Operator: Good day, and thank you for standing by. Welcome to the Goosehead Insurance second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Maddie Middleton, Senior Director of Investor Relations. Please go ahead.

Maddie Middleton: 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 discussions are subject to various assumptions, risks and uncertainties that are difficult to predict and which could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These statements are not guarantees of future performance, and therefore, reliance should not be placed on them. We refer you all to our recent SEC filings for a 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 in 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 including 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 the use of non GAAP financial 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 made available shortly after the call ends on the Investor Relations portion of the company's website at goosehead.com. Now I would like to turn the call over to our CEO, Mark Miller.

Mark K. Miller: Thanks, Maddie, and good afternoon, everyone. Thank you for joining us today for our second quarter 2026 earnings call. Before I walk through the quarter, I want to start with a little perspective. 4 years ago when I joined the management team, we were navigating a business that had significant untapped potential but also had some real challenges. Since that time, we have fundamentally transformed this organization. We restructured our corporate and franchise agent forces, raising the bar on quality and productivity across both networks. We grew our corporate footprint to more than 12 offices across the country, We launched and expanded ASP, our internal staffing support program, for our franchise owners. We launched our enterprise, sales, and partnership businesses from scratch. And they are now unlocking access to millions of new potential clients. We built a world class technology team that delivered The United States' first true end to end choice shopping platform for personal lines insurance. We increased total written premiums from approximately $2 billion in 2022 to well over $4 billion today. We rightsized our cost structure while preserving our capacity to grow. We grew adjusted EBITDA from under $40 million in 2022 to over $130 million in our last 4 quarters, and expanded our margin meaningfully through the hardest product market in 50 years. We did all this while returning significant capital to our shareholders, and maintaining a conservative balance sheet. The business we have today is stronger, more diversified, and more capable. With the company and the industry in such a strong position, I would like to share something personal. After a 40-year professional career, I have decided that the time is right for me to retire. At the end of this year, I will hand over the CEO position to Mark Jones Junior, and remain a member of the board of directors and help in any way I can. My decision was made easier knowing we have an exceptional leader in Mark Jones Junior. He has been a member of the management team for nearly 10 years, and closely tied to the business since its founding. He knows this business like no 1 else, He has the trust of our agents, our carriers, and our shareholders. And he has the hunger, the skill set, and the vision to take Goosehead to heights that will continue to set the standard for what excellence looks like in our industry. I am very confident in him and in this team. I love this company, and I believe deeply in what we are building, and I will remain fully engaged and focused on execution through the end of the year. I will do everything in my power to set this organization up for its next chapter. Now let me turn to our current operational performance. We delivered strong second quarter results that reflect continued execution against our strategic plan and broad based momentum across the business. Total written premiums grew 14% accelerating off the first quarter to $1.36 billion Policies in force grew 15% year over year and client retention, our most impactful driver of top and bottom line performance improved to 86% representing its highest level since the hard market began. We are encouraged by this continued sequential improvement in client retention rate, and see no structural limitation to meeting or exceeding our prior high of 89% in the future. Total revenues grew 21% to $113 million with core revenues up 10% to $95 million over the prior year period. As a reminder, in the second quarter of 2025, we recovered $4 million of previously unpaid renewal commissions and royalty fees. When adjusting for that year over year variance, core revenues grew 16% and total revenues grew 26% in the second quarter. Adjusted EBITDA was $38 million representing a 34% margin for the quarter. We have spent a considerable amount of time recently discussing our technology enhancements and new developments related to our Digital Agent 2.0 the country's first choice shopping platform. We remain as enthusiastic as ever around the progress we are making in the significant future opportunity ahead of us. But I wanna focus the discussion today on the strategy, consistency, and compounding nature of our core business. The largest portion of our business are franchise network is now healthier than ever. Our franchise strategy remains focused on placing the right agency owners in the right geographies and arming them with the support they need to maximize their productivity and profitability. A core pillar of that strategy is generating franchises with more producers. Our agency staffing program, which we stood up in 2023, has done exactly that. Since that program's inception, we have helped our agency owners place hundreds of producers into their operations. And now that strategy is bearing real fruit. Franchise producers are at the highest level in history at nearly 2.2 thousand with an average of 2.4 producers per franchise which is resulting in our franchises generating more income per location than ever. The average payment that we send to a franchise on a monthly basis has increased more than 35% year over year and is now over $28 thousand. This powerful and durable income stream allows them to reinvest back into their businesses to further reinforce the growth flywheel. At the beginning of the year, we discussed the expanding footprint of our corporate offices, These new locations were selected strategically. To align with attractive product markets high rates of homeownership, and strong recruiting pipelines from local universities. Our 5 recent office launches across the country are scaling rapidly averaging nearly 20 agents each and delivering strong new business production Over the quarter, several of these new offices were among the top overall offices in our corporate network. These offices allow us to tap into previously underserved markets, build a more diversified client base, and most importantly, it will produce the next generation of future franchise owners. We will continue to drive outsized market share gains with this powerful capacity that is both unique to Goosehead and extremely difficult to replicate. Our enterprise sales business continues to grow at a rapid pace and our pipeline of new potential partners to fuel continued growth is expanding. As we implement our embedded insurance offering, with our current and future partners, the third leg of our distribution stool will continue to grow at an accelerated pace. The backdrop for all of our agents across the sales network is now a dramatically improved product environment which is resulting in improving bind and package rates. As we highlighted over the past several quarters, everything in our business operates more efficiently, in a stable product environment. This is where we thrive. We have navigated a historically hard market over the last several years, and we are now poised to take advantage of a much healthier personal lines product market. Client retention continues to improve, The burden on our service function continues to abate. And remain aligned with our carrier partners in our mutual pursuit of profitable growth. We have built a firm foundation for the next phase of growth and I am incredibly proud of the work we have done. And then Mark and John asked me to take this position 4 years ago. I knew it was a special opportunity. I had been with Goosehead on its board for 4 years, and I have been a client for 15 before that. I knew the business. I knew the culture. Most importantly, I knew Mark's vision. I did not fully appreciate until I was inside is just how truly extraordinary the people at every level are in the organization. The agents who wake up every day and go find new referral partners, the franchise owners who are building businesses that are generating life changing income, the service team members who help our clients navigate some of the most stressful moments in their lives, the technology team who built something that the industry said could not be built, and the rest of our teammates who strive for excellence every day. I am grateful to all of them. And I am proud of what we have accomplished together. We came through a once in a generation hard market stronger than we entered. We built new capabilities that will define the next decade of this business. We consistently expanded our market share and more than tripled adjusted EBITDA. We returned hundreds of millions of dollars to shareholders, and we did it without compromising who we are. A company that puts the client at the center of its universe. The company is in exceptional position today and it gives me great confidence that now is the right time for the transition. Our leadership team is deep and experienced, and Mark Jones Junior is 1 of the best operators I have encountered in my career. I plan to spend the rest of the year making sure every initiative is properly sourced, and set up for success. And then I will hand the baton with tremendous pride, full confidence, and continued support wherever needed for my position on the board. Thank you to this team Thank you to our agents and franchise partners Thank you to our carrier partners. And thank you to our shareholders for the trust you have placed in us. It has been the biggest privilege of my professional career. With that, let me turn the call over to our President and COO, Mark Jones Junior.

