questions.
Mark Colby, CFO
Thanks, Mark.
Operator, Operator
Our next question comes from Chris Martin of KBW. Please go ahead.
Unidentified Analyst, Analyst
Hi guys, thanks for having me on today. Impressive mayor. Pretty busy afternoon. So the one thing I want to ask is really about the agent part of it also, just engagement you guys are getting, and you really talk a lot about your NPS looks awesome. The agent experience, but what I'm seeing from the insurance side, and insurers like one appetite to get involved with your agent portal, but also the other technological side? How easily are they able to connect into your portal? And what types of insurers that you kind of seen to be able to get up and running?
Mark Colby, CFO
I think, to your first question, our insurance company partners are enthusiastically supportive of our technology endeavors; particularly the Digital Agents platform that we have developed, that we continue to invest in. What they see is, and because the technology is powered by expert agents' insights, it allows us the ability to very precisely match risk with risk appetite and drive profitable underwriting results and growth for our insurance company partners. Not to mention the fact that we have almost 30 quality analysts on staff that are reviewing every single policy that we write to make sure that it is within their guidelines and within their appetite. So I would say we have demoed this for all of our partners, and again, it has been met with enthusiastic support. The second part of your question?
Unidentified Analyst, Analyst
Sure, if there are any hurdles, on the technological side for insurers to be able to actually connect to the portal and just briefly chat about how that works and which type ?
Mark Jones, CEO
Yes, there is a massive disparity between the least capable insurance company partner of ours and the most capable. There are partners of ours that would reside everywhere in between that continuum. If it were up to us, we would have gotten our technology goals accomplished five years ago. Because of our buying power, and because of our scale and the long history of our relationship with these partners, they are willing to make differentiated levels of investments on their technology side to accomplish our shared goals. Ultimately, they are shared goals. We want to provide a great client experience, we want to drive profitable growth, we want to be the lowest cost distribution partner for the insurance companies. So what you will see over time is our more advanced—like I mentioned, in 2022 having multiple carriers to roll out with those capabilities as we complete the projects with them. I can say that it is very rare that any of our partners are waiting for us; it is typically the other way around. As new carriers finalize the deeper integration processes, and are equipped to handle issue quotes, we will see those types of options rolling into the results on our Digital Agent platform. We will never get to a point where all of our partners will be able to do that or that we will provide that for every segment of the market. Our private client segment is so complicated that it wouldn't be a great client experience to ask them to do that on their own—it is too complicated, there is too much at risk. But it will be a specific approach to different segments of the market based on kind of where they are located geographically and what the capabilities the carriers that are addressing those local market needs provide. I would expect, I think it will be very exciting for you to see over the course of 2022 these companies developing these capabilities to do quote issues. I think we will have a critical mass of companies that allow us to provide a legitimate choice offering in all of our major markets, flow to issue by the end of next year. So we are very excited about that progress we are seeing, and not to mention ancillary products. Like I mentioned, the GEICO Life, which is going to be a great, seamless, cross-sell opportunity for us to flood insurance, landlord insurance policies, all of this that is not available anywhere today, in a single platform with a choice product offering.
Unidentified Analyst, Analyst
This is kind of a follow-up really related question is. I think describing all of that, and you are proving out in the market. What does the business development look like from a set of inbound versus outbound type of relationship there?
Mark Jones, CEO
Right, I mean, we believe the role of the agent is critical today. It remains a technology and routing effort, and we are experiencing that from past endeavors. We have a solid plan to ensure that inbound traffic is routed and served expediently. Most importantly, for our consumers to know that when they are requesting an insurance quote from an agent, we never sell their data. We protect their privacy, and we assign them with a specific agent that is equipped to meet their specific local needs. They have that one-to-one relationship. We are not trying to monetize the data in any way. We are seeing some enhanced levels of inbound traffic based on a small base and have been very effectively able to route that, respond, and deliver an excellent client experience as evidenced by a 96 net promoter score for those consumers that are engaging on the Digital Agent Platform.
Unidentified Analyst, Analyst
Excellent. Thank you very much. That is all I had for now.
Mark Jones, CEO
Thanks, Chris.
Operator, Operator
Our next question comes from Pablo Singzon of JPMorgan. Please go ahead.
Pablo Singzon, Analyst
Thanks and good afternoon. I think you outlined about maybe three or four incremental revenue opportunities that you see with the Digital Agent Platform. And, recognizing that it is early days, I was wondering if you could rank those opportunities based on the relative size? And I guess, if we focus on one that you mentioned, increasing shared with referral partners, could you provide context and where that stands today, just in order for magnitude? And I guess the kind of opportunities do you see there? Thanks.