Mark E. Jones: Thanks, Mark. And good afternoon to everyone on the call. First and foremost, I feel incredibly honored to have been able to work directly with Mark Miller for the last number of years. Mark brings deep care and commitment not only to the work that we do, but to our teammates, franchisees, carrier partners, and shareholders. he is been an incredible example for everyone here at Goosehead and positioned the company to create value well beyond his tenure as CEO. On behalf of everyone at Goosehead, thank you for your leadership, your partnership, and your unwavering commitment to this organization. I am grateful to have worked alongside you and look forward to continuing that partnership as you remain on the board. I am deeply grateful to our board of directors our shareholders and our executive team for their support and the confidence they placed in me to lead this organization into the next chapter. Our strategy is not changing. We remain laser focused on our objective. To become the largest distributor of personal lines insurance in our founder's lifetime. Our pathway to achieving that is fundamentally rooted in our highly differentiated human capital advantage. Our best in class sales agents, our white glove service team, our technology organization, rivaling the best in Silicon Valley, our professionals across all of our operating teams. Because of the work that Mark K. Miller has done to build such a strong foundation and leadership team, By focusing this next chapter will be focus on speed of execution, simplification, and rapid decision making. I look forward to continuing my relationship with the investing community and keeping you all up to date on the exciting things we are doing at Goosehead as we continue to disrupt the industry and raise the bar in the years ahead. As Mark Miller mentioned, this quarter's results speak to the consistency and durability of our business. Our model focused solely on personal lines and organic growth is highly differentiated in insurance distribution, and our results compete with some of the most successful businesses in any sector. Since our IPO in 2018, we have grown our total revenue at a 29% compound annual growth rate and adjusted EBITDA at a 34% compound annual growth rate while when comparing full year 2018 results to the trailing 4 quarters ended June 30, 2026. All of this while returning hundreds of millions to shareholders through dividends and share repurchases. I am so proud of our team for building such an amazing business, 1 that looks like no other organization out there. As Mark Miller mentioned, our corporate and franchise teams are healthier than ever before. Delivering strong growth and profitability. As the product market has improved, franchisees have increasingly leaned into growth. We now have multiple agencies with more than 40 producers, and 1 agency over 50 producers. As we have talked about in the past, the productivity impact of that is not linear. Each time a franchise adds an additional producer, it raises the average productivity per producer meaning that growth accelerates in excess of the producer count. To give you some context, the number of highly productive agencies during the second quarter, we had approximately 70% more franchises produce $100 thousand of gross new business commissions and agency fees in a month when compared to the prior year. More and more agencies are hitting all time production highs, and the bar continues to get raised. Our corporate sales team is a key enabler for future franchise growth. As we produce the highest powered agency owners inside of our corporate team first before launching them into their own franchise. In total, we have over 60 agencies who launch from corporate, representing more than 170 producers inside those franchises. A new development with our highly differentiated corporate sales talent is to seed these producers into an embedded franchise. Like our partnership with Planet Home. We are able to provide embedded agencies that have natural lead flow access to plug and play talent from our corporate Salesforce, A majority of Planet Home's team consists of former corporate sales agents and the ramp up has been faster than any franchise in system history. Pairing high quality lead flow, with embedded seasoned talent has allowed them to produce at a strong level immediately placing them near the top 5% of franchises after just 6 months of production. Fueled by our strategic partnerships, enterprise sales is quickly becoming a more material portion of our business. During the second quarter, this team generated approximately $3 million in new business commissions and agency fees. In just 3 years since its inception, enterprise sales is approaching a third the size of our corporate sales team which we have been operating in an industry leading fashion for 20 plus years. That growth reflects increasing demand for businesses across the homeownership ecosystem that are looking to improve the client experience, while adding recurring high quality revenue streams. Goosehead is uniquely positioned to support those partners. We combine national scale with local expertise access to more than 200 carrier relationships, sophisticated technology, and a service platform built to support clients as their insurance needs evolve over time. We know of no 1 else that has that combination of capabilities and execution at scale. As our partners continue to grow, we would expect enterprise to become an increasingly more meaningful contributor to both revenue growth and profitability. Technology is an important part of enabling that opportunity. Over the last several years, we built capabilities that broaden how consumers interact with Goosehead. Our digital agent platform allows consumers to shop across multiple carriers through a seamless digital experience while preserving access to a licensed Goosehead agent whenever advice or expertise add value. Today, consumers in Texas can complete the entire shopping and binding process digitally across multiple home and auto carriers. We believe that is an important step forward not because technology replaces our agents, but because it allows our agents to spend more time where they create the greatest value. Our early results reinforce that view. We are now generating business entirely through digital interactions, many clients still choose to engage with an agent before completing a purchase. By the time that interaction occurs, the client has already completed the data collection process, creating highly qualified opportunities for our producers and driving productivity. Enhancing agent productivity, while also driving fully digital interactions will allow us to break the human capital bottleneck that exists in traditional agent models and accelerate growth. Over time, we believe 1 of the best ways to measure this success of the digital agent will be growth in new business production per active producer rather than digital adoption alone. That is ultimately the economic outcome we are trying to achieve. We are applying the same philosophy across our broader technology investments. Lily, our AI voice assistant, now handles approximately 20% of our inbound service calls from start to finish, with performance exceeding 30% during certain periods. Those interactions reduce routine administrative work while allowing our service professionals to focus on situations where experience judgment, and empathy have the greatest impact on client experience and retention. Technology should improve the overall offering and economics, not simply automate activity. If automation enhances the client experience, increases producer productivity, or improves retention, we will continue to invest aggressively. If it does not, we will not. That discipline will remain central to how we allocate capital. We have made amazing progress over the last several years across every area of our business and I look forward to keeping you updated on our progress as we continue to march towards industry leadership. Again, I am grateful, honored, and humbled to have the opportunity to lead this organization to the next phase in our journey. I would like to extend a heartfelt thank you to our teammates, franchisees, carrier partners, board members, and our shareholders for their support. I will turn it over to John Martin, Chief Financial Officer, to discuss the quarter's results and outlook for the rest of the year.

John A. Martin: Thank you, Mark, and good afternoon, everyone. it is a pleasure to speak with you today for the first time as Goosehead's CFO. I have enjoyed meeting many of you in the second quarter, and I look forward to engaging with more of you in the months ahead. Before we dive into the numbers, I would like to take a step back and briefly share my perspective from these first few months on the executive team. I have had the opportunity to dig in and pressure test what really makes our company different and what is especially clear to me is the business is stronger and the opportunity is larger than I initially appreciated from the outside. At the core of Goosehead's success, are a number of foundational competitive advantages. Beginning with talent. The belief that people represent our greatest asset has been central to our ethos from the beginning. This is clearly reflected in the quality of our team who show up eager to win in the market every single day. Across sales, service, technology, and more our differentiated human capital foundation has no peer. Goosehead's integrated technology, proprietary data, carrier relationships, product breadth, and nationwide distribution enable a flywheel at scale that is incredibly difficult to replicate. With the client at the center of every decision, Goosehead leverages the scale to reinvest in what matters most, improving the client experience, reducing complexity, and providing greater choice across products and transactional modalities. Goosehead has always led with the home, not in spite of its difficulty, but because of it. This uncompromising focus has allowed our business to become the authority for clients and an essential partner for carriers. Within a massive, essential, and fragmented market, we have a proven history of capturing significantly outsized share. Our competitive positioning long term approach, and consistent execution have together created a rule of 50 financial profile that grows stronger year after year. Goosehead's unique value proposition and recurring revenue model delivers sustainable growth, attractive margins, and natural operating leverage with scale. This is the hallmark of a true compounder. Companies of this quality are extraordinarily uncommon and the results speak for themselves. Since the 2018 IPO, revenue and EBITDA have increased more than sevenfold organically. And while these figures are helpful in setting context, what is most important is the number our entire organization is focused on. 99%. With less than 1% market share today, more than 99% of our addressable market remains in front of us. This is what we wake up every day thinking about. And it could not be a more exciting time to be here. And with that, I will turn to our financial results for the second quarter. Total written premiums grew 14% year over year to $1.3 billion, accelerating from 13% growth in the first quarter. Policies in force grew 15% year over year to 2.1 million, accelerating from 14% growth in the first quarter. Total revenues grew 21% year over year to $113.4 million and core revenues grew 10% year-over-year to $95.6 million. Strong new business generation improving client retention, and meaningful contingent commissions all contributed to our robust top line performance. As a reminder, in the second quarter of 2025, we recovered $4 million related to previously unpaid renewal commissions and royalty fees, from a carrier partner. Adjusting for this amount in 2025, total revenues grew 26% year over year and core revenues grew 16% year over year. New business commissions grew 27% year over year to $9 million. We have now delivered consecutive quarters of over 20% growth in new business commissions for the first time since 2021. Improvements to agent management infrastructure, a healthier product market, geographic expansion, and enterprise sales and partnership efforts together drove the strength in new business commissions. Enterprise sales continues to scale rapidly and represented 21% of total new business commissions and agency fees in the quarter. New business royalties grew 20% year over year to $9.4 million. This was the fastest pace of growth in the last 6 quarters supported by increases in both producers and producer productivity. Franchise producers grew 5% year over year and 2% sequentially, to 2.19 thousand producers. We are encouraged to see continued momentum here with producer hires increasing 30% year over year. As our franchisees continue to scale their producer forces, lean into best practices, and benefit from healthy product environment, they are reaching impressive new levels of success. Client retention increased sequentially as expected from 85% to 86% driven by strategic client experience initiatives and a more stable year over year pricing environment. Ancillary revenues largely comprised of contingent commissions, grew 180% year over year to $16.3 million. Improved underwriting loss ratios favorable carrier mix dynamics, initiatives to optimize carrier relationships all contributed to the increase in contingent commission revenues in the quarter. Adjusted EBITDA grew 30% year over year to $37.9 million, representing a 33% adjusted EBITDA margin. During the second quarter, we generated $15.9 million in operating cash flow and repurchased 95 thousand Class A shares for a total of $3.9 million On a year to date basis, we generated $38.8 million in operating cash flow and repurchased over 1 million Class A shares for a total $53.7 million We now have fewer class a shares outstanding than we did at the time of our IPO. And we will continue to be opportunistic with the $144.6 million remaining on our existing share repurchase authorization. We continue to believe the price of our stock is meaningfully dislocated from the value of our business. Recent filings reflect that conviction showing that Mark Jones Junior, Mark Miller, our general counsel Martin Thornthwaite, and I all purchased shares in the open market during the quarter. We ended the quarter with $23.7 million of cash and cash equivalents, and $323 million of total debt outstanding. Turning now to the balance of the year. We are increasing our revenue outlook for the full year 2026. We now expect total revenues to grow organically in the range of 12% to 19% year over year. This increase to the bottom end of our revenue range reflects a more favorable outlook around contingent commissions. Which are currently tracking to outperform our prior expectations. Are encouraged by the 12% year over year growth in core revenue we delivered in the first half, and we continue to expect a second half acceleration from these levels given the upward trajectory of client retention and strong new business generation. Finally, we continue to expect total written premiums to grow organically in the range of 12% to 20% year over year. I would like to close by emphasizing how thrilled I am to be part of such an exceptional team and such an extraordinary business. Our unique positioning provides a strong foundation for continued share gains and compounding growth far into the future. Though Goosehead has come a long way, it truly feels like we are just getting started. And it is such an exciting time to be here. Thank you to our teammates, partners, and franchisees for the hard work you do to make all of this possible. And thank you to everyone joining us today for your continued support of Goosehead. With that, conclude our prepared remarks. For today's Q and A session, our Co-founder and Chairman, Mark Jones, will be joining us. Let's go ahead and open the line for questions. Operator?