Mark Jones, CEO
I don't think that there would—we look at those as mutually exclusive priorities. We are attacking those from every angle. There is a lot of value that can be created across all of those efforts. Integrated into the loan origination process earlier and capturing more share of a referral partner's business is going to help anchor that account and drive agent productivity. Driving increased levels of cross-selling will obviously enhance our new business per new account, but also increase the lifetime value of the client through enhanced levels of retention. Putting tools into our existing clients' hands, where they can shop their insurance policies when they see rate increases proactively or when they incur different life events will not only remove work from our agents' place and increase productivity, but that will drive retention. I wouldn't say that any one of those is the number one priority. I think we can attack all of these areas with vigor, and not with our existing resources, and not have to make any specific tradeoffs there.
Pablo Singzon, Analyst
Got it that makes sense. And then my second question, sorry.
Mark Jones, CEO
One thing that I didn't hit on is just the recruiting benefit of this tool. That is going to be a lever for growth. That is another area that, anecdotally speaking, is providing us with a lot of momentum in the recruiting effort is seeing kind of this tangible tool that agents can work with kind of during the recruiting process and then understanding that there is nothing else like this on the market. I do think that is going to provide some wind in our sails as it relates to recruiting.
Pablo Singzon, Analyst
Understood. And then my second question is if you measure franchise productivity in terms of premiums for a franchise, that has been going up for you the past couple of years, I think, maybe 2019 is about $900,000 and now it is about $1.1 million? I guess the question is, what kind of upside do you see this metric as more of your franchises mature? And I guess conversely, it seems like the opposite has been happening in the corporate channel and I think in the back you had said that, serve a due to efforts of corporate agencies apart from franchisees. Also, I think, a change in business mix, right? So I guess, if you can speak to those productivity metrics, high level and where you see them trending over time? Thanks.
Mark Jones, CEO
I think the productivity, it is interesting; we are seeing strong levels of productivity from our more seasoned franchisees, both from hiring producers and scaling their sales efforts, but also as they leverage technology as they continue to become more proficient and efficient in the sales and marketing process. We are seeing kind of individual productivity levels improve as well. That is a big area of investment for us and the strategic rationale of our corporate channel. We are very happy with what our corporate agents are doing both by defining best practices, but by working very effectively to disseminate that information and drive productivity in the franchise channel; that doesn't happen by accident. Even on the recruiting side, a big part of our value proposition to those more senior tenured franchisees is teaching them the people process that has worked for us for nearly two decades and has allowed us to effectively scale our corporate channel.
Pablo Singzon, Analyst
Great. Thanks for the answers.
Mark Jones, CEO
Thank you.
Operator, Operator
Our next question comes from Josh Shanker of Bank of America. Please go ahead.
Joshua Shanker, Analyst
Thank you for taking my question. I may have missed it, but I don't think I did. What is the operating franchise under contract number for the quarter?
Mark Colby, CFO
1,801, so franchises and then operating -.
Mark Jones, CEO
1958 total.
Mark Colby, CFO
And 1,139 operating franchises, up 38% from a year-ago. We also continue to invest heavily in corporate agent hiring in national expansion to facilitate the franchise channel growth and productivity. Corporate sales headcount at the end of the third quarter was 502, an increase of 35% from the year-ago quarter.
Joshua Shanker, Analyst
Okay, great.
Mark Jones, CEO
We are also seeing strong levels of growth in both Texas and non-Texas productivity, as we have launched 82% of the franchises outside of Texas. And one other unrelated question given where pricing is right now in the auto and home markets. A lot of companies are going to take rate here. Are you seeing any changes in commission rates in order to sort of close the funnel to some extent to new business given where margins are for the underwriters? Not for scale distributors as you said. I mean, I think if you are subscale, you are certainly feeling pressure and have been for a long time. But we have very stable compensation arrangements. In fact, as we continue to scale and deliver on our value proposition for the insurance company, with high levels of growth and high levels of profitable growth, most importantly, we are seeing enhanced compensation opportunities. I mean, it doesn't mean there is not a step function increase in any one year, but if you look at trends over the long-term, we feel very confident that our compensation levels will remain stable and grow more favorable.
Joshua Shanker, Analyst
Okay. Well thank you for all the answers and getting into the late hour. Thank you.
Mark Jones, CEO
Thank you, Josh.
Operator, Operator
This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Jones for any closing remarks.
Mark Jones, CEO
I just like to thank everyone for listening and for your participation today, and wish you all a good evening.
Operator, Operator
This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.