Operator: Thank you. A question, please press 1 on your telephone. You will hear the automated message advising that your hand is raised. We also ask that you please wait for your name and company to be announced before proceeding with your question. Our first question of the day will be coming from the line of Tommy McJoynt of KBW. Your line is open.

Tommy McJoynt: Hey, good evening. Thanks for taking my questions. And congrats, Mark and Mark as well. My first question, actually just around the trajectory of margins. Obviously, a very strong margin report in the second quarter. And part of that was benefiting from the high contingents number. So can you go through your expectations maybe on a full year basis for how you think about margins on ex contingent basis, how you see those trending? Thanks.

John A. Martin: Sure thing. Hey. it is John here. So there is no change on an underlying basis with respect to how we are thinking about expenses for the year. Ultimately, from a planning perspective. We look at our expenses largely on a revenue ex contingent basis. And know, previously, we have mentioned that we expect moderate compression this year driven by the growth investments that we are making in our guidance around expenses thus remain unchanged. You know, we have also commented that we expect comp and G&A to grow in the high teens to low 20s for the year. Which will likely be in excess of core revenue growth just given the current investment cycle.

Tommy McJoynt: Got it. Thanks for that. And then switching over, there have been some well publicized changes regarding the comp and benefits at the largest captive insurer in this space, 1 of your competitors. Have you seen any notable uptick in interest from captive agents in the Goosehead opportunity just over the last few weeks or months. And then just seeing those changes, you know, in the market from a competitor impact at all your go to market strategy around recruiting, compensation, or anything?

Mark E. Jones: Hey, Tommy. This is Mark E. Jones junior. it is a pretty interesting development. What we are seeing is a lot of our franchisees and producers have contacts across the entire insurance landscape. So I think what you are going to end up seeing is a lot of free agents on the field. Who do not necessarily feel like they are being treated the right way. Ultimately, I think that could potentially be a tailwind for our producer recruiting. it is not changing the way we think about our go to market strategy. We are going to continue to invest in things like the digital agent to drive digital conversions, but that is also a tool that is going to help arm our existing agent force with productivity enhancements, help them get through their entire funnel more quickly. Ultimately, we believe we have a model that is going to win in the marketplace over the long term. Thanks.

Operator: Thank you. 1 moment for the next question, please. And our next question is coming from the line of Andrew Andersen of Jefferies. Please go ahead.

Andrew Andersen: Hey. Good afternoon, and congrats to you both. Productivity improved pretty significantly for both the newer and tenured franchise operators. Could you maybe just elaborate a bit on what is driving that step up and how durable you think that is? I imagine there was a good chunk of it related to the agency staffing program and the agency side, but would hope agency size, but hopefully, you could just expand a bit more on that productivity gain.

Mark E. Jones: Yeah. We are seeing really positive things with our franchise continuing to lean into the growth message. And hire new producers as well as adopt best practices. And we are also getting a tailwind from the product market being considerably more open than it was in the previous couple of years. Ultimately, you know, what we have been trying to do for the last multiple years is continue to grow really high quality franchises inside our corporate sales team. First and then launch them into that community. You can see the impact of that in that less-than-1-year franchise count. there is approximately 30 ish franchises that launched out of corporate that are included in that. You can see that is driving a 70% productivity improvement in that tenure band. And our more tenured agencies are continuing to hire. The same-call same-store sales stats for this quarter are pretty awesome. So in aggregate, same store sales is up 22% for this quarter. And the top end of the franchise community, the top 50, store sales was over 40%. So they are really leaning into the message. They are onboarding new producers, and I think we can continue to grow the franchise unit. Productivity for the foreseeable future.

Andrew Andersen: Thanks. And you had mentioned kind of your next chapter focused on speed of execution and simplification. Parts of the business do you think you can move materially faster here? Is that on product development, technology, more partnerships, kind of all of the above?

Mark E. Jones: Yeah. I mean, it is really all of the above. We have done a lot of foundational work in the last few years and massive credit to Mark K. Miller for the amount of work that he is done in getting this business in a really stable position with a strong foundation. Now we need to look for opportunities to reduce complexity where we can. As the product market has had constricted over several years, we had to onboard a tremendous amount of new underwriters. And I do not necessarily think having 300 underwriters on the platform is ideally the right amount. So we have reduced some complexity there. We are going to continue to do that. On the service side, that has had massive complexity increase over the last several years just with the changes in the product environment and underwriter capacity. Beginning to alleviate. that is an area where we can use technology to automate everything that should be automated, not necessarily everything that could be automated. We still really believe in the role of the human service agent. We are going to continue to expand that. Some of the nitty gritty stuff in the back office that I do not think the industry fully comprehends. Things like how do you get an agent licensed and onboarded nationally for something like our enterprise sales team in a really scalable fashion. Actually a pretty complex challenge to cover because you have got 50 different state regulators. You get a whole bunch of different licensing exams, and every carrier has different requirements for licensing in their appointing in their state. We are making a ton of progress on that front, and we are gonna continue to look for opportunities to speed up everywhere in the business. Thank you.

Operator: Thank you. 1 moment for the next question. Our next question is coming from the line of Jon Paul Newsome of Piper Sandler. Please go ahead.

Jon Paul Newsome: Good morning. Congratulations, Mark, on the changes. Was hoping you could talk a little bit about additional color on the contingent commissions and the sustainability thereof. Seem to be the solution in my mind, the biggest happy surprise. And anything in there that would be deemed kind of unusual or anything that we should think of from a that perspective?

John A. Martin: Hey. So just on speaking to the contingents, our nothing's changed structurally or with respect to how we are approaching recognition or anything like that. As I mentioned, in the prepared remarks, there is really 3 main drivers of favorability this year. So 1, growth in the new business we are driving 2, profitability of the business, and 3, more favorably negotiated contracts. But all 3 of these have been tracking a bit higher than we initially anticipated. And, you know, as you know, contingents can have a relatively wide range of outcomes depending on where business close business flows and boxes shake out throughout the year, but our updated guidance reflects confidence in where we are going to land this year.

Jon Paul Newsome: Is there anything today that would change the cadence of new production relative to new agents that we have seen in past, or should we should we generally think that the new agent forces should have about the same impact prospectively over the next 12 months that we would have, you know, a year ago or something like that.

Mark E. Jones: Yeah. I think agent ramp up is going to look similar to how it has looked in the past. You know, we have invested a ton in training tools and management infrastructure, so we should get incrementally better in wrapping up ramping up new agents. And we have also, on the corporate side, think we talked about this in previous calls as we have expanded that pipeline of new agents that we are onboarding from more so, like, 90% college tires to now more of an even between experienced hires and college hires. that is been pretty impactful for agent ramp up. Just get that is got a little bit more experience underneath them has been incrementally positive. We have got a good onboarding class coming during summer. We feel great about the position of our sales panels. And we are more spread out than they typically have. So then you have more market opportunity Pablo. So I think that is that is 1 of the biggest things is the just the aperture of opportunity has opened up for us as well. Great. Thanks, folks.

Analyst: Appreciate the help.

Operator: Thank you. 1 moment, please. And our next question will be coming from the line of Brian Meredith of UBS. Please go ahead.

Brian Meredith: Yes. Thanks. Just a couple of quick questions here for you. First, just on comp and benefits. I guess, it looks like there is going to be a pretty big ramp-up second half of the year. Is that all just coming from the new hires you have coming in? And should that ultimately kind of lead to additional sales?

Mark E. Jones: Yeah. it is a couple of things, Brian. it is new sales talent coming in the door, it is continued investments in our technology teams. Which is really differentiated talent, I think, in the industry. As well as continued investments in our service function to keep driving client satisfaction, move client retention up. As fast as possible. So you are gonna see some of that end up reflected in new business production, but not all of that compensation increase is going to go directly towards current day new business. it is more platform stability and scalability. Alright. So that is helpful. Thanks. And then I saw you in a little bit of a tick up in customer retention rates.

Brian Meredith: Do you expect that to continue here? Yeah.

Mark E. Jones: I mean, we are pretty pleased with the trajectory of client retention. You know, we were pretty confident it was going to tick up to 86% during the year. We saw that it is continuing to improve. Obviously, we are not gonna promise any specific timeline for when you are going to see the next click up. But we have put some of our sharpest human capital against client retention just to make sure we continue to see that forward progress. Obviously, the improved product market is super helpful, but we are not just sitting on our heels waiting for the market to heal itself. We are being pretty aggressive with investments in this area. Gotcha. that is helpful. And then I guess last question, just curious. Commission rates, base commission rates, seeing any tick up there yet? Yeah.

Brian Meredith: Aggregate commission rate has improved. So it improved in Q1 over the fourth quarter to improve again in Q2 over the first quarter, which is a combination of multiple factors.

Mark E. Jones: 1 first being just business mix, so less of it going to your statement plans, less of it going to ENS. And more of it going towards the traditional admitted markets. But, as carriers have gotten into a really healthy position now, they are looking for ways to incentivize growth and I think we have talked about in the past. We, yeah, look at those negotiations holistically. Right? like how do we drive the most efficient service interactions? How do we get the most efficient technology interactions? And, also, how do we make sure we have got appropriate market compensation for the business we are delivering. Makes sense. Thank you.

Operator: Thank you. 1 moment, please, for the next question. And the next question is coming from the line of Charlie Letter of BMO Capital Markets. Please go ahead.

Charlie Letter: Hey. Thanks. Maybe just on the digital agent You had previously said you anticipate that being a contributor in the second half. Of 2026. Do you still expect that to be the case Do you have plans this year to expand that outside of Texas? And then you also mentioned that new business per active producer KPI. Do you have any stats around how that is running? Yeah. I will leave it there. Thanks.

Mark E. Jones: Hey, Charlie. Thanks for the question. Yeah. So we were really pleased to be able to deliver this version 1 of the platform slightly ahead of our anticipated schedule. So our tech team has done a really amazing job putting something in market that has never really existed before. For a client to interact in a fully digital world in a choice model has not existed in The US. So super excited to have delivered that in the first half of this year. The second half of this year, the focus is on optimizing the Texas conversion funnel. So like we talked about in prepared remarks, we have got fully digital transactions going through. We have also got plenty of people that are getting even all the way down to the buy screen and then kicking out because they wanna talk to an agent. Our agent network is a massive competitive moat for us, 1 that I do not believe exists elsewhere in the market. But we will keep investing in Texas. Optimizing the conversion funnel, and then rolling it out to additional states. Subsequent to that as well as increasing functionality adding and improving the user interface, making it more chat like. So it feels more like you are talking to a normal human agent, but we just wanna make sure we are providing couple things. Our agents with leading technology, our carrier partners with highly profitable business that match what the risk appetite is, and our clients with a tremendous experience.

Charlie Letter: that is helpful. Thanks. And maybe just on the pricing environment and geographic mix, can you update us on how you are thinking about premium per policy trends from here? It looked like it decelerated a little bit in the quarter. Thanks.

Mark E. Jones: Yeah. it is in line with our expectations. I mean, we plan to see the stability in the pricing market that we are seeing right now. I mean, we anticipated, you know, moderate pricing declines in most geographies. You are seeing that in the PIF growth rates versus premium growth rates. Historically, those have been considerably different given the pricing environment, and now they look a lot more similar. But that is not driving any kind of negative impact on our business. We expected that to happen. it is contemplated in our guidance. We prefer a product market that is considerably more stable. It just makes everything else work more efficiently in our business. Thank you.

Operator: Thank you. 1 moment for the next question. And our next question will be coming from the line of Andrew Kligerman of TD Cowen. Please go ahead.

Andrew Kligerman: Hey. Good evening, and congratulations to both Mark. I want to follow-up just quickly on Charlie's question just now. Could you clarify or kind of define what you meant by moderate? In terms of pricing decline? And then maybe separately home versus auto. Those 2 pieces.

Mark E. Jones: Yeah. Sure, Andrew. So in auto, what you are seeing is more like mid-single-digit. Pricing decline. And, obviously, that is geography dependent. there is places where that is not necessarily gonna be the norm. But if you look kind of nationwide, should expect something like mid-single-digit pricing decline. Home has been much more durable. it is looking more flat. And in some geographies, still low-single-digits. The new business trends, I think have been interesting. The pricing on new business has not been as impactful as it has been on the renewal book. So the pricing decline on renewal has been larger than the pricing impact on new business. We are actually still continuing to see higher pricing on new policies that we are writing. But auto market mid-single-digits down. Home market, generally flat. Super helpful. And then just a little clarity on productions. Both corporate and franchise. So, I mean, really solid number, better than solid 22% up head count in corporate agents. And I think you mentioned a little earlier, you know, that the mix was kind of even college versus more experienced. I am kinda curious. What was the mix or, you know, the new agent count mix of embedded versus non embedded.

Andrew Kligerman: Not sure I am quite following the question, Andrew. I mean, so we are talking about Like, in other words, like, if agents are, you know, immediately put into 1 of the embedded channels, versus, going into it, you know, a typical corporate setting as has always been the case.

Mark E. Jones: Yeah. So, like, the agency staffing program has added a large amount of producers into existing franchises from our existing corporate agent team, we have taken more than 10 producers in the last several months out of the corporate agent team and place them into something like Planet's embedded franchise where they have got natural lead flow. And the exciting thing for me is it is actually improving the productivity of those agents. So they are already solid producers inside our corporate agent force. We put them in a situation where they have got the same type of lead flow but effectively at an unlimited amount, and they are doing a great job. Planet has had a tremendous start for the agency. I see. I see. And then just lastly, in terms of franchise producers, up 5%. So you are now starting to see the producer count grow as well as the franchise count, which is great. And the franchises are growing too, rather. And then you mentioned 30% increase in producer hires. So do you see kind of the producer count kind of accelerating up from 5% over time? I mean, where could that go a couple of years from now? I mean, are we going to start to see the double digits pretty soon? So there is a lot of possibilities, Andrew. And, obviously, we do not control exactly what our franchisees do. Right? We explain to them best practices. We help walk through the model and help them understand the level of value that they are able to create by onboarding more producers and, you know, holding them accountable to the standards that we think that they should be able to go produce. And you are seeing the top end of the franchise community just continue to grow at a really exciting pace. I mean, we talked about we have multiple agencies over 40 producers now. We have got 1 over 50. And if you remember, I think it is probably a couple of years ago, but Mark K. Miller used to refer to, I want 50 franchises that have 50 producers or more. That could be a great kind of moniker for us. Right? A 50 by 50 stat. We are making progress on that goal. And we have talked about getting it producers per franchise number up to 5. I still think that is a pretty attainable target in the kind of near- to medium-term. Even if you just go, okay. We have got, you know, ballpark 900 franchises. Could all of those higher 1 person? That feels reasonably attainable. Could the top 50 of those hire 5 people? That feels reasonably attainable. So you can get to some math that looks pretty exciting. I mean, obviously, we are not going to be providing specific guidance on what producer count goes to. But you can see how this model works really well, especially because they generate such durable income streams inside their business. Very helpful. Thank you.

Operator: Thank you. 1 moment, please, for the next question. Our next question is coming from the line of Mark Hughes of Truist Securities. Please go ahead.

Mark Hughes: Yeah. Thank you. Good afternoon. The enterprise sales team, I think you described the $3 million in new sales this quarter. And that is really ramped up. To what extent is that growing faster, and as it become a bigger part of the mix here, is it going to be a tailwind for new sales and that corporate channel?

Mark E. Jones: Yeah. I think it absolutely is going to be. it is our fastest growing sales channel right now. We have got tremendous leadership there. We have great partners. We have built really strong technology to effectively route leads to the right agents. We have got a great agent force that can handle the complexity of dealing with leads from across the entire country. We have tried to make that as easy as possible. that is a business that is going to grow at a really strong rate for a long period of time. Because if you think about it, our corporate agents and our franchisees are typically going towards the home closing transaction as their main lead source. it is not their only lead source, but it is their main lead source. And right now, that is somewhere between 4.5 and 5 million transactions annualized. The enterprise sales team is focused on embedded pools of clients. So that could be in mortgage servicing where there is 85 million mortgages existing in The United States today. Or a myriad of other potential adjacencies, financial services, moving companies. We have a really strong partnership with Vivint. So we just get access to a lot more potential clients in a really efficient way. I think it is going to be a really meaningful portion of the business over time. Yeah. If it was $3 million this quarter, what was it in this quarter last year?

Mark Hughes: Like, we said it was 70% growth.

Mark E. Jones: This quarter.

Mark Hughes: Oh, okay. Alright. Very good. And then the retention if I kind of try to back into my own number on the renewal commissions it looks like in the corporate channel, it is a little less strong than the royalty fees. So the renewal royalty fees very healthy and or let's just say it is it is seems to be a little bit better than the corporate channel. Is there any reason for that, or is that just some normal variability?

Mark E. Jones: Yeah. I would point towards geographic diversity. The franchise side of the business is much more geographically diverse than corporate side of the business. We have done a great job extending outside of Texas in corporate over the last couple of years, and we have made really strong progress there. But corporate does have larger taxes exposure than the franchise side of the business. So that diversification can insulate you more on the franchise side. And then just from a incentives perspective, a franchisee is making 50¢ on every dollar on every policy that renews. And we do everything that we would do for corporate on the franchise side with the service team. But the franchisees also throw in more additional work on their end because that is just how the incentive structure works. Then if you look at the second half of 2026, ultimately, we are expecting total second half on renewal commissions to have some improving revenue retention. Yeah. Very good. Thank you. Thanks.

Operator: Thank you. 1 moment, for the next question. Next question is coming from the line of Rounak Majumdar of RBC Capital Markets. Please go ahead.

Analyst: Hi. Good evening. And I wanted to quickly congratulate Mark and then, of course, John on first quarterly call. I believe the percentage of calls that started being handled by Lilly is similar to last quarter. Could you maybe walk through what percentage you might be able to reach long term? For any significant savings that might come through with Lily?

Mark E. Jones: Yes. So we said 20% this quarter is kind of the every single day, we feel really it is gonna be 20%. We are reaching periods of 30% now. With some level of consistency, although not really to plant the flag if that is the current watermark to continue to chase after. I do not really have a target in my head of exactly how much should be fully contained by Lily. I think that is gonna be dictated by the client satisfaction scores. If we get to a position where people do not like interacting with that system, then we will adjust. But what we have found so far is that for the more administrative type task, things like need my ID card. I have a billing question. Help me understand this certain piece of my policy. That works really well. And people get that handled immediately, and they are highly satisfied. I also think there is a considerable portion of the work that our service function does that we probably could automate that we are not going to, Because if that is gonna negatively impact the client experience and then that would negatively impact our client retention and our goal is to always maintain absolute, you know, kind of tremendous client experience and continue to drive client retention because that is where all the profitability is in this business. So I do not necessarily have a target for exactly what we want the number to be. And those cost savings are gonna continue to get reinvested into further tools and technology that help our clients ultimately, over time, should reduce our cost to serve. Again, we wanna maximize client experience. That all makes sense. Thank you.

Analyst: Could you maybe just quickly walk through the cash utilization strategy? I was a bit surprised to see the buybacks slow despite the price being down on the shares.

John A. Martin: Sure. So I think about the 1Q, 2Q repurchase levels, much less as any sort of signal on our view of the business or the price of the stock and really point to the fact that we just bought a ton of stock recently. So since the beginning of 2024, we have repurchased over 3 million shares and 1 million of which has come from the first half of this year alone. And you can also see that we, on the management team, have also been very aggressive in the open market with purchases more broadly. I share the same view that management has always had around capital allocation of and that is been sort of first priority has been investment into the operations of the business, after which we think about return of capital to shareholders. What we are aiming to do is we really wanna make sure the core business, is appropriately funded and retains much optionality as possible. What we do not wanna do is be in a position where we are making operational decisions based on our capital structure. So to that end, we maintain a conservative balance sheet, and have a conservative approach to leverage. And so we will continue to follow that approach, and then buybacks are gonna be an important part of Thank you.

Analyst: And then if I could maybe sneak 1 more in. there is an adjustment for a contract termination cost. Could you maybe highlight what that is?

Mark E. Jones: Yeah. We were making some technology changes in our service function to reduce complexity and improve routing technology and provide more analytics. So we exited 1 contract, and we implemented a new system. Perfect. Have a great summer. Thank you. Thanks.

Operator: Thank you. 1 moment, please. And our next question will be coming from the line of Ryan Tunis of Cantor. Please go ahead.

Ryan Tunis: Hey. Thanks, Good evening, and congrats to everyone. So I have got a question. I am gonna put Mark E. Jones Junior on the spot. I am just an observation. And again, this is not to take anything away from all the investments. Like, I think the company's made all the right capital allocation decisions, but you do have this reality that the stock price has not necessarily been it is been a bit uneven in the last few years. And so I guess my question Mark E. Jones Junior is how are you thinking about shareholder value creation? I mean, for me, it is margins. growing your earnings power, If it is not margin, that this makes more sense than just as a private company? I will leave it there.

Mark E. Jones: Yeah. Ryan, I think the way to maximize long term shareholder value is to drive the maximum long term profit dollars. And so we are not going to be concerned with short term swings in equity valuations. We have got a lot of confidence in the direction that our business is going. Obviously, you can see the management team voting with their wallets there. We are in the right place in the value chain. I think we have a pretty strong head start on the industry. And we are gonna continue to drive as much growth as we can while maintaining strong margins. We have made pretty material progress on our margin profile, over the last number of years while still delivering organic growth considerably in excess of the average player you would see in the industry. So I am not concerned with short term equity dislocations. We are a long term shareholders, and we intend to be long term shareholders. Yeah. And this is this is Mark E. Jones senior as the largest shareholder by a huge margin Our focus is building long term shareholder value in We are not going to get distracted by short term fluctuations. We are not going to get distracted by the temptation to do a take private. This is about building long term shareholder value, and we are confident that we have the right strategy We have the right team. And, ultimately, we believe that we will be the winner. Thanks, Pablo.

Ryan Tunis: And, like I said, congrats. I got confidence here. So thanks. Thanks, Ryan.

Operator: Thank you. 1 moment for the next question. And our next question will be coming from the line of Katya Sakys of Autonomous Research. Please go ahead.

Katie Sakys: Hey, thanks. Good evening, and congratulations to all. My first question is on the increase to the full year total revenue growth guide. Do you guys think that core revenue growth can hit that new 15.5% midpoint this year?

John A. Martin: Yeah. So, you know, I think as we said previously, we are extremely pleased with what we have delivered in the first half of the year, both in terms of our financial results and also the directionality of our major operational KPIs. You know, growing new business at incredibly strong pace. We feel great about the direction of client retention. We are looking at now points to a second half acceleration off the 12% that we delivered in the first half. That includes both gains from client retention and new business generation. I would say the 1 thing, Katya, to keep in mind is as you are thinking about the year, from an intra year perspective, we saw a pretty meaningful acceleration in new business generation in the second half of 25 relative to the first. As product availability came back into the market and began hitting our stride on a number of initiatives. So we are just pointing to the quartering of last year as you are thinking about year on year growth in the third and fourth quarters this year. But, overall, we are performing very well against our expectations so far, things are setting up well for the back half.

Mark E. Jones: Yeah. And I would say our expectations on core revenue have not changed. The increase in the low end of the guidance range was really to adjust for the outperformance on contingencies driven by strong profitability and growth.

John A. Martin: And, sorry, just to follow-up. You know, previously, I know we have given guidance around the 60 to 85 basis points. And just to round out Mark's comments there, our more updated view, which is reflected in the full year revenue update is 70 to 100 basis points, total written premium for contingent commissions on the year. All right. Thank you.

Katie Sakys: That takes care of 1 of my follow-ups. I guess just to sneak 1 more in quickly. It looks like even excluding the contract termination charge, adjusted G&A expense was a little bit higher than, I think, I was expecting for the quarter. Certainly appreciate that you guys are investing quite a bit in technology and professional services. But was wondering if perhaps you perhaps you could unpack the year over year increase there and you know, give any color as to whether there was, like, a pull forward and the timing of certain costs, or if perhaps you are not just spending more year over year, then perhaps initially expected.

Mark E. Jones: Yes, Katya, there was a couple of nitty gritty pull forwards associated to the DA for some implementation projects. Nothing that is hugely material, but you know, on the margin can moderately increase that year over year growth rate. And remember, we did just deliver the country's first choice shopping platform end to end. And that generates some incremental G&A expense. And we had a conference with our franchisees in this second quarter, our President's Club conference, which incrementally is $1.5 million of G&A. But as you are looking at that from Q1 to Q2, that is what that is. Same period year-over-year as the second quarter of last year. Got it. Thank you. Thanks, Katya.

Operator: Thank you. There are no more questions in the queue, and I would like to turn the call back over to Mark Miller, CEO, for closing remarks. Please go ahead.

Mark K. Miller: Yeah. I just want to thank everybody for joining us on today's earnings call. We look forward to talking to you again in October to review our third quarter results.

Operator: This concludes today's program. Thank you for joining. You may now disconnect